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):
                                February 20, 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 February 11, 1998, to the Prospectus, dated September 4, 1997,
relate  to  the   offering  of   Continental   Airlines,   Inc.'s  Pass  Through
Certificates, Series 1998-1.







                                    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

March 6, 1998






                                  EXHIBIT INDEX


     4.1  Revolving Credit Agreement (1998-1A), dated February 20, 1998, between
          Wilmington Trust Company, as Subordination Agent, as Borrower, and AIG
          Matched Funding Corp., as Liquidity Provider

     4.2  Revolving Credit Agreement (1998-1B), dated February 20, 1998, between
          Wilmington Trust Company, as Subordination Agent, as Borrower, and AIG
          Matched Funding Corp., as Liquidity Provider

     4.3  Revolving Credit Agreement (1998-1C), dated February 20, 1998, between
          Wilmington Trust Company, as Subordination Agent, as Borrower, and AIG
          Matched Funding Corp., as Liquidity Provider

     4.4  Trust  Supplement  No.  1998-1A-O,  dated  February 20, 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.  1998-1A-S,  dated  February 20, 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.  1998-1B-O,  dated  February 20, 1998,  between
          Wilmington Trust Company, as Trustee, and Continental  Airlines,  Inc.
          to Pass Through Trust Agreement, dated September 25, 1997

     4.7  Trust  Supplement  No.  1998-1B-S,  dated  February 20, 1998,  between
          Wilmington Trust Company, as Trustee, and Continental  Airlines,  Inc.
          to Pass Through Trust Agreement, dated September 25, 1997

     4.8  Trust  Supplement  No.  1998-1C-O,  dated  February 20, 1998,  between
          Wilmington Trust Company, as Trustee, and Continental  Airlines,  Inc.
          to Pass Through Trust Agreement, dated September 25, 1997

     4.9  Trust  Supplement  No.  1998-1C-S,  dated  February 20, 1998,  between
          Wilmington Trust Company, as Trustee, and Continental  Airlines,  Inc.
          to Pass Through Trust Agreement, dated September 25, 1997

     4.10 Intercreditor  Agreement,  dated February 20, 1998,  among  Wilmington
          Trust Company,  as Trustee,  AIG Matched  Funding Corp.,  as Liquidity
          Provider,  and Wilmington Trust Company,  as  Subordination  Agent and
          Trustee



     4.11 Deposit  Agreement  (Class A), dated February 20, 1998,  between First
          Security  Bank,  National  Association,  as Escrow  Agent,  and Credit
          Suisse First Boston, New York Branch, as Depositary

     4.12 Deposit  Agreement  (Class B), dated February 20, 1998,  between First
          Security  Bank,  National  Association,  as Escrow  Agent,  and Credit
          Suisse First Boston, New York Branch, as Depositary

     4.13 Deposit  Agreement  (Class C), dated February 20, 1998,  between First
          Security  Bank,  National  Association,  as Escrow  Agent,  and Credit
          Suisse First Boston, New York Branch, as Depositary

     4.14 Escrow and Paying Agent Agreement  (Class A), dated February 20, 1998,
          among First  Security  Bank,  National  Association,  as Escrow Agent,
          Credit  Suisse  First  Boston   Corporation,   Morgan  Stanley  &  Co.
          Incorporated and Chase  Securities  Inc., as Underwriters,  Wilmington
          Trust Company,  as Trustee,  and Wilmington  Trust Company,  as Paying
          Agent

     4.15 Escrow and Paying Agent Agreement  (Class B), dated February 20, 1998,
          among First  Security  Bank,  National  Association,  as Escrow Agent,
          Credit  Suisse  First  Boston   Corporation,   Morgan  Stanley  &  Co.
          Incorporated and Chase  Securities  Inc., as Underwriters,  Wilmington
          Trust Company,  as Trustee,  and Wilmington  Trust Company,  as Paying
          Agent

     4.16 Escrow and Paying Agent Agreement  (Class C), dated February 20, 1998,
          among First  Security  Bank,  National  Association,  as Escrow Agent,
          Credit  Suisse  First  Boston   Corporation,   Morgan  Stanley  &  Co.
          Incorporated and Chase  Securities  Inc., as Underwriters,  Wilmington
          Trust Company,  as Trustee,  and Wilmington  Trust Company,  as Paying
          Agent

     4.17 Note Purchase  Agreement,  dated February 20, 1998, among  Continental
          Airlines, Inc., Wilmington Trust Company, as Trustee, Wilmington Trust
          Company,  as  Subordination   Agent,  First  Security  Bank,  National
          Association,  as Escrow Agent, and Wilmington Trust Company, as Paying
          Agent

     4.18 Form  of  Leased  Aircraft  Participation   Agreement   (Participation
          Agreement among Continental Airlines, Inc., Lessee,  [______________],
          Owner Participant,  First Security Bank, National  Association,  Owner
          Trustee,  Wilmington  Trust Company,  Mortgagee and Loan  Participant)
          (Exhibit A-1 to Note Purchase Agreement)

     4.19 Form of Lease (Lease Agreement  between First Security Bank,  National
          Association,  Lessor, and Continental Airlines, Inc., Lessee) (Exhibit
          A-2 to Note Purchase Agreement)





     4.20 Form of  Leased  Aircraft  Indenture  (Trust  Indenture  and  Mortgage
          between First Security Bank, National Association,  Owner Trustee, and
          Wilmington  Trust  Company,  Mortgagee)  (Exhibit A-3 to Note Purchase
          Agreement)

     4.21 Form of Leased  Aircraft  Trust  Agreement  (Trust  Agreement  between
          [________] and First Security Bank, National Association) (Exhibit A-5
          to Note Purchase Agreement)

     4.22 Form of Special  Indenture (Trust Indenture and Mortgage between First
          Security  Bank,  National  Association,  Owner Trustee and  Wilmington
          Trust Company, Mortgagee) (Exhibit A-6 to Note Purchase Agreement)

     4.23 Form  of  Owned  Aircraft   Participation   Agreement   (Participation
          Agreement among  Continental  Airlines,  Inc.,  Owner,  and Wilmington
          Trust Company, as Mortgagee, Subordination Agent and Trustee) (Exhibit
          C-1 to Note Purchase Agreement)

     4.24 Form of Owned Aircraft Indenture (Trust Indenture and Mortgage between
          Continental  Airlines,  Inc.,  Owner,  and  Wilmington  Trust Company,
          Mortgagee) (Exhibit C-2 to Note Purchase Agreement)

     4.25 6.648%  Continental  Airlines  Pass  Through  Certificate   1998-1A-O,
          Certificate No. 1

     4.26 6.648%  Continental  Airlines  Pass  Through  Certificate   1998-1A-O,
          Certificate No. 2

     4.27 6.648%  Continental  Airlines  Pass  Through  Certificate   1998-1A-O,
          Certificate No. 3

     4.28 6.748%  Continental  Airlines  Pass  Through  Certificate   1998-1B-O,
          Certificate No. 1

     4.29 6.541%  Continental  Airlines  Pass  Through  Certificate   1998-1C-O,
          Certificate No. 1

     23.1 Consent of Aircraft Information Services, Inc., dated February 6, 1998

     23.2 Consent of Aircraft  Information  Services,  Inc.,  dated February 11,
          1998

     23.3 Consent of BK Associates, Inc., dated February 6, 1998

     23.4 Consent of BK Associates, Inc., dated February 11, 1998

     23.5 Consent of Morten Beyer and Agnew, Inc., dated February 6, 1998

     23.6 Consent of Morten Beyer and Agnew, Inc., dated February 11, 1998


                                                                       EXECUTION


       _________________________________________________________________   


                           REVOLVING CREDIT AGREEMENT
                                    (1998-1A)


                          Dated as of February 20, 1998

                                     between

                            WILMINGTON TRUST COMPANY,

                             as Subordination Agent,
                          as agent and trustee for the
                 Continental Airlines Pass Through Trust 1998-1A

                                   as Borrower

                                       and

                            AIG MATCHED FUNDING CORP.

                              as Liquidity Provider

       _________________________________________________________________   


                                   Relating to

                 Continental Airlines Pass Through Trust 1998-1A
             6.648% Continental Airlines Pass Through Certificates,
                                 Series 1998-1A



                               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.     Reduction or Termination of the Maximum
                  Commitment...........................................        9

Section 2.05.     Repayments of Interest Advances or the Final.........        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..........................       14

Section 3.04.     Payments.............................................       14

Section 3.05.     Computations.........................................       14

Section 3.06.     Payment on Non-Business Days.........................       14



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

Section 3.07.     Interest.............................................       15

Section 3.08.     Replacement of Borrower..............................       16

Section 3.09.     Funding Loss Indemnification.........................       16

Section 3.10.     Illegality...........................................       16

                         ARTICLE IV CONDITIONS PRECEDENT

Section 4.01.     Conditions Precedent to Effectiveness of Section
                  2.01.................................................       17

Section 4.02.     Conditions Precedent to Borrowing....................       18

                              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..........................       19

                           ARTICLE VII - MISCELLANEOUS

Section 7.01.     Amendments, Etc......................................       20

Section 7.02.     Notices, Etc.........................................       20

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..................       21

Section 7.07.     Costs, Expenses and Taxes............................       22

Section 7.08.     Binding Effect; Participations.......................       22

Section 7.09.     Severability.........................................       24

Section 7.10.     GOVERNING LAW........................................       24



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

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.............................................       25

Section 7.15.     Transfer.............................................       25

Section 7.16.     LIQUIDITY PROVIDER'S OBLIGATION TO
                  MAKE ADVANCES........................................       25



                                TABLE OF CONTENTS
                                   (CONTINUED)

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 February 20, 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 AIG MATCHED FUNDING CORP., a corporation  organized under
the laws of the State of Delaware, (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%, (z) with respect to any Unapplied Provider
     Advance, .35%.

          "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).

          "ASSIGNMENT  AND  ASSUMPTION   AGREEMENT"  means  the  Assignment  and
     Assumption  to be entered  into between the Borrower and the trustee of the
     Successor  Trust,  substantially  in the  form of  Exhibit  C to the  Trust
     Supplement  No.  1998-1A-O,  dated as of the date  hereof,  relating to the
     Class A Trust.

          "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.

          "DEPOSITS"  has the  meaning  assigned  to such  terms in the  Deposit
     Agreement.

          "DEPOSITARY"  has the  meaning  assigned  to such term in the  Deposit
     Agreement.

          "DEPOSIT  AGREEMENT"  means the Deposit  Agreement  dated February 20,
     1998 between First Security Bank, National Association, as Escrow Agent and
     Credit Suisse First Boston,  New York Branch, as Depositary,  pertaining to



     the  Class  A  Certificates,  as the  same  may  be  amended,  modified  or
     supplemented from time to time in accordance with the terms thereof.

          "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 Facility Office by the jurisdiction where
     such  Liquidity  Provider's  principal  office or such  Facility  Office is
     located, and (ii) Excluded Withholding Taxes.

          "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding  Taxes imposed by
     the United  States  except (but only in the case of a  successor  Liquidity
     Provider  organized  under the laws of a  jurisdiction  outside  the United
     States) 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 Facility Office,  after the date on which such
     successor  Liquidity Provider obtains its interest or on which the Facility
     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 February 18, 1999, initially, or any date to which
     the Expiry Date is extended pursuant to Section 2.10.

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

          "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 (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; and

               (ii) each  subsequent  period  commencing  on the last day of the
          immediately  preceding  Interest Period and ending on the next Regular
          Distribution Date;

PROVIDED,  HOWEVER,  that 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
Regular  Distribution  Date following such conversion (in the case of clause (y)
above).

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

          "LIBOR RATE" means, with respect to any Interest Period,

                (i) the rate per annum appearing on display  page 3750  (British
          Bankers  Association-LIBOR)  of the Dow Jones Markets  Service (or any
          successor or substitute  therefor) at approximately 11:00 A.M. (London
          time) two Business Days before the first day of such Interest  Period,
          as the rate for dollar  deposits  with a maturity  comparable  to such
          Interest Period, or

               (ii) if the rate  calculated  pursuant to clause (i) above is not
          available,  the average (rounded  upwards,  if necessary,  to the next
          1/16 of 1%) of the rates per annum at which  deposits  in dollars  are
          offered for the relevant  Interest Period by three banks of recognized
          standing  selected by the Liquidity  Provider 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 LIBOR Advance to
          which such Interest Period is to apply and for a period  comparable to
          such Interest Period.

          "LIQUIDITY  EVENT OF DEFAULT"  means the  occurrence of either (a) the
     Acceleration  of all of the Equipment Notes (provided that, with respect to
     the period prior to the Delivery  Period Expiry Date,  such Equipment Notes
     have an aggregate  outstanding principal balance in excess of $200,000,000)
     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  $48,424,530.60,  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 February
     11, 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.

          "SUCCESSOR  TRUST"  means  Continental  Airlines  Pass  Through  Trust
     1998-1A-S.

          "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 CERTIFICATES", "CLASS A CERTIFICATEHOLDERS", "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",
          "DELIVERY  PERIOD  EXPIRY  DATE",   "DISTRIBUTION  DATE",  "DOWNGRADED
          FACILITY",   "EQUIPMENT  NOTES",   "FINAL  LEGAL  DISTRIBUTION  DATE",
          "FINANCING   AGREEMENT",   "INDENTURE",   "INTEREST   PAYMENT   DATE",
          "INVESTMENT EARNINGS",  "LIQUIDITY FACILITY", "LIQUIDITY OBLIGATIONS",
          "LOAN TRUSTEE",  "MOODY'S",  "NON-EXTENDED  FACILITY",  "NOTE PURCHASE
          AGREEMENT",  "OPERATIVE  AGREEMENTS",   "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 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. REDUCTION 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
8.1 or 9.1, as the case may be, of the Participation Agreements and Section 6 of
the Note Purchase  Agreement 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. The
Expiry Date shall be automatically extended,  effective on the 25th day prior to



each  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),  for
a period of 364 days after such  Expiry  Date  (unless  the  obligations  of the
Liquidity  Provider are earlier terminated in accordance with the terms hereof),
without the  necessity of any act on the part of the  Borrower or the  Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower, prior to such
25th day that it does not agree to such  extension of such Expiry Date, in which
event (and if the Liquidity  Provider shall not have been replaced in accordance
with  Section  3(e) of the  Interrcreditor  Agreement),  the  Borrower  shall be
entitled on and after such 25th day (but prior to such 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 Facility 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.

          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding
two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          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 Facility
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.

          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding



two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          Section 3.03.  PAYMENTS FREE OF  DEDUCTIONS.  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 Facility  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,  if the Liquidity Provider is not organized
under the laws of the United States or any State thereof, the Liquidity Provider
agrees to provide to the Borrower two original  Internal  Revenue  Service Forms
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.

          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 Swiss Bank Corp.. Stamford, ABA
#  0260-07993,   Account  Name:   AIG  Matched   Funding   Corp.,   Account  No.
WA-659-886-000,  Account  Reference:  Continental  Airlines Liquidity Facility A
1998-1.

          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.

          (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 Provider Advance shall bear interest in
an amount equal to the Investment  Earnings on amounts on deposit in the Class A
Cash Collateral  Account plus the Applicable Margin for such Unapplied  Provider
Advance  on the amount of such  Unapplied  Provider  Advance  from time to time,
payable in arrears on each Regular Distribution Date.

          (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 Facility



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 Facility 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 (related to Leased  Aircraft) or the  corresponding  section of
          the Indentures  (related to Owned Aircraft) 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:    AIG MATCHED FUNDING CORP.
                                      100 Nyala Farm
                                      Westport, CT 06880
                                      Attention: Chief Financial Officer

                                      Telephone: 203-222-4700
                                      Telecopy: 203-222-4780

                                      With a copy to the General  Counsel at the
                                      same address and telecopy number

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 8.1 or 9.1, as the case may be, 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  Financing  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 or any other  Operative  Agreement  to which it is a
party.  The indemnities  contained in Section 8.1 or 9.1, as the case may be, 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,
director 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  that are banks (subject,  in each
case, if any such participant is not a bank that is (i) organized under the laws
of the United  States or any State thereof and (ii) a member bank of the Federal
Reserve System with deposits exceeding $1,000,000,000 (such a bank, a "Reference
Bank"),  to the  maximum  amount that would have been  directly  incurred by any
Reference  Bank  organized  under  the laws of the  United  States  or any State
thereof  if such  Reference  Bank,  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. TRANSFER. The Liquidity Provider hereby acknowledges and
consents  to  the  Transfer   contemplated  by  the  Assignment  and  Assumption
Agreement.

          Section 7.16. 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:


                                        AIG MATCHED FUNDING CORP.,
                                        as Liquidity Provider



                                        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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1A) dated as of February 20, 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 the
     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,  (v) does not include any amount of interest
     which was due and payable on the Class A Certificates on such  Distribution
     Date but which remains  unpaid due to the failure of the  Depositary to pay
     any amount of accrued  interest on the Deposits on such  Distribution  Date
     and (vi) 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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1A) dated as of February 20, 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.

          (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  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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1A) dated as of February 20, 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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1A) dated as of February 20, 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.]

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



          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:



                 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 February 20,  1998,  between
Wilmington Trust Company,  as Subordination  Agent, as agent and trustee for the
Continental  Airlines Pass Through Trust,  1998-1A-[O/S],  as Borrower,  and AIG
Matched Funding Corp. (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,

                                        AIG MATCHED  FUNDING CORP.,
                                          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 February 20,  1998,  between
Wilmington Trust Company,  as Subordination  Agent, as agent and trustee for the
Continental  Airlines Pass Through Trust,  1998-1A-[O/S],  as Borrower,  and AIG
Matched Funding Corp. (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
                                    (1998-1B)


                          Dated as of February 20, 1998

                                     between

                            WILMINGTON TRUST COMPANY,

                             as Subordination Agent,
                          as agent and trustee for the
                 Continental Airlines Pass Through Trust 1998-1B

                                   as Borrower

                                       and

                            AIG MATCHED FUNDING CORP.

                              as Liquidity Provider

        _________________________________________________________________  



                                   Relating to

                 Continental Airlines Pass Through Trust 1998-1B
             6.748% Continental Airlines Pass Through Certificates,
                                 Series 1998-1B



                                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.  Reduction 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.............................       14
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..............................................       16

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

Section 4.01.  Conditions Precedent to Effectiveness of Section 2.01...       17
Section 4.02.  Conditions Precedent to Borrowing.......................       18



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

                                    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.............................       19

                                   ARTICLE VII

                                  MISCELLANEOUS

Section 7.01.  Amendments, Etc.........................................       20
Section 7.02.  Notices, Etc............................................       20
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.....................       21
Section 7.07.  Costs, Expenses and Taxes...............................       22
Section 7.08.  Binding Effect; Participations..........................       22
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................................................       25
Section 7.15.  Transfer................................................       25
Section 7.16.  LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........       25


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 February 20, 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 AIG MATCHED FUNDING CORP., a corporation  organized under
the laws of the State of Delaware, (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%, (z) with respect to any Unapplied Provider
     Advance, .35%.

          "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).

          "ASSIGNMENT  AND  ASSUMPTION   AGREEMENT"  means  the  Assignment  and
     Assumption  to be entered  into between the Borrower and the trustee of the
     Successor  Trust,  substantially  in the  form of  Exhibit  C to the  Trust
     Supplement  No.  1998-1B-O,  dated as of the date  hereof,  relating to the
     Class B Trust.

          "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.

          "DEPOSITS"  has the  meaning  assigned  to such  terms in the  Deposit
     Agreement.

          "DEPOSITARY"  has the  meaning  assigned  to such term in the  Deposit
     Agreement.

          "DEPOSIT  AGREEMENT"  means the Deposit  Agreement  dated February 20,
     1998 between First Security Bank, National Association, as Escrow Agent and
     Credit Suisse First Boston,  New York Branch, as Depositary,  pertaining to



     the  Class  B  Certificates,  as the  same  may  be  amended,  modified  or
     supplemented from time to time in accordance with the terms thereof.

          "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 Facility Office by the jurisdiction where
     such  Liquidity  Provider's  principal  office or such  Facility  Office is
     located, and (ii) Excluded Withholding Taxes.

          "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding  Taxes imposed by
     the United  States  except (but only in the case of a  successor  Liquidity
     Provider  organized  under the laws of a  jurisdiction  outside  the United
     States) 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 Facility Office,  after the date on which such
     successor  Liquidity Provider obtains its interest or on which the Facility
     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 February 18, 1999, initially, or any date to which
     the Expiry Date is extended pursuant to Section 2.10.

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

          "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 (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; and

          (ii) each  subsequent  period  commencing  on  the  last  day  of  the
               immediately  preceding  Interest  Period  and  ending on the next
               Regular Distribution Date;

PROVIDED,  HOWEVER,  that 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
Regular  Distribution  Date following such conversion (in the case of clause (y)
above).

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

          "LIBOR RATE" means, with respect to any Interest Period,

          (i)  the rate per  annum  appearing  on  display  page  3750  (British
               Bankers  Association-LIBOR)  of the Dow Jones Markets Service (or
               any successor or substitute therefor) at approximately 11:00 A.M.
               (London  time) two  Business  Days  before  the first day of such
               Interest Period,  as the rate for dollar deposits with a maturity
               comparable to such Interest Period, or

          (ii) if the  rate  calculated  pursuant  to  clause  (i)  above is not
               available,  the average (rounded  upwards,  if necessary,  to the
               next  1/16 of 1%) of the rates  per  annum at which  deposits  in
               dollars  are offered for the  relevant  Interest  Period by three
               banks of recognized  standing selected by the Liquidity  Provider
               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 LIBOR Advance to which such  Interest  Period is to
               apply and for a period comparable to such Interest Period.

          "LIQUIDITY  EVENT OF DEFAULT"  means the  occurrence of either (a) the
     Acceleration  of all of the Equipment Notes (provided that, with respect to
     the period prior to the Delivery  Period Expiry Date,  such Equipment Notes
     have an aggregate  outstanding principal balance in excess of $200,000,000)
     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  $15,220,552.62,  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 February
     11, 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.

          "SUCCESSOR  TRUST"  means  Continental  Airlines  Pass  Through  Trust
     1998-1B-S.

          "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    CERTIFICATES",    "CLASS   B
          CERTIFICATEHOLDERS",  "CLASS  B  TRUST",  "CLASS  B TRUST  AGREEMENT",
          "CLASS  B   TRUSTEE",   "CLASS  C   CERTIFICATES",   "CLOSING   Date",
          "CONTINENTAL",  "CONTINENTAL  BANKRUPTCY EVENT",  "CONTROLLING PARTY",
          "CORPORATE TRUST OFFICE", "DELIVERY PERIOD EXPIRY DATE", "DISTRIBUTION
          DATE",   "DOWNGRADED   FACILITY",   "EQUIPMENT  NOTES",  "FINAL  LEGAL
          DISTRIBUTION  DATE",  "FINANCING  AGREEMENT",  "INDENTURE",  "INTEREST
          PAYMENT DATE", "INVESTMENT EARNINGS", "LIQUIDITY FACILITY", "LIQUIDITY
          OBLIGATIONS",  "LOAN  TRUSTEE",  "MOODY'S",  "NON-EXTENDED  FACILITY",
          "NOTE  PURCHASE  AGREEMENT",   "OPERATIVE   AGREEMENTS",   "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 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 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. REDUCTION 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
8.1 or 9.1, as the case may be, of the Participation Agreements and Section 6 of
the Note Purchase  Agreement 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. The
Expiry Date shall be automatically extended,  effective on the 25th day prior to



each  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),  for
a period of 364 days after such  Expiry  Date  (unless  the  obligations  of the
Liquidity  Provider are earlier terminated in accordance with the terms hereof),
without the  necessity of any act on the part of the  Borrower or the  Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower, prior to such
25th day that it does not agree to such  extension of such Expiry Date, in which
event (and if the Liquidity  Provider shall not have been replaced in accordance
with  Section  3(e) of the  Interrcreditor  Agreement),  the  Borrower  shall be
entitled on and after such 25th day (but prior to such 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 Facility 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.

          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding
two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          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 Facility
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.

          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding



two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          Section 3.03.  PAYMENTS FREE OF  DEDUCTIONS.  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 Facility  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,  if the Liquidity Provider is not organized
under the laws of the United States or any State thereof, the Liquidity Provider
agrees to provide to the Borrower two original  Internal  Revenue  Service Forms
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.

          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 Swiss Bank Corp.. Stamford, ABA
#  0260-07993,   Account  Name:   AIG  Matched   Funding   Corp.,   Account  No.
WA-659-886-000,  Account  Reference:  Continental  Airlines Liquidity Facility B
1998-1.

          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.

          (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 Provider Advance shall bear interest in
an amount equal to the Investment  Earnings on amounts on deposit in the Class B
Cash Collateral  Account plus the Applicable Margin for such Unapplied  Provider
Advance  on the amount of such  Unapplied  Provider  Advance  from time to time,
payable in arrears on each Regular Distribution Date.

          (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



admininstration  thereof,  or  compliance  by the  Liquidity  Provider  (or  its
Facility 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 Facility  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 (related to Leased  Aircraft) or the  corresponding  section of
          the Indentures  (related to Owned Aircraft) 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:    AIG MATCHED FUNDING CORP.
                                      100 Nyala Farm
                                      Westport, CT 06880
                                      Attention: Chief Financial Officer
                                      Telephone: 203-222-4700
                                      Telecopy:  203-222-4780

                                      With a copy to the General  Counsel at the
                                      same address and telecopy number

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 8.1 or 9.1, as the case may be, 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  Financing  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 or any other  Operative  Agreement  to which it is a
party.  The indemnities  contained in Section 8.1 or 9.1, as the case may be, 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,
director 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  that are banks (subject,  in each
case, if any such participant is not a bank that is (i) organized under the laws
of the United  States or any State thereof and (ii) a member bank of the Federal
Reserve System with deposits exceeding $1,000,000,000 (such a bank, a "Reference
Bank"),  to the  maximum  amount that would have been  directly  incurred by any
Reference  Bank  organized  under  the laws of the  United  States  or any State
thereof  if such  Reference  Bank,  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. TRANSFER. The Liquidity Provider hereby acknowledges and
consents  to  the  Transfer   contemplated  by  the  Assignment  and  Assumption
Agreement.

          Section 7.16. 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:


                                        AIG MATCHED FUNDING CORP.,
                                          as Liquidity Provider



                                        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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1B) dated as of February 20, 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 the
     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,  (v) does not include any amount of interest
     which was due and payable on the Class B Certificates on such  Distribution
     Date but which remains  unpaid due to the failure of the  Depositary to pay
     any amount of accrued  interest on the Deposits on such  Distribution  Date
     and (vi) 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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1B) dated as of February 20, 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.

          (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  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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1B) dated as of February 20, 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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1B) dated as of February 20, 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.]

________________

 Bracketed language may be included at Borrower's option.



          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:



                 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  February  20,  1998,   between
     Wilmington Trust Company, as Subordination  Agent, as agent and trustee for
     the Continental  Airlines Pass Through Trust,  1998-1B-[O/S],  as Borrower,
     and AIG Matched Funding Corp. (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,

                                        AIG MATCHED FUNDING CORP.,
                                          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  February  20,  1998,   between
     Wilmington Trust Company, as Subordination  Agent, as agent and trustee for
     the Continental  Airlines Pass Through Trust,  1998-1B-[O/S],  as Borrower,
     and AIG Matched Funding Corp. (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
                                    (1998-1C)


                          Dated as of February 20, 1998

                                     between

                            WILMINGTON TRUST COMPANY,

                             as Subordination Agent,
                          as agent and trustee for the
                 Continental Airlines Pass Through Trust 1998-1C

                                   as Borrower

                                       and

                            AIG MATCHED FUNDING CORP.

                              as Liquidity Provider

       _________________________________________________________________   


                                   Relating to

                 Continental Airlines Pass Through Trust 1998-1C
             6.541% Continental Airlines Pass Through Certificates,
                                 Series 1998-1C



                               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.     Reduction 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..........................       14



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

Section 3.04.     Payments.............................................       14

Section 3.05.     Computations.........................................       14

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.........................       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



                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

Section 7.02.     Notices, Etc.........................................       20

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.     Transfer.............................................       26

Section 7.16.     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 February 20, 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 C1 Trust (as defined below)
(the "BORROWER"),  and AIG MATCHED FUNDING CORP., a corporation  organized under
the laws of the State of Delaware, (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%, (z) with respect to any Unapplied Provider
     Advance, .35%.

          "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).

          "ASSIGNMENT  AND  ASSUMPTION   AGREEMENT"  means  the  Assignment  and
     Assumption  to be entered  into between the Borrower and the trustee of the
     Successor  Trust,  substantially  in the  form of  Exhibit  C to the  Trust
     Supplement  No.  1998-1C-O,  dated as of the date  hereof,  relating to the
     Class C Trust.

          "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.

          "DEPOSITS"  has the  meaning  assigned  to such  terms in the  Deposit
     Agreement.

          "DEPOSITARY"  has the  meaning  assigned  to such term in the  Deposit
     Agreement.

          "DEPOSIT  AGREEMENT"  means the Deposit  Agreement  dated February 20,
     1998 between First Security Bank, National Association, as Escrow Agent and
     Credit Suisse First Boston,  New York Branch, as Depositary,  pertaining to



     the  Class  C  Certificates,  as the  same  may  be  amended,  modified  or
     supplemented from time to time in accordance with the terms thereof.

          "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 Facility Office by the jurisdiction where
     such  Liquidity  Provider's  principal  office or such  Facility  Office is
     located, and (ii) Excluded Withholding Taxes.

          "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding  Taxes imposed by
     the United  States  except (but only in the case of a  successor  Liquidity
     Provider  organized  under the laws of a  jurisdiction  outside  the United
     States) 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 Facility Office,  after the date on which such
     successor  Liquidity Provider obtains its interest or on which the Facility
     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 February 18, 1999, initially, or any date to which
     the Expiry Date is extended pursuant to Section 2.10.

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

          "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 (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; and

          (ii) each  subsequent  period  commencing  on  the  last  day  of  the
               immediately  preceding  Interest  Period  and  ending on the next
               Regular Distribution Date;

PROVIDED,  HOWEVER,  that 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
Regular  Distribution  Date following such conversion (in the case of clause (y)
above).

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

          "LIBOR RATE" means, with respect to any Interest Period,

          (i)  the rate per  annum  appearing  on  display  page  3750  (British
               Bankers  Association-LIBOR)  of the Dow Jones Markets Service (or
               any successor or substitute therefor) at approximately 11:00 A.M.
               (London  time) two  Business  Days  before  the first day of such
               Interest Period,  as the rate for dollar deposits with a maturity
               comparable to such Interest Period, or

          (ii) if the  rate  calculated  pursuant  to  clause  (i)  above is not
               available,  the average (rounded  upwards,  if necessary,  to the
               next  1/16 of 1%) of the rates  per  annum at which  deposits  in
               dollars  are offered for the  relevant  Interest  Period by three
               banks of recognized  standing selected by the Liquidity  Provider
               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 LIBOR Advance to which such  Interest  Period is to
               apply and for a period comparable to such Interest Period.

          "LIQUIDITY  EVENT OF DEFAULT"  means the  occurrence of either (a) the
     Acceleration  of all of the Equipment Notes (provided that, with respect to
     the period prior to the Delivery  Period Expiry Date,  such Equipment Notes
     have an aggregate  outstanding principal balance in excess of $200,000,000)
     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  $13,396,818.33,  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 February
     11, 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.

          "SUCCESSOR  TRUST"  means  Continental  Airlines  Pass  Through  Trust
     1998-1C-S.

          "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
          Certificates", "Class C Certificateholders", "Class C Trust", "Class C
          Trust Agreement",  "Class C Trustee",  "Closing Date",  "Continental",
          "Continental Bankruptcy Event",  "Controlling Party", "Corporate Trust
          Office",   "Delivery   Period  Expiry  Date",   "Distribution   Date",
          "Downgraded  Facility",  "Equipment Notes",  "Final Legal Distribution
          Date",  "Financing Agreement",  "Indenture",  "Interest Payment Date",
          "Investment Earnings",  "Liquidity Facility", "Liquidity Obligations",
          "Loan Trustee",  "Moody's",  "Non-Extended  Facility",  "Note Purchase
          Agreement",  "Operative  Agreements",   "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 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 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 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. REDUCTION 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
8.1 or 9.1, as the case may be, of the Participation Agreements and Section 6 of
the Note Purchase  Agreement 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. The
Expiry Date shall be automatically extended,  effective on the 25th day prior to
each  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),  for
a period of 364 days after such  Expiry  Date  (unless  the  obligations  of the
Liquidity  Provider are earlier terminated in accordance with the terms hereof),
without the  necessity of any act on the part of the  Borrower or the  Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower, prior to such
25th day that it does not agree to such  extension of such Expiry Date, in which
event (and if the Liquidity  Provider shall not have been replaced in accordance
with  Section  3(e) of the  Intercreditor  Agreement),  the  Borrower  shall  be
entitled on and after such 25th day (but prior to such 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 Facility 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.

          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding
two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          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 Facility
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.



          Notwithstanding  the preceding two paragraphs,  the Liquidity Provider
and the Subordination  Agent agree that the initial Liquidity Provider (i.e. AIG
Matched  Funding  Corp.) shall not be entitled to the benefits of the  preceding
two paragraphs,  PROVIDED, however, any permitted assignee or participant of the
initial  Liquidity  Provider  which is a bank  organized  under  the laws of the
United  States or any State  thereof  shall be entitled  to the  benefits of the
preceding two paragraphs (subject, in the case of any permitted participant,  to
the limitation set forth in Section 7.08 hereof).

          Section 3.03.  PAYMENTS FREE OF  DEDUCTIONS.  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 Facility  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,  if the Liquidity Provider is not organized
under the laws of the United States or any State thereof, the Liquidity Provider
agrees to provide to the Borrower two original  Internal  Revenue  Service Forms
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.

          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 Swiss Bank Corp.. Stamford, ABA
#  0260-07993,   Account  Name:   AIG  Matched   Funding   Corp.,   Account  No.
WA-659-886-000,  Account  Reference:  Continental  Airlines Liquidity Facility C
1998-1.

          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.

               (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  Provider  Advance  shall  bear
interest in an amount equal to the Investment  Earnings on amounts on deposit in
the  Class C Cash  Collateral  Account  plus  the  Applicable  Margin  for  such
Unapplied Provider Advance on the amount of such Unapplied Provider Advance from
time to time, payable in arrears on each Regular Distribution Date.

               (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 Facility
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 Facility 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 (related
               to  Leased  Aircraft)  or  the   corresponding   section  of  the
               Indentures (related to Owned Aircraft) 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:    AIG MATCHED FUNDING CORP.
                                      100 Nyala Farm
                                      Westport, CT 06880



                                      Attention: Chief Financial Officer

                                      Telephone: 203-222-4700
                                      Telecopy:  203-222-4780

                                      With a copy to the General  Counsel at the
                                      same address and telecopy number

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 8.1 or 9.1, as the case may be, 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  Financing  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 or any other  Operative  Agreement  to which it is a
party.  The indemnities  contained in Section 8.1 or 9.1, as the case may be, 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,  director 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 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  that are banks (subject,  in each
case, if any such participant is not a bank that is (i) organized under the laws
of the United  States or any State thereof and (ii) a member bank of the Federal
Reserve System with deposits exceeding $1,000,000,000 (such a bank, a "Reference
Bank"),  to the  maximum  amount that would have been  directly  incurred by any
Reference  Bank  organized  under  the laws of the  United  States  or any State
thereof  if such  Reference  Bank,  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. TRANSFER. The Liquidity Provider hereby acknowledges and
consents  to  the  Transfer   contemplated  by  the  Assignment  and  Assumption
Agreement.

          Section 7.16. 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:

                                        AIG MATCHED  FUNDING CORP.,
                                        as Liquidity Provider



                                        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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1C) dated as of February 20, 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 the
          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,  (v) does not include any amount of interest which was due and
          payable  on the Class C  Certificates  on such  Distribution  Date but
          which remains  unpaid due to the failure of the  Depositary to pay any
          amount of accrued interest on the Deposits on such  Distribution  Date
          and  (vi)  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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1C) dated as of February 20, 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.

               (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  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 AIG Matched Funding
Corp.  (the  "LIQUIDITY  PROVIDER"),  with  reference  to the  Revolving  Credit
Agreement  (1998-1C) dated as of February 20, 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 AIG Matched Funding Corp. (the
"LIQUIDITY  PROVIDER"),   with  reference  to  the  Revolving  Credit  Agreement
(1998-1C) dated as of February 20, 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.]

          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  February  20,  1998,   between
     Wilmington Trust Company, as Subordination  Agent, as agent and trustee for
     the Continental  Airlines Pass Through Trust,  1998-1C-[O/S],  as Borrower,
     and AIG Matched Funding Corp. (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,

                                        AIG MATCHED  FUNDING CORP.,
                                          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  February  20,  1998,   between
     Wilmington Trust Company, as Subordination  Agent, as agent and trustee for
     the Continental  Airlines Pass Through Trust,  1998-1C-[O/S],  as Borrower,
     and AIG Matched Funding Corp. (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:


                         TRUST SUPPLEMENT No. 1998-1A-O

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $485,605,000

                Continental Airlines Pass Through Trust 1998-1A-O
                           6.648% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1A-O



          This Trust  Supplement  No.  1998-1A-O,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

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

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

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

          WHEREAS,  the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-1A-O (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  except  for those  Certificates  to which an Escrow  Receipt  has been
affixed;



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

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

          WHEREAS,  pursuant to the terms and conditions of the Basic  Agreement
as supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement,  upon or shortly  following  delivery of an Aircraft,  the Trustee on
behalf  of  the  Applicable  Trust,  using  funds  withdrawn  under  the  Escrow
Agreement,  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 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
"6.648%  Continental  Airlines  Pass  Through  Certificates,  Series  1998-1A-O"
(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 $485,605,000.

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

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
Trustee  shall  affix  the  corresponding  Escrow  Receipt  to  each  Applicable
Certificate.   In  any  event,  any  transfer  or  exchange  of  any  Applicable
Certificate  shall also effect a transfer  or  exchange  of the  related  Escrow
Receipt.  Prior to the Final  Withdrawal  Date,  no  transfer or exchange of any
Applicable  Certificate  shall be  permitted  unless  the  corresponding  Escrow
Receipt  is  attached  thereto  and  also is so  transferred  or  exchanged.  By
acceptance of any Applicable Certificate to which an Escrow Receipt is attached,
each  Holder of such an  Applicable  Certificate  acknowledges  and  accepts the
restrictions  on  transfer  of the Escrow  Receipt  set forth  herein and in the
Escrow 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 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 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  Applicable  Certificates  are  subject  to the  Intercreditor
Agreement, the Deposit Agreement, and the Escrow Agreement.

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

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement",  for
purposes of clause (3) of Section 7.07 of the Basic  Agreement,  are Section 8.1
(with  respect  to Owned  Aircraft)  and  Section  9.1 (with  respect  to Leased
Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
Trust,  and the related  Aircraft and Note Documents,  are described in the Note
Purchase 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:  Means each of the New  Aircraft or  Substitute  Aircraft in
respect of which a  Participation  Agreement is entered into in accordance  with
the Note Purchase Agreement.

          AIRCRAFT  PURCHASE  AGREEMENT:  Has the meaning  specified in the Note
Purchase Agreement.

          APPLICABLE  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 DELIVERY DATE: Has the meaning specified in Section 5.01(b)
of this Trust Supplement.

          APPLICABLE  PARTICIPATION  AGREEMENT:  Has the  meaning  specified  in
Section 5.01(b) of this Trust Supplement.

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

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
assumption agreement  substantially in the form of Exhibit C hereto executed and
delivered in accordance with Section 7.01 of this Trust Supplement.

          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.

          CLASS  D  CERTIFICATEHOLDER:  Has the  meaning  specified  in  Section
4.01(a)(iii) of this Trust Supplement.

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

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

          DELIVERY  DATE:  Has  the  meaning  specified  in  the  Note  Purchase
Agreement.

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
Agreement.

          DELIVERY PERIOD TERMINATION DATE: Means the earlier of (a) January 31,
1999,  or,  if the  Equipment  Notes  relating  to all of the New  Aircraft  (or
Substitute  Aircraft in lieu thereof) have not been  purchased by the Applicable
Trust and the Other Trusts on or prior to such date due to any reason beyond the
control of the Company and not occasioned by the Company's  fault or negligence,
June 30, 1999 (PROVIDED  that, if a labor strike occurs at Boeing on or prior to
either or both of such dates  referred to in this clause (a), such date or dates
on or  following  the  commencement  of such strike  shall be extended by adding
thereto  the number of days that such  strike  continued  in effect) and (b) the



date on which Equipment Notes issued with respect to all of the New Aircraft (or
Substitute Aircraft in lieu thereof) have been purchased by the Applicable Trust
and the Other Trusts in accordance with the Note Purchase Agreement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
20, 1998 relating to the Applicable  Certificates between the Depositary and the
Escrow Agent,  as the same may be amended,  supplemented  or otherwise  modified
from time to time in accordance with its terms.

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

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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
of February 20, 1998 relating to the Applicable  Certificates,  among the Escrow
Agent, the Escrow Paying Agent, the Trustee and Underwriters, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
Escrow Agreement.

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

          FINAL MATURITY DATE: Means March 15, 2019.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
Agreement.

          FINAL WITHDRAWAL  NOTICE: Has the meaning specified in Section 5.02 of
this Trust Supplement.

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



Agreement,  in each case as the same may be amended,  supplemented  or otherwise
modified from time to time in accordance with its terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
February  20,  1998  among  the  Trustee,  the  Other  Trustees,  the  Liquidity
Providers,  the liquidity  providers  relating to the Certificates  issued under
(and as defined in) each of the Other Agreements,  and Wilmington Trust Company,
as Subordination  Agent and as trustee thereunder,  as amended,  supplemented or
otherwise modified from time to time in accordance with its terms.

          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
this Trust Supplement.

          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
dated as of February 20, 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,  AIG Matched Funding Corp., a
Delaware  corporation,  and any replacements or successors therefor appointed in
accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
Applicable  Certificates  and, with respect to any such Equipment  Note, (i) the
Indenture and the Participation  Agreement  relating to such Equipment Note, and
(ii) in the case of any Equipment Note related to a Leased  Aircraft,  the Lease
relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
February 20, 1998 among the Trustee, the Other Trustees, the Company, the Escrow



Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among
other  things,  the purchase of Equipment  Notes by the Trustee on behalf of the
Trust, as the same may be amended,  supplemented or otherwise modified from time
to time, in accordance with its terms.

          NOTICE  OF  PURCHASE  WITHDRAWAL:  Has the  meaning  specified  in the
Deposit Agreement.

          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
Trust  Supplement No.  1998-1B-O  dated the date hereof  relating to Continental
Airlines  Pass  Through  Trust   1998-1B-O  and  (ii)  the  Basic  Agreement  as
supplemented by Trust Supplement No. 1998-1C-O dated the date hereof relating to
Continental Airlines Pass Through Trust 1998-1C-O.

          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
1998-1B-O  and the  Continental  Airlines  Pass Through  Trust  1998-1C-O,  each
created on the date hereof.

          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
Intercreditor Agreement.

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

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

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

          POOL BALANCE:  Means, as of any date, (i) the original  aggregate face
amount of the  Applicable  Certificates  less (ii) the  aggregate  amount of all
payments  made in  respect  of such  Applicable  Certificates  or in  respect of



Deposits  other than payments made in respect of interest or premium  thereon or
reimbursement  of any costs or expenses  incurred in connection  therewith.  The
Pool Balance as of any  Distribution  Date shall be computed after giving effect
to any  special  distribution  with  respect  to  unused  Deposits,  payment  of
principal of the Equipment Notes or payment with respect to other Trust Property
and the distribution thereof to be made on that date.

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
to the seventh  decimal place) computed by dividing (i) the Pool Balance by (ii)
the original  aggregate  face amount of the  Applicable  Certificates.  The Pool
Factor as of any Distribution  Date shall be computed after giving effect to any
special  distribution  with respect to unused Deposits,  payment of principal of
the  Equipment  Notes or payments  with respect to other Trust  Property and the
distribution thereof to be made on that date.

          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
11, 1998 relating to the offering of the Certificates.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
supplemented  by the  Trust  Supplement  No.  1998-1A-S  dated  the date  hereof
relating to the  Continental  Airlines Pass Through Trust  1998-1A-S and entered
into by the Company and the Trustee,  which agreement becomes effective upon the
execution and delivery of the Assignment and  Assumption  Agreement  pursuant to
Section 7.01 of this Trust Supplement.

          RELATED TRUST: Means the Continental Pass Through Trust 1998-1A-S,  to
be formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
Agreement.

          TRANSFER DATE: Has the meaning specified in Section 7.01 of this Trust
Supplement.



          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
Equipment Notes held as the property of the Applicable  Trust, all monies at any
time paid  thereon and all monies due and to become due  thereunder,  (ii) funds
from time to time deposited in the Certificate  Account and the Special Payments
Account and, subject to the Intercreditor  Agreement, any proceeds from the sale
by the Trustee  pursuant to Article VI of the Basic  Agreement of any  Equipment
Note and (iii) all rights of the Applicable Trust and the Trustee,  on behalf of
the Applicable Trust, under the Intercreditor  Agreement,  the Escrow Agreement,
the Note Purchase  Agreement and the Liquidity  Facilities,  including,  without
limitation,  all rights to receive certain payments  thereunder,  and all monies
paid  to  the  Trustee  on  behalf  of  the  Applicable  Trust  pursuant  to the
Intercreditor  Agreement or the Liquidity Facilities,  PROVIDED that rights with
respect to the Deposits or under the Escrow  Agreement,  except for the right to
direct  withdrawals for the purchase of Equipment Notes to be held herein,  will
not constitute Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
February 11, 1998 among the Underwriters, the Company and the Depositary, as the
same may be amended,  supplemented  or otherwise  modified  from time to time in
accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
Basic Agreement following the fourth sentence thereof:

          In the event of the  payment  of a Special  Redemption  Premium by the
          Company to the Trustee under the Note Purchase  Agreement,  the notice
          provided for in this Section  4.02(c)  shall be mailed,  together with
          the notice by the Escrow Paying Agent under Section 2.06 of the Escrow
          Agreement,  not less than 15 days  prior to the  Special  Distribution



          Date for such amount,  which  Special  Distribution  Date shall be the
          Final Withdrawal Date.

          (b) The  following  sentence  shall  replace in its  entirety the last
sentence of the first paragraph of Section 4.02(c) of the Basic Agreement:

          If the amount of (i) premium,  if any,  payable upon the redemption or
          purchase of an Equipment Note or (ii) the Special Redemption  Premium,
          if any,  has not been  calculated  at the time that the Trustee  mails
          notice of a Special Payment, it shall be sufficient if the notice sets
          forth the other amounts to be distributed  and states that any premium
          received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

          With respect to the Applicable  Certificates registered in the name of
a Clearing  Agency,  on the Record  Date prior to each  Distribution  Date,  the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on



such Record Date. On each Distribution  Date, the Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

          (b) Within a reasonable  period of time after the end of each calendar
year but not later than the latest date  permitted  by law,  the  Trustee  shall
furnish  to each  Person  who at any  time  during  such  calendar  year  was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and
(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following (i) the Delivery Period  Termination  Date, if
there has been any change in the  information  set forth in clauses (x), (y) and
(z) below  from that set forth in page S-52 of the  Prospectus  Supplement,  and
(ii) any early  redemption  or  purchase  of, or any  default in the  payment of
principal  or  interest in respect  of, any of the  Equipment  Notes held in the
Applicable  Trust,  or any  Final  Withdrawal,  the  Trustee  shall  furnish  to
Applicable  Certificateholders  of record on such date a statement setting forth
(x) the expected Pool Balances for each  subsequent  Regular  Distribution  Date
following the Delivery Period Termination Date, (y) the related Pool Factors for
such  Regular  Distribution  Dates and (z) the expected  principal  distribution
schedule of the Equipment Notes, in the aggregate, held as Trust Property at the
date of such notice. With respect to the Applicable  Certificates  registered in
the name of a Clearing  Agency,  on the Delivery  Period  Termination  Date, the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on
such date. The Trustee will mail to each such Clearing  Agency  Participant  the
statement described above and will make available additional copies as requested
by such Clearing  Agency  Participant  for forwarding to holders of interests in
the Applicable Certificates.



          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
Basic Agreement.


                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 4.01(a);

          (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 4.01(a); and

          (iii)   each   holder   of  a  Class  D   Certificate   (a   "CLASS  D
     CERTIFICATEHOLDER")  shall have the right  (which shall not expire upon any
     purchase  of the  Applicable  Certificates  pursuant  to clause (i) or (ii)
     above)  to  purchase  all,  but  not  less  than  all,  of  the  Applicable
     Certificates,  the Class B Certificates  and the Class C Certificates  upon
     ten days' written notice to the Trustee,  the Class B Trustee,  the Class C
     Trustee  and each other  Class D  Certificateholder,  PROVIDED  that (A) if
     prior to the end of such ten-day period any other Class D Certificateholder
     notifies such purchasing Class D Certificateholder  that such other Class D
     Certificateholder  wants to participate  in such purchase,  then such other
     Class  D   Certificateholder   may  join  with  the   purchasing   Class  D
     Certificateholder to purchase all, but not less than all, of the Applicable
     Certificates,  the Class B Certificates  and the Class C  Certificates  pro
     rata based on the Fractional  Undivided  Interest in the Class D Trust held
     by each such Class D Certificateholder  and (B) if prior to the end of such
     ten-day  period  any other  Class D  Certificateholder  fails to notify the
     purchasing   Class   D   Certificateholder    of   such   other   Class   D
     Certificateholder's  desire to  participate  in such a purchase,  then such
     other  Class D  Certificateholder  shall  lose its  right to  purchase  the
     Applicable Certificates pursuant to this Section 4.01(a).

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



Certificates  and the Class C  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be
subject to the terms of this Section 4.01(a). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  B
Certificateholder(s),    Class    C    Certificateholder(s),    or    Class    D
Certificateholder(s), as the case may be, of the purchase price set forth in the
first sentence of this paragraph, forthwith sell, assign, transfer and convey to
the purchaser(s)  thereof (without  recourse,  representation or warranty of any
kind except for its own acts), all of the right, title,  interest and obligation
of such Applicable  Certificateholder  in this Agreement,  the Escrow Agreement,
the Deposit Agreement,  the Intercreditor  Agreement,  the Liquidity Facilities,
the Note Documents and all Applicable  Certificates  and Escrow Receipts held by
such Applicable  Certificateholder (subject to clauses (i) and (ii) in the first
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 purchaser  shall assume
all of such Applicable Certificateholder's obligations under this Agreement, the
Escrow  Agreement,  the Deposit  Agreement,  the  Intercreditor  Agreement,  the
Liquidity  Facilities,  the Note Documents and all such Applicable  Certificates
and Escrow Receipts. The Applicable  Certificates will be deemed to be purchased
on the date payment of the purchase price is made notwithstanding the failure of
the Applicable  Certificateholders  to deliver any Applicable  Certificates and,
upon such a purchase,  (i) the only rights of the Applicable  Certificateholders
will be to deliver the Applicable  Certificates to the  purchaser(s) and receive
the purchase price for such Applicable Certificates and (ii) if the purchaser(s)
shall so request,  such  Applicable  Certificateholder  will comply with all the
provisions  of Section  3.04 of the Basic  Agreement  to enable  new  Applicable
Certificates  to be issued to the  purchaser in such  denominations  as it shall
request.  All charges and expenses in  connection  with the issuance of any such
new Applicable Certificates shall be borne by the purchaser thereof.

          As  used  in  this  Section   4.01(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",  "Class C Trustee",  "Class D Certificate" and "Class D Trust",
shall have the respective  meanings  assigned to such terms in the Intercreditor
Agreement.



          (b) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.


                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01.  DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor  Agreement,  the
Escrow  Agreement  and the Note  Purchase  Agreement on or prior to the Issuance
Date,  each in the form delivered to the Trustee by the Company and (ii) subject
to the respective  terms thereof,  to perform its obligations  thereunder.  Upon
request of the Company and the satisfaction or waiver of the closing  conditions
specified in the  Underwriting  Agreement,  the Trustee shall execute,  deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth,  with respect to the  Applicable
Trust,  in  Schedule  II to the  Underwriting  Agreement  evidencing  the entire
ownership  interest in the  Applicable  Trust,  which amount  equals the maximum
aggregate  principal  amount of  Equipment  Notes which may be  purchased by the
Trustee pursuant to the Note Purchase Agreement.  Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate  or  deliver  Applicable  Certificates  in excess of the  aggregate
amount specified in this paragraph.

          (b) On or after the Issuance  Date,  the Company may deliver from time
to time to the  Trustee a  Delivery  Notice  relating  to one or more  Equipment
Notes.  After  receipt  of a  Delivery  Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery  Notice  relates
(the "APPLICABLE  DELIVERY  DATE"),  the Trustee shall (as and when specified in
the Delivery  Notice)  instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal  to the  Depositary  requesting  (A)  the  withdrawal  of one or more
Deposits on the  Applicable  Delivery Date in accordance  with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such  Equipment  Notes to or on behalf
of the Owner Trustee or the Company,  as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery  Notice.  The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in  Section  2 of the  Note  Purchase  Agreement,  enter  into and  perform  its
obligations under the Participation  Agreement specified in such Delivery Notice
(the  "APPLICABLE   PARTICIPATION   Agreement")  and  cause  such  certificates,
documents  and legal  opinions  relating to the Trustee to be duly  delivered as
required by the Applicable  Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase  Agreement,  then the Trustee shall



give the Depositary  (with a copy to the Escrow Agent) a notice of  cancellation
of such Notice of Purchase  Withdrawal  relating to such  Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions  specified in
the Note Purchase  Agreement and the  Applicable  Participation  Agreement,  the
Trustee shall purchase the applicable  Equipment  Notes with the proceeds of the
withdrawals  of one or more  Deposits  made on the  Applicable  Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal  amount of such
Equipment  Notes.  Amounts  withdrawn from such Deposit or Deposits in excess of
the purchase  price of the  Equipment  Notes or to the extent not applied on the
Applicable  Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable  Delivery Date
in accordance  with the terms of the Deposit  Agreement.  The provisions of this
Section  5.01(b)  supersede  and replace the  provisions  of Section 2.02 of the
Basic Agreement (which are inapplicable to the Trust), and all provisions of the
Basic  Agreement  relating  to  Postponed  Notes and  Section  2.02 of the Basic
Agreement shall not apply to the Applicable Trust.

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable
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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.

          Section  5.02.   WITHDRAWAL  OF  DEPOSITS.   If  any  Deposits  remain
outstanding  on the  Business  Day next  succeeding  the Cut-off  Date,  (i) the
Trustee  shall give the Escrow Agent  notice that the  Trustee's  obligation  to
purchase  Equipment  Notes under the Note Purchase  Agreement has terminated and
instruct  the  Escrow  Agent to  provide  a notice  of Final  Withdrawal  to the
Depositary  substantially in the form of Exhibit B to the Deposit Agreement (the
"FINAL  WITHDRAWAL  NOTICE")  and (ii) the  Trustee  will make a demand upon the
Company  under the Note  Purchase  Agreement  for an amount equal to the Special
Redemption  Premium (if any is  payable),  such  payment to be made on the Final
Withdrawal Date.

          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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, the Deposit Agreement, the



Note Purchase  Agreement or the Escrow  Agreement or the due execution hereof or
thereof by the Company or the other parties thereto (other than the Trustee), or
for or in respect of the recitals and  statements  contained  herein or therein,
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,  the Intercreditor Agreement,
the Note  Purchase  Agreement  and the Escrow  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  5.04.  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,  the Escrow  Agreement  and the Note
Documents to which it is a party and has taken all necessary action to authorize
the  execution,  delivery and  performance by it of this Trust  Supplement,  the
Escrow Agreement and the Note Documents to which it is a party;

          (b) the  execution,  delivery and  performance  by the Trustee of this
Trust  Supplement,  the Escrow Agreement and the Note Documents to which it is a
party (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,  the Escrow Agreement and the Note Documents to which it is a



party will not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any other action in
respect of, any  governmental  authority  or agency of the United  States or the
state of the  United  States  where it is located  regulating  the  banking  and
corporate trust activities of the Trustee; and

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

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note
Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document".

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any  time  and  from  time to  time,  (i)  enter  into  one or more
agreements supplemental to the Escrow Agreement,  the Note Purchase Agreement or
the Deposit Agreement,  for any of the purposes set forth in clauses (1) through
(9) of such  Section  9.01,  except that (a) clause (2) and (3) of such  Section



9.01 shall be deemed to include the Company's  obligations under (in the case of
clause (2)),  and the Company's  rights and powers  conferred by (in the case of
clause (3)),  the Note Purchase  Agreement,  (b) clause (4) of such Section 9.01
shall be deemed to include  corrections  or  supplements  to  provisions  of the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement which may
be  defective or  inconsistent  with any other  provision  of this  Agreement or
contained in any agreement  referred to in such clause (4) and the curing of any
ambiguity or the  modification of any other provision with respect to matters or
questions arising under the Escrow Agreement, the Note Purchase Agreement or the
Deposit Agreement and (c) references in clauses (6) and (7) of such Section 9.01
to "any  Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to
refer to "the  Intercreditor  Agreement,  the  Liquidity  Facility,  the  Escrow
Agreement,  the Note Purchase Agreement or the Deposit Agreement" and (ii) enter
into one or more  agreements  supplemental  to this Agreement to provide for the
formation of a Class D Trust, the issuance of Class D Certificates, the purchase
by the Class D Trust of Equipment Notes and other matters  incidental thereto or
otherwise contemplated by Section 2.01(b) of the Basic Agreement.

          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in
the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.


                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the earlier of (A) the completion of
the  assignment,  transfer and discharge  described in the first sentence of the
immediately   following   paragraph  and  (B)  distribution  to  all  Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
execution of this Trust Supplement.



          Upon the earlier of (i) the first  Business Day following  January 31,
1999,  or, if later,  the fifth  Business  Day  following  the  Delivery  Period
Termination  Date and (ii) the fifth  Business Day following the date on which a
Triggering Event occurs (such date, the "TRANSFER DATE"), or, if later, the date
on which all of the conditions set forth in the immediately  following  sentence
have been  satisfied,  the  Trustee  is  hereby  directed  (subject  only to the
immediately following sentence) to, and the Company shall direct the institution
that will serve as the Related  Trustee  under the Related  Pass  Through  Trust
Agreement  to,  execute and deliver the  Assignment  and  Assumption  Agreement,
pursuant  to which the Trustee  shall  assign,  transfer  and deliver all of the
Trustee's right, title and interest to the Trust Property to the Related Trustee
under the Related  Pass  Through  Trust  Agreement.  The Trustee and the Related
Trustee shall execute and deliver the Assignment  and Assumption  Agreement upon
the satisfaction of the following conditions:

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

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

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

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

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

               (V) neither the  execution  and  delivery of the  Assignment  and
          Assumption  Agreement in accordance  with the terms of this  Agreement



          and the Related Pass Through Trust Agreement,  nor the consummation by
          the parties thereto of the transactions contemplated to be consummated
          thereunder on the date thereof,  will violate any law or  governmental
          rule or  regulation  of the State of New York or the United  States of
          America  known to such counsel to be  applicable  to the  transactions
          contemplated by the Assignment and Assumption Agreement.

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

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

          In connection with the occurrence of the event set forth in clause (B)
above,  notice of such termination,  specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein



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

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

          (b) The  provisions  of this  Section 7.01  supersede  and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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 8.02.  GOVERNING  LAW. THIS  AGREEMENT AND, UNTIL THE TRANSFER
DATE,  THE  APPLICABLE  CERTIFICATES  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  THIS SECTION 8.02 SUPERSEDES
AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT.

          Section 8.03. 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 8.04. 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:  Gerald Laderman
                                                Title: Vice President



                                    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 1998-1A-O

              6.648% Continental Airlines Pass Through Certificate,
                                Series 1998-1A-O
                        Issuance Date: February 20, 1998

                       Final Maturity Date: March 15, 2019

          Evidencing A Fractional Undivided Interest In The Continental Airlines
          Pass Through Trust  1998-1A-O,  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 0.000205929% 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 1998-1A-O (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. 1998-1A-O
thereto,  dated as of February 20, 1998 (the "Trust  Supplement"  and,  together
with the Basic Agreement, the "AGREEMENT"), between the Trustee and the Company,

____________________
*    This legend to appear on Book-Entry  Certificates  to be deposited with the
     Depository Trust 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 "6.648%  Continental  Airlines Pass
Through Certificates, Series 1998-1A-O" (herein called the "CERTIFICATES"). This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the 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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER,  THIS CERTIFICATE  SHALL BE GOVERNED
AND  CONSTRUED  IN  ACCORDANCE  WITH THE  LAWS OF THE  STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

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



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


                                             CONTINENTAL  AIRLINES  PASS THROUGH
                                             TRUST 1998-1A-O

                                             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]



                                    EXHIBIT C
                                    ---------


                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
                 Continental Airlines Pass Through Trust 1998-1A

          ASSIGNMENT AND ASSUMPTION  AGREEMENT,  dated  ____________,  199_ (the
"ASSIGNMENT  AGREEMENT"),  between  Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
September  25,  1997 (as  amended  or  modified  from time to time,  the  "BASIC
AGREEMENT"),  as  supplemented  by the  Trust  Supplement  No.  1998-1A-O  dated
February 20, 1998 (the "TRUST SUPPLEMENT" and together with the Basic Agreement,
the  "AGREEMENT")  in respect of the  Continental  Airlines  Pass Through  Trust
1998-1A-O (the  "ASSIGNOR"),  and Wilmington  Trust Company,  a Delaware banking
corporation, not in its individual capacity except as expressly provided herein,
but solely as trustee  under the Basic  Agreement as  supplemented  by the Trust
Supplement No.  1998-1A-S  dated February 20, 1998 (the "NEW  SUPPLEMENT",  and,
together  with the Basic  Agreement,  the "NEW  AGREEMENT")  in  respect  of the
Continental Airlines Pass Through Trust 1998-1A-S (the "ASSIGNEE").

                              W I T N E S S E T H:

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

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

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

          1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer
and set over unto the  Assignee as of the  Transfer  Date all of its present and
future  right,  title  and  interest  in,  under and with  respect  to the Trust
Property  and the  Scheduled  Documents  and  each  other  contract,  agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements,  documents or instruments,  together with the



Scheduled  Documents,  to be referred to as the "ASSIGNED  DOCUMENTS"),  and any
proceeds therefrom,  together with all documents and instruments  evidencing any
of such right, title and interest.

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

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

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

          5. FURTHER  ASSURANCES.  The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further  instruments and documents and take such further action
as the  Assignee  may  reasonably  request to obtain the full  benefits  of this
Assignment  Agreement and of the right and powers herein  granted.  The Assignor
agrees to deliver any Applicable  Certificates,  and all Trust Property, if any,
then in the physical possession of the Assignor, to the Assignee.

          6.  REPRESENTATIONS  AND WARRANTIES.  (a) The Assignee  represents and
warrants to the Assignor and each of the Beneficiaries that:

          (i) it has all requisite  power and authority and legal right to enter
     into and carry out the  transactions  contemplated  hereby and to carry out



     and  perform  the  obligations  of the  "Pass  Through  Trustee"  under the
     Assigned Documents;

          (ii) on and as of the date hereof, the  representations and warranties
     of the  Assignee  set  forth in  Section  7.15 of the Basic  Agreement  and
     Section 5.04 of the New Supplement are true and correct.

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

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

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

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

          7. GOVERNING LAW. THIS  ASSIGNMENT  AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

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

          9. THIRD PARTY  BENEFICIARIES.  The Assignee  hereby  agrees,  for the
benefit of the Beneficiaries, that its representations, warranties and covenants
contained  herein are also  intended to be for the benefit of each  Beneficiary,
and each  Beneficiary  shall be deemed to be an express third party  beneficiary



with  respect  thereto,  entitled  to enforce  directly  and in its own name any
rights or claims it may have against such party as such beneficiary.



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

                                             ASSIGNOR:
                                             WILMINGTON  TRUST  COMPANY,  not in
                                               its individual capacity except as
                                               expressly  provided  herein,  but
                                               solely as trustee  under the Pass
                                               Through Trust Agreement and Trust
                                               Supplement   in  respect  of  the
                                               Continental Airlines Pass Through
                                               Trust 1998-1A-O

                                             By:________________________________
                                                Title:

                                             ASSIGNEE:
                                             WILMINGTON  TRUST  COMPANY,  not in
                                               its individual capacity except as
                                               expressly  provided  herein,  but
                                               solely as trustee  under the Pass
                                               Through Trust Agreement and Trust
                                               Supplement   in  respect  of  the
                                               Continental Airlines Pass Through
                                               Trust 1998-1A-S

                                             By:________________________________
                                                Title:



                                   Schedule I


                         Schedule of Assigned Documents

          (1)  Intercreditor  Agreement  dated as of February 20, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any,  relating to the Certificates  issued under (and as defined in) each of the
Other Agreements and the Subordination Agent.

          (2) Escrow and Paying Agent  Agreement  (Class A) dated as of February
20, 1998 among the Escrow Agent,  the  Underwriters,  the Trustee and the Paying
Agent.

          (3) Note  Purchase  Agreement  dated as of February 20, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary,  the Escrow Agent, the
Paying Agent and the Subordination Agent.

          (4) Deposit  Agreement (Class A) dated as of February 20, 1998 between
the Escrow Agent and the Depositary.

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



                                   Schedule II


                            Schedule of Beneficiaries

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

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

AIG Matched Funding Corp., as Liquidity Providers

Continental Airlines, Inc.

Credit Suisse First Boston Corporation, as Underwriter

Morgan Stanley & Co. Incorporated, as Underwriter

Chase Securities Inc., as Underwriter

First Security Bank, National Association, as Escrow Agent

Each of the other parties to the Assigned Documents


                         TRUST SUPPLEMENT No. 1998-1A-S

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $485,605,000

                Continental Airlines Pass Through Trust 1998-1A-S
                           6.648% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1A-S



          This Trust  Supplement  No.  1998-1A-S,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

          WHEREAS,  as of the Transfer Date (as defined below), the Company will
have financed the  acquisition  of all or a portion of such Aircraft  either (i)
through separate leveraged lease transactions,  in which case the Company leases
such Aircraft  (collectively,  the "LEASED  AIRCRAFT") or (ii) through  separate
secured  loan  transactions,  in  which  case the  Company  owns  such  Aircraft
(collectively, the "OWNED AIRCRAFT");

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

          WHEREAS,  as of the Transfer Date, in the case of each Owned Aircraft,
the Company  will have issued  pursuant to an  Indenture,  on a recourse  basis,
Equipment  Notes to  finance  a  portion  of the  purchase  price of such  Owned
Aircraft;

          WHEREAS,  as of the Transfer  Date,  the Related  Trustee will assign,
transfer  and deliver all of such  trustee's  right,  title and  interest to the
trust  property  held by the  Related  Trustee to the  Trustee  pursuant  to the
Assignment and Assumption Agreement (as defined below);

          WHEREAS,  the  Trustee,   effective  only,  but  automatically,   upon
execution  and delivery of the  Assignment  and  Assumption  Agreement,  will be
deemed to have  declared the creation of the  Continental  Airlines Pass Through
Trust  1998-1A-S  (the  "APPLICABLE  TRUST") for the  benefit of the  Applicable



Certificateholders, and each Holder of Applicable Certificates outstanding as of
the Transfer Date, as the grantors of the Applicable  Trust, by their respective
acceptances of such Applicable  Certificates,  will join in the creation of this
Applicable Trust with the Trustee;

          WHEREAS,  all Applicable  Certificates deemed 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  except for those  Applicable  Certificates  to which an
Escrow Receipt (as defined below) has been affixed;

          WHEREAS,  upon  the  execution  and  delivery  of the  Assignment  and
Assumption Agreement,  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.  The Applicable  Certificates shall be
known  as  "6.648%  Continental  Airlines  Pass  Through  Certificates,   Series
1998-1A-S".  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 initially  deemed issued under the Agreement shall be equal to the
     aggregate  principal  amount of  "Outstanding"  pass  through  certificates
     representing  fractional  undivided  interests in the Related  Trust on the
     Transfer Date.

          (b) The  Regular  Distribution  Dates with  respect to any  payment of
     Scheduled Payments means March 15 and September 15 of each year, commencing



     on March 15, 1998,  until  payment of all of the  Scheduled  Payments to be
     made under the Equipment Notes has been made.

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
     Trustee shall affix the  corresponding  Escrow  Receipt to each  Applicable
     Certificate.  In any event,  any  transfer or  exchange  of any  Applicable
     Certificate  shall also effect a transfer or exchange of the related Escrow
     Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
     Applicable  Certificate shall be permitted unless the corresponding  Escrow
     Receipt is attached  thereto and also is so  transferred  or exchanged.  By
     acceptance  of any  Applicable  Certificate  to which an Escrow  Receipt is
     attached,  each Holder of such an Applicable  Certificate  acknowledges and
     accepts the restrictions on transfer of the Escrow Receipt set forth herein
     and in the Escrow Agreement.

          (e) (i) The Applicable  Certificates  shall be in the form attached as
     Exhibit  A  to  the  Related  Pass  Through  Trust  Supplement,  with  such
     appropriate  insertions,  omissions,  substitutions and other variations as
     are required or permitted  by the Related Pass Through  Trust  Agreement or
     this Agreement, as the case may be, or as the Trustee may deem appropriate,
     to reflect the fact that the Applicable Certificates are being issued under
     the Agreement as opposed to under the Related Pass Through Trust Agreement.
     Any  Person  acquiring  or  accepting  an  Applicable  Certificate,  by its
     acceptance of such Applicable  Certificate or an interest  therein will, by
     such  acquisition or acceptance,  be deemed to represent and warrant 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 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 as
     Exhibit B to the Related Pass Through Trust Supplement.

          (f) The  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement, the Deposit Agreement and the Escrow Agreement.

          (g) The  Applicable  Certificates  are entitled to the benefits of the
     Liquidity Facilities.

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement,"  for
     purposes of clause (3) of Section 7.07 of the Basic  Agreement  are Section
     8.1 (with  respect to Owned  Aircraft)  and  Section  9.1 (with  respect to
     Leased Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust,  and the related  Aircraft and Note Documents,  are described in the
     Note Purchase 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:  Means the Basic  Agreement,  as supplemented by this Trust
     Supplement.

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

          APPLICABLE  CERTIFICATE:  Means any of the  "Applicable  Certificates"
     issued by the Related Trust and that are  "Outstanding"  (as defined in the
     Related  Pass  Through  Trust  Agreement)  as of  the  Transfer  Date  (the
     "TRANSFER DATE  CERTIFICATES")  and any Applicable  Certificates  issued in
     exchange therefor or replacement thereof pursuant to this Agreement.



          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.

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
     assumption agreement  substantially in the form of Exhibit C to the Related
     Pass Through Trust  Supplement  executed and  delivered in accordance  with
     Section 7.01 of the Related Trust Supplement.

          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.

          CLASS D  CERTIFICATEHOLDERS:  Has the  meaning  specified  in  Section
     4.01(a)(iii) of this Trust Supplement.

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

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
     Agreement.

          DELIVERY  PERIOD  TERMINATION  DATE: Has the meaning  specified in the
     Related Pass Through Trust Supplement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
     20, 1998 relating to the Applicable Certificates between the Depositary and
     the Escrow  Agent,  as the same may be amended,  supplemented  or otherwise
     modified from time to time in accordance with its terms.

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



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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
     of February 20, 1998  relating to the  Applicable  Certificates,  among the
     Escrow Agent,  the Escrow Paying Agent,  the Related Trustee (and after the
     Transfer  Date,  the  Trustee)  and the  Underwriters,  as the  same may be
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
     Escrow Agreement.

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

          FINAL MATURITY DATE: Means March 15, 2019.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
     Agreement.

          INDENTURE:  Means each of the separate trust  indentures and mortgages
     relating to the  Aircraft,  each as  specified  or  described in a Delivery
     Notice  delivered  pursuant to the Note  Purchase  Agreement or the related
     Participation  Agreement,  in  each  case  as  the  same  may  be  amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees),  the Liquidity Providers, the liquidity providers relating
     to the  Certificates  issued  under (and as defined in) each of the Related
     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.



          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
     beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
     this Trust Supplement.

          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of February  20, 1998  relating  to the  Applicable  Certificates,
     between  the  Liquidity  Provider  and  Wilmington  Trust  Company,  as the
     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,  AIG Matched Funding Corp., a
     Delaware corporation, and any replacements or successors therefor appointed
     in accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
     Applicable  Certificates  and, with respect to such any Equipment Note, (i)
     the Indenture and the  Participation  Agreement  relating to such Equipment
     Note,  and  (ii) in the  case of any  Equipment  Note  related  to a Leased
     Aircraft, the Lease relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent and
     the  Subordination  Agent,  as the same  may be  amended,  supplemented  or
     otherwise modified from time to time, in accordance with its terms.



          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
     Trust   Supplement  No.   1998-1B-S  dated  the  date  hereof  relating  to
     Continental  Airlines  Pass  Through  Trust  1998-1B-S  and (ii) the  Basic
     Agreement as supplemented by Trust  Supplement No. 1998-1C-S dated the date
     hereof relating to Continental Airlines Pass Through Trust 1998-1C-S.

          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
     1998-1B-S and Continental Airlines Pass Through Trust 1998-1C-S, created by
     the Other Pass Through Trust Agreements.

          OUTSTANDING: When used with respect to Applicable Certificates, means,
     as of the date of determination,  all Transfer Date  Certificates,  and all
     other Applicable Certificates theretofore authenticated and delivered under
     this Agreement, in each case except:

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

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

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

          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
     Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          OWNER  PARTICIPANT:  With respect to any Equipment  Note relating to a
     Leased  Aircraft,  means the  "Owner  Participant"  as  referred  to in the



     Indenture pursuant to which such Equipment Note is issued and any permitted
     successor or assign of such Owner  Participant;  and OWNER  PARTICIPANTS at
     any time of determination means all of the Owner Participants thus referred
     to in the Indentures.

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

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

          POOL BALANCE:  Means, as of any date, (i) the original  aggregate face
     amount of the  "Applicable  Certificates"  as defined in the  Related  Pass
     Through Trust  Agreement,  less (ii) the  aggregate  amount of all payments
     made in respect of such  Certificates  or in respect of Deposits other than
     payments made in respect of interest or premium thereon or reimbursement of
     any costs or expenses incurred in connection therewith. The Pool Balance as
     of any  Distribution  Date shall be  computed  after  giving  effect to any
     special distribution with respect to unused Deposits,  payment of principal
     on the Equipment Notes or payments with respect to other Trust Property and
     the distribution thereof to be made on that date.

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
     to the seventh  decimal place) computed by dividing (i) the Pool Balance by
     (ii) the original aggregate face amount of the "Applicable Certificates" as
     defined in the Related Pass Through Trust Agreement.  The Pool Factor as of
     any Distribution  Date shall be computed after giving effect to any special
     distribution  with respect to unused Deposits,  payment of principal on the
     Equipment  Notes or payments  with respect to other Trust  Property and the
     distribution thereof to be made on that date.

          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
     11, 1998 relating to the offering of the Certificates.



          RELATED  OTHER  PASS  THROUGH  TRUST  AGREEMENTS:   Means  the  "Other
     Agreements" as defined in the Related Pass Through Trust Agreement.

          RELATED OTHER TRUSTEES:  Means the "Other  Trustees" as defined in the
     Related Pass Through Trust Agreement.

          RELATED  OTHER  TRUSTS:  Means the  "Other  Trusts"  as defined in the
     Related Pass Through Trust Agreement.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
     supplemented  by the Trust  Supplement No.  1998-1A-O dated the date hereof
     (the "RELATED PASS THROUGH TRUST SUPPLEMENT"),  relating to the Continental
     Airlines Pass Through  Trust  1998-1A-O and entered into by the Company and
     the Trustee,  as amended,  supplemented or otherwise  modified from time to
     time in accordance with its terms.

          RELATED TRUST:  Means the  Continental  Pass Through Trust  1998-1A-O,
     formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
     Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
     in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
     Agreement.

          TRANSFER  DATE:  Means the moment of  execution  and  delivery  of the
     Assignment and Assumption Agreement by each of the parties thereto.

          TRANSFER  DATE   CERTIFICATES:   Has  the  meaning  specified  in  the
     definition of "Applicable Certificates".

          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
     Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
     Equipment Notes held as the property of the Applicable Trust, all monies at
     any time paid thereon and all monies due and to become due thereunder, (ii)



     funds  from  time to time  deposited  in the  Certificate  Account  and the
     Special Payments Account and, subject to the Intercreditor  Agreement,  any
     proceeds  from the sale by the Trustee  pursuant to Article VI of the Basic
     Agreement of any  Equipment  Note and (iii) all rights of the Trust and the
     Trustee,  on  behalf  of the  Applicable  Trust,  under  the  Intercreditor
     Agreement,  the  Escrow  Agreement,  the Note  Purchase  Agreement  and the
     Liquidity Facilities,  including, without limitation, all rights to receive
     certain payments  thereunder,  and all monies paid to the Trustee on behalf
     of the  Applicable  Trust  pursuant to the  Intercreditor  Agreement or the
     Liquidity Facilities,  PROVIDED that rights with respect to the Deposits or
     under the Escrow Agreement, will not constitute Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
     Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
     February 11, 1998 among the  Underwriters,  the Company and the Depositary,
     as the same may be amended, supplemented or otherwise modified from time to
     time in accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
     Basic Agreement following the fourth sentence thereof:

               In the event of the  payment of a Special  Redemption  Premium by
          the  Company to the Trustee  under the Note  Purchase  Agreement,  the
          notice provided for in this Section 4.02(c) shall be mailed,  together
          with the notice by the Escrow  Paying Agent under  Section 2.06 of the
          Escrow  Agreement,  not  less  than  15  days  prior  to  the  Special
          Distribution  Date for such amount,  which Special  Distribution  Date
          shall be the Final Withdrawal Date.



          (b) The  following  sentence  shall  replace in its  entirety the last
     sentence of the first paragraph of Section 4.02(c) of the Basic Agreement:

               If the amount of (i) premium, if any, payable upon the redemption
          or  purchase  of an  Equipment  Note or (ii)  the  Special  Redemption
          Premium,  if any, has not been calculated at the time that the Trustee
          mails  notice  of a Special  Payment,  it shall be  sufficient  if the
          notice sets forth the other amounts to be distributed  and states that
          any premium received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

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



Clearing  Agency  Participant  the  statement  described  above  and  will  make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

          (b) Within a reasonable  period of time after the end of each calendar
year but not later than the latest date  permitted  by law,  the  Trustee  shall
furnish  to each  Person  who at any  time  during  such  calendar  year  was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and
(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following  (i) the Transfer  Date, if there has been any
change in the  information set forth in clauses (x), (y) and (z) below from that
set  forth  in page  S-52 of the  Prospectus  Supplement,  and  (ii)  any  early
redemption  or  purchase  of, or any  default  in the  payment of  principal  or
interest in respect of, any of the Equipment Notes held in the Applicable Trust,
or any Final  Withdrawal,  the Trustee  shall furnish to  Certificateholders  of
record on such date a statement setting forth (x) the expected Pool Balances for
each  subsequent  Regular   Distribution  Date  following  the  Delivery  Period
Termination  Date,  (y) the related Pool  Factors for such Regular  Distribution
Dates and (z) the  expected  principal  distribution  schedule of the  Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice. With
respect  to the  Applicable  Certificates  registered  in the name of a Clearing
Agency, on the Transfer Date, the Trustee will request from such Clearing Agency
a securities  position  listing  setting forth the names of all Clearing  Agency
Participants  reflected on such Clearing  Agency's books as holding interests in
the  "Applicable  Certificates"  (as defined in the Related Pass  Through  Trust
Agreement)  on such date.  The Trustee  will mail to each such  Clearing  Agency
Participant  the statement  described  above and will make available  additional



copies as  requested by such  Clearing  Agency  Participant  for  forwarding  to
holders of interests in the Applicable Certificates.

          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
Basic Agreement.


                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 4.01(a);

          (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 4.01(a); and

          (iii)   each   holder   of  a  Class  D   Certificate   (a   "CLASS  D
     CERTIFICATEHOLDER")  shall have the right  (which shall not expire upon any
     purchase  of the  Applicable  Certificates  pursuant  to clause (i) or (ii)
     above)  to  purchase  all,  but  not  less  than  all,  of  the  Applicable
     Certificates,  the Class B Certificates  and the Class C Certificates  upon
     ten days' written notice to the Trustee,  the Class B Trustee,  the Class C
     Trustee  and each other  Class D  Certificateholder,  PROVIDED  that (A) if
     prior to the end of such ten-day period any other Class D Certificateholder
     notifies such purchasing Class D Certificateholder  that such other Class D
     Certificateholder  wants to participate  in such purchase,  then such other
     Class  D   Certificateholder   may  join  with  the   purchasing   Class  D
     Certificateholder to purchase all, but not less than all, of the Applicable
     Certificates,  the Class B Certificates  and the Class C  Certificates  pro
     rata based on the Fractional  Undivided  Interest in the Class D Trust held
     by each such Class D Certificateholder  and (B) if prior to the end of such
     ten-day  period  any other  Class D  Certificateholder  fails to notify the
     purchasing   Class   D   Certificateholder    of   such   other   Class   D
     Certificateholder's  desire to  participate  in such a purchase,  then such
     other  Class D  Certificateholder  shall  lose its  right to  purchase  the
     Applicable Certificates pursuant to this Section 4.01(a).

          The purchase price with respect to the Applicable  Certificates  shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;  PROVIDED,  HOWEVER,  that (i) if such  purchase  occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate  amount of unused  Deposits and
interest to be distributed  under the Escrow  Agreement  (which deducted amounts
shall  remain   distributable  to,  and  may  be  retained  by,  the  Applicable



Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record  Date,  such  purchase  price  shall be  reduced  by the  amount  to be
distributed  under  this  Agreement  on the  related  Distribution  Date  (which
deducted  amounts  shall  remain  distributable  to, and may be retained by, the
Applicable  Certificateholder as of such Record Date);  PROVIDED FURTHER that no
such  purchase  of  Applicable   Certificates  shall  be  effective  unless  the
purchaser(s)  shall  certify to the  Trustee  that  contemporaneously  with such
purchase,  such  purchaser(s)  is  purchasing,  pursuant  to the  terms  of this
Agreement and the Other  Agreements,  the Applicable  Certificates,  the Class B
Certificates  and the Class C  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be
subject to the terms of this Section 4.01(a). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  B
Certificateholder(s),     Class    C    Certificateholder(s)    or    Class    D
Certificateholder(s), as the case may be, of the purchase price set forth in the
first sentence of this paragraph, forthwith sell, assign, transfer and convey to
the purchaser(s)  thereof (without  recourse,  representation or warranty of any
kind except for its own acts), all of the right, title,  interest and obligation
of such Applicable  Certificateholder  in this Agreement,  the Escrow Agreement,
the Deposit Agreement,  the Intercreditor  Agreement,  the Liquidity Facilities,
the Note Documents and all Applicable  Certificates  and Escrow Receipts held by
such Applicable  Certificateholder (subject to clauses (i) and (ii) in the first
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 purchaser  shall assume
all of such Applicable Certificateholder's obligations under this Agreement, the
Escrow  Agreement,  the Deposit  Agreement,  the  Intercreditor  Agreement,  the
Liquidity  Facilities,  the Note Documents and all such Applicable  Certificates
and Escrow Receipts. The Applicable  Certificates will be deemed to be purchased
on the date payment of the purchase price is made notwithstanding the failure of
the Applicable  Certificateholders  to deliver any Applicable  Certificates and,
upon such a purchase,  (i) the only rights of the Applicable  Certificateholders
will be to deliver the Applicable  Certificates to the  purchaser(s) and receive
the purchase price for such Applicable Certificates and (ii) if the purchaser(s)
shall so request,  such  Applicable  Certificateholder  will comply with all the
provisions  of Section  3.04 of the Basic  Agreement  to enable  new  Applicable



Certificates  to be issued to the  purchaser in such  denominations  as it shall
request.  All charges and expenses in  connection  with the issuance of any such
new Certificates shall be borne by the purchaser thereof.

          As  used  in  this  Section   4.01(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",  "Class C Trustee",  "Class D Certificate" and "Class D Trust",
shall have the respective  meanings  assigned to such terms in the Intercreditor
Agreement.

          (b) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.


                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01. ACQUISITION OF TRUST PROPERTY. (a) The Trustee is hereby
irrevocably  authorized  and directed to execute and deliver the  Assignment and
Assumption  Agreement on the date  specified in Section 7.01 of the Related Pass
Through Trust Supplement, subject only to the satisfaction of the conditions set
forth in said Section  7.01.  This  Agreement  (except only for the  immediately
preceding  sentence  hereof,  which is  effective  upon  execution  and delivery
hereof) shall become effective upon the execution and delivery of the Assignment
and Assumption  Agreement by the Trustee and the Related Trustee,  automatically
and without any further  signature  or action on the part of the Company and the
Trustee,  and shall thereupon constitute the legal, valid and binding obligation
of the  parties  hereto  enforceable  against  each  of the  parties  hereto  in
accordance  with its terms.  Upon such  execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated,  the Applicable
Certificateholders shall receive beneficial interests in the Applicable Trust in
exchange  for their  interests  in the Related  Trust equal to their  respective
beneficial  interests in the Related Trust and the  "Outstanding" (as defined in
the Related Pass Through Trust Agreement) pass through certificates representing
fractional  undivided  interests  in the  Related  Trust shall be deemed for all
purposes of this Agreement,  without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests  in the Trust and Trust  Property.  By  acceptance  of its  Applicable
Certificate,  each  Applicable  Certificateholder  consents to and ratifies such
assignment,  transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution  and delivery of the  Assignment  and  Assumption
Agreement.  The  provisions  of this Section  5.01(a)  supersede and replace the



provisions of Section 2.02 of the Basic Agreement (which are inapplicable to the
Trust), and all provisions of the Basic Agreement relating to Postponed Notes or
Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.

          (b) The Trustee, upon the execution and delivery of the Assignment and
Assumption  Agreement,  acknowledges  its  acceptance  of all  right,  title and
interest in and to the Trust  Property and declares  that the Trustee  holds and
will hold such right, title and interest for the benefit of all then present and
future  Applicable  Certificateholders,  upon the trusts herein and in the Basic
Agreement set forth. By the acceptance of each Applicable  Certificate issued to
it under the Related Pass Through  Trust  Agreement and deemed issued under this
Agreement,  each  Holder of any such  Applicable  Certificate  as grantor of the
Applicable Trust thereby joins in the creation and declaration of the Applicable
Trust.  The  provisions  of this  Section  5.01(b)  supersede  and  replace  the
provisions of Section 2.03 of the Basic Agreement (which are inapplicable to the
Trust).

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable
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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.

          Section 5.02. [Intentionally Omitted]

          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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,  the Deposit Agreement,  the Note Purchase
Agreement or the Escrow  Agreement or the due execution hereof or thereof by the
Company or the other  parties  thereto  (other than the  Trustee),  or for or in
respect of the recitals and statements contained herein or therein, 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,  the Intercreditor  Agreement, the Note
Purchase  Agreement and the Escrow  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  5.04.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants, on the Transfer Date, that:

          (a) the Trustee has full power,  authority  and legal right to receive
     the Trust Property assigned by the Related Trustee,  assume the obligations
     under,  and perform,  the Assignment and Assumption  Agreement,  this Trust
     Supplement,  the Intercreditor Agreement, the Escrow Agreement and the Note
     Documents  and has taken all  necessary  action to authorize  such receipt,
     assumption   and   performance  by  it  of  this  Trust   Supplement,   the
     Intercreditor  Agreement,  the Escrow  Agreement and the Note  Documents to
     which it is a party;

          (b) the  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents (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  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents 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) The Assignment and Assumption Agreement has been duly executed and
     delivered  by the  Trustee  and this Trust  Supplement,  the  Intercreditor
     Agreement,  the Escrow  Agreement and the Note Documents have been, or will
     be,  as  applicable,  duly  executed  and  delivered  by  the  Trustee  and
     constitute, or will constitute, as applicable, the legal, valid and binding
     agreements of the Trustee,  enforceable against it in accordance with their
     respective terms; PROVIDED,  however, that enforceability may be limited by
     (i)  applicable  bankruptcy,  insolvency,  reorganization,   moratorium  or
     similar laws  affecting the rights of creditors  generally and (ii) general
     principles of equity.

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note
Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document".

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,



under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any  time  and  from  time to  time,  (i)  enter  into  one or more
agreements supplemental to the Escrow Agreement,  the Note Purchase Agreement or
the Deposit Agreement,  for any of the purposes set forth in clauses (1) through
(9) of such  Section  9.01,  except that (a) clause (2) and (3) of such  Section
9.01 shall be deemed to include the Company's  obligations under (in the case of
clause (2)),  and the Company's  rights and powers  conferred by (in the case of
clause (3)),  the Note Purchase  Agreement,  (b) clause (4) of such Section 9.01
shall be deemed to include  corrections  or  supplements  to  provisions  of the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement which may
be  defective or  inconsistent  with any other  provision  of this  Agreement or
contained in any agreement  referred to in such clause (4) and the curing of any
ambiguity or the  modification of any other provision with respect to matters or
questions arising under the Escrow Agreement, the Note Purchase Agreement or the
Deposit Agreement and (c) references in clauses (6) and (7) of such Section 9.01
to "any  Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to
refer to "the  Intercreditor  Agreement,  the  Liquidity  Facility,  the  Escrow
Agreement,  the Note Purchase Agreement or the Deposit Agreement" and (ii) enter
into one or more  agreements  supplemental  to this Agreement to provide for the
formation of a Class D Trust, the issuance of Class D Certificates, the purchase
by the Class D Trust of the Equipment Notes and other matters  incident  thereto
or otherwise contemplated by Section 2.01(b) of the Basic Agreement.

          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in
the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.



                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the  distribution  to all Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
earliest execution of this Trust Supplement.

          Notice of any termination, specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein
specified.  The Trustee shall give such notice to the Registrar at the time such
notice  is  given  to  Applicable  Certificateholders.   Upon  presentation  and
surrender of the Applicable  Certificates  in accordance  with such notice,  the
Trustee  shall cause to be  distributed  to Applicable  Certificateholders  such
final payments.

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



Trustee shall pay to each Loan Trustee the appropriate  amount of money relating
to such Loan Trustee and shall give written  notice thereof to the related Owner
Trustees, the Owner Participants and the Company.

          (b) The  provisions of this Section 7.01  supersedes  and replaces the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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  8.02.  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. THIS SECTION 8.02  SUPERSEDES AND REPLACES  SECTION 12.05
OF THE BASIC AGREEMENT.

          Section 8.03. 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 8.04. 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 this  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:




                         TRUST SUPPLEMENT No. 1998-1B-O

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $150,371,000

                Continental Airlines Pass Through Trust 1998-1B-O
                           6.748% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1B-O



          This Trust  Supplement  No.  1998-1B-O,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

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

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

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

          WHEREAS,  the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-1B-O (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  except  for those  Certificates  to which an Escrow  Receipt  has been
affixed;

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

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

          WHEREAS,  pursuant to the terms and conditions of the Basic  Agreement
as supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement,  upon or shortly  following  delivery of an Aircraft,  the Trustee on
behalf  of  the  Applicable  Trust,  using  funds  withdrawn  under  the  Escrow
Agreement,  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 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
"6.748%  Continental  Airlines  Pass  Through  Certificates,  Series  1998-1B-O"
(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 $150,371,000.

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

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
     Trustee shall affix the  corresponding  Escrow  Receipt to each  Applicable
     Certificate.  In any event,  any  transfer or  exchange  of any  Applicable
     Certificate  shall also effect a transfer or exchange of the related Escrow
     Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
     Applicable  Certificate shall be permitted unless the corresponding  Escrow
     Receipt is attached  thereto and also is so  transferred  or exchanged.  By
     acceptance  of any  Applicable  Certificate  to which an Escrow  Receipt is
     attached,  each Holder of such an Applicable  Certificate  acknowledges and
     accepts the restrictions on transfer of the Escrow Receipt set forth herein
     and in the Escrow 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 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 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  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement, the Deposit Agreement, and the Escrow Agreement.

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

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement",  for
     purposes of clause (3) of Section 7.07 of the Basic Agreement,  are Section
     8.1 (with  respect to Owned  Aircraft)  and  Section  9.1 (with  respect to
     Leased Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust,  and the related  Aircraft and Note Documents,  are described in the
     Note Purchase 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:  Means each of the New  Aircraft or  Substitute  Aircraft in
     respect of which a  Participation  Agreement is entered into in  accordance
     with the Note Purchase Agreement.

          AIRCRAFT  PURCHASE  AGREEMENT:  Has the meaning  specified in the Note
     Purchase Agreement.

          APPLICABLE  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 DELIVERY DATE: Has the meaning specified in Section 5.01(b)
     of this Trust Supplement.

          APPLICABLE  PARTICIPATION  AGREEMENT:  Has the  meaning  specified  in
     Section 5.01(b) of this Trust Supplement.

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

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
     assumption agreement substantially in the form of Exhibit C hereto executed
     and delivered in accordance with Section 7.01 of this Trust Supplement.

          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.

          CLASS  D  CERTIFICATEHOLDER:  Has the  meaning  specified  in  Section
     4.01(a)(iii) of this Trust Supplement.

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

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



          DELIVERY  DATE:  Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
     Agreement.

          DELIVERY PERIOD TERMINATION DATE: Means the earlier of (a) January 31,
     1999,  or, if the Equipment  Notes  relating to all of the New Aircraft (or
     Substitute  Aircraft  in lieu  thereof)  have  not  been  purchased  by the
     Applicable  Trust and the Other  Trusts on or prior to such date due to any
     reason  beyond  the  control  of the  Company  and  not  occasioned  by the
     Company's  fault or negligence,  June 30, 1999  (PROVIDED  that, if a labor
     strike  occurs  at  Boeing  on or prior  to  either  or both of such  dates
     referred  to in this  clause (a),  such date or dates on or  following  the
     commencement  of such strike shall be extended by adding thereto the number
     of days that such  strike  continued  in effect)  and (b) the date on which
     Equipment  Notes  issued  with  respect  to  all of the  New  Aircraft  (or
     Substitute  Aircraft in lieu thereof) have been purchased by the Applicable
     Trust and the Other Trusts in accordance with the Note Purchase Agreement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
     20, 1998 relating to the Applicable Certificates between the Depositary and
     the Escrow  Agent,  as the same may be amended,  supplemented  or otherwise
     modified from time to time in accordance with its terms.

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

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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
     of February 20, 1998  relating to the  Applicable  Certificates,  among the
     Escrow Agent, the Escrow Paying Agent, the Trustee and Underwriters, as the
     same may be amended,  supplemented or otherwise  modified from time to time
     in accordance with its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
     Escrow Agreement.



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

          FINAL MATURITY DATE: Means September 15, 2018.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
     Agreement.

          FINAL WITHDRAWAL  NOTICE: Has the meaning specified in Section 5.02 of
     this Trust Supplement.

          INDENTURE:  Means each of the separate trust  indentures and mortgages
     relating to the  Aircraft,  each as  specified  or  described in a Delivery
     Notice  delivered  pursuant to the Note  Purchase  Agreement or the related
     Participation  Agreement,  in  each  case  as  the  same  may  be  amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     February  20, 1998 among the Trustee,  the Other  Trustees,  the  Liquidity
     Providers,  the liquidity  providers  relating to the  Certificates  issued
     under  (and as defined  in) each of the Other  Agreements,  and  Wilmington
     Trust  Company,  as  Subordination  Agent  and as  trustee  thereunder,  as
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms.

          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
     beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
     this Trust Supplement.

          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of February  20, 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,  AIG Matched Funding Corp., a
     Delaware corporation, and any replacements or successors therefor appointed
     in accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
     Applicable  Certificates  and, with respect to any such Equipment Note, (i)
     the Indenture and the  Participation  Agreement  relating to such Equipment
     Note,  and  (ii) in the  case of any  Equipment  Note  related  to a Leased
     Aircraft, the Lease relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
     February 20, 1998 among the Trustee,  the Other Trustees,  the Company, the
     Escrow  Agent,  the  Escrow  Paying  Agent  and  the  Subordination  Agent,
     providing for, among other things,  the purchase of Equipment  Notes by the
     Trustee on behalf of the Trust, as the same may be amended, supplemented or
     otherwise modified from time to time, in accordance with its terms.

          NOTICE  OF  PURCHASE  WITHDRAWAL:  Has the  meaning  specified  in the
     Deposit Agreement.

          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
     Trust   Supplement  No.   1998-1A-O  dated  the  date  hereof  relating  to
     Continental  Airlines  Pass  Through  Trust  1998-1A-O  and (ii) the  Basic
     Agreement as supplemented by Trust  Supplement No. 1998-1C-O dated the date
     hereof relating to Continental Airlines Pass Through Trust 1998-1C-O.

          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
     1998-1A-O and the Continental  Airlines Pass Through Trust 1998-1C-O,  each
     created on the date hereof.



          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
     Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

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

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

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

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

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
     to the seventh  decimal place) computed by dividing (i) the Pool Balance by
     (ii) the original aggregate face amount of the Applicable Certificates. The
     Pool  Factor as of any  Distribution  Date shall be computed  after  giving
     effect to any special distribution with respect to unused Deposits, payment
     of principal of the Equipment Notes or payments with respect to other Trust
     Property and the distribution thereof to be made on that date.



          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
     11, 1998 relating to the offering of the Certificates.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
     supplemented  by the Trust  Supplement No.  1998-1B-S dated the date hereof
     relating to the  Continental  Airlines  Pass Through  Trust  1998-1B-S  and
     entered  into by the  Company  and the  Trustee,  which  agreement  becomes
     effective  upon the execution and delivery of the Assignment and Assumption
     Agreement pursuant to Section 7.01 of this Trust Supplement.

          RELATED TRUST: Means the Continental Pass Through Trust 1998-1B-S,  to
     be formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
     Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
     in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
     Agreement.

          TRANSFER DATE: Has the meaning specified in Section 7.01 of this Trust
     Supplement.

          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
     Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
     Equipment Notes held as the property of the Applicable Trust, all monies at
     any time paid thereon and all monies due and to become due thereunder, (ii)
     funds  from  time to time  deposited  in the  Certificate  Account  and the
     Special Payments Account and, subject to the Intercreditor  Agreement,  any
     proceeds  from the sale by the Trustee  pursuant to Article VI of the Basic
     Agreement  of any  Equipment  Note and (iii) all  rights of the  Applicable
     Trust  and the  Trustee,  on  behalf  of the  Applicable  Trust,  under the
     Intercreditor  Agreement, the Escrow Agreement, the Note Purchase Agreement
     and the Liquidity Facilities,  including, without limitation, all rights to



     receive certain payments thereunder,  and all monies paid to the Trustee on
     behalf of the Applicable Trust pursuant to the  Intercreditor  Agreement or
     the Liquidity Facilities, PROVIDED that rights with respect to the Deposits
     or under the Escrow Agreement,  except for the right to direct  withdrawals
     for the purchase of Equipment Notes to be held herein,  will not constitute
     Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
     Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
     February 11, 1998 among the  Underwriters,  the Company and the Depositary,
     as the same may be amended, supplemented or otherwise modified from time to
     time in accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
     Basic Agreement following the fourth sentence thereof:

          In the event of the  payment  of a Special  Redemption  Premium by the
          Company to the Trustee under the Note Purchase  Agreement,  the notice
          provided for in this Section  4.02(c)  shall be mailed,  together with
          the notice by the Escrow Paying Agent under Section 2.06 of the Escrow
          Agreement,  not less than 15 days  prior to the  Special  Distribution
          Date for such amount,  which  Special  Distribution  Date shall be the
          Final Withdrawal Date.

          The following sentence shall replace in its entirety the last sentence
     of the first paragraph of Section 4.02(c) of the Basic Agreement:

          (b) If the amount of (i) premium,  if any, payable upon the redemption
          or  purchase  of an  Equipment  Note or (ii)  the  Special  Redemption
          Premium,  if any, has not been calculated at the time that the Trustee



          mails  notice  of a Special  Payment,  it shall be  sufficient  if the
          notice sets forth the other amounts to be distributed  and states that
          any premium received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

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

          (b) Within a reasonable  period of time after the end of each calendar
year but not later than the latest date  permitted  by law,  the  Trustee  shall



furnish  to each  Person  who at any  time  during  such  calendar  year  was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and
(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following (i) the Delivery Period  Termination  Date, if
there has been any change in the  information  set forth in clauses (x), (y) and
(z) below  from that set forth in page S-52 of the  Prospectus  Supplement,  and
(ii) any early  redemption  or  purchase  of, or any  default in the  payment of
principal  or  interest in respect  of, any of the  Equipment  Notes held in the
Applicable  Trust,  or any  Final  Withdrawal,  the  Trustee  shall  furnish  to
Applicable  Certificateholders  of record on such date a statement setting forth
(x) the expected Pool Balances for each  subsequent  Regular  Distribution  Date
following the Delivery Period Termination Date, (y) the related Pool Factors for
such  Regular  Distribution  Dates and (z) the expected  principal  distribution
schedule of the Equipment Notes, in the aggregate, held as Trust Property at the
date of such notice. With respect to the Applicable  Certificates  registered in
the name of a Clearing  Agency,  on the Delivery  Period  Termination  Date, the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on
such date. The Trustee will mail to each such Clearing  Agency  Participant  the
statement described above and will make available additional copies as requested
by such Clearing  Agency  Participant  for forwarding to holders of interests in
the Applicable Certificates.

          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
Basic Agreement.



                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 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 4.01(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,

          (i) 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 4.01(b); and

          (ii)   each   holder   of  a  Class  D   Certificate   (a   "CLASS   D
     CERTIFICATEHOLDER")  shall have the right  (which shall not expire upon any
     purchase  of the Class A  Certificates  pursuant to clause (a) above or any
     purchase  of the  Applicable  Certificates  and the  Class  A  Certificates
     pursuant  to clause (i) above) to purchase  all,  but not less than all, of
     the  Applicable  Certificates,  the  Class A  Certificates  and the Class C
     Certificates  upon ten days'  written  notice to the  Trustee,  the Class A
     Trustee,  the Class C Trustee  and each  other  Class D  Certificateholder,
     PROVIDED  that (A) if prior to the end of such  ten-day  period  any  other
     Class   D    Certificateholder    notifies   such   purchasing    Class   D
     Certificateholder  that  such  other  Class D  Certificateholder  wants  to
     participate in such purchase, then such other Class D Certificateholder may
     join with the purchasing Class D Certificateholder to purchase all, but not
     less than all, of the Applicable Certificates, the Class A Certificates and
     the  Class C  Certificates  pro  rata  based  on the  Fractional  Undivided
     Interest  in the Class D Trust held by each such Class D  Certificateholder
     and (B) if  prior  to the end of such  ten-day  period  any  other  Class D
     Certificateholder  fails to notify the purchasing Class D Certificateholder
     of such other Class D  Certificateholder's  desire to participate in such a
     purchase, then such other Class D Certificateholder shall lose its right to
     purchase the Applicable Certificates pursuant to this Section 4.01(b).

          The purchase price with respect to the Applicable  Certificates  shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;  PROVIDED,  HOWEVER,  that (i) if such  purchase  occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate  amount of unused  Deposits and
interest to be distributed  under the Escrow  Agreement  (which deducted amounts
shall  remain   distributable  to,  and  may  be  retained  by,  the  Applicable
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record  Date,  such  purchase  price  shall be  reduced  by the  amount  to be



distributed  under  this  Agreement  on the  related  Distribution  Date  (which
deducted  amounts  shall  remain  distributable  to, and may be retained by, the
Applicable  Certificateholder as of such Record Date);  PROVIDED FURTHER that no
such  purchase  of  Applicable   Certificates  shall  be  effective  unless  the
purchaser(s)  shall  certify to the  Trustee  that  contemporaneously  with such
purchase,  such  purchaser(s)  is  purchasing,  pursuant  to the  terms  of this
Agreement and the Other  Agreements,  the Applicable  Certificates,  the Class A
Certificates  and the Class C  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be
subject to the terms of this Section 4.01(b). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  C
Certificateholder(s) or Class D Certificateholder(s), as the case may be, of the
purchase  price set forth in the first  sentence  of this  paragraph,  forthwith
sell, assign, transfer and convey to the purchaser(s) thereof (without recourse,
representation  or  warranty  of any kind  except for its own acts),  all of the
right, title,  interest and obligation of such Applicable  Certificateholder  in
this Agreement,  the Escrow Agreement,  the Deposit Agreement, the Intercreditor
Agreement,  the Liquidity  Facilities,  the Note  Documents  and all  Applicable
Certificates  and  Escrow  Receipts  held by such  Applicable  Certificateholder
(subject to clauses (i) and (ii) in the first  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  purchaser   shall  assume  all  of  such   Applicable
Certificateholder's  obligations under this Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor  Agreement,  the Liquidity Facilities,  the
Note Documents and all such Applicable  Certificates  and Escrow  Receipts.  The
Applicable  Certificates  will be deemed to be  purchased on the date payment of
the  purchase  price  is made  notwithstanding  the  failure  of the  Applicable
Certificateholders  to deliver  any  Applicable  Certificates  and,  upon such a
purchase,  (i) the only rights of the Applicable  Certificateholders  will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable  Certificates  and (ii) if the  purchaser(s)  shall so
request, such Applicable  Certificateholder  will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable  Certificates to
be  issued to the  purchaser  in such  denominations  as it shall  request.  All



charges and expenses in connection  with the issuance of any such new Applicable
Certificates shall be borne by the purchaser thereof.

          As used in this Section 4.01 and  elsewhere in this Trust  Supplement,
the terms "Class A Certificate",  "Class A Trust Agreement",  "Class A Trustee",
"Class C Certificate",  "Class C  Certificateholder",  "Class C Trust", "Class C
Trustee",  "Class D Certificate" and "Class D Trust",  shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.

          (c) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.


                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01.  DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor  Agreement,  the
Escrow  Agreement  and the Note  Purchase  Agreement on or prior to the Issuance
Date,  each in the form delivered to the Trustee by the Company and (ii) subject
to the respective  terms thereof,  to perform its obligations  thereunder.  Upon
request of the Company and the satisfaction or waiver of the closing  conditions
specified in the  Underwriting  Agreement,  the Trustee shall execute,  deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equalling in the aggregate the amount set forth,  with respect to the Applicable
Trust,  in  Schedule  II to the  Underwriting  Agreement  evidencing  the entire
ownership  interest in the  Applicable  Trust,  which amount  equals the maximum
aggregate  principal  amount of  Equipment  Notes which may be  purchased by the
Trustee pursuant to the Note Purchase Agreement.  Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate  or  deliver  Applicable  Certificates  in excess of the  aggregate
amount specified in this paragraph.

          (b) On or after the Issuance  Date,  the Company may deliver from time
to time to the  Trustee a  Delivery  Notice  relating  to one or more  Equipment
Notes.  After  receipt  of a  Delivery  Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery  Notice  relates
(the "APPLICABLE  DELIVERY  DATE"),  the Trustee shall (as and when specified in
the Delivery  Notice)  instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal  to the  Depositary  requesting  (A)  the  withdrawal  of one or more
Deposits on the  Applicable  Delivery Date in accordance  with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal



in the aggregate to the purchase price of such  Equipment  Notes to or on behalf
of the Owner Trustee or the Company,  as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery  Notice.  The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in  Section  2 of the  Note  Purchase  Agreement,  enter  into and  perform  its
obligations under the Participation  Agreement specified in such Delivery Notice
(the  "APPLICABLE   PARTICIPATION   Agreement")  and  cause  such  certificates,
documents  and legal  opinions  relating to the Trustee to be duly  delivered as
required by the Applicable  Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase  Agreement,  then the Trustee shall
give the Depositary  (with a copy to the Escrow Agent) a notice of  cancellation
of such Notice of Purchase  Withdrawal  relating to such  Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions  specified in
the Note Purchase  Agreement and the  Applicable  Participation  Agreement,  the
Trustee shall purchase the applicable  Equipment  Notes with the proceeds of the
withdrawals  of one or more  Deposits  made on the  Applicable  Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal  amount of such
Equipment  Notes.  Amounts  withdrawn from such Deposit or Deposits in excess of
the purchase  price of the  Equipment  Notes or to the extent not applied on the
Applicable  Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable  Delivery Date
in accordance  with the terms of the Deposit  Agreement.  The provisions of this
Section  5.01(b)  supersede  and replace the  provisions  of Section 2.02 of the
Basic Agreement (which are inapplicable to the Trust), and all provisions of the
Basic  Agreement  relating  to  Postponed  Notes and  Section  2.02 of the Basic
Agreement shall not apply to the Applicable Trust.

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable
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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.



          Section  5.02.   WITHDRAWAL  OF  DEPOSITS.   If  any  Deposits  remain
outstanding  on the  Business  Day next  succeeding  the Cut-off  Date,  (i) the
Trustee  shall give the Escrow Agent  notice that the  Trustee's  obligation  to
purchase  Equipment  Notes under the Note Purchase  Agreement has terminated and
instruct  the  Escrow  Agent to  provide  a notice  of Final  Withdrawal  to the
Depositary  substantially in the form of Exhibit B to the Deposit Agreement (the
"FINAL  WITHDRAWAL  NOTICE")  and (ii) the  Trustee  will make a demand upon the
Company  under the Note  Purchase  Agreement  for an amount equal to the Special
Redemption  Premium (if any is  payable),  such  payment to be made on the Final
Withdrawal Date.

          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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,  the Deposit Agreement,  the Note Purchase
Agreement or the Escrow  Agreement or the due execution hereof or thereof by the
Company or the other  parties  thereto  (other than the  Trustee),  or for or in
respect of the recitals and statements contained herein or therein, 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,  the Intercreditor  Agreement, the Note
Purchase  Agreement and the Escrow  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  5.04.  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,  the Escrow  Agreement  and the
     Note Documents to which it is a party and has taken all necessary action to
     authorize  the  execution,  delivery  and  performance  by it of this Trust
     Supplement,  the Escrow  Agreement and the Note  Documents to which it is a
     party;



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

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

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note
Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document".

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any  time  and  from  time to  time,  (i)  enter  into  one or more
agreements supplemental to the Escrow Agreement,  the Note Purchase Agreement or
the Deposit Agreement,  for any of the purposes set forth in clauses (1) through
(9) of such  Section  9.01,  except that (a) clause (2) and (3) of such  Section
9.01 shall be deemed to include the Company's  obligations under (in the case of
clause (2)),  and the Company's  rights and powers  conferred by (in the case of
clause (3)),  the Note Purchase  Agreement,  (b) clause (4) of such Section 9.01
shall be deemed to include  corrections  or  supplements  to  provisions  of the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement which may
be  defective or  inconsistent  with any other  provision  of this  Agreement or
contained in any agreement  referred to in such clause (4) and the curing of any
ambiguity or the  modification of any other provision with respect to matters or
questions arising under the Escrow Agreement, the Note Purchase Agreement or the
Deposit Agreement and (c) references in clauses (6) and (7) of such Section 9.01
to "any  Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to
refer to "the  Intercreditor  Agreement,  the  Liquidity  Facility,  the  Escrow
Agreement,  the Note Purchase Agreement or the Deposit Agreement" and (ii) enter
into one or more  agreements  supplemental  to this Agreement to provide for the
formation of a Class D Trust, the issuance of Class D Certificates, the purchase
by the Class D Trust of Equipment Notes and other matters  incidental thereto or
otherwise contemplated by Section 2.01(b) of the Basic Agreement.



          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in
the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.


                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the earlier of (A) the completion of
the  assignment,  transfer and discharge  described in the first sentence of the
immediately   following   paragraph  and  (B)  distribution  to  all  Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
execution of this Trust Supplement.

          Upon the earlier of (i) the first  Business Day following  January 31,
1999,  or, if later,  the fifth  Business  Day  following  the  Delivery  Period
Termination  Date and (ii) the fifth  Business Day following the date on which a
Triggering Event occurs (such date, the "TRANSFER DATE"), or, if later, the date
on which all of the conditions set forth in the immediately  following  sentence
have been  satisfied,  the  Trustee  is  hereby  directed  (subject  only to the
immediately following sentence) to, and the Company shall direct the institution
that will serve as the Related  Trustee  under the Related  Pass  Through  Trust
Agreement  to,  execute and deliver the  Assignment  and  Assumption  Agreement,
pursuant  to which the Trustee  shall  assign,  transfer  and deliver all of the
Trustee's right, title and interest to the Trust Property to the Related Trustee
under the Related  Pass  Through  Trust  Agreement.  The Trustee and the Related
Trustee shall execute and deliver the Assignment  and Assumption  Agreement upon
the satisfaction of the following conditions:



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

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

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

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

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

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

          (ii) The Trustee and the Company shall have received (x) a copy of the
     articles of incorporation and bylaws of the Related Trustee certified as of
     the  Transfer  Date  by  the  Secretary  or  Assistant  Secretary  of  such



     institution  and  (y) a  copy  of the  filing  (including  all  attachments
     thereto) made by the  institution  serving as the Related  Trustee with the
     Office of the Superintendent,  State of New York Banking Department for the
     qualification  of the Related  Trustee under Section 131(3) of the New York
     Banking Law.

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

          In connection with the occurrence of the event set forth in clause (B)
above,  notice of such termination,  specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein
specified.  The Trustee shall give such notice to the Registrar at the time such
notice  is  given  to  Applicable  Certificateholders.   Upon  presentation  and
surrender of the Applicable  Certificates  in accordance  with such notice,  the
Trustee  shall cause to be  distributed  to Applicable  Certificateholders  such
final payments.

          In the event that all of the Applicable  Certificateholders  shall not
surrender their Applicable Certificates for cancellation within six months after
the date specified in the above-mentioned written notice, the Trustee shall give



a second  written  notice  to the  remaining  Applicable  Certificateholders  to
surrender their  Applicable  Certificates for cancellation and receive the final
distribution  with respect thereto.  No additional  interest shall accrue on the
Applicable  Certificates  after the  Distribution  Date  specified  in the first
written notice.  In the event that any money held by the Trustee for the payment
of distributions on the Applicable  Certificates  shall remain unclaimed for two
years (or such lesser time as the Trustee shall be satisfied,  after sixty days'
notice from the Company, is one month prior to the escheat period provided under
applicable  law) after the final  distribution  date with respect  thereto,  the
Trustee shall pay to each Loan Trustee the appropriate  amount of money relating
to such Loan Trustee and shall give written  notice thereof to the related Owner
Trustees, the Owner Participants and the Company.

          (b) The  provisions  of this  Section 7.01  supersede  and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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 8.02.  GOVERNING  LAW. THIS  AGREEMENT AND, UNTIL THE TRANSFER
DATE,  THE  APPLICABLE  CERTIFICATES  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  THIS SECTION 8.02 SUPERSEDES
AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT.

          Section 8.03. 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 8.04. 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 1998-1B-O

     6.748% Continental Airlines Pass Through Certificate, Series
                                   1998-1B-O
                        Issuance Date: February 20, 1998

                     Final Maturity Date: September 15, 2018

          Evidencing A Fractional Undivided Interest In The Continental Airlines
          Pass Through Trust  1998-1B-O,  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  0.000665022%
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 1998-1B-O (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

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



corporation (the  "COMPANY"),  as supplemented by Trust Supplement No. 1998-1B-O
thereto,  dated as of February 20, 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 "6.748%  Continental  Airlines Pass
Through Certificates, Series 1998-1B-O" (herein called the "CERTIFICATES"). This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the 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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "TRANSFER"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.



          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE



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

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

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


                                             CONTINENTAL AIRLINES PASS
                                               THROUGH TRUST 1998-1B-O


                                             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]


                                    EXHIBIT C
                                    ---------


                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
                 Continental Airlines Pass Through Trust 1998-1B

          ASSIGNMENT AND ASSUMPTION  AGREEMENT,  dated  ____________,  199_ (the
"ASSIGNMENT  AGREEMENT"),  between  Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
September  25,  1997 (as  amended  or  modified  from time to time,  the  "BASIC
AGREEMENT"),  as  supplemented  by the  Trust  Supplement  No.  1998-1B-O  dated
February 20, 1998 (the "TRUST SUPPLEMENT" and together with the Basic Agreement,
the  "AGREEMENT")  in respect of the  Continental  Airlines  Pass Through  Trust
1998-1B-O (the  "ASSIGNOR"),  and Wilmington  Trust Company,  a Delaware banking
corporation, not in its individual capacity except as expressly provided herein,
but solely as trustee  under the Basic  Agreement as  supplemented  by the Trust
Supplement No.  1998-1B-S  dated February 20, 1998 (the "NEW  SUPPLEMENT",  and,
together  with the Basic  Agreement,  the "NEW  AGREEMENT")  in  respect  of the
Continental Airlines Pass Through Trust 1998-1B-S (the "ASSIGNEE").

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

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

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

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

          1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer
and set over unto the  Assignee as of the  Transfer  Date all of its present and
future  right,  title  and  interest  in,  under and with  respect  to the Trust



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

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

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

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

          5. FURTHER  ASSURANCES.  The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further  instruments and documents and take such further action
as the  Assignee  may  reasonably  request to obtain the full  benefits  of this
Assignment  Agreement and of the right and powers herein  granted.  The Assignor
agrees to deliver any Applicable  Certificates,  and all Trust Property, if any,
then in the physical possession of the Assignor, to the Assignee.



          6.  REPRESENTATIONS  AND WARRANTIES.  (a) The Assignee  represents and
warrants to the Assignor and each of the Beneficiaries that:

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

          (ii) on and as of the date hereof, the  representations and warranties
     of the  Assignee  set  forth in  Section  7.15 of the Basic  Agreement  and
     Section 5.04 of the New Supplement are true and correct.

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

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

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

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

          7. GOVERNING LAW. THIS  ASSIGNMENT  AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

          8.  COUNTERPARTS.  This  Assignment  Agreement  may be executed in any
number  of  counterparts,  all of  which  together  shall  constitute  a  single



instrument.  It shall not be necessary  that any  counterpart  be signed by both
parties so long as each party shall sign at least one counterpart.

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

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

                                             ASSIGNOR:
                                               WILMINGTON TRUST COMPANY,  not in
                                               its individual capacity except as
                                               expressly  provided  herein,  but
                                               solely as trustee  under the Pass
                                               Through Trust Agreement and Trust
                                               Supplement   in  respect  of  the
                                               Continental Airlines Pass Through
                                               Trust 1998-1B-O


                                             By:________________________________
                                                Title:

                                             ASSIGNEE:
                                             WILMINGTON  TRUST  COMPANY,
                                               not  in its  individual  capacity
                                               except  as   expressly   provided
                                               herein,  but  solely  as  trustee
                                               under  the  Pass  Through   Trust
                                               Agreement and Trust Supplement in
                                               respect   of   the    Continental
                                               Airlines   Pass   Through   Trust
                                               1998-1B-S


                                             By:________________________________
                                                Title:



                                   Schedule I


                         Schedule of Assigned Documents

          (1)  Intercreditor  Agreement  dated as of February 20, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any,  relating to the Certificates  issued under (and as defined in) each of the
Other Agreements and the Subordination Agent.

          (2) Escrow and Paying Agent  Agreement  (Class B) dated as of February
20, 1998 among the Escrow Agent,  the  Underwriters,  the Trustee and the Paying
Agent.

          (3) Note  Purchase  Agreement  dated as of February 20, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary,  the Escrow Agent, the
Paying Agent and the Subordination Agent.

          (4) Deposit  Agreement (Class B) dated as of February 20, 1998 between
the Escrow Agent and the Depositary.

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




                                   Schedule II


                            Schedule of Beneficiaries

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

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

AIG Matched Funding Corp., as Liquidity Providers

Continental Airlines, Inc.

Credit Suisse First Boston Corporation, as Underwriter

Morgan Stanley & Co. Incorporated, as Underwriter

Chase Securities Inc., as Underwriter

First Security Bank, National Association, as Escrow Agent

Each of the other parties to the Assigned Documents



                         TRUST SUPPLEMENT No. 1998-1B-S

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $150,371,000

                Continental Airlines Pass Through Trust 1998-1B-S
                           6.748% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1B-S



          This Trust  Supplement  No.  1998-1B-S,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

          WHEREAS,  as of the Transfer Date (as defined below), the Company will
have financed the  acquisition  of all or a portion of such Aircraft  either (i)
through separate leveraged lease transactions,  in which case the Company leases
such Aircraft  (collectively,  the "LEASED  AIRCRAFT") or (ii) through  separate
secured  loan  transactions,  in  which  case the  Company  owns  such  Aircraft
(collectively, the "OWNED AIRCRAFT");

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

          WHEREAS,  as of the Transfer Date, in the case of each Owned Aircraft,
the Company  will have issued  pursuant to an  Indenture,  on a recourse  basis,
Equipment  Notes to  finance  a  portion  of the  purchase  price of such  Owned
Aircraft;

          WHEREAS,  as of the Transfer  Date,  the Related  Trustee will assign,
transfer  and deliver all of such  trustee's  right,  title and  interest to the
trust  property  held by the  Related  Trustee to the  Trustee  pursuant  to the
Assignment and Assumption Agreement (as defined below);

          WHEREAS,  the  Trustee,   effective  only,  but  automatically,   upon
execution  and delivery of the  Assignment  and  Assumption  Agreement,  will be
deemed to have  declared the creation of the  Continental  Airlines Pass Through
Trust  1998-1B-S  (the  "APPLICABLE  TRUST") for the  benefit of the  Applicable



Certificateholders, and each Holder of Applicable Certificates outstanding as of
the Transfer Date, as the grantors of the Applicable  Trust, by their respective
acceptances of such Applicable  Certificates,  will join in the creation of this
Applicable Trust with the Trustee;

          WHEREAS,  all Applicable  Certificates deemed 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  except for those  Applicable  Certificates  to which an
Escrow Receipt (as defined below) has been affixed;

          WHEREAS,  upon  the  execution  and  delivery  of the  Assignment  and
Assumption Agreement,  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.  The Applicable  Certificates shall be
known  as  "6.748%  Continental  Airlines  Pass  Through  Certificates,   Series
1998-1B-S".  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 initially  deemed issued under the Agreement shall be equal to the
     aggregate  principal  amount of  "Outstanding"  pass  through  certificates
     representing  fractional  undivided  interests in the Related  Trust on the
     Transfer Date.

          (b) The  Regular  Distribution  Dates with  respect to any  payment of
     Scheduled Payments means March 15 and September 15 of each year, commencing



     on March 15, 1998,  until  payment of all of the  Scheduled  Payments to be
     made under the Equipment Notes has been made.

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
     Trustee shall affix the  corresponding  Escrow  Receipt to each  Applicable
     Certificate.  In any event,  any  transfer or  exchange  of any  Applicable
     Certificate  shall also effect a transfer or exchange of the related Escrow
     Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
     Applicable  Certificate shall be permitted unless the corresponding  Escrow
     Receipt is attached  thereto and also is so  transferred  or exchanged.  By
     acceptance  of any  Applicable  Certificate  to which an Escrow  Receipt is
     attached,  each Holder of such an Applicable  Certificate  acknowledges and
     accepts the restrictions on transfer of the Escrow Receipt set forth herein
     and in the Escrow Agreement.

          (e) (i) The Applicable  Certificates  shall be in the form attached as
     Exhibit  A  to  the  Related  Pass  Through  Trust  Supplement,  with  such
     appropriate  insertions,  omissions,  substitutions and other variations as
     are required or permitted  by the Related Pass Through  Trust  Agreement or
     this Agreement, as the case may be, or as the Trustee may deem appropriate,
     to reflect the fact that the Applicable Certificates are being issued under
     the Agreement as opposed to under the Related Pass Through Trust Agreement.
     Any  Person  acquiring  or  accepting  an  Applicable  Certificate,  by its
     acceptance of such Applicable  Certificate or an interest  therein will, by
     such  acquisition or acceptance,  be deemed to represent and warrant 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 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 as
     Exhibit B to the Related Pass Through Trust Supplement.

          (f) The  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement, the Deposit Agreement and the Escrow Agreement.

          (g) The  Applicable  Certificates  are entitled to the benefits of the
     Liquidity Facilities.

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement,"  for
     purposes of clause (3) of Section 7.07 of the Basic  Agreement  are Section
     8.1 (with  respect to Owned  Aircraft)  and  Section  9.1 (with  respect to
     Leased Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust,  and the related  Aircraft and Note Documents,  are described in the
     Note Purchase 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:  Means the Basic  Agreement,  as supplemented by this Trust
     Supplement.

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

          APPLICABLE  CERTIFICATE:  Means any of the  "Applicable  Certificates"
     issued by the Related Trust and that are  "Outstanding"  (as defined in the
     Related  Pass  Through  Trust  Agreement)  as of  the  Transfer  Date  (the
     "TRANSFER DATE  CERTIFICATES")  and any Applicable  Certificates  issued in
     exchange therefor or replacement thereof pursuant to this Agreement.



          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.

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
     assumption agreement  substantially in the form of Exhibit C to the Related
     Pass Through Trust  Supplement  executed and  delivered in accordance  with
     Section 7.01 of the Related Trust Supplement.

          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.

          CLASS D  CERTIFICATEHOLDERS:  Has the  meaning  specified  in  Section
     4.01(a)(iii) of this Trust Supplement.

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

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
     Agreement.

          DELIVERY  PERIOD  TERMINATION  DATE: Has the meaning  specified in the
     Related Pass Through Trust Supplement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
     20, 1998 relating to the Applicable Certificates between the Depositary and
     the Escrow  Agent,  as the same may be amended,  supplemented  or otherwise
     modified from time to time in accordance with its terms.

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




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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
     of February 20, 1998  relating to the  Applicable  Certificates,  among the
     Escrow Agent,  the Escrow Paying Agent,  the Related Trustee (and after the
     Transfer  Date,  the  Trustee)  and the  Underwriters,  as the  same may be
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
     Escrow Agreement.

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

          FINAL MATURITY DATE: Means September 15, 2018.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
     Agreement.

          INDENTURE:  Means each of the separate trust  indentures and mortgages
     relating to the  Aircraft,  each as  specified  or  described in a Delivery
     Notice  delivered  pursuant to the Note  Purchase  Agreement or the related
     Participation  Agreement,  in  each  case  as  the  same  may  be  amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees),  the Liquidity Providers, the liquidity providers relating
     to the  Certificates  issued  under (and as defined in) each of the Related
     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.



          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
     beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
     this Trust Supplement.

          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of February  20, 1998  relating  to the  Applicable  Certificates,
     between  the  Liquidity  Provider  and  Wilmington  Trust  Company,  as the
     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,  AIG Matched Funding Corp., a
     Delaware corporation, and any replacements or successors therefor appointed
     in accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
     Applicable  Certificates  and, with respect to such any Equipment Note, (i)
     the Indenture and the  Participation  Agreement  relating to such Equipment
     Note,  and  (ii) in the  case of any  Equipment  Note  related  to a Leased
     Aircraft, the Lease relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent and
     the  Subordination  Agent,  as the same  may be  amended,  supplemented  or
     otherwise modified from time to time, in accordance with its terms.



          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
     Trust   Supplement  No.   1998-1A-S  dated  the  date  hereof  relating  to
     Continental  Airlines  Pass  Through  Trust  1998-1A-S  and (ii) the  Basic
     Agreement as supplemented by Trust  Supplement No. 1998-1C-S dated the date
     hereof relating to Continental Airlines Pass Through Trust 1998-1C-S.

          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
     1998-1A-S and Continental Airlines Pass Through Trust 1998-1C-S, created by
     the Other Pass Through Trust Agreements.

          OUTSTANDING: When used with respect to Applicable Certificates, means,
     as of the date of determination,  all Transfer Date  Certificates,  and all
     other Applicable Certificates theretofore authenticated and delivered under
     this Agreement, in each case except:

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

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

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

          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
     Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          OWNER  PARTICIPANT:  With respect to any Equipment  Note relating to a
     Leased  Aircraft,  means the  "Owner  Participant"  as  referred  to in the
     Indenture pursuant to which such Equipment Note is issued and any permitted



     successor or assign of such Owner  Participant;  and OWNER  PARTICIPANTS at
     any time of determination means all of the Owner Participants thus referred
     to in the Indentures.

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

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

          POOL BALANCE:  Means, as of any date, (i) the original  aggregate face
     amount of the  "Applicable  Certificates"  as defined in the  Related  Pass
     Through Trust  Agreement,  less (ii) the  aggregate  amount of all payments
     made in respect of such  Certificates  or in respect of Deposits other than
     payments made in respect of interest or premium thereon or reimbursement of
     any costs or expenses incurred in connection therewith. The Pool Balance as
     of any  Distribution  Date shall be  computed  after  giving  effect to any
     special distribution with respect to unused Deposits,  payment of principal
     on the Equipment Notes or payments with respect to other Trust Property and
     the distribution thereof to be made on that date.

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
     to the seventh  decimal place) computed by dividing (i) the Pool Balance by
     (ii) the original aggregate face amount of the "Applicable Certificates" as
     defined in the Related Pass Through Trust Agreement.  The Pool Factor as of
     any Distribution  Date shall be computed after giving effect to any special
     distribution  with respect to unused Deposits,  payment of principal on the
     Equipment  Notes or payments  with respect to other Trust  Property and the
     distribution thereof to be made on that date.

          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
     11, 1998 relating to the offering of the Certificates.

          RELATED  OTHER  PASS  THROUGH  TRUST  AGREEMENTS:   Means  the  "Other
     Agreements" as defined in the Related Pass Through Trust Agreement.



          RELATED OTHER TRUSTEES:  Means the "Other  Trustees" as defined in the
     Related Pass Through Trust Agreement.

          RELATED  OTHER  TRUSTS:  Means the  "Other  Trusts"  as defined in the
     Related Pass Through Trust Agreement.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
     supplemented  by the Trust  Supplement No.  1998-1B-O dated the date hereof
     (the "RELATED PASS THROUGH TRUST SUPPLEMENT"),  relating to the Continental
     Airlines Pass Through  Trust  1998-1B-O and entered into by the Company and
     the Trustee,  as amended,  supplemented or otherwise  modified from time to
     time in accordance with its terms.

          RELATED TRUST:  Means the  Continental  Pass Through Trust  1998-1B-O,
     formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
     Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
     in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
     Agreement.

          TRANSFER  DATE:  Means the moment of  execution  and  delivery  of the
     Assignment and Assumption Agreement by each of the parties thereto.

          TRANSFER  DATE   CERTIFICATES:   Has  the  meaning  specified  in  the
     definition of "Applicable Certificates".

          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
     Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
     Equipment Notes held as the property of the Applicable Trust, all monies at
     any time paid thereon and all monies due and to become due thereunder, (ii)
     funds  from  time to time  deposited  in the  Certificate  Account  and the
     Special Payments Account and, subject to the Intercreditor  Agreement,  any



     proceeds  from the sale by the Trustee  pursuant to Article VI of the Basic
     Agreement of any  Equipment  Note and (iii) all rights of the Trust and the
     Trustee,  on  behalf  of the  Applicable  Trust,  under  the  Intercreditor
     Agreement,  the  Escrow  Agreement,  the Note  Purchase  Agreement  and the
     Liquidity Facilities,  including, without limitation, all rights to receive
     certain payments  thereunder,  and all monies paid to the Trustee on behalf
     of the  Applicable  Trust  pursuant to the  Intercreditor  Agreement or the
     Liquidity Facilities,  PROVIDED that rights with respect to the Deposits or
     under the Escrow Agreement, will not constitute Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
     Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
     February 11, 1998 among the  Underwriters,  the Company and the Depositary,
     as the same may be amended, supplemented or otherwise modified from time to
     time in accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
     Basic Agreement following the fourth sentence thereof:

               In the event of the  payment of a Special  Redemption  Premium by
          the  Company to the Trustee  under the Note  Purchase  Agreement,  the
          notice provided for in this Section 4.02(c) shall be mailed,  together
          with the notice by the Escrow  Paying Agent under  Section 2.06 of the
          Escrow  Agreement,  not  less  than  15  days  prior  to  the  Special
          Distribution  Date for such amount,  which Special  Distribution  Date
          shall be the Final Withdrawal Date.

          (b) The  following  sentence  shall  replace in its  entirety the last
     sentence of the first paragraph of Section 4.02(c) of the Basic Agreement:



               If the amount of (i) premium, if any, payable upon the redemption
          or  purchase  of an  Equipment  Note or (ii)  the  Special  Redemption
          Premium,  if any, has not been calculated at the time that the Trustee
          mails  notice  of a Special  Payment,  it shall be  sufficient  if the
          notice sets forth the other amounts to be distributed  and states that
          any premium received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

          With respect to the Applicable  Certificates registered in the name of
a Clearing  Agency,  on the Record  Date prior to each  Distribution  Date,  the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on
such Record Date. On each Distribution  Date, the Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make



available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

          (b) Within a reasonable  period of time after the end of each calendar
year but not later than the latest date  permitted  by law,  the  Trustee  shall
furnish  to each  Person  who at any  time  during  such  calendar  year  was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and
(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following  (i) the Transfer  Date, if there has been any
change in the  information set forth in clauses (x), (y) and (z) below from that
set  forth  in page  S-52 of the  Prospectus  Supplement,  and  (ii)  any  early
redemption  or  purchase  of, or any  default  in the  payment of  principal  or
interest in respect of, any of the Equipment Notes held in the Applicable Trust,
or any Final  Withdrawal,  the Trustee  shall furnish to  Certificateholders  of
record on such date a statement setting forth (x) the expected Pool Balances for
each  subsequent  Regular   Distribution  Date  following  the  Delivery  Period
Termination  Date,  (y) the related Pool  Factors for such Regular  Distribution
Dates and (z) the  expected  principal  distribution  schedule of the  Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice. With
respect  to the  Applicable  Certificates  registered  in the name of a Clearing
Agency, on the Transfer Date, the Trustee will request from such Clearing Agency
a securities  position  listing  setting forth the names of all Clearing  Agency
Participants  reflected on such Clearing  Agency's books as holding interests in
the  "Applicable  Certificates"  (as defined in the Related Pass  Through  Trust
Agreement)  on such date.  The Trustee  will mail to each such  Clearing  Agency
Participant  the statement  described  above and will make available  additional
copies as  requested by such  Clearing  Agency  Participant  for  forwarding  to
holders of interests in the Applicable Certificates.



          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
Basic Agreement.


                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 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 4.01(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,

          (i) 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 4.01(b); and

          (ii)   each   holder   of  a  Class  D   Certificate   (a   "CLASS   D
     CERTIFICATEHOLDER")  shall have the right  (which shall not expire upon any
     purchase  of the Class A  Certificates  pursuant to clause (a) above or any
     purchase  of the  Applicable  Certificates  and the  Class  A  Certificates
     pursuant  to clause (i) above) to purchase  all,  but not less than all, of
     the  Applicable  Certificates,  the  Class A  Certificates  and the Class C
     Certificates  upon ten days'  written  notice to the  Trustee,  the Class A
     Trustee,  the Class C Trustee  and each  other  Class D  Certificateholder,
     PROVIDED  that (A) if prior to the end of such  ten-day  period  any  other
     Class   D    Certificateholder    notifies   such   purchasing    Class   D
     Certificateholder  that  such  other  Class D  Certificateholder  wants  to
     participate in such purchase, then such other Class D Certificateholder may
     join with the purchasing Class D Certificateholder to purchase all, but not
     less than all, of the Applicable Certificates, the Class A Certificates and
     the  Class C  Certificates  pro  rata  based  on the  Fractional  Undivided
     Interest  in the Class D Trust held by each such Class D  Certificateholder
     and (B) if  prior  to the end of such  ten-day  period  any  other  Class D
     Certificateholder  fails to notify the purchasing Class D Certificateholder
     of such other Class D  Certificateholder's  desire to participate in such a
     purchase, then such other Class D Certificateholder shall lose its right to
     purchase the Applicable Certificates pursuant to this Section 4.01(b).

          The purchase price with respect to the Applicable  Certificates  shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;  PROVIDED,  HOWEVER,  that (i) if such  purchase  occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate  amount of unused  Deposits and
interest to be distributed  under the Escrow  Agreement  (which deducted amounts



shall  remain   distributable  to,  and  may  be  retained  by,  the  Applicable
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record  Date,  such  purchase  price  shall be  reduced  by the  amount  to be
distributed  under  this  Agreement  on the  related  Distribution  Date  (which
deducted  amounts  shall  remain  distributable  to, and may be retained by, the
Applicable  Certificateholder as of such Record Date);  PROVIDED FURTHER that no
such  purchase  of  Applicable   Certificates  shall  be  effective  unless  the
purchaser(s)  shall  certify to the  Trustee  that  contemporaneously  with such
purchase,  such  purchaser(s)  is  purchasing,  pursuant  to the  terms  of this
Agreement and the Other  Agreements,  the Applicable  Certificates,  the Class A
Certificates  and the Class C  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be
subject to the terms of this Section 4.01(b). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  C
Certificateholder(s) or Class D Certificateholder(s), as the case may be, of the
purchase  price set forth in the first  sentence  of this  paragraph,  forthwith
sell, assign, transfer and convey to the purchaser(s) thereof (without recourse,
representation  or  warranty  of any kind  except for its own acts),  all of the
right, title,  interest and obligation of such Applicable  Certificateholder  in
this Agreement,  the Escrow Agreement,  the Deposit Agreement, the Intercreditor
Agreement,  the Liquidity  Facilities,  the Note  Documents  and all  Applicable
Certificates  and  Escrow  Receipts  held by such  Applicable  Certificateholder
(subject to clauses (i) and (ii) in the first  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  purchaser   shall  assume  all  of  such   Applicable
Certificateholder's  obligations under this Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor  Agreement,  the Liquidity Facilities,  the
Note Documents and all such Applicable  Certificates  and Escrow  Receipts.  The
Applicable  Certificates  will be deemed to be  purchased on the date payment of
the  purchase  price  is made  notwithstanding  the  failure  of the  Applicable
Certificateholders  to deliver  any  Applicable  Certificates  and,  upon such a
purchase,  (i) the only rights of the Applicable  Certificateholders  will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable  Certificates  and (ii) if the  purchaser(s)  shall so
request, such Applicable  Certificateholder  will comply with all the provisions



of Section 3.04 of the Basic Agreement to enable new Applicable  Certificates to
be  issued to the  purchaser  in such  denominations  as it shall  request.  All
charges  and  expenses  in  connection   with  the  issuance  of  any  such  new
Certificates shall be borne by the purchaser thereof.

          As used in this Section 4.01 and  elsewhere in this Trust  Supplement,
the terms "Class A Certificate",  "Class A Trust Agreement",  "Class A Trustee",
"Class C Certificate",  "Class C  Certificateholder",  "Class C Trust", "Class C
Trustee",  "Class D Certificate" and "Class D Trust",  shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.

          (c) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.


                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01. ACQUISITION OF TRUST PROPERTY. (a) The Trustee is hereby
irrevocably  authorized  and directed to execute and deliver the  Assignment and
Assumption  Agreement on the date  specified in Section 7.01 of the Related Pass
Through Trust Supplement, subject only to the satisfaction of the conditions set
forth in said Section  7.01.  This  Agreement  (except only for the  immediately
preceding  sentence  hereof,  which is  effective  upon  execution  and delivery
hereof) shall become effective upon the execution and delivery of the Assignment
and Assumption  Agreement by the Trustee and the Related Trustee,  automatically
and without any further  signature  or action on the part of the Company and the
Trustee,  and shall thereupon constitute the legal, valid and binding obligation
of the  parties  hereto  enforceable  against  each  of the  parties  hereto  in
accordance  with its terms.  Upon such  execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated,  the Applicable
Certificateholders shall receive beneficial interests in the Applicable Trust in
exchange  for their  interests  in the Related  Trust equal to their  respective
beneficial  interests in the Related Trust and the  "Outstanding" (as defined in
the Related Pass Through Trust Agreement) pass through certificates representing
fractional  undivided  interests  in the  Related  Trust shall be deemed for all
purposes of this Agreement,  without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests  in the Trust and Trust  Property.  By  acceptance  of its  Applicable
Certificate,  each  Applicable  Certificateholder  consents to and ratifies such
assignment,  transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution  and delivery of the  Assignment  and  Assumption



Agreement.  The  provisions  of this Section  5.01(a)  supersede and replace the
provisions of Section 2.02 of the Basic Agreement (which are inapplicable to the
Trust), and all provisions of the Basic Agreement relating to Postponed Notes or
Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.

          (b) The Trustee, upon the execution and delivery of the Assignment and
Assumption  Agreement,  acknowledges  its  acceptance  of all  right,  title and
interest in and to the Trust  Property and declares  that the Trustee  holds and
will hold such right, title and interest for the benefit of all then present and
future  Applicable  Certificateholders,  upon the trusts herein and in the Basic
Agreement set forth. By the acceptance of each Applicable  Certificate issued to
it under the Related Pass Through  Trust  Agreement and deemed issued under this
Agreement,  each  Holder of any such  Applicable  Certificate  as grantor of the
Applicable Trust thereby joins in the creation and declaration of the Applicable
Trust.  The  provisions  of this  Section  5.01(b)  supersede  and  replace  the
provisions of Section 2.03 of the Basic Agreement (which are inapplicable to the
Trust).

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable
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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.

          Section 5.02. [Intentionally Omitted]

          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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,  the Deposit Agreement,  the Note Purchase
Agreement or the Escrow  Agreement or the due execution hereof or thereof by the
Company or the other  parties  thereto  (other than the  Trustee),  or for or in
respect of the recitals and statements contained herein or therein, 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,  the Intercreditor  Agreement, the Note
Purchase  Agreement and the Escrow  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  5.04.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants, on the Transfer Date, that:

          (a) the Trustee has full power,  authority  and legal right to receive
     the Trust Property assigned by the Related Trustee,  assume the obligations
     under,  and perform,  the Assignment and Assumption  Agreement,  this Trust
     Supplement,  the Intercreditor Agreement, the Escrow Agreement and the Note
     Documents  and has taken all  necessary  action to authorize  such receipt,
     assumption   and   performance  by  it  of  this  Trust   Supplement,   the
     Intercreditor  Agreement,  the Escrow  Agreement and the Note  Documents to
     which it is a party;

          (b) the  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents (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  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents 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) The Assignment and Assumption Agreement has been duly executed and
     delivered  by the  Trustee  and this Trust  Supplement,  the  Intercreditor
     Agreement,  the Escrow  Agreement and the Note Documents have been, or will
     be,  as  applicable,  duly  executed  and  delivered  by  the  Trustee  and
     constitute, or will constitute, as applicable, the legal, valid and binding
     agreements of the Trustee,  enforceable against it in accordance with their
     respective terms; PROVIDED,  however, that enforceability may be limited by
     (i)  applicable  bankruptcy,  insolvency,  reorganization,   moratorium  or
     similar laws  affecting the rights of creditors  generally and (ii) general
     principles of equity.

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note
Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document."

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,



under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any  time  and  from  time to  time,  (i)  enter  into  one or more
agreements supplemental to the Escrow Agreement,  the Note Purchase Agreement or
the Deposit Agreement,  for any of the purposes set forth in clauses (1) through
(9) of such  Section  9.01,  except that (a) clause (2) and (3) of such  Section
9.01 shall be deemed to include the Company's  obligations under (in the case of
clause (2)),  and the Company's  rights and powers  conferred by (in the case of
clause (3)),  the Note Purchase  Agreement,  (b) clause (4) of such Section 9.01
shall be deemed to include  corrections  or  supplements  to  provisions  of the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement which may
be  defective or  inconsistent  with any other  provision  of this  Agreement or
contained in any agreement  referred to in such clause (4) and the curing of any
ambiguity or the  modification of any other provision with respect to matters or
questions arising under the Escrow Agreement, the Note Purchase Agreement or the
Deposit Agreement and (c) references in clauses (6) and (7) of such Section 9.01
to "any  Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to
refer to "the  Intercreditor  Agreement,  the  Liquidity  Facility,  the  Escrow
Agreement,  the Note Purchase Agreement or the Deposit Agreement" and (ii) enter
into one or more  agreements  supplemental  to this Agreement to provide for the
formation of a Class D Trust, the issuance of Class D Certificates, the purchase
by the Class D Trust of the Equipment Notes and other matters  incident  thereto
or otherwise contemplated by Section 2.01(b) of the Basic Agreement.

          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in
the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.



                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the  distribution  to all Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
earliest execution of this Trust Supplement.

          Notice of any termination, specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein
specified.  The Trustee shall give such notice to the Registrar at the time such
notice  is  given  to  Applicable  Certificateholders.   Upon  presentation  and
surrender of the Applicable  Certificates  in accordance  with such notice,  the
Trustee  shall cause to be  distributed  to Applicable  Certificateholders  such
final payments.

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



applicable  law) after the final  distribution  date with respect  thereto,  the
Trustee shall pay to each Loan Trustee the appropriate  amount of money relating
to such Loan Trustee and shall give written  notice thereof to the related Owner
Trustees, the Owner Participants and the Company.

          (b) The  provisions of this Section 7.01  supersedes  and replaces the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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  8.02.  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. THIS SECTION 8.02  SUPERSEDES AND REPLACES  SECTION 12.05
OF THE BASIC AGREEMENT.

          Section 8.03. 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 8.04. 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 this  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: 


                         TRUST SUPPLEMENT No. 1998-1C-O

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $136,542,000

                Continental Airlines Pass Through Trust 1998-1C-O
                           6.541% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1C-O



          This Trust  Supplement  No.  1998-1C-O,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

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

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

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

          WHEREAS,  the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-1C-O (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  except  for those  Certificates  to which an Escrow  Receipt  has been
affixed;

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

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

          WHEREAS,  pursuant to the terms and conditions of the Basic  Agreement
as supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement,  upon or shortly  following  delivery of an Aircraft,  the Trustee on
behalf  of  the  Applicable  Trust,  using  funds  withdrawn  under  the  Escrow
Agreement,  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 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
"6.541%  Continental  Airlines  Pass  Through  Certificates,  Series  1998-1C-O"
(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 $136,542,000.

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

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
     Trustee shall affix the  corresponding  Escrow  Receipt to each  Applicable
     Certificate.  In any event,  any  transfer or  exchange  of any  Applicable
     Certificate  shall also effect a transfer or exchange of the related Escrow
     Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
     Applicable  Certificate shall be permitted unless the corresponding  Escrow
     Receipt is attached  thereto and also is so  transferred  or exchanged.  By
     acceptance  of any  Applicable  Certificate  to which an Escrow  Receipt is
     attached,  each Holder of such an Applicable  Certificate  acknowledges and
     accepts the restrictions on transfer of the Escrow Receipt set forth herein
     and in the Escrow 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 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 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  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement, the Deposit Agreement, and the Escrow Agreement.

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

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement",  for
     purposes of clause (3) of Section 7.07 of the Basic Agreement,  are Section
     8.1 (with  respect to Owned  Aircraft)  and  Section  9.1 (with  respect to
     Leased Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust,  and the related  Aircraft and Note Documents,  are described in the
     Note Purchase 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:  Means each of the New  Aircraft or  Substitute  Aircraft in
     respect of which a  Participation  Agreement is entered into in  accordance
     with the Note Purchase Agreement.

          AIRCRAFT  PURCHASE  AGREEMENT:  Has the meaning  specified in the Note
     Purchase Agreement.

          APPLICABLE  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 DELIVERY DATE: Has the meaning specified in Section 5.01(b)
     of this Trust Supplement.

          APPLICABLE  PARTICIPATION  AGREEMENT:  Has the  meaning  specified  in
     Section 5.01(b) of this Trust Supplement.

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

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
     assumption agreement substantially in the form of Exhibit C hereto executed
     and delivered in accordance with Section 7.01 of this Trust Supplement.

          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.

          CLASS  D  CERTIFICATEHOLDER:  Has the  meaning  specified  in  Section
     4.01(a)(iii) of this Trust Supplement.

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



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

          DELIVERY  DATE:  Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
     Agreement.

          DELIVERY PERIOD TERMINATION DATE: Means the earlier of (a) January 31,
     1999,  or, if the Equipment  Notes  relating to all of the New Aircraft (or
     Substitute  Aircraft  in lieu  thereof)  have  not  been  purchased  by the
     Applicable  Trust and the Other  Trusts on or prior to such date due to any
     reason  beyond  the  control  of the  Company  and  not  occasioned  by the
     Company's  fault or negligence,  June 30, 1999  (PROVIDED  that, if a labor
     strike  occurs  at  Boeing  on or prior  to  either  or both of such  dates
     referred  to in this  clause (a),  such date or dates on or  following  the
     commencement  of such strike shall be extended by adding thereto the number
     of days that such  strike  continued  in effect)  and (b) the date on which
     Equipment  Notes  issued  with  respect  to  all of the  New  Aircraft  (or
     Substitute  Aircraft in lieu thereof) have been purchased by the Applicable
     Trust and the Other Trusts in accordance with the Note Purchase Agreement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
     20, 1998 relating to the Applicable Certificates between the Depositary and
     the Escrow  Agent,  as the same may be amended,  supplemented  or otherwise
     modified from time to time in accordance with its terms.

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

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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
     of February 20, 1998  relating to the  Applicable  Certificates,  among the
     Escrow Agent, the Escrow Paying Agent, the Trustee and Underwriters, as the



     same may be amended,  supplemented or otherwise  modified from time to time
     in accordance with its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
     Escrow Agreement.

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

          FINAL MATURITY DATE: Means September 15, 2009.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
     Agreement.

          FINAL WITHDRAWAL  NOTICE: Has the meaning specified in Section 5.02 of
     this Trust Supplement.

          INDENTURE:  Means each of the separate trust  indentures and mortgages
     relating to the  Aircraft,  each as  specified  or  described in a Delivery
     Notice  delivered  pursuant to the Note  Purchase  Agreement or the related
     Participation  Agreement,  in  each  case  as  the  same  may  be  amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     February  20, 1998 among the Trustee,  the Other  Trustees,  the  Liquidity
     Providers,  the liquidity  providers  relating to the  Certificates  issued
     under  (and as defined  in) each of the Other  Agreements,  and  Wilmington
     Trust  Company,  as  Subordination  Agent  and as  trustee  thereunder,  as
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms.

          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
     beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
     this Trust Supplement.



          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of February  20, 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,  AIG Matched Funding Corp., a
     Delaware corporation, and any replacements or successors therefor appointed
     in accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
     Applicable  Certificates  and, with respect to any such Equipment Note, (i)
     the Indenture and the  Participation  Agreement  relating to such Equipment
     Note,  and  (ii) in the  case of any  Equipment  Note  related  to a Leased
     Aircraft, the Lease relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
     February 20, 1998 among the Trustee,  the Other Trustees,  the Company, the
     Escrow  Agent,  the  Escrow  Paying  Agent  and  the  Subordination  Agent,
     providing for, among other things,  the purchase of Equipment  Notes by the
     Trustee on behalf of the Trust, as the same may be amended, supplemented or
     otherwise modified from time to time, in accordance with its terms.

          NOTICE  OF  PURCHASE  WITHDRAWAL:  Has the  meaning  specified  in the
     Deposit Agreement.

          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
     Trust   Supplement  No.   1998-1A-O  dated  the  date  hereof  relating  to
     Continental  Airlines  Pass  Through  Trust  1998-1A-O  and (ii) the  Basic
     Agreement as supplemented by Trust  Supplement No. 1998-1B-O dated the date
     hereof relating to Continental Airlines Pass Through Trust 1998-1B-O.



          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
     1998-1A-O and the Continental  Airlines Pass Through Trust 1998-1B-O,  each
     created on the date hereof.

          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
     Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

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

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

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

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

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
     to the seventh  decimal place) computed by dividing (i) the Pool Balance by



     (ii) the original aggregate face amount of the Applicable Certificates. The
     Pool  Factor as of any  Distribution  Date shall be computed  after  giving
     effect to any special distribution with respect to unused Deposits, payment
     of principal of the Equipment Notes or payments with respect to other Trust
     Property and the distribution thereof to be made on that date.

          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
     11, 1998 relating to the offering of the Certificates.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
     supplemented  by the Trust  Supplement No.  1998-1C-S dated the date hereof
     relating to the  Continental  Airlines  Pass Through  Trust  1998-1C-S  and
     entered  into by the  Company  and the  Trustee,  which  agreement  becomes
     effective  upon the execution and delivery of the Assignment and Assumption
     Agreement pursuant to Section 7.01 of this Trust Supplement.

          RELATED TRUST: Means the Continental Pass Through Trust 1998-1C-S,  to
     be formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
     Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
     in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
     Agreement.

          TRANSFER DATE: Has the meaning specified in Section 7.01 of this Trust
     Supplement.

          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
     Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
     Equipment Notes held as the property of the Applicable Trust, all monies at
     any time paid thereon and all monies due and to become due thereunder, (ii)
     funds  from  time to time  deposited  in the  Certificate  Account  and the



     Special Payments Account and, subject to the Intercreditor  Agreement,  any
     proceeds  from the sale by the Trustee  pursuant to Article VI of the Basic
     Agreement  of any  Equipment  Note and (iii) all  rights of the  Applicable
     Trust  and the  Trustee,  on  behalf  of the  Applicable  Trust,  under the
     Intercreditor  Agreement, the Escrow Agreement, the Note Purchase Agreement
     and the Liquidity Facilities,  including, without limitation, all rights to
     receive certain payments thereunder,  and all monies paid to the Trustee on
     behalf of the Applicable Trust pursuant to the  Intercreditor  Agreement or
     the Liquidity Facilities, PROVIDED that rights with respect to the Deposits
     or under the Escrow Agreement,  except for the right to direct  withdrawals
     for the purchase of Equipment Notes to be held herein,  will not constitute
     Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
     Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
     February 11, 1998 among the  Underwriters,  the Company and the Depositary,
     as the same may be amended, supplemented or otherwise modified from time to
     time in accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
     Basic Agreement following the fourth sentence thereof:

          In the event of the  payment  of a Special  Redemption  Premium by the
          Company to the Trustee under the Note Purchase  Agreement,  the notice
          provided for in this Section  4.02(c)  shall be mailed,  together with
          the notice by the Escrow Paying Agent under Section 2.06 of the Escrow
          Agreement,  not less than 15 days  prior to the  Special  Distribution
          Date for such amount,  which  Special  Distribution  Date shall be the
          Final Withdrawal Date.



          (b) The  following  sentence  shall  replace in its  entirety the last
     sentence of the first paragraph of Section 4.02(c) of the Basic Agreement:

          If the amount of (i) premium,  if any,  payable upon the redemption or
          purchase of an Equipment Note or (ii) the Special Redemption  Premium,
          if any,  has not been  calculated  at the time that the Trustee  mails
          notice of a Special Payment, it shall be sufficient if the notice sets
          forth the other amounts to be distributed  and states that any premium
          received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

          With respect to the Applicable  Certificates registered in the name of
a Clearing  Agency,  on the Record  Date prior to each  Distribution  Date,  the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on



such Record Date. On each Distribution  Date, the Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

          (b) Within a reasonable  period of time after the end of each calendar
     year but not later than the latest date permitted by law, the Trustee shall
     furnish to each  Person who at any time during  such  calendar  year was an
     Applicable  Certificateholder  of record a statement  containing the sum of
     the amounts  determined  pursuant  to clauses  (a)(i),  (a)(ii),  (a)(iii),
     (a)(iv)  and  (a)(v)  above for such  calendar  year or, in the event  such
     Person was an  Applicable  Certificateholder  of record during a portion of
     such calendar  year, for such portion of such year, and such other items as
     are   readily   available   to  the   Trustee   and  which  an   Applicable
     Certificateholder  shall reasonably request as necessary for the purpose of
     such Applicable  Certificateholder's  preparation of its federal income tax
     returns. Such statement and such other items shall be prepared on the basis
     of information  supplied to the Trustee by the Clearing Agency Participants
     and shall be delivered by the Trustee to such Clearing Agency  Participants
     to be available for forwarding by such Clearing Agency  Participants to the
     holders of interests in the Applicable Certificates in the manner described
     in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following (i) the Delivery Period  Termination  Date, if
     there has been any change in the  information set forth in clauses (x), (y)
     and  (z)  below  from  that  set  forth  in  page  S-52  of the  Prospectus
     Supplement, and (ii) any early redemption or purchase of, or any default in
     the payment of  principal  or interest in respect of, any of the  Equipment
     Notes held in the Applicable  Trust, or any Final  Withdrawal,  the Trustee
     shall  furnish to  Applicable  Certificateholders  of record on such date a
     statement  setting forth (x) the expected Pool Balances for each subsequent
     Regular  Distribution Date following the Delivery Period  Termination Date,
     (y) the related Pool Factors for such  Regular  Distribution  Dates and (z)
     the expected principal distribution schedule of the Equipment Notes, in the
     aggregate,  held as Trust Property at the date of such notice. With respect
     to the Applicable Certificates registered in the name of a Clearing Agency,
     on the Delivery Period Termination Date, the Trustee will request from such
     Clearing  Agency a securities  position  listing setting forth the names of
     all Clearing Agency Participants  reflected on such Clearing Agency's books



     as holding  interests  in the  Applicable  Certificates  on such date.  The
     Trustee will mail to each such Clearing  Agency  Participant  the statement
     described above and will make available  additional  copies as requested by
     such Clearing Agency  Participant for forwarding to holders of interests in
     the Applicable Certificates.

          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
     Basic Agreement.


                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 4.01(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 holder of a Class D  Certificate  (a
"CLASS D  CERTIFICATEHOLDER")  shall have the right (which shall not expire upon
any purchase of the Class A Certificates pursuant to the Class B Trust Agreement
or any  purchase  of the  Class  A  Certificates  and the  Class B  Certificates
pursuant  to clause (a) above) to  purchase  all,  but not less than all, of the



Applicable  Certificates,  the Class A Certificates and the Class B Certificates
upon ten days' written notice to the Trustee,  the Class A Trustee,  the Class B
Trustee and each other Class D Certificateholder,  PROVIDED that (A) if prior to
the end of such ten-day period any other Class D Certificateholder notifies such
purchasing Class D  Certificateholder  that such other Class D Certificateholder
wants to participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Class D Certificateholder  to purchase all, but not
less than all, of the Applicable Certificates,  the Class A Certificates and the
Class B Certificates pro rata based on the Fractional  Undivided Interest in the
Class D Trust  held by each such Class D  Certificateholder  and (B) if prior to
the end of such  ten-day  period any other  Class D  Certificateholder  fails to
notify  the  purchasing  Class  D  Certificateholder   of  such  other  Class  D
Certificateholder's  desire to participate  in such a purchase,  then such other
Class D  Certificateholder  shall  lose its  right to  purchase  the  Applicable
Certificates pursuant to this Section 4.01(b).

          The purchase price with respect to the Applicable  Certificates  shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;  PROVIDED,  HOWEVER,  that (i) if such  purchase  occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate  amount of unused  Deposits and
interest to be distributed  under the Escrow  Agreement  (which deducted amounts
shall  remain   distributable  to,  and  may  be  retained  by,  the  Applicable
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record  Date,  such  purchase  price  shall be  reduced  by the  amount  to be
distributed  under  this  Agreement  on the  related  Distribution  Date  (which
deducted  amounts  shall  remain  distributable  to, and may be retained by, the
Applicable  Certificateholder as of such Record Date);  PROVIDED FURTHER that no
such  purchase  of  Applicable   Certificates  shall  be  effective  unless  the
purchaser(s)  shall  certify to the  Trustee  that  contemporaneously  with such
purchase,  such  purchaser(s)  is  purchasing,  pursuant  to the  terms  of this
Agreement and the Other  Agreements,  the Applicable  Certificates,  the Class A
Certificates  and the Class B  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be



subject to the terms of this Section 4.01(b). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  D
Certificateholder(s)  of the purchase  price set forth in the first  sentence of
this paragraph,  forthwith sell, assign, transfer and convey to the purchaser(s)
thereof (without recourse, representation or warranty of any kind except for its
own acts), all of the right,  title,  interest and obligation of such Applicable
Certificateholder  in  this  Agreement,   the  Escrow  Agreement,   the  Deposit
Agreement,  the  Intercreditor  Agreement,  the Liquidity  Facilities,  the Note
Documents  and all  Applicable  Certificates  and Escrow  Receipts  held by such
Applicable  Certificateholder  (subject  to  clauses  (i) and (ii) in the  first
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 purchaser  shall assume
all of such Applicable Certificateholder's obligations under this Agreement, the
Escrow  Agreement,  the Deposit  Agreement,  the  Intercreditor  Agreement,  the
Liquidity  Facilities,  the Note Documents and all such Applicable  Certificates
and Escrow Receipts. The Applicable  Certificates will be deemed to be purchased
on the date payment of the purchase price is made notwithstanding the failure of
the Applicable  Certificateholders  to deliver any Applicable  Certificates and,
upon such a purchase,  (i) the only rights of the Applicable  Certificateholders
will be to deliver the Applicable  Certificates to the  purchaser(s) and receive
the purchase price for such Applicable Certificates and (ii) if the purchaser(s)
shall so request,  such  Applicable  Certificateholder  will comply with all the
provisions  of Section  3.04 of the Basic  Agreement  to enable  new  Applicable
Certificates  to be issued to the  purchaser in such  denominations  as it shall
request.  All charges and expenses in  connection  with the issuance of any such
new Applicable Certificates shall be borne by the purchaser thereof.

          As used in this Section 4.01 and  elsewhere in this Trust  Supplement,
the terms "Class A Certificate",  "Class A Trust Agreement",  "Class A Trustee",
"Class B  Certificate",  "Class B Trust",  "Class B Trust  Agreement",  "Class B
Trustee",  "Class D Certificate" and "Class D Trust",  shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.

          (c) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.



                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01.  DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor  Agreement,  the
Escrow  Agreement  and the Note  Purchase  Agreement on or prior to the Issuance
Date,  each in the form delivered to the Trustee by the Company and (ii) subject
to the respective  terms thereof,  to perform its obligations  thereunder.  Upon
request of the Company and the satisfaction or waiver of the closing  conditions
specified in the  Underwriting  Agreement,  the Trustee shall execute,  deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth,  with respect to the  Applicable
Trust,  in  Schedule  II to the  Underwriting  Agreement  evidencing  the entire
ownership  interest in the  Applicable  Trust,  which amount  equals the maximum
aggregate  principal  amount of  Equipment  Notes which may be  purchased by the
Trustee pursuant to the Note Purchase Agreement.  Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate  or  deliver  Applicable  Certificates  in excess of the  aggregate
amount specified in this paragraph.

          (b) On or after the Issuance  Date,  the Company may deliver from time
to time to the  Trustee a  Delivery  Notice  relating  to one or more  Equipment
Notes.  After  receipt  of a  Delivery  Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery  Notice  relates
(the "APPLICABLE  DELIVERY  DATE"),  the Trustee shall (as and when specified in
the Delivery  Notice)  instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal  to the  Depositary  requesting  (A)  the  withdrawal  of one or more
Deposits on the  Applicable  Delivery Date in accordance  with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such  Equipment  Notes to or on behalf
of the Owner Trustee or the Company,  as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery  Notice.  The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in  Section  2 of the  Note  Purchase  Agreement,  enter  into and  perform  its
obligations under the Participation  Agreement specified in such Delivery Notice
(the  "APPLICABLE   PARTICIPATION   Agreement")  and  cause  such  certificates,
documents  and legal  opinions  relating to the Trustee to be duly  delivered as
required by the Applicable  Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase  Agreement,  then the Trustee shall



give the Depositary  (with a copy to the Escrow Agent) a notice of  cancellation
of such Notice of Purchase  Withdrawal  relating to such  Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions  specified in
the Note Purchase  Agreement and the  Applicable  Participation  Agreement,  the
Trustee shall purchase the applicable  Equipment  Notes with the proceeds of the
withdrawals  of one or more  Deposits  made on the  Applicable  Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal  amount of such
Equipment  Notes.  Amounts  withdrawn from such Deposit or Deposits in excess of
the purchase  price of the  Equipment  Notes or to the extent not applied on the
Applicable  Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable  Delivery Date
in accordance  with the terms of the Deposit  Agreement.  The provisions of this
Section  5.01(b)  supersede  and replace the  provisions  of Section 2.02 of the
Basic Agreement (which are inapplicable to the Trust), and all provisions of the
Basic  Agreement  relating  to  Postponed  Notes and  Section  2.02 of the Basic
Agreement shall not apply to the Applicable Trust.

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable
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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.

          Section  5.02.   WITHDRAWAL  OF  DEPOSITS.   If  any  Deposits  remain
outstanding  on the  Business  Day next  succeeding  the Cut-off  Date,  (i) the
Trustee  shall give the Escrow Agent  notice that the  Trustee's  obligation  to
purchase  Equipment  Notes under the Note Purchase  Agreement has terminated and
instruct  the  Escrow  Agent to  provide  a notice  of Final  Withdrawal  to the
Depositary  substantially in the form of Exhibit B to the Deposit Agreement (the
"FINAL  WITHDRAWAL  NOTICE")  and (ii) the  Trustee  will make a demand upon the
Company  under the Note  Purchase  Agreement  for an amount equal to the Special
Redemption  Premium (if any is  payable),  such  payment to be made on the Final
Withdrawal Date.



          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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,  the Deposit Agreement,  the Note Purchase
Agreement or the Escrow  Agreement or the due execution hereof or thereof by the
Company or the other  parties  thereto  (other than the  Trustee),  or for or in
respect of the recitals and statements contained herein or therein, 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,  the Intercreditor  Agreement, the Note
Purchase  Agreement and the Escrow  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  5.04.  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,  the Escrow  Agreement  and the
     Note Documents to which it is a party and has taken all necessary action to
     authorize  the  execution,  delivery  and  performance  by it of this Trust
     Supplement,  the Escrow  Agreement and the Note  Documents to which it is a
     party;

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

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

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note



Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document".

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any time and from time to time,  enter into one or more  agreements
supplemental to the Escrow Agreement, the Note Purchase Agreement or the Deposit
Agreement,  for any of the purposes set forth in clauses (1) through (9) of such
Section  9.01,  except that (a) clause (2) and (3) of such Section 9.01 shall be
deemed to include the Company's  obligations  under (in the case of clause (2)),
and the  Company's  rights and powers  conferred by (in the case of clause (3)),
the Note Purchase Agreement, (b) clause (4) of such Section 9.01 shall be deemed
to include corrections or supplements to provisions of the Escrow Agreement, the
Note  Purchase  Agreement  or the Deposit  Agreement  which may be  defective or
inconsistent  with any other  provision  of this  Agreement  or contained in any
agreement  referred to in such clause (4) and the curing of any ambiguity or the
modification of any other provision with respect to matters or questions arising
under the Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement
and  (c)  references  in  clauses  (6)  and  (7) of  such  Section  9.01 to "any
Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to refer to
"the Intercreditor  Agreement, the Liquidity Facility, the Escrow Agreement, the
Note  Purchase  Agreement or the Deposit  Agreement"  and (ii) enter into one or
more agreements supplemental to this Agreement to provide for the formation of a
Class D Trust, the issuance of Class D Certificates, the purchase by the Class D
Trust of  Equipment  Notes and other  matters  incidental  thereto or  otherwise
contemplated by Section 2.01(b) of the Basic Agreement.

          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in



the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.


                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the earlier of (A) the completion of
the  assignment,  transfer and discharge  described in the first sentence of the
immediately   following   paragraph  and  (B)  distribution  to  all  Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
execution of this Trust Supplement.

          Upon the earlier of (i) the first  Business Day following  January 31,
1999,  or, if later,  the fifth  Business  Day  following  the  Delivery  Period
Termination  Date and (ii) the fifth  Business Day following the date on which a
Triggering Event occurs (such date, the "TRANSFER DATE"), or, if later, the date
on which all of the conditions set forth in the immediately  following  sentence
have been  satisfied,  the  Trustee  is  hereby  directed  (subject  only to the
immediately following sentence) to, and the Company shall direct the institution
that will serve as the Related  Trustee  under the Related  Pass  Through  Trust
Agreement  to,  execute and deliver the  Assignment  and  Assumption  Agreement,
pursuant  to which the Trustee  shall  assign,  transfer  and deliver all of the
Trustee's right, title and interest to the Trust Property to the Related Trustee
under the Related  Pass  Through  Trust  Agreement.  The Trustee and the Related
Trustee shall execute and deliver the Assignment  and Assumption  Agreement upon
the satisfaction of the following conditions:

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

               (I)  upon the  execution  and  delivery  thereof  by the  parties
          thereto in accordance with the terms of this Agreement and the Related
          Pass Through Trust Agreement,  the Assignment and Assumption Agreement



          will  constitute  the  valid  and  binding  obligation  of each of the
          parties thereto enforceable against each such party in accordance with
          its terms;

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

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

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

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

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

Upon the execution of the  Assignment  and  Assumption  Agreement by the parties
thereto,   the   Applicable   Trust   shall  be   terminated,   the   Applicable
Certificateholders  shall receive  beneficial  interests in the Related Trust in
exchange for their interests in the Applicable  Trust equal to their  respective
beneficial  interests in the Applicable  Trust,  and the Outstanding  Applicable
Certificates representing Fractional Undivided Interests in the Applicable Trust



shall be deemed for all purposes of this  Agreement and the Related Pass Through
Trust Agreement,  without further signature or action of any party or Applicable
Certificateholder, to be certificates representing the same fractional undivided
interests in the Related  Trust and its trust  property.  By  acceptance  of its
Applicable  Certificate,  each  Applicable  Certificateholder  consents  to such
assignment,  transfer and  delivery of the Trust  Property to the trustee of the
Related Trust upon the execution and delivery of the  Assignment  and Assumption
Agreement.

          In connection with the occurrence of the event set forth in clause (B)
above,  notice of such termination,  specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein
specified.  The Trustee shall give such notice to the Registrar at the time such
notice  is  given  to  Applicable  Certificateholders.   Upon  presentation  and
surrender of the Applicable  Certificates  in accordance  with such notice,  the
Trustee  shall cause to be  distributed  to Applicable  Certificateholders  such
final payments.

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



Trustee shall pay to each Loan Trustee the appropriate  amount of money relating
to such Loan Trustee and shall give written  notice thereof to the related Owner
Trustees, the Owner Participants and the Company.

          (b) The  provisions  of this  Section 7.01  supersede  and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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 8.02.  GOVERNING  LAW. THIS  AGREEMENT AND, UNTIL THE TRANSFER
DATE,  THE  APPLICABLE  CERTIFICATES  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  THIS SECTION 8.02 SUPERSEDES
AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT.

          Section 8.03. 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 8.04. 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.]1


                CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-1C-O


     6.541% Continental Airlines Pass Through Certificate, Series
                                   1998-1C-O
                        Issuance Date: February 20, 1998

                     Final Maturity Date: September 15, 2009

          Evidencing A Fractional Undivided Interest In The Continental Airlines
          Pass Through Trust  1998-1C-O,  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  0.000732375%
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 1998-1C-O (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"),

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



between the Trustee and Continental Airlines,  Inc., a Delaware corporation (the
"Company"),  as supplemented by Trust Supplement No. 1998-1C-O thereto, dated as
of February  20,  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 "6.541% Continental Airlines Pass Through
Certificates,  Series  1998-1C-O"  (herein  called  the  "CERTIFICATES").   This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the 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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.



          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST



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

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

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



                                             CONTINENTAL  AIRLINES  PASS THROUGH
                                             TRUST 1998-1C-O

                                             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]



                                    EXHIBIT C
                                    ---------

                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
                 Continental Airlines Pass Through Trust 1998-1C

          ASSIGNMENT AND ASSUMPTION  AGREEMENT,  dated  ____________,  199_ (the
"ASSIGNMENT  AGREEMENT"),  between  Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
September  25,  1997 (as  amended  or  modified  from time to time,  the  "BASIC
AGREEMENT"),  as  supplemented  by the  Trust  Supplement  No.  1998-1C-O  dated
February 20, 1998 (the "TRUST SUPPLEMENT" and together with the Basic Agreement,
the  "AGREEMENT")  in respect of the  Continental  Airlines  Pass Through  Trust
1998-1C-O (the  "ASSIGNOR"),  and Wilmington  Trust Company,  a Delaware banking
corporation, not in its individual capacity except as expressly provided herein,
but solely as trustee  under the Basic  Agreement as  supplemented  by the Trust
Supplement No.  1998-1C-S  dated February 20, 1998 (the "NEW  SUPPLEMENT",  and,
together  with the Basic  Agreement,  the "NEW  AGREEMENT")  in  respect  of the
Continental Airlines Pass Through Trust 1998-1C-S (the "ASSIGNEE").

                              W I T N E S S E T H:

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

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

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

          1. ASSIGNMENT. The Assignor does hereby sell, assign, convey, transfer
and set over unto the  Assignee as of the  Transfer  Date all of its present and
future  right,  title  and  interest  in,  under and with  respect  to the Trust



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

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

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

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

          5. FURTHER  ASSURANCES.  The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further  instruments and documents and take such further action
as the  Assignee  may  reasonably  request to obtain the full  benefits  of this
Assignment  Agreement and of the right and powers herein  granted.  The Assignor
agrees to deliver any Applicable  Certificates,  and all Trust Property, if any,
then in the physical possession of the Assignor, to the Assignee.



          6.  REPRESENTATIONS  AND WARRANTIES.  (a) The Assignee  represents and
warrants to the Assignor and each of the Beneficiaries that:

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

          (ii) on and as of the date hereof, the  representations and warranties
     of the  Assignee  set  forth in  Section  7.15 of the Basic  Agreement  and
     Section 5.04 of the New Supplement are true and correct.

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

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

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

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

          7. GOVERNING LAW. THIS  ASSIGNMENT  AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

          8.  COUNTERPARTS.  This  Assignment  Agreement  may be executed in any
number  of  counterparts,  all of  which  together  shall  constitute  a  single



instrument.  It shall not be necessary  that any  counterpart  be signed by both
parties so long as each party shall sign at least one counterpart.

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

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

                                             ASSIGNOR:
                                             WILMINGTON  TRUST  COMPANY,  not in
                                               its individual capacity except as
                                               expressly  provided  herein,  but
                                               solely as trustee  under the Pass
                                               Through Trust Agreement and Trust
                                               Supplement   in  respect  of  the
                                               Continental Airlines Pass Through
                                               Trust 1998-1C-O



                                             By:________________________________
                                                Title:

                                             ASSIGNEE:
                                             WILMINGTON  TRUST  COMPANY,  not in
                                               its individual capacity except as
                                               expressly  provided  herein,  but
                                               solely as trustee  under the Pass
                                               Through Trust Agreement and Trust
                                               Supplement   in  respect  of  the
                                               Continental Airlines Pass Through
                                               Trust 1998-1C-S



                                             By:________________________________
                                                Title:



                                   Schedule I

                         Schedule of Assigned Documents

          (1)  Intercreditor  Agreement  dated as of February 20, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any,  relating to the Certificates  issued under (and as defined in) each of the
Other Agreements and the Subordination Agent.

          (2) Escrow and Paying Agent  Agreement  (Class C) dated as of February
20, 1998 among the Escrow Agent,  the  Underwriters,  the Trustee and the Paying
Agent.

          (3) Note  Purchase  Agreement  dated as of February 20, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary,  the Escrow Agent, the
Paying Agent and the Subordination Agent.

          (4) Deposit  Agreement (Class C) dated as of February 20, 1998 between
the Escrow Agent and the Depositary.

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



                                   Schedule II

                            Schedule of Beneficiaries

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

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

AIG Matched Funding Corp., as Liquidity Providers

Continental Airlines, Inc.

Credit Suisse First Boston Corporation, as Underwriter

Morgan Stanley & Co. Incorporated, as Underwriter

Chase Securities Inc., as Underwriter

First Security Bank, National Association, as Escrow Agent

Each of the other parties to the Assigned Documents


                         TRUST SUPPLEMENT No. 1998-1C-S

                             Dated February 20, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $136,542,000

                Continental Airlines Pass Through Trust 1998-1C-S
                           6.541% Continental Airlines
                           Pass Through Certificates,
                                Series 1998-1C-S



          This Trust  Supplement  No.  1998-1C-S,  dated as of February 20, 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  has  obtained  commitments  from Boeing for the
delivery of certain Aircraft;

          WHEREAS,  as of the Transfer Date (as defined below), the Company will
have financed the  acquisition  of all or a portion of such Aircraft  either (i)
through separate leveraged lease transactions,  in which case the Company leases
such Aircraft  (collectively,  the "LEASED  AIRCRAFT") or (ii) through  separate
secured  loan  transactions,  in  which  case the  Company  owns  such  Aircraft
(collectively, the "OWNED AIRCRAFT");

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

          WHEREAS,  as of the Transfer Date, in the case of each Owned Aircraft,
the Company  will have issued  pursuant to an  Indenture,  on a recourse  basis,
Equipment  Notes to  finance  a  portion  of the  purchase  price of such  Owned
Aircraft;

          WHEREAS,  as of the Transfer  Date,  the Related  Trustee will assign,
transfer  and deliver all of such  trustee's  right,  title and  interest to the
trust  property  held by the  Related  Trustee to the  Trustee  pursuant  to the
Assignment and Assumption Agreement (as defined below);

          WHEREAS,  the  Trustee,   effective  only,  but  automatically,   upon
execution  and delivery of the  Assignment  and  Assumption  Agreement,  will be
deemed to have  declared the creation of the  Continental  Airlines Pass Through
Trust  1998-1C-S  (the  "APPLICABLE  TRUST") for the  benefit of the  Applicable
Certificateholders, and each Holder of Applicable Certificates outstanding as of



the Transfer Date, as the grantors of the Applicable  Trust, by their respective
acceptances of such Applicable  Certificates,  will join in the creation of this
Applicable Trust with the Trustee;

          WHEREAS,  all Applicable  Certificates deemed 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  except for those  Applicable  Certificates  to which an
Escrow Receipt (as defined below) has been affixed;

          WHEREAS,  upon  the  execution  and  delivery  of the  Assignment  and
Assumption Agreement,  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.  The Applicable  Certificates shall be
known  as  "6.541%  Continental  Airlines  Pass  Through  Certificates,   Series
1998-1C-S".  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 initially  deemed issued under the Agreement shall be equal to the
     aggregate  principal  amount of  "Outstanding"  pass  through  certificates
     representing  fractional  undivided  interests in the Related  Trust on the
     Transfer Date.

          (b) The  Regular  Distribution  Dates with  respect to any  payment of
     Scheduled Payments means March 15 and September 15 of each year, commencing



     on March 15, 1998,  until  payment of all of the  Scheduled  Payments to be
     made under the Equipment Notes has been made.

          (c) 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.

          (d) At the Escrow  Agent's  request  under the Escrow  Agreement,  the
     Trustee shall affix the  corresponding  Escrow  Receipt to each  Applicable
     Certificate.  In any event,  any  transfer or  exchange  of any  Applicable
     Certificate  shall also effect a transfer or exchange of the related Escrow
     Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
     Applicable  Certificate shall be permitted unless the corresponding  Escrow
     Receipt is attached  thereto and also is so  transferred  or exchanged.  By
     acceptance  of any  Applicable  Certificate  to which an Escrow  Receipt is
     attached,  each Holder of such an Applicable  Certificate  acknowledges and
     accepts the restrictions on transfer of the Escrow Receipt set forth herein
     and in the Escrow Agreement.

          (e) (i) The Applicable  Certificates  shall be in the form attached as
     Exhibit  A  to  the  Related  Pass  Through  Trust  Supplement,  with  such
     appropriate  insertions,  omissions,  substitutions and other variations as
     are required or permitted  by the Related Pass Through  Trust  Agreement or
     this Agreement, as the case may be, or as the Trustee may deem appropriate,
     to reflect the fact that the Applicable Certificates are being issued under
     the Agreement as opposed to under the Related Pass Through Trust Agreement.
     Any  Person  acquiring  or  accepting  an  Applicable  Certificate,  by its
     acceptance of such Applicable  Certificate or an interest  therein will, by
     such  acquisition or acceptance,  be deemed to represent and warrant 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 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 as
     Exhibit B to the Related Pass Through Trust Supplement.

          (f) The  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement, the Deposit Agreement and the Escrow Agreement.

          (g) The  Applicable  Certificates  are entitled to the benefits of the
     Liquidity Facilities.

          (h) The Responsible Party is the Company.

          (i) The  particular  "sections of the Note  Purchase  Agreement,"  for
     purposes of clause (3) of Section 7.07 of the Basic  Agreement  are Section
     8.1 (with  respect to Owned  Aircraft)  and  Section  9.1 (with  respect to
     Leased Aircraft) of each Participation Agreement.

          (j) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust,  and the related  Aircraft and Note Documents,  are described in the
     Note Purchase 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:  Means the Basic  Agreement,  as supplemented by this Trust
     Supplement.

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

          APPLICABLE  CERTIFICATE:  Means any of the  "Applicable  Certificates"
     issued by the Related Trust and that are  "Outstanding"  (as defined in the
     Related  Pass  Through  Trust  Agreement)  as of  the  Transfer  Date  (the
     "TRANSFER DATE  CERTIFICATES")  and any Applicable  Certificates  issued in
     exchange therefor or replacement thereof pursuant to this Agreement.



          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.

          ASSIGNMENT  AND  ASSUMPTION   AGREEMENT:   Means  the  assignment  and
     assumption agreement  substantially in the form of Exhibit C to the Related
     Pass Through Trust  Supplement  executed and  delivered in accordance  with
     Section 7.01 of the Related Trust Supplement.

          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.

          CLASS D  CERTIFICATEHOLDERS:  Has the  meaning  specified  in  Section
     4.01(a)(iii) of this Trust Supplement.

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

          DELIVERY  NOTICE:  Has the  meaning  specified  in the  Note  Purchase
     Agreement.

          DELIVERY  PERIOD  TERMINATION  DATE: Has the meaning  specified in the
     Related Pass Through Trust Supplement.

          DEPOSITS: Has the meaning specified in the Deposit Agreement.

          DEPOSIT  AGREEMENT:  Means the Deposit  Agreement dated as of February
     20, 1998 relating to the Applicable Certificates between the Depositary and
     the Escrow  Agent,  as the same may be amended,  supplemented  or otherwise
     modified from time to time in accordance with its terms.

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



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

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

          ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated as
     of February 20, 1998  relating to the  Applicable  Certificates,  among the
     Escrow Agent,  the Escrow Paying Agent,  the Related Trustee (and after the
     Transfer  Date,  the  Trustee)  and the  Underwriters,  as the  same may be
     amended, supplemented or otherwise modified from time to time in accordance
     with its terms.

          ESCROW PAYING AGENT: Means the Person acting as paying agent under the
     Escrow Agreement.

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

          FINAL MATURITY DATE: Means September 15, 2009.

          FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

          FINAL  WITHDRAWAL  DATE:  Has  the  meaning  specified  in the  Escrow
     Agreement.

          INDENTURE:  Means each of the separate trust  indentures and mortgages
     relating to the  Aircraft,  each as  specified  or  described in a Delivery
     Notice  delivered  pursuant to the Note  Purchase  Agreement or the related
     Participation  Agreement,  in  each  case  as  the  same  may  be  amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees),  the Liquidity Providers, the liquidity providers relating
     to the  Certificates  issued  under (and as defined in) each of the Related
     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.



          INVESTORS:   Means  the  Underwriters  together  with  all  subsequent
     beneficial owners of the Applicable Certificates.

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

          LEASED  AIRCRAFT:  Has the meaning  specified in the third  recital to
     this Trust Supplement.

          LEASED  AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of February  20, 1998  relating  to the  Applicable  Certificates,
     between  the  Liquidity  Provider  and  Wilmington  Trust  Company,  as the
     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,  AIG Matched Funding Corp., a
     Delaware corporation, and any replacements or successors therefor appointed
     in accordance with the Intercreditor Agreement.

          NEW  AIRCRAFT:   Has  the  meaning  specified  in  the  Note  Purchase
     Agreement.

          NOTE  DOCUMENTS:  Means  the  Equipment  Notes  with  respect  to  the
     Applicable  Certificates  and, with respect to such any Equipment Note, (i)
     the Indenture and the  Participation  Agreement  relating to such Equipment
     Note,  and  (ii) in the  case of any  Equipment  Note  related  to a Leased
     Aircraft, the Lease relating to such Leased Aircraft.

          NOTE PURCHASE AGREEMENT: Means the Note Purchase Agreement dated as of
     February 20, 1998 among the Related  Trustee (and after the Transfer  Date,
     the Trustee),  the Related Other Trustees (and after the Transfer Date, the
     Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent and
     the  Subordination  Agent,  as the same  may be  amended,  supplemented  or
     otherwise modified from time to time, in accordance with its terms.



          OTHER  AGREEMENTS:  Means (i) the Basic  Agreement as  supplemented by
     Trust   Supplement  No.   1998-1A-S  dated  the  date  hereof  relating  to
     Continental  Airlines  Pass  Through  Trust  1998-1A-S  and (ii) the  Basic
     Agreement as supplemented by Trust  Supplement No. 1998-1B-S dated the date
     hereof relating to Continental Airlines Pass Through Trust 1998-1B-S.

          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
     1998-1A-S and Continental Airlines Pass Through Trust 1998-1B-S, created by
     the Other Pass Through Trust Agreements.

          OUTSTANDING: When used with respect to Applicable Certificates, means,
     as of the date of determination,  all Transfer Date  Certificates,  and all
     other Applicable Certificates theretofore authenticated and delivered under
     this Agreement, in each case except:

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

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

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

          OWNED AIRCRAFT: Has the meaning specified in the third recital to this
     Trust Supplement.

          OWNED   AIRCRAFT   INDENTURE:   Has  the  meaning   specified  in  the
     Intercreditor Agreement.

          OWNER  PARTICIPANT:  With respect to any Equipment  Note relating to a
     Leased  Aircraft,  means the  "Owner  Participant"  as  referred  to in the
     Indenture pursuant to which such Equipment Note is issued and any permitted



     successor or assign of such Owner  Participant;  and OWNER  PARTICIPANTS at
     any time of determination means all of the Owner Participants thus referred
     to in the Indentures.

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

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

          POOL BALANCE:  Means, as of any date, (i) the original  aggregate face
     amount of the  "Applicable  Certificates"  as defined in the  Related  Pass
     Through Trust  Agreement,  less (ii) the  aggregate  amount of all payments
     made in respect of such  Certificates  or in respect of Deposits other than
     payments made in respect of interest or premium thereon or reimbursement of
     any costs or expenses incurred in connection therewith. The Pool Balance as
     of any  Distribution  Date shall be  computed  after  giving  effect to any
     special distribution with respect to unused Deposits,  payment of principal
     on the Equipment Notes or payments with respect to other Trust Property and
     the distribution thereof to be made on that date.

          POOL FACTOR: Means, as of any Distribution Date, the quotient (rounded
     to the seventh  decimal place) computed by dividing (i) the Pool Balance by
     (ii) the original aggregate face amount of the "Applicable Certificates" as
     defined in the Related Pass Through Trust Agreement.  The Pool Factor as of
     any Distribution  Date shall be computed after giving effect to any special
     distribution  with respect to unused Deposits,  payment of principal on the
     Equipment  Notes or payments  with respect to other Trust  Property and the
     distribution thereof to be made on that date.

          PROSPECTUS SUPPLEMENT:  Means the Prospectus Supplement dated February
     11, 1998 relating to the offering of the Certificates.

          RELATED  OTHER  PASS  THROUGH  TRUST  AGREEMENTS:   Means  the  "Other
     Agreements" as defined in the Related Pass Through Trust Agreement.



          RELATED OTHER TRUSTEES:  Means the "Other  Trustees" as defined in the
     Related Pass Through Trust Agreement.

          RELATED  OTHER  TRUSTS:  Means the  "Other  Trusts"  as defined in the
     Related Pass Through Trust Agreement.

          RELATED PASS THROUGH  TRUST  AGREEMENT:  Means the Basic  Agreement as
     supplemented  by the Trust  Supplement No.  1998-1C-O dated the date hereof
     (the "RELATED PASS THROUGH TRUST SUPPLEMENT"),  relating to the Continental
     Airlines Pass Through  Trust  1998-1C-O and entered into by the Company and
     the Trustee,  as amended,  supplemented or otherwise  modified from time to
     time in accordance with its terms.

          RELATED TRUST:  Means the  Continental  Pass Through Trust  1998-1C-O,
     formed under the Related Pass Through Trust Agreement.

          RELATED  TRUSTEE:  Means the trustee  under the Related  Pass  Through
     Trust Agreement.

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

          SPECIAL REDEMPTION  PREMIUM:  Means the premium payable by the Company
     in respect of the Final Withdrawal pursuant to the Note Purchase Agreement.

          SUBSTITUTE  AIRCRAFT:  Has the meaning  specified in the Note Purchase
     Agreement.

          TRANSFER  DATE:  Means the moment of  execution  and  delivery  of the
     Assignment and Assumption Agreement by each of the parties thereto.

          TRANSFER  DATE   CERTIFICATES:   Has  the  meaning  specified  in  the
     definition of "Applicable Certificates".

          TRIGGERING  EVENT:  Has  the  meaning  assigned  to  such  term in the
     Intercreditor Agreement.

          TRUST PROPERTY:  Means (i) subject to the Intercreditor Agreement, the
     Equipment Notes held as the property of the Applicable Trust, all monies at
     any time paid thereon and all monies due and to become due thereunder, (ii)
     funds  from  time to time  deposited  in the  Certificate  Account  and the
     Special Payments Account and, subject to the Intercreditor  Agreement,  any
     proceeds  from the sale by the Trustee  pursuant to Article VI of the Basic



     Agreement of any  Equipment  Note and (iii) all rights of the Trust and the
     Trustee,  on  behalf  of the  Applicable  Trust,  under  the  Intercreditor
     Agreement,  the  Escrow  Agreement,  the Note  Purchase  Agreement  and the
     Liquidity Facilities,  including, without limitation, all rights to receive
     certain payments  thereunder,  and all monies paid to the Trustee on behalf
     of the  Applicable  Trust  pursuant to the  Intercreditor  Agreement or the
     Liquidity Facilities,  PROVIDED that rights with respect to the Deposits or
     under the Escrow Agreement, will not constitute Trust Property.

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

          UNDERWRITERS:   Means,   collectively,   Credit  Suisse  First  Boston
     Corporation, Morgan Stanley & Co. Incorporated and Chase Securities Inc.

          UNDERWRITING   AGREEMENT:   Means  the  Underwriting  Agreement  dated
     February 11, 1998 among the  Underwriters,  the Company and the Depositary,
     as the same may be amended, supplemented or otherwise modified from time to
     time in accordance with its terms.


                                   ARTICLE III
                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

          Section 3.01. AMENDMENTS TO ARTICLE IV OF THE BASIC AGREEMENT. Article
IV of the Basic Agreement shall be amended as follows:

          (a) The following sentence shall be inserted in Section 4.02(c) of the
     Basic Agreement following the fourth sentence thereof:

               In the event of the  payment of a Special  Redemption  Premium by
          the  Company to the Trustee  under the Note  Purchase  Agreement,  the
          notice provided for in this Section 4.02(c) shall be mailed,  together
          with the notice by the Escrow  Paying Agent under  Section 2.06 of the
          Escrow  Agreement,  not  less  than  15  days  prior  to  the  Special
          Distribution  Date for such amount,  which Special  Distribution  Date
          shall be the Final Withdrawal Date.

          (b) The  following  sentence  shall  replace in its  entirety the last
     sentence of the first paragraph of Section 4.02(c) of the Basic Agreement:



               If the amount of (i) premium, if any, payable upon the redemption
          or  purchase  of an  Equipment  Note or (ii)  the  Special  Redemption
          Premium,  if any, has not been calculated at the time that the Trustee
          mails  notice  of a Special  Payment,  it shall be  sufficient  if the
          notice sets forth the other amounts to be distributed  and states that
          any premium received will also be distributed.

          Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders  of a Scheduled  Payment or Special Payment,  as the case may
be, a statement  setting forth the information  provided below (in the case of a
Special Payment,  including any Special Redemption  Premium,  reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Applicable Certificate as
to (ii), (iii), (iv) and (v) below) the following information:

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

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

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

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

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

          (vi) the Pool Balance and the Pool Factor.

          With respect to the Applicable  Certificates registered in the name of
a Clearing  Agency,  on the Record  Date prior to each  Distribution  Date,  the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on
such Record Date. On each Distribution  Date, the Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make



available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

          (b) Within a reasonable  period of time after the end of each calendar
year but not later than the latest date  permitted  by law,  the  Trustee  shall
furnish  to each  Person  who at any  time  during  such  calendar  year  was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and
(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.

          (c) Promptly  following  (i) the Transfer  Date, if there has been any
change in the  information set forth in clauses (x), (y) and (z) below from that
set  forth  in page  S-52 of the  Prospectus  Supplement,  and  (ii)  any  early
redemption  or  purchase  of, or any  default  in the  payment of  principal  or
interest in respect of, any of the Equipment Notes held in the Applicable Trust,
or any Final  Withdrawal,  the Trustee  shall furnish to  Certificateholders  of
record on such date a statement setting forth (x) the expected Pool Balances for
each  subsequent  Regular   Distribution  Date  following  the  Delivery  Period
Termination  Date,  (y) the related Pool  Factors for such Regular  Distribution
Dates and (z) the  expected  principal  distribution  schedule of the  Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice. With
respect  to the  Applicable  Certificates  registered  in the name of a Clearing
Agency, on the Transfer Date, the Trustee will request from such Clearing Agency
a securities  position  listing  setting forth the names of all Clearing  Agency
Participants  reflected on such Clearing  Agency's books as holding interests in
the  "Applicable  Certificates"  (as defined in the Related Pass  Through  Trust
Agreement)  on such date.  The Trustee  will mail to each such  Clearing  Agency
Participant  the statement  described  above and will make available  additional
copies as  requested by such  Clearing  Agency  Participant  for  forwarding  to
holders of interests in the Applicable Certificates.



          (d) This Section  3.02  supersedes  and  replaces  Section 4.03 of the
Basic Agreement.


                                   ARTICLE IV
                                     DEFAULT

          Section 4.01. 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 4.01(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 holder of a Class D  Certificate  (a
"CLASS D  CERTIFICATEHOLDER")  shall have the right (which shall not expire upon
any purchase of the Class A Certificates pursuant to the Class B Trust Agreement
or any  purchase  of the  Class  A  Certificates  and the  Class B  Certificates
pursuant  to clause (a) above) to  purchase  all,  but not less than all, of the
Applicable  Certificates,  the Class A Certificates and the Class B Certificates
upon ten days' written notice to the Trustee,  the Class A Trustee,  the Class B
Trustee and each other Class D Certificateholder,  PROVIDED that (A) if prior to
the end of such ten-day period any other Class D Certificateholder notifies such
purchasing Class D  Certificateholder  that such other Class D Certificateholder



wants to participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Class D Certificateholder  to purchase all, but not
less than all, of the Applicable Certificates,  the Class A Certificates and the
Class B Certificates pro rata based on the Fractional  Undivided Interest in the
Class D Trust  held by each such Class D  Certificateholder  and (B) if prior to
the end of such  ten-day  period any other  Class D  Certificateholder  fails to
notify  the  purchasing  Class  D  Certificateholder   of  such  other  Class  D
Certificateholder's  desire to participate  in such a purchase,  then such other
Class D  Certificateholder  shall  lose its  right to  purchase  the  Applicable
Certificates pursuant to this Section 4.01(b).

          The purchase price with respect to the Applicable  Certificates  shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;  PROVIDED,  HOWEVER,  that (i) if such  purchase  occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate  amount of unused  Deposits and
interest to be distributed  under the Escrow  Agreement  (which deducted amounts
shall  remain   distributable  to,  and  may  be  retained  by,  the  Applicable
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record  Date,  such  purchase  price  shall be  reduced  by the  amount  to be
distributed  under  this  Agreement  on the  related  Distribution  Date  (which
deducted  amounts  shall  remain  distributable  to, and may be retained by, the
Applicable  Certificateholder as of such Record Date);  PROVIDED FURTHER that no
such  purchase  of  Applicable   Certificates  shall  be  effective  unless  the
purchaser(s)  shall  certify to the  Trustee  that  contemporaneously  with such
purchase,  such  purchaser(s)  is  purchasing,  pursuant  to the  terms  of this
Agreement and the Other  Agreements,  the Applicable  Certificates,  the Class A
Certificates  and the Class B  Certificates  which are senior to the  securities
held by such purchaser(s).  Each payment of the purchase price of the Applicable
Certificates  referred  to in the  first  sentence  hereof  shall  be made to an
account or accounts  designated by the Trustee and each such  purchase  shall be
subject to the terms of this Section 4.01(b). Each Applicable  Certificateholder
agrees by its acceptance of its Applicable  Certificate that it will, subject to
Section  3.04  of  the  Basic   Agreement,   upon  payment  from  such  Class  D
Certificateholder(s)  of the purchase  price set forth in the first  sentence of
this paragraph,  forthwith sell, assign, transfer and convey to the purchaser(s)



thereof (without recourse, representation or warranty of any kind except for its
own acts), all of the right,  title,  interest and obligation of such Applicable
Certificateholder  in  this  Agreement,   the  Escrow  Agreement,   the  Deposit
Agreement,  the  Intercreditor  Agreement,  the Liquidity  Facilities,  the Note
Documents  and all  Applicable  Certificates  and Escrow  Receipts  held by such
Applicable  Certificateholder  (subject  to  clauses  (i) and (ii) in the  first
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 purchaser  shall assume
all of such Applicable Certificateholder's obligations under this Agreement, the
Escrow  Agreement,  the Deposit  Agreement,  the  Intercreditor  Agreement,  the
Liquidity  Facilities,  the Note Documents and all such Applicable  Certificates
and Escrow Receipts. The Applicable  Certificates will be deemed to be purchased
on the date payment of the purchase price is made notwithstanding the failure of
the Applicable  Certificateholders  to deliver any Applicable  Certificates and,
upon such a purchase,  (i) the only rights of the Applicable  Certificateholders
will be to deliver the Applicable  Certificates to the  purchaser(s) and receive
the purchase price for such Applicable Certificates and (ii) if the purchaser(s)
shall so request,  such  Applicable  Certificateholder  will comply with all the
provisions  of Section  3.04 of the Basic  Agreement  to enable  new  Applicable
Certificates  to be issued to the  purchaser in such  denominations  as it shall
request.  All charges and expenses in  connection  with the issuance of any such
new Certificates shall be borne by the purchaser thereof.

          As used in this Section 4.01 and  elsewhere in this Trust  Supplement,
the terms "Class A Certificate",  "Class A Trust Agreement",  "Class A Trustee",
"Class B  Certificate",  "Class B Trust",  "Class B Trust  Agreement",  "Class B
Trustee",  "Class D Certificate" and "Class D Trust",  shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.

          (c) This Section 4.01  supersedes and replaces  Section 6.01(b) of the
Basic Agreement.


                                    ARTICLE V
                                   THE TRUSTEE

          Section 5.01. ACQUISITION OF TRUST PROPERTY. (a) The Trustee is hereby
irrevocably  authorized  and directed to execute and deliver the  Assignment and
Assumption  Agreement on the date  specified in Section 7.01 of the Related Pass
Through Trust Supplement, subject only to the satisfaction of the conditions set



forth in said Section  7.01.  This  Agreement  (except only for the  immediately
preceding  sentence  hereof,  which is  effective  upon  execution  and delivery
hereof) shall become effective upon the execution and delivery of the Assignment
and Assumption  Agreement by the Trustee and the Related Trustee,  automatically
and without any further  signature  or action on the part of the Company and the
Trustee,  and shall thereupon constitute the legal, valid and binding obligation
of the  parties  hereto  enforceable  against  each  of the  parties  hereto  in
accordance  with its terms.  Upon such  execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated,  the Applicable
Certificateholders shall receive beneficial interests in the Applicable Trust in
exchange  for their  interests  in the Related  Trust equal to their  respective
beneficial  interests in the Related Trust and the  "Outstanding" (as defined in
the Related Pass Through Trust Agreement) pass through certificates representing
fractional  undivided  interests  in the  Related  Trust shall be deemed for all
purposes of this Agreement,  without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests  in the Trust and Trust  Property.  By  acceptance  of its  Applicable
Certificate,  each  Applicable  Certificateholder  consents to and ratifies such
assignment,  transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution  and delivery of the  Assignment  and  Assumption
Agreement.  The  provisions  of this Section  5.01(a)  supersede and replace the
provisions of Section 2.02 of the Basic Agreement (which are inapplicable to the
Trust), and all provisions of the Basic Agreement relating to Postponed Notes or
Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.

          (b) The Trustee, upon the execution and delivery of the Assignment and
Assumption  Agreement,  acknowledges  its  acceptance  of all  right,  title and
interest in and to the Trust  Property and declares  that the Trustee  holds and
will hold such right, title and interest for the benefit of all then present and
future  Applicable  Certificateholders,  upon the trusts herein and in the Basic
Agreement set forth. By the acceptance of each Applicable  Certificate issued to
it under the Related Pass Through  Trust  Agreement and deemed issued under this
Agreement,  each  Holder of any such  Applicable  Certificate  as grantor of the
Applicable Trust thereby joins in the creation and declaration of the Applicable
Trust.  The  provisions  of this  Section  5.01(b)  supersede  and  replace  the
provisions of Section 2.03 of the Basic Agreement (which are inapplicable to the
Trust).

          (c) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this  Trust  Supplement,  the Note  Purchase  Agreement  and each  Applicable



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. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement.

          Section 5.02. [Intentionally Omitted]

          Section 5.03.  THE TRUSTEE.  (a) Subject to Section 5.04 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,  the Deposit Agreement,  the Note Purchase
Agreement or the Escrow  Agreement or the due execution hereof or thereof by the
Company or the other  parties  thereto  (other than the  Trustee),  or for or in
respect of the recitals and statements contained herein or therein, 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,  the Intercreditor  Agreement, the Note
Purchase  Agreement and the Escrow  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  5.04.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants, on the Transfer Date, that:

          (a) the Trustee has full power,  authority  and legal right to receive
     the Trust Property assigned by the Related Trustee,  assume the obligations
     under,  and perform,  the Assignment and Assumption  Agreement,  this Trust
     Supplement,  the Intercreditor Agreement, the Escrow Agreement and the Note



     Documents  and has taken all  necessary  action to authorize  such receipt,
     assumption   and   performance  by  it  of  this  Trust   Supplement,   the
     Intercreditor  Agreement,  the Escrow  Agreement and the Note  Documents to
     which it is a party;

          (b) the  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents (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  receipt  of the  Trust  Property  under  the  Assignment  and
     Assumption  Agreement and the  performance by the Trustee of the Assignment
     and  Assumption  Agreement,   this  Trust  Supplement,   the  Intercreditor
     Agreement, the Escrow Agreement and the Note Documents 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) The Assignment and Assumption Agreement has been duly executed and
     delivered  by the  Trustee  and this Trust  Supplement,  the  Intercreditor
     Agreement,  the Escrow  Agreement and the Note Documents have been, or will
     be,  as  applicable,  duly  executed  and  delivered  by  the  Trustee  and
     constitute, or will constitute, as applicable, the legal, valid and binding
     agreements of the Trustee,  enforceable against it in accordance with their
     respective terms; PROVIDED,  however, that enforceability may be limited by
     (i)  applicable  bankruptcy,  insolvency,  reorganization,   moratorium  or



     similar laws  affecting the rights of creditors  generally and (ii) general
     principles of equity.

          Section 5.05.  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 or the Note Purchase Agreement.


                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

          Section  6.01.  AMENDMENT  OF  SECTION  5.02 OF THE  BASIC  AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended by (i) replacing the phrase
"of the Note Documents and of this Agreement" set forth in paragraph (b) thereof
with the phrase "of the Note  Documents,  of the Note Purchase  Agreement and of
this  Agreement"  and (ii)  replacing the phrase "of this Agreement and any Note
Document"  set forth in the last  paragraph  of Section 5.02 with the phrase "of
this Agreement, the Note Purchase Agreement and any Note Document."

          Section 6.02.  SUPPLEMENTAL  AGREEMENTS  WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any time and from time to time,  enter into one or more  agreements
supplemental to the Escrow Agreement, the Note Purchase Agreement or the Deposit
Agreement,  for any of the purposes set forth in clauses (1) through (9) of such
Section  9.01,  except  that  clause (2) and (3) of such  Section  9.01 shall be
deemed to include the Company's  obligations  under (in the case of clause (2)),
and the  Company's  rights and powers  conferred by (in the case of clause (3)),
the Note Purchase Agreement, (b) clause (4) of such Section 9.01 shall be deemed
to include corrections or supplements to provisions of the Escrow Agreement, the
Note  Purchase  Agreement  or the Deposit  Agreement  which may be  defective or
inconsistent  with any other  provision  of this  Agreement  or contained in any
agreement  referred to in such clause (4) and the curing of any ambiguity or the
modification of any other provision with respect to matters or questions arising
under the Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement
and  (c)  references  in  clauses  (6)  and  (7) of  such  Section  9.01 to "any
Intercreditor  Agreement or any Liquidity  Facility" shall be deemed to refer to



"the Intercreditor  Agreement, the Liquidity Facility, the Escrow Agreement, the
Note  Purchase  Agreement or the Deposit  Agreement"  and (ii) enter into one or
more agreements supplemental to this Agreement to provide for the formation of a
Class D Trust, the issuance of Class D Certificates, the purchase by the Class D
Trust of the  Equipment  Notes and other matters  incident  thereto or otherwise
contemplated by Section 2.01(b) of the Basic Agreement.

          Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH  CONSENT OF  APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement  or the  Note  Purchase  Agreement  to the  extent  applicable  to the
Applicable Certificateholders approving such agreement or amendment or modifying
in any manner the rights and obligations of such  Applicable  Certificateholders
under  the  Escrow  Agreement,  the  Deposit  Agreement  or  the  Note  Purchase
Agreement;  provided  that  the  provisions  of  Section  9.02(1)  of the  Basic
Agreement  shall be deemed to include  reductions  in any manner of, or delay in
the timing of, any receipt by the Applicable Certificateholders of payments upon
the Deposits.


                                   ARTICLE VII
                              TERMINATION OF TRUST

          Section 7.01.  TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and  responsibilities of the Company and the Trustee with respect to
the Applicable  Trust shall  terminate upon the  distribution  to all Applicable
Certificateholders  and the Trustee of all amounts required to be distributed to
them pursuant to this Agreement and the disposition of all property held as part
of the Trust Property;  PROVIDED, HOWEVER, that in no event shall the Applicable
Trust  continue  beyond one hundred ten (110)  years  following  the date of the
earliest execution of this Trust Supplement.

          Notice of any termination, specifying the Distribution Date upon which
the Applicable Certificateholders may surrender their Applicable Certificates to
the Trustee for payment of the final  distribution  and  cancellation,  shall be
mailed promptly by the Trustee to Applicable Certificateholders not earlier than
the  60th  day and not  later  than the  15th  day  next  preceding  such  final
Distribution  Date specifying (A) the Distribution  Date upon which the proposed
final payment of the Applicable  Certificates will be made upon presentation and
surrender  of  Applicable  Certificates  at the office or agency of the  Trustee
therein  specified,  (B) the amount of any such proposed final payment,  and (C)



that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable,  payments  being made only upon  presentation  and  surrender of the
Applicable  Certificates  at  the  office  or  agency  of  the  Trustee  therein
specified.  The Trustee shall give such notice to the Registrar at the time such
notice  is  given  to  Applicable  Certificateholders.   Upon  presentation  and
surrender of the Applicable  Certificates  in accordance  with such notice,  the
Trustee  shall cause to be  distributed  to Applicable  Certificateholders  such
final payments.

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

          (b) The  provisions  of this  Section 7.01  supersede  and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety.


                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

          Section 8.01.  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  8.02.  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. THIS SECTION 8.02  SUPERSEDES AND REPLACES  SECTION 12.05
OF THE BASIC AGREEMENT.



          Section 8.03. 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 8.04. 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 this  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:


                                                                       EXECUTION


       _________________________________________________________________   

                            INTERCREDITOR AGREEMENT

                                   Dated as of
                                February 20, 1998

                                      AMONG

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity
                         but solely as Trustee under the
                Continental Airlines Pass Through Trust 1998-1A,
                 Continental Airlines Pass Through Trust 1998-1B
                                       and
                 Continental Airlines Pass Through Trust 1998-1C

                            AIG MATCHED FUNDING CORP.


                         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...................        25
SECTION 2.2.     Trust Accounts.......................................        26
SECTION 2.3.     Deposits to the Collection Account
                 and Special Payments Account.........................        28
SECTION 2.4.     Distributions of Special Payments....................        28
SECTION 2.5.     Designated Representatives...........................        31
SECTION 2.6.     Controlling Party....................................        32

              ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF
                                AMOUNTS RECEIVED

SECTION 3.1.     Written Notice of Distribution.......................        34
SECTION 3.2.     Distribution of Amounts on Deposit in
                 the Collection Account...............................        37
SECTION 3.3.     Distribution of Amounts on Deposit
                 Following a Triggering Event.........................        38
SECTION 3.4.     Other Payments.......................................        41
SECTION 3.5.     Payments to the Trustees and the
                 Liquidity Providers..................................        41
SECTION 3.6.     Liquidity Facilities.................................        42

                         ARTICLE IV EXERCISE OF REMEDIES

SECTION 4.1.     Directions from the Controlling Party................        51
SECTION 4.2.     Remedies Cumulative..................................        52
SECTION 4.3.     Discontinuance of Proceedings........................        53
SECTION 4.4.     Right of Certificateholders to Receive
                 Payments Not to Be Impaired..........................        53
SECTION 4.5.     Undertaking for Costs................................        53

                  ARTICLE V DUTIES OF THE SUBORDINATION AGENT;
                          AGREEMENTS OF TRUSTEES, ETC.

SECTION 5.1.     Notice of Indenture Default or
                 Triggering Event.....................................        54
SECTION 5.2.     Indemnification......................................        54
SECTION 5.3.     No Duties Except as Specified in
                 Intercreditor Agreement..............................        55
SECTION 5.4.     Notice from the Liquidity Providers and
                 Trustees.............................................        55



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                       ARTICLE VI THE SUBORDINATION AGENT

SECTION 6.1.     Authorization; Acceptance of Trusts and
                 Duties...............................................        55
SECTION 6.2.     Absence of Duties....................................        56
SECTION 6.3.     No Representations or Warranties as to
                 Documents............................................        56
SECTION 6.4.     No Segregation of Monies; No Interest................        56
SECTION 6.5.     Reliance; Agents; Advice of Counsel..................        56
SECTION 6.6.     Capacity in Which Acting.............................        57
SECTION 6.7.     Compensation.........................................        57
SECTION 6.8.     May Become Certificateholder.........................        57
SECTION 6.9.     Subordination Agent Required;
                 Eligibility..........................................        58
SECTION 6.10.    Money to Be Held in Trust............................        58

               ARTICLE VII INDEMNIFICATION OF SUBORDINATION AGENT

SECTION 7.1.     Scope of Indemnification.............................        58

                   ARTICLE VIII SUCCESSOR SUBORDINATION AGENT

SECTION 8.1.     Replacement of Subordination Agent;
                 Appointment of Successor.............................        59

                      ARTICLE IX SUPPLEMENTS AND AMENDMENTS

SECTION 9.1.     Amendments, Waivers, etc.............................        60
SECTION 9.2.     Subordination Agent Protected........................        62
SECTION 9.3.     Effect of Supplemental Agreements....................        62
SECTION 9.4.     Notice to Rating Agencies............................        63

                             ARTICLE X MISCELLANEOUS

SECTION 10.1.    Termination of Intercreditor Agreement...............        63
SECTION 10.2.    Intercreditor Agreement for Benefit of
                 Trustees, Liquidity Providers and
                 Subordination Agent..................................        63
SECTION 10.3.    Notices..............................................        63
SECTION 10.4.    Severability.........................................        64
SECTION 10.5.    No Oral Modifications or Continuing
                 Waivers..............................................        65
SECTION 10.6.    Successors and Assigns...............................        65
SECTION 10.7.    Headings.............................................        65
SECTION 10.8.    Counterpart Form.....................................        65
SECTION 10.9.    Subordination........................................        65
SECTION 10.10.   Governing Law........................................        67
SECTION 10.11.   Submission to Jurisdiction; Waiver of
                 Jury Trial; Waiver of Immunity.......................        67



                             INTERCREDITOR AGREEMENT

          INTERCREDITOR   AGREEMENT  dated  as  of  February  20,  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);  AIG
MATCHED  FUNDING CORP., a corporation  organized  under the laws of the State of
Delaware,  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 (i) in the case of each Aircraft
that is owned by  Continental  at the time such  Indenture  is entered into (the
"OWNED  AIRCRAFT"),  Continental  will issue on a recourse basis three series of
Equipment  Notes to finance the purchase of such Aircraft,  and (ii) in the case
of each  Aircraft that is leased to  Continental  pursuant to a related Lease at
the time such  Indenture is entered into (the  "LEASED  AIRCRAFT"),  the related
Owner Trustee will issue on a nonrecourse  basis three series of Equipment Notes
to finance the purchase of such Aircraft;

          WHEREAS, pursuant to the Financing 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 Certificate holders 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  (excluding  interest,  if any,
payable with respect to the Deposits  related to such Trust) and (y) the greater
of:

          (A) the difference  between (x) the Pool Balance of such  Certificates
     as of the  immediately  preceding  Distribution  Date (or,  if the  Current
     Distribution Date is the first  Distribution  Date, the original  aggregate
     face amount of the  Certificates of such Trust) 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,  but
     without  giving  effect to any reduction in the Pool Balance as a result of
     any distribution  attributable to Deposits  occurring after the immediately
     preceding  Distribution  Date (or, if the Current  Distribution Date is the
     first  Distribution  Date,  occurring  after the  initial  issuance  of the
     Certificates of such Trust), and

          (B) the amount of the excess,  if any, of (i) the Pool Balance of such
     Class of  Certificates as of the immediately  preceding  Distribution  Date
     (or, if the Current  Distribution Date is the first  Distribution Date, the
     original aggregate face amount of the Certificates of such Trust), less the
     amount of the Deposits for such Class of  Certificates as of such preceding
     Distribution  Date  (or,  if the  Current  Distribution  Date is the  first
     Distribution  Date, the original  aggregate amount of the Deposits for such
     Class of Certificates)  other than any portion of such Deposits  thereafter
     used to acquire  Equipment  Notes pursuant to the Note Purchase  Agreement,
     over  (ii)  the  Aggregate  LTV   Collateral   Amount  for  such  Class  of
     Certificates for the Current Distribution Date;

PROVIDED that,  until the date of the initial LTV  Appraisals,  clause (B) shall
not apply.

          For  purposes of  calculating  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 Leased Aircraft and Owned  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  Leased  Aircraft  or Owned
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.

          "ASSIGNMENT  AND ASSUMPTION  AGREEMENTS"  means each of the Assignment
and  Assumption  Agreements  to be  executed  among a Trustee and trustee of the
relevant Successor Trust in accordance with the relevant Trust Agreement, as the
same may be amended, modified or supplemented from time to time.

          "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 either 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 AIG Matched Funding Corp., 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  (i)  prior to the  Transfer,  the  Continental
Airlines Pass Through Trust 1998-1A-O  created and administered  pursuant to the
Class A Trust Agreement and (ii) after the Transfer,  the  Continental  Airlines
Pass Through Trust 1998-1A-S  created and  administered  pursuant to the Class A
Trust Agreement.

          "CLASS A TRUST AGREEMENT"  means (i) prior to the Transfer,  the Basic
Agreement,  as supplemented by the Supplement No. 1998-1A-O  thereto dated as of
the date hereof,  governing the creation and  administration  of the Continental
Airlines  Pass  Through  Trust  1998-1A-O  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, and (ii) after the Transfer, the
Basic  Agreement,  as  supplemented  by the  Supplement No.  1998-1A-S  thereto,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through  Trust  1998-1A-S 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 either 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 AIG Matched Funding Corp., 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  (i)  prior to the  Transfer,  the  Continental
Airlines Pass Through Trust 1998-1B-O  created and administered  pursuant to the
Class B Trust Agreement and (ii) after the Transfer,  the  Continental  Airlines
Pass Through Trust 1998-1B-S  created and  administered  pursuant to the Class B
Trust Agreement.

          "CLASS B TRUST AGREEMENT"  means (i) prior to the Transfer,  the Basic
Agreement,  as supplemented by the Supplement No. 1998-1B-O  thereto dated as of
the date hereof,  governing the creation and  administration  of the Continental
Airlines  Pass  Through  Trust  1998-1B-O  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, and (ii) after the Transfer, the
Basic  Agreement,  as  supplemented  by the  Supplement No.  1998-1B-S  thereto,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through  Trust  1998-1B-S 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 either 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 AIG Matched Funding Corp., 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  (i)  prior to the  Transfer,  the  Continental
Airlines Pass Through Trust 1998-1C-O  created and administered  pursuant to the
Class C Trust Agreement and (ii) after the Transfer,  the  Continental  Airlines
Pass Through Trust 1998-1C-S  created and  administered  pursuant to the Class C
Trust Agreement.

          "CLASS C TRUST AGREEMENT"  means (i) prior to the Transfer,  the Basic
Agreement,  as supplemented by the Supplement No. 1998-1C-O  thereto dated as of
the date hereof,  governing the creation and  administration  of the Continental
Airlines  Pass  Through  Trust  1998-1C-O  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, and (ii) after the Transfer, the
Basic  Agreement,  as  supplemented  by the  Supplement No.  1998-1C-S  thereto,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through  Trust  1998-1C-S 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.

          "CLASS D CERTIFICATES"  means any pass through  certificates issued by
the Class D Trust  representing  fractional  undivided  interests in the Class D
Trust.

          "CLASS D TRUST" means the  Continental  Airlines  Pass  Through  Trust
1998-1D, if and when established.

          "CLOSING DATE" means February 20, 1998.

          "CODE" means the Internal  Revenue Code of 1986,  as amended from time
to time, and 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.

          "DELIVERY  PERIOD  EXPIRY  DATE"  means the earlier of (a) January 31,
1999, or, if the Equipment Notes relating to all the New Aircraft (or Substitute
Aircraft in lieu thereof)  have not been  purchased by the Trusts on or prior to
such date due to any reason beyond the control of Continental and not occasioned
by Continental's  fault or negligence,  June 30, 1999 (PROVIDED that, if a labor
strike occurs at The Boeing  Company on or prior to either or both of such dates
referred  to in  this  clause  (a),  such  date or  dates  on or  following  the
commencement  of such strike  shall be extended by adding  thereto the number of
days that such strike  continued in effect) and (b) the date on which  Equipment
Notes with respect to all New Aircraft (or Substitute  Aircraft in lieu thereof)
have  been  purchased  by the  Trusts  in  accordance  with  the  Note  Purchase
Agreement.

          "DEPOSIT AGREEMENT" shall mean, with respect to any Class, the Deposit
Agreement  pertaining  to such Class  dated the date  hereof  between the Escrow
Agent, and the Depositary,  as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.

          "DEPOSITARY"  means Credit  Suisse First Boston,  New York Branch,  as
depositary under each Deposit Agreement.

          "DEPOSITS" with respect to any Class, shall have the meaning set forth
in the Deposit Agreement pertaining to such Class.

          "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" 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 S&P 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.

          "ESCROW  AGENT" means First Security Bank,  National  Association,  as
escrow agent under each Escrow and Paying  Agent  Agreement,  together  with its
successors in such capacity.

          "ESCROW AND PAYING AGENT  AGREEMENT"  shall mean,  with respect to any
Class, the Escrow and Paying Agent Agreement  pertaining to such Class dated the
date hereof  between the Escrow Agent,  the  Underwriters,  the Trustee for such
Class and the Paying Agent, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.

          "EXPECTED  DISTRIBUTIONS"  means,  with respect to the Certificates of
any Trust on any Current  Distribution  Date,  the sum of (x) accrued and unpaid



interest on such Certificates  (excluding interest, if any, payable with respect
to the Deposits  related to such Trust) 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) 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,  but without giving effect to any reduction in
the Pool  Balance  as a result  of any  distribution  attributable  to  Deposits
occurring after the immediately preceding  Distribution Date (or, if the Current
Distribution Date is the first  Distribution  Date,  occurring after the initial
issuance  of the  Certificates  of such  Trust).  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.

          "FACILITY OFFICE" means, with respect to any Liquidity  Facility,  the
office of such Liquidity  Provider  thereunder,  presently  located at Westport,
Connecticut  for AIG  Matched  Funding  Corp.,  or  such  other  office  as such
Liquidity  Provider from time to time shall notify the applicable Trustee as its
"Facility  Office"  under  any  such  Liquidity  Facility;  PROVIDED  that  such
Liquidity  Provider  shall not change its Facility  Office to a Facility  Office
outside the United  States of America  except in  accordance  with Section 3.01,
3.02 or 3.03 of any such Liquidity Facility.

          "FEE LETTER" means the Fee Letter dated  February 20, 1998 between AIG
Matched  Funding Corp. 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  (excluding  interest,  if any,
payable with  respect to the  Deposits  relating to such Trust) and (y) the Pool
Balance of such Certificates as of the immediately  preceding  Distribution Date
(less the  amount of the  Deposits  for such  Class of  Certificates  as of such
preceding  Distribution Date other than any portion of such Deposits  thereafter
used to acquire  Equipment Notes pursuant to the Note Purchase  Agreement).  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,  March 15, 2019,  (ii) with  respect to the Class B  Certificates,
September 15, 2018 and (iii) with respect to the Class C Certificates, September
15, 2009.

          "FINANCING  AGREEMENT" means each of the Participation  Agreements and
the Note Purchase Agreement.

          "INDENTURE"  means each of the Trust  Indentures  entered  into by the
Loan  Trustee,  and the  Owner  Trustee  or  Continental,  pursuant  to the Note
Purchase  Agreement,  in each case as the same may be amended,  supplemented  or
otherwise modified from time to time in accordance with its terms.

          "INDENTURE DEFAULT" 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 Section 3.07(c), (d) or (e)
of such  Liquidity  Facility on a Downgrade  Drawing,  Non-Extension  Drawing or
Final Drawing thereunder.



          "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  pertaining to a Leased
Aircraft, the "Lease" referred to therein.

          "LEASED  AIRCRAFT"  has  the  meaning  assigned  to  such  term in the
preliminary statements of this Agreement.

          "LEASED  AIRCRAFT  INDENTURE"  means,  with  respect  to  each  Leased
Aircraft, the Indenture pertaining thereto.

          "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  FACILITIES"  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
9.1 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 loan 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 Leased Aircraft or Owned Aircraft for
any Class of Certificates  means, as of any Distribution Date, the lesser of (i)
the LTV Ratio for such Class of Certificates multiplied by the Appraised Current
Market Value of such  Aircraft (or with respect to any such  Aircraft  which has
suffered  an Event of Loss under and as defined  in the  relevant  Lease (in the
case of a Leased Aircraft) or Indenture (in the case of an Owned Aircraft),  the
amount of the  insurance  proceeds  paid to the related  Loan Trustee in respect
thereof to the extent then held by such Loan  Trustee  (and/or on deposit in the
Special  Payments  Account) or payable to such Loan Trustee in respect  thereof)
and (ii) the outstanding principal amount of the Equipment Notes secured by such
Aircraft after giving effect to any principal  payments of such Equipment  Notes
on or before such Distribution Date.

          "LTV RATIO" means for the Class A Certificates 40.50%, for the Class B
Certificates 53.75%, and for the Class C Certificates, 68.00%.

          "MAJORITY LIQUIDITY PROVIDERS" means, at any time, Liquidity Providers
holding at least 66-2/3% of the aggregate  outstanding  Liquidity Obligations at
such time.

          "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.

          "NEW  AIRCRAFT"  shall have the meaning set forth in the Note Purchase
Agreement.

          "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.

          "NOTE PURCHASE  AGREEMENT" means the Note Purchase  Agreement dated as
of the date hereof,  among  Continental,  each Trustee,  the Escrow  Agent,  the
Subordination Agent and the Paying Agent.

          "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 Financing
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.

          "OWNED  AIRCRAFT"  has  the  meaning  assigned  to  such  term  in the
preliminary statements of this Agreement.

          "OWNED AIRCRAFT INDENTURE" means, with respect to each Owned Aircraft,
the Indenture pertaining to such Aircraft.

          "OWNER TRUSTEE" means,  with respect to any Indenture  pertaining to a
Leased  Aircraft,  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).

          "PAYING AGENT" means Wilmington  Trust Company,  as paying agent under
each Escrow and Paying Agent  Agreement,  together  with its  successors in such
capacity.

          "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 (in the case of a Leased Aircraft) or under the Indenture related
to such Equipment  Note (in the case of an Owned  Aircraft) and (ii) any payment



default occurring after the date of the order of relief in such proceeding shall
not be taken into  consideration  if such payment default is cured under Section
1110(a)(1)(B)  of the 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 or in respect of  Deposits
relating  to such Trust  other than  payments  made in  respect of  interest  or
premium  thereon  or  reimbursement  of any costs  and  expenses  in  connection
therewith. The Pool Balance for each Trust or for the Certificates issued by any
Trust as of any  Distribution  Date shall be computed after giving effect to any
special  distribution  with respect to unused Deposits,  payment of principal of
the Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date.

          "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 March 15 and  September  15,
commencing on March 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, an
irrevocable revolving credit agreement in substantially the form of the replaced
Liquidity Facility,  including reinstatement  provisions,  or in such other form
(which may  include a letter of credit) as shall  permit the Rating  Agencies to
confirm in writing their respective  ratings then in effect for the Certificates
(before  downgrading of such ratings,  if any, as a result of the downgrading of
the applicable  Liquidity  Provider),  in a face amount (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 6.648% Series A Equipment  Notes
issued  pursuant to each Indenture by the related Owner Trustee or  Continental,
as the case may be, 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 6.748% Series B Equipment  Notes
issued  pursuant to each Indenture by the related Owner Trustee or  Continental,
as the case may be, 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 6.541% Series C Equipment  Notes
issued  pursuant to each Indenture by the related Owner Trustee or  Continental,



as the case may be, 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 Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft 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,  6.648% per annum,  (ii) with respect to the Class B Certificates,
6.748% per annum, and (iii) with respect to the Class C Certificates, 6.541% 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).

          "SUBSTITUTE  AIRCRAFT"  shall have the  meaning  set forth in the Note
Purchase Agreement.

          "SUCCESSOR  TRUSTS"  means,  collectively,  Continental  Airlines Pass
Through Trust 1998-1A-S,  Continental  Airlines Pass Through Trust 1998-1B-S and
Continental Airlines Pass Through Trust 1998-1C-S.



          "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.

          "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.

          "TRANSFER"  means the transfers  contemplated  by the  Assignment  and
Assumption Agreements.

          "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  (PROVIDED  that,  with respect to the
period prior to the Delivery Period Expiry Date, the aggregate principal balance
of such Equipment Notes is in excess of $200,000,000) 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 Credit Suisse First Boston  Corporation,  Morgan
Stanley & Co. Incorporated and Chase Securities Inc.

          "UNDERWRITING   AGREEMENT"  means  the  Underwriting  Agreement  dated
February  11,  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.

          "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,  payments  under  Section  9.1  of  the
Participation Agreements or payments under Sections 6 and 7 of the Note Purchase
Agreement,  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 to the relevant  Deposits 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;
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,  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;  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 amounts 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),  clause  (x) of the  definition  of
"Expected  Distributions" shall be deemed to read as follows:  "(x) accrued, due
and unpaid  interest on 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)
(excluding  interest,  if any,  payable with respect to the Deposits  related to
such Trust)".



          (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,  any
Liquidity  Provider,  any Paying  Agent,  any  Depositary  or any  Escrow  Agent
(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,  in the case of an
Indenture pertaining to a Leased Aircraft,  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  (PROVIDED that, with respect to the



period prior to the Delivery  Period Expiry Date,  such Equipment  Notes have an
aggregate  outstanding  principal  balance  of in excess of  $200,000,000),  the
Liquidity Provider with the highest 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. Notwithstanding the immediately preceding



three sentences,  so long as AIG Matched Funding Corp. is the Liquidity Provider
for any  Facility,  the  Stated  Expiration  Date  for  such  Facility  shall be
automatically  extended,  effective  on  the  25th  day  prior  to  such  Stated
Expiration Date (unless such Stated Expiration Date is on or after the date that
is 15 days after the Final Legal  Distribution  Date for the  relevant  Class of
Certificates),  for a period  of 364 days  after  such  Stated  Expiration  Date
(unless  the  obligations  of such  Liquidity  Provider  thereunder  are earlier
terminated in accordance with such Liquidity  Facility) without the necessity of
any act by the  Subordination  Agent  or the  Liquidity  Provider,  unless  such
Liquidity  Provider  shall advise the Borrower,  prior to such 25th day, that it
does not agree to such extension of the Stated  Expiration Date, in which event,
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
Non-Extended  Facility,  request a Non-Extension  Drawing under the Non-Extended
Facility of all available and undrawn amounts thereunder.

          (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 the initial Liquidity
Provider  shall not be replaced by  Continental  as a  Liquidity  Provider  with
respect  to any  Class of  Certificates  prior to the fifth  anniversary  of the
Closing  Date unless (A) there  shall have  become due to the initial  Liquidity
Provider,  or the  initial  Liquidity  Provider  shall  have  demanded,  amounts
pursuant  to  Section  3.01,  3.02  or 3.03 of any  Liquidity  Facility  and the
replacement  of the initial  Liquidity  Provider  would reduce or eliminate  the
obligation  to pay such  amounts or  Continental  determines  in good faith that
there is a substantial  likelihood that the initial Liquidity Provider will have
the right to claim any such  amounts  (unless  the  initial  Liquidity  Provider
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
the initial  Liquidity  Provider setting forth the basis for such  determination
and  accompanied by an opinion of outside  counsel  selected by Continental  and
reasonably  acceptable  to the initial  Liquidity  Provider  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 the initial  Liquidity  Provider (or its Facility  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 the initial
Liquidity Provider 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 the initial Liquidity Provider 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
the initial Liquidity  Provider or (E) the initial Liquidity Provider shall have
breached any of its payment (including, without limitation, funding) obligations
under any 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 or pursuant to Section 2.03 of
     the Escrow and Paying Agent  Agreement  for such Class,  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), 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 or pursuant to Section 2.03 of
     the Escrow and Paying  Agent  Agreement  of such Class,  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), 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 or pursuant to Section 2.03 of
     the Escrow and Paying Agent  Agreement  for such Class,  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), 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 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, set forth in the Indentures with respect to Leased
Aircraft  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, set forth in the Indentures with respect to Leased Aircraft
     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) with respect
     to any Leased Aircraft,  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



9.1  of  the  Participation  Agreements  and  Section  7 of  the  Note  Purchase
Agreement.  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,
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 (x) any Trustee if such supplement, amendment or modification (i)
is in  accordance  with  Section  9.1(c)  hereof or (ii) cures an  ambiguity  or
inconsistency  or does not  materially  adversely  affect  such  Trustee  or the
holders of the related Class of Certificates  and (y) any Liquidity  Provider if
such supplement,  amendment or modification is in accordance with Section 9.1(c)
hereof;  PROVIDED  FURTHER,  HOWEVER,  that,  if such  supplement,  amendment or
modification  (A) 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),  Section  9.1(c),  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 or (B) is



made pursuant to Section 9.1(c), 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), except
as provided in Section 9.1(c),  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,  in the case of any Indenture
pertaining  to a Leased  Aircraft,  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 or reduce the
amount of principal or interest payable by Continental  under any Equipment Note
issued under any Indenture in respect of an Owned Aircraft.



          (c) If with respect to any Owned Aircraft  Continental  issues Class D
Certificates,   this  Agreement  shall  be  amended  by  written   agreement  of
Continental and the Subordination Agent to provide for the subordination of such
Class D Certificates to the Class A Certificates,  the Class B Certificates  and
the  Class C  Certificates  substantially  in the  same  manner  as the  Class C
Certificates are subordinated hereunder to the Class B and Class A Certificates.
No such amendment shall materially  adversely affect any Trustee.  The amendment
to this  Agreement  to give effect to the  issuance of any Class D  Certificates
shall include, without limitation:

          (i) the trustee of the Class D Trust shall be added as a party to this
     Agreement;

         (ii) the  definitions  of "Cash  Collateral  Account,"  "Certificate,"
     "Class,"  "Equipment  Notes," "Final Legal  Distribution  Date," "Liquidity
     Facilities,"  "Liquidity  Provider," "LTV Ratio,"  "Stated  Interest Rate,"
     "Trust,"  "Trust  Agreement,"  "Controlling  Party"  shall be  revised,  as
     appropriate,  to reflect the issuance of the Class D Certificates  (and the
     subordination thereof); and

        (iii) provisions  of  this Agreement  governing payments with respect to
     Certificates and related notices, including,  without limitation,  Sections
     2.4,  3.1,   3.2,  3.3  and  3.6(e),   shall  be  revised  to  provide  for
     distributions  on the Class D  Certificates  after  payment of all relevant
     distributions on Class C Certificates.

          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.  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 the initial  Liquidity  Provider,  addressed  to it at its
     office at:

                            AIG Matched Funding Corp.
                            100 Nyala Farm
                            Westport, CT  06880

                            Attention: Chief Financial Officer
                            Telephone: (203) 222-4700
                            Telecopy:  (203) 222-478

                            with  a copy  to the  General  Counsel  at the  same
                            address and fax number.

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 ASSIGNS.  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.  Upon the occurrence of the
Transfers contemplated by the Assignment and Assumption Agreements,  the Trustee
of each Class shall (without any further act) be deemed to have  transferred all
of its rights, title and interest in and to this Agreement to the trustee of the
Successor Trust of the same Class and, thereafter, the trustee of each Successor
Trust  shall be deemed to be the  "Trustee"  of such  Successor  Trust  with the
rights and  obligations of a "Trustee"  hereunder and under the other  Operative
Agreements  and each  reference to a Trust of any Class herein shall be deemed a
reference to the Successor Trust of such Class.

          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:


                                        AIG MATCHED FUNDING CORP.,
                                          as Class A Liquidity Provider, Class B
                                          Liquidity   Provider   and   Class   C
                                          Liquidity Provider


                                        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:

                                                                       EXECUTION









                                DEPOSIT AGREEMENT
                                    (Class A)

                          Dated as of February 20, 1998


                                     between


                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent

                                       and

                           CREDIT SUISSE FIRST BOSTON,
                                 New York Branch

                                  as Depositary




          DEPOSIT AGREEMENT (Class A) dated as of February 20, 1998 (as amended,
modified or  supplemented  from time to time,  this  "AGREEMENT")  between FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  a national banking association,  as Escrow
Agent  under the Escrow and Paying  Agent  Agreement  referred to below (in such
capacity,  together with its successors in such capacity,  the "ESCROW  AGENT"),
and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution organized
under the laws of Switzerland  acting through its New York branch, as depositary
bank (the "DEPOSITARY").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL") and Wilmington
Trust Company,  not in its  individual  capacity  except as otherwise  expressly
provided  therein,  but solely as trustee (in such  capacity,  together with its
successors in such  capacity,  the "PASS THROUGH  TRUSTEE")  have entered into a
Trust  Supplement,  dated February 20, 1998, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together,  as amended,  modified or supplemented
from time to time in accordance with the terms thereof,  the "PASS THROUGH TRUST
AGREEMENT")  relating to  Continental  Airlines  Pass  Through  Trust  1998-1A-O
pursuant to which the Continental  Airlines Pass Through Trust, Series 1998-1A-O
Certificates referred to therein (the "CERTIFICATES") are being issued;

          WHEREAS,  Continental  and Credit  Suisse  First  Boston  Corporation,
Morgan Stanley & Co. Incorporated and Chase Securities Inc.  (collectively,  the
"UNDERWRITERS"  and,  together with their respective  transferees and assigns as
registered  owners of the  Certificates,  the "INVESTORS")  have entered into an
Underwriting  Agreement dated as of February 11, 1998 pursuant to which the Pass
Through Trustee will issue and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT
NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee
or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");

          WHEREAS, the Escrow Agent, the Underwriters,  the Pass Through Trustee
and  Wilmington  Trust  Company,  as paying  agent for the Escrow Agent (in such
capacity,  together with its  successors in such capacity,  the "PAYING  AGENT")




concurrently  herewith are entering  into an Escrow and Paying Agent  Agreement,
dated as of the date hereof (as amended,  modified or supplemented  from time to
time in  accordance  with the  terms  thereof,  the  "ESCROW  AND  PAYING  AGENT
AGREEMENT"); and

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net  Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors
pursuant to the Escrow and Paying Agent  Agreement,  subject to withdrawal  upon
request of and proper  certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which  provides  for the  Depositary  to pay interest  for  distribution  to the
Investors  and to  establish  accounts  from which the Escrow  Agent  shall make
withdrawals  upon  request  of and  proper  certification  by the  Pass  Through
Trustee.

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

          SECTION 1.1 ACCEPTANCE OF DEPOSITARY.  The Depositary hereby agrees to
act as depositary bank as provided herein and in connection  therewith to accept
all amounts to be delivered to or held by the  Depositary  pursuant to the terms
of this Agreement. The Depositary further agrees to hold, maintain and safeguard
the  Deposits  and the  Accounts  (as  defined  below)  during  the term of this
Agreement in accordance with the provisions of this Agreement.  The Escrow Agent
shall not have any right to withdraw,  assign or otherwise  transfer moneys held
in the Accounts except as permitted by this Agreement.

          SECTION  1.2  ESTABLISHMENT  OF  ACCOUNTS.  The  Escrow  Agent  hereby
instructs the Depositary,  and the Depositary  agrees, to establish the separate
deposit  accounts  listed on Schedule I hereto and to establish such  additional
separate  deposit  accounts as may be required in  connection  with the deposits
contemplated  by Section 2.4 hereof (each,  an "ACCOUNT" and  collectively,  the
"ACCOUNTS"),  each in the name of the  Escrow  Agent  and all on the  terms  and
conditions set forth in this Agreement.

          SECTION 2.1 DEPOSITS.  The Escrow Agent shall direct the  Underwriters
to deposit  with the  Depositary  on the date of this  Agreement  (the  "DEPOSIT
DATE") in Federal (same day) funds by official  check or checks or wire or other
transfer to: Credit Suisse First Boston, New York Branch, Reference: Continental
1998-1, and the Depositary shall accept from the Underwriters,  on behalf of the
Escrow  Agent,  the sum of  US$485,605,000.  Upon  acceptance  of such sum,  the




Depositary  shall (i)  establish  each of the  deposits  specified in Schedule I
hereto maturing on the respective dates set forth therein (including any deposit
made   pursuant  to  Section  2.4  hereof,   individually,   a  "DEPOSIT"   and,
collectively,  the  "DEPOSITS")  and (ii)  credit  each  Deposit to the  related
Account as set forth therein.  No amount shall be deposited in any Account other
than the related Deposit.

          SECTION  2.2  INTEREST.  Each  Deposit  shall bear  interest  from and
including  the date of deposit to but  excluding  the date of  withdrawal at the
rate of 6.648%  per  annum  (computed  on the  basis of a year of twelve  30-day
months) payable to the Paying Agent on behalf of the Escrow Agent  semi-annually
in  arrears  on each  March 15 and  September  15,  and on the date of the Final
Withdrawal (as defined below),  commencing on March 15, 1998 (each, an "INTEREST
PAYMENT DATE"),  all in accordance with the terms of this Agreement  (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date,  notwithstanding
any intervening Final Withdrawal (as defined below).

          SECTION  2.3  WITHDRAWALS.  (a) On and after the date seven days after
the  establishment  of any Deposit,  the Escrow Agent may, by providing at least
one Business  Day's prior notice of withdrawal to the  Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire  balance  of such  Deposit,  except  that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the  Depositary,  cancel such  withdrawal  (including on the scheduled
date  therefor),  and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance  with the original  terms  thereof.  Following such
withdrawal  the balance in the related  Account shall be zero and the Depositary
shall close such Account.  As used herein,  "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.

               (b) The Escrow  Agent may, by  providing  at least 15 days' prior
notice  of  withdrawal  to the  Depositary  in the form of  Exhibit  B hereto (a
"NOTICE  OF  FINAL  WITHDRAWAL"),  withdraw  the  entire  amount  of  all of the
remaining  Deposits  together with the payment by the  Depositary of all accrued
and unpaid  interest on such Deposits to but  excluding  the  specified  date of
withdrawal  (a "FINAL  WITHDRAWAL"),  on such date as shall be specified in such
Notice of Final  Withdrawal.  If a Notice of Final Withdrawal has not been given
to the  Depositary on or before July 7, 1999  (provided  that, if a labor strike




occurs at The Boeing  Company  prior to June 30, 1999 (a "LABOR  STRIKE"),  such
date shall be  extended  by adding  thereto  the number of days that such strike
continued in effect (the "ADDITIONAL  DAYS") and there are unwithdrawn  Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on July 30, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).

               (c)  If  the  Depositary  receives  a duly  completed  Notice  of
Purchase Withdrawal or Notice of Final Withdrawal  complying with the provisions
of this Agreement,  it shall make the payments  specified  therein in accordance
with the provisions of this Agreement.

          SECTION 2.4 OTHER ACCOUNTS.  On the date of withdrawal of any Deposit,
the Escrow  Agent,  or the Pass Through  Trustee on behalf of the Escrow  Agent,
shall be entitled to re-deposit  with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully  provided in Section 2.1 hereof,  and thereafter the provisions of
this  Agreement  shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit  may  not  be  withdrawn   prior  to  the  date  seven  days  after  the
establishment  thereof  and (ii) such  Deposit  shall  mature  on July 30,  1999
(provided  that if a Labor  Strike  occurs,  such date shall be  extended by the
Additional  Days) and bear  interest as provided in Section 2.2. The  Depositary
shall  promptly  give  notice  to the  Escrow  Agent  of  receipt  of each  such
re-deposit and the account number assigned thereto.

          SECTION 3.  TERMINATION.  This Agreement  shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits  shall
have been withdrawn and paid as provided  herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein,  but in no event  prior to the date on which the  Depositary  shall have
performed in full its obligations hereunder.

          SECTION 4.  PAYMENTS.  All payments  (including,  without  limitation,
those  payments  made in respect of Taxes (as defined and  provided  for below))
made by the  Depositary  hereunder  shall be paid in United  States  Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the  Deposits  payable  under  Section  2.2  hereof or any Final  Withdrawal,
directly to the Paying Agent at Wilmington Trust Company,  Wilmington,  DE, ABA#
031-100-092,  Account No. 44224-0, Attention: Bruce Bisson, Telephone; No. (302)
651-8584, Reference: Continental 1998-1A, or to such other account as the Paying





Agent may direct from time to time in writing to the  Depositary  and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant to
a Notice of Purchase Withdrawal,  directly to or as directed by the Pass Through
Trustee as  specified  and in the manner  provided  in such  Notice of  Purchase
Withdrawal.  The  Depositary  hereby  waives  any and  all  rights  of  set-off,
combination of accounts,  right of retention or similar right  (whether  arising
under  applicable  law,  contract or otherwise) it may have against the Deposits
howsoever  arising.  All payments on or in respect of each Deposit shall be made
free and clear of and without  reduction for or on account of any and all taxes,
levies or other impositions or charges (collectively,  "TAXES"). However, if the
Depositary  or the Paying  Agent  (pursuant  to  Section  2.04 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable  hereunder,  the Depositary shall (i) make
such  deductions or  withholding,  (ii) pay the full amount deducted or withheld
(including  in respect of such  additional  amounts) to the  competent  taxation
authority and (iii) if the Taxes required to be deducted or withheld are imposed
by Switzerland or any political subdivision thereof, pay such additional amounts
as may be necessary in order that the actual amount  received by the  designated
recipient  of such sum under this  Agreement  or the  Escrow  and  Paying  Agent
Agreement  after  such  deduction  or  withholding  equals the sum it would have
received had no such  deduction or  withholding  been  required.  If the date on
which any payment due on any Deposit would  otherwise fall on a day which is not
a Business Day, such payment shall be made on the next succeeding  Business Day,
and no additional interest shall accrue in respect of such extension.

          SECTION  5.  REPRESENTATION  AND  WARRANTIES.  The  Depositary  hereby
represents  and  warrants to  Continental,  the Escrow  Agent,  the Pass Through
Trustee and the Paying Agent that:

               (a) it is a bank duly  organized  and  validly  existing  in good
     standing under the laws of its  jurisdiction  of  organization  and is duly
     qualified to conduct banking  business in the State of New York through its
     New York Branch;

               (b) it has full power,  authority  and legal right to conduct its
     business  and  operations  as  currently  conducted  and to enter  into and
     perform its obligations under this Agreement;

               (c) the  execution,  delivery and  performance  of this Agreement
     have been duly authorized by all necessary  corporate action on the part of
     it and do not require any stockholder  approval,  or approval or consent of
     any trustee or holder of any  indebtedness  or  obligations of it, and such






     document has been duly  executed and  delivered by it and  constitutes  its
     legal, valid and binding  obligations  enforceable against it in accordance
     with the terms hereof;

               (d) no authorization,  consent or approval of or other action by,
     and no  notice  to or filing  with,  any  United  States  federal  or state
     governmental  authority or regulatory  body is required for the  execution,
     delivery or performance by it of this Agreement;

               (e) neither the execution,  delivery or performance by it of this
     Agreement,  nor compliance with the terms and provisions hereof,  conflicts
     or will conflict with or results or will result in a breach or violation of
     any of the terms,  conditions or provisions of, or will require any consent
     or approval under, any law,  governmental rule or regulation or the charter
     documents,  as  amended,  or  bylaws,  as  amended,  of it or  any  similar
     instrument  binding on it or any order,  writ,  injunction or decree of any
     court or  governmental  authority  against  it or by which it or any of its
     properties  is  bound  or any  indenture,  mortgage  or  contract  or other
     agreement or instrument to which it is a party or by which it or any of its
     properties is bound, or constitutes or will constitute a default thereunder
     or results  or will  result in the  imposition  of any lien upon any of its
     properties; and

               (f)  there  are  no  pending  or,  to its  knowledge,  threatened
     actions,  suits,  investigations or proceedings (whether or not purportedly
     on behalf of it) against or affecting  it or any of its property  before or
     by any court or administrative agency which, if adversely  determined,  (i)
     would adversely  affect the ability of it to perform its obligations  under
     this  Agreement or (ii) would call into  question or challenge the validity
     of this Agreement or the enforceability hereof in accordance with the terms
     hereof,  nor is the  Depositary in default with respect to any order of any
     court,  governmental authority,  arbitration board or administrative agency
     so as to adversely affect its ability to perform its obligations under this
     Agreement.

          SECTION 6. TRANSFER.  Neither party hereto shall be entitled to assign
or otherwise transfer this Agreement (or any interest herein) other than (in the
case of the  Escrow  Agent) to a  successor  escrow  agent  under the Escrow and
Paying Agent Agreement,  and any purported assignment in violation thereof shall
be void.  This  Agreement  shall be binding  upon the  parties  hereto and their
respective  successors and (in the case of the Escrow Agent) permitted  assigns.
Upon the  occurrence  of the Transfer  (as defined  below)  contemplated  by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee




shall  (without  further  act) be deemed to have  transferred  all of its right,
title and  interest in and to this  Agreement  to the  trustee of the  Successor
Trust (as defined  below) and,  thereafter,  the trustee of the Successor  Trust
shall be deemed to be the "Pass Through  Trustee"  hereunder  with the rights of
the "Pass Through Trustee" hereunder,  and each reference herein to "Continental
Airlines  Pass  Through  Trust  1998-1A-O"  shall be deemed to be a reference to
"Continental  Airlines Pass Through Trust  1998-1A-S".  The Escrow Agent and the
Depositary  hereby  acknowledge and consent to the Transfer  contemplated by the
Assignment  and  Assumption  Agreement.  For the  purposes  of this  Section  6,
"TRANSFER"  means the transfer  contemplated  by the  Assignment  and Assumption
Agreement;  "ASSIGNMENT  AND  ASSUMPTION  AGREEMENT"  means the  Assignment  and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor  Trust,  substantially  in the form of Exhibit C to the
Pass Through  Trust  Agreement;  and  "SUCCESSOR  TRUST"  means the  Continental
Airlines Pass Through Trust 1998-1A-S.

          SECTION 7. AMENDMENT,  ETC. This Agreement may not be amended,  waived
or otherwise  modified  except by an instrument  in writing  signed by the party
against  whom the  amendment,  waiver  or other  modification  is  sought  to be
enforced and by the Pass Through Trustee.

          SECTION 8. NOTICES.  Unless otherwise  expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit  Suisse  First  Boston,  11 Madison  Avenue,  New York,  New York  10010,
Attention:  Robert Finney and Charlyn Lusk (Telecopier:  212-325-8319) or (y) in
the case of the Escrow Agent,  First Security  Bank,  National  Association,  79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier:  (801)  246-5053),  in each case,  with a copy to the Pass  Through
Trustee,  Wilmington  Trust Company,  1100 North Market Street,  Wilmington,  DE
19890, Attention:  Corporate Trust Administration  (Telecopier:  (302) 651-8882)
and to Continental,  Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010,
Houston,  TX 77019,  Attention:  Executive  Vice  President and Chief  Financial
Officer (Telecopier: (713) 520-6329) (or at such other address as any such party
may specify from time to time in a written notice to the parties hereto).  On or
prior to the execution of this Agreement,  the Escrow Agent has delivered to the
Depositary a certificate  containing  specimen signatures of the representatives
of the Escrow Agent who are  authorized  to give notices and  instructions  with
respect  to  this  Agreement.  The  Depositary  may  conclusively  rely  on such
certificate  until the Depositary  receives written notice from the Escrow Agent
to the contrary.





          SECTION  9.   OBLIGATIONS   UNCONDITIONAL.   The   Depositary   hereby
acknowledges  and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute,  irrevocable and  unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.

          SECTION  10.  ENTIRE   AGREEMENT.   This   Agreement   (including  all
attachments  hereto)  sets  forth all of the  promises,  covenants,  agreements,
conditions and  understandings  between the Depositary and the Escrow Agent with
respect  to  the   subject   matter   hereof  and   supersedes   all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.

          SECTION  11.  GOVERNING  LAW.  This  Agreement,  and  the  rights  and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal  Reserve System (or any  successor),  as the same may be modified
and supplemented and in effect from time to time.

          SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND THE
ESCROW AGENT  ACKNOWLEDGES  AND ACCEPTS THAT IN ANY SUIT,  ACTION OR  PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY  IRREVOCABLY  WAIVES ITS
RIGHT TO A TRIAL BY JURY.

          SECTION 13.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.

          SECTION 14. HEAD OFFICE OBLIGATION.  Credit Suisse First Boston hereby
agrees that the obligations of the Depositary hereunder are also the obligations
of Credit Suisse First Boston's Head Office in Zurich, Switzerland. Accordingly,
any  beneficiary  of this  Agreement  will be able to proceed  directly  against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York branch  defaults in its  obligation to such  beneficiary
under this Agreement.

          SECTION 15. LAST DEPOSIT.  Notwithstanding anything to the contrary in
this  Agreement,  (i) the last  Deposit  listed  on  Schedule  I  hereto  ("LAST
DEPOSIT") shall not bear interest, but otherwise shall be treated as a "Deposit"
for all purposes of this Agreement,  (ii) the Escrow Agent many not withdraw any
Deposit  (other than the Last  Deposit)  unless the Last Deposit shall have been
withdrawn  prior to or  concurrently  with such Deposit and (iii) for so long as
the Last Deposit shall not have been  withdrawn in  accordance  with Section 2.3




hereof, the other Deposits shall be deemed to bear additional  interest from and
including  the date hereof to but  excluding  the date of withdrawal of the Last
Deposit in an amount equal to $4,333.28 per day (computed on the basis of a year
of twelve 30-day months).






          IN WITNESS  WHEREOF,  the Escrow Agent and the Depositary  have caused
this Deposit  Agreement  to be duly  executed as of the day and year first above
written.

                                                   FIRST SECURITY BANK, NATIONAL
                                                     ASSOCIATION,
                                                     as Escrow Agent


                                                   By___________________________
                                                     Name:
                                                     Title:

                                                   CREDIT SUISSE FIRST BOSTON,
                                                     New York Branch,
                                                     as Depositary


                                                   By___________________________
                                                     Name:
                                                     Title:


                                                   By___________________________
                                                     Name:
                                                     Title:





                                                                      Schedule I

SCHEDULE OF DEPOSITS -------------------- (Class A) DATE DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE ---- -------------- ----------- -------------- 2/20/98 47,023,200 3-98 7/30/99 2/20/98 23,562,000 1-98 7/30/99 2/20/98 23,466,400 6-98 7/30/99 2/20/98 44,703,951 8-98 7/30/99 2/20/98 39,546,636 10-98 7/30/99 2/20/98 59,665,000 10-98 7/30/99 2/20/98 62,237,457 10-98 7/30/99 2/20/98 142,035,956 12-98 7/30/99 2/20/98 23,465,400 2-98 7/30/99 - ---------- Provided that if a Labor Strike occurs, each date below shall be extended by the Additional Days.
EXHIBIT A NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class A) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $_______, Account No. ____________. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [________________, Account No. _____, Reference: _________] on _________ __, 199_, upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________ Name: Title: Dated: _______ __, 199_ EXHIBIT B NOTICE OF FINAL WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class A) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of all Deposits. The undersigned hereby directs the Depositary to pay the proceeds of the Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust Company, ABA# 031-100-092, Account No. _____________, Reference: Continental 1998-1. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________ Name: Title: Dated: _______ __, 199_



                                                                       EXECUTION






                                DEPOSIT AGREEMENT
                                    (Class B)

                          Dated as of February 20, 1998


                                     between


                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent


                                       and


                           CREDIT SUISSE FIRST BOSTON,
                                 New York Branch


                                  as Depositary





          DEPOSIT AGREEMENT (Class B) dated as of February 20, 1998 (as amended,
modified or  supplemented  from time to time,  this  "AGREEMENT")  between FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  a national banking association,  as Escrow
Agent  under the Escrow and Paying  Agent  Agreement  referred to below (in such
capacity,  together with its successors in such capacity,  the "ESCROW  AGENT"),
and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution organized
under the laws of Switzerland  acting through its New York branch, as depositary
bank (the "DEPOSITARY").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL") and Wilmington
Trust Company,  not in its  individual  capacity  except as otherwise  expressly
provided  therein,  but solely as trustee (in such  capacity,  together with its
successors in such  capacity,  the "PASS THROUGH  TRUSTEE")  have entered into a
Trust  Supplement,  dated February 20, 1998, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together,  as amended,  modified or supplemented
from time to time in accordance with the terms thereof,  the "PASS THROUGH TRUST
AGREEMENT")  relating to  Continental  Airlines  Pass  Through  Trust  1998-1B-O
pursuant to which the Continental  Airlines Pass Through Trust, Series 1998-1B-O
Certificates referred to therein (the "CERTIFICATES") are being issued;

          WHEREAS,  Continental  and Credit  Suisse  First  Boston  Corporation,
Morgan Stanley & Co. Incorporated and Chase Securities Inc.  (collectively,  the
"UNDERWRITERS"  and,  together with their respective  transferees and assigns as
registered  owners of the  Certificates,  the "INVESTORS")  have entered into an
Underwriting  Agreement dated as of February 11, 1998 pursuant to which the Pass
Through Trustee will issue and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT
NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee
or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");



          WHEREAS, the Escrow Agent, the Underwriters,  the Pass Through Trustee
and  Wilmington  Trust  Company,  as paying  agent for the Escrow Agent (in such
capacity,  together with its  successors in such capacity,  the "PAYING  AGENT")
concurrently  herewith are entering  into an Escrow and Paying Agent  Agreement,
dated as of the date hereof (as amended,  modified or supplemented  from time to
time in  accordance  with the  terms  thereof,  the  "ESCROW  AND  PAYING  AGENT
AGREEMENT"); and

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net  Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors
pursuant to the Escrow and Paying Agent  Agreement,  subject to withdrawal  upon
request of and proper  certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which  provides  for the  Depositary  to pay interest  for  distribution  to the
Investors  and to  establish  accounts  from which the Escrow  Agent  shall make
withdrawals  upon  request  of and  proper  certification  by the  Pass  Through
Trustee.

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

          SECTION 1.1 ACCEPTANCE OF DEPOSITARY.  The Depositary hereby agrees to
act as depositary bank as provided herein and in connection  therewith to accept
all amounts to be delivered to or held by the  Depositary  pursuant to the terms
of this Agreement. The Depositary further agrees to hold, maintain and safeguard
the  Deposits  and the  Accounts  (as  defined  below)  during  the term of this
Agreement in accordance with the provisions of this Agreement.  The Escrow Agent
shall not have any right to withdraw,  assign or otherwise  transfer moneys held
in the Accounts except as permitted by this Agreement.

          SECTION  1.2  ESTABLISHMENT  OF  ACCOUNTS.  The  Escrow  Agent  hereby
instructs the Depositary,  and the Depositary  agrees, to establish the separate
deposit  accounts  listed on Schedule I hereto and to establish such  additional
separate  deposit  accounts as may be required in  connection  with the deposits
contemplated  by Section 2.4 hereof (each,  an "ACCOUNT" and  collectively,  the
"ACCOUNTS"),  each in the name of the  Escrow  Agent  and all on the  terms  and
conditions set forth in this Agreement.

          SECTION 2.1 DEPOSITS.  The Escrow Agent shall direct the  Underwriters
to deposit  with the  Depositary  on the date of this  Agreement  (the  "DEPOSIT



DATE") in Federal (same day) funds by official  check or checks or wire or other
transfer to: Credit Suisse First Boston, New York Branch, Reference: Continental
1998-1, and the Depositary shall accept from the Underwriters,  on behalf of the
Escrow  Agent,  the sum of  US$150,371,000.  Upon  acceptance  of such sum,  the
Depositary  shall (i)  establish  each of the  deposits  specified in Schedule I
hereto maturing on the respective dates set forth therein (including any deposit
made   pursuant  to  Section  2.4  hereof,   individually,   a  "DEPOSIT"   and,
collectively,  the  "DEPOSITS")  and (ii)  credit  each  Deposit to the  related
Account as set forth therein.  No amount shall be deposited in any Account other
than the related Deposit.

          SECTION  2.2  INTEREST.  Each  Deposit  shall bear  interest  from and
including  the date of deposit to but  excluding  the date of  withdrawal at the
rate of 6.748%  per  annum  (computed  on the  basis of a year of twelve  30-day
months) payable to the Paying Agent on behalf of the Escrow Agent  semi-annually
in  arrears  on each  March 15 and  September  15,  and on the date of the Final
Withdrawal (as defined below),  commencing on March 15, 1998 (each, an "INTEREST
PAYMENT DATE"),  all in accordance with the terms of this Agreement  (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date,  notwithstanding
any intervening Final Withdrawal (as defined below).

          SECTION  2.3  WITHDRAWALS.  (a) On and after the date seven days after
the  establishment  of any Deposit,  the Escrow Agent may, by providing at least
one Business  Day's prior notice of withdrawal to the  Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire  balance  of such  Deposit,  except  that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the  Depositary,  cancel such  withdrawal  (including on the scheduled
date  therefor),  and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance  with the original  terms  thereof.  Following such
withdrawal  the balance in the related  Account shall be zero and the Depositary
shall close such Account.  As used herein,  "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.

               (b) The Escrow  Agent may, by  providing  at least 15 days' prior
notice  of  withdrawal  to the  Depositary  in the form of  Exhibit  B hereto (a
"NOTICE  OF  FINAL  WITHDRAWAL"),  withdraw  the  entire  amount  of  all of the
remaining  Deposits  together with the payment by the  Depositary of all accrued



and unpaid  interest on such Deposits to but  excluding  the  specified  date of
withdrawal  (a "FINAL  WITHDRAWAL"),  on such date as shall be specified in such
Notice of Final  Withdrawal.  If a Notice of Final Withdrawal has not been given
to the  Depositary on or before July 7, 1999  (provided  that, if a labor strike
occurs at The Boeing  Company  prior to June 30, 1999 (a "LABOR  STRIKE"),  such
date shall be  extended  by adding  thereto  the number of days that such strike
continued in effect (the "ADDITIONAL  DAYS") and there are unwithdrawn  Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on July 30, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).

               (c)  If  the  Depositary  receives  a duly  completed  Notice  of
Purchase Withdrawal or Notice of Final Withdrawal  complying with the provisions
of this Agreement,  it shall make the payments  specified  therein in accordance
with the provisions of this Agreement.

          SECTION 2.4 OTHER ACCOUNTS.  On the date of withdrawal of any Deposit,
the Escrow  Agent,  or the Pass Through  Trustee on behalf of the Escrow  Agent,
shall be entitled to re-deposit  with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully  provided in Section 2.1 hereof,  and thereafter the provisions of
this  Agreement  shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit  may  not  be  withdrawn   prior  to  the  date  seven  days  after  the
establishment  thereof  and (ii) such  Deposit  shall  mature  on July 30,  1999
(provided  that if a Labor  Strike  occurs,  such date shall be  extended by the
Additional  Days) and bear  interest as provided in Section 2.2. The  Depositary
shall  promptly  give  notice  to the  Escrow  Agent  of  receipt  of each  such
re-deposit and the account number assigned thereto.

          SECTION 3.  TERMINATION.  This Agreement  shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits  shall
have been withdrawn and paid as provided  herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein,  but in no event  prior to the date on which the  Depositary  shall have
performed in full its obligations hereunder.

          SECTION 4.  PAYMENTS.  All payments  (including,  without  limitation,
those  payments  made in respect of Taxes (as defined and  provided  for below))
made by the  Depositary  hereunder  shall be paid in United  States  Dollars and



immediately available funds by wire transfer (i) in the case of accrued interest
on the  Deposits  payable  under  Section  2.2  hereof or any Final  Withdrawal,
directly to the Paying Agent at Wilmington Trust Company,  Wilmington,  DE, ABA#
031-100-092,  Account No. 44225-0, Attention: Bruce Bisson, Telephone; No. (302)
651-8584, Reference: Continental 1998-1B, or to such other account as the Paying
Agent may direct from time to time in writing to the  Depositary  and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant to
a Notice of Purchase Withdrawal,  directly to or as directed by the Pass Through
Trustee as  specified  and in the manner  provided  in such  Notice of  Purchase
Withdrawal.  The  Depositary  hereby  waives  any and  all  rights  of  set-off,
combination of accounts,  right of retention or similar right  (whether  arising
under  applicable  law,  contract or otherwise) it may have against the Deposits
howsoever  arising.  All payments on or in respect of each Deposit shall be made
free and clear of and without  reduction for or on account of any and all taxes,
levies or other impositions or charges (collectively,  "TAXES"). However, if the
Depositary  or the Paying  Agent  (pursuant  to  Section  2.04 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable  hereunder,  the Depositary shall (i) make
such  deductions or  withholding,  (ii) pay the full amount deducted or withheld
(including  in respect of such  additional  amounts) to the  competent  taxation
authority and (iii) if the Taxes required to be deducted or withheld are imposed
by Switzerland or any political subdivision thereof, pay such additional amounts
as may be necessary in order that the actual amount  received by the  designated
recipient  of such sum under this  Agreement  or the  Escrow  and  Paying  Agent
Agreement  after  such  deduction  or  withholding  equals the sum it would have
received had no such  deduction or  withholding  been  required.  If the date on
which any payment due on any Deposit would  otherwise fall on a day which is not
a Business Day, such payment shall be made on the next succeeding  Business Day,
and no additional interest shall accrue in respect of such extension.

          SECTION  5.  REPRESENTATION  AND  WARRANTIES.  The  Depositary  hereby
represents  and  warrants to  Continental,  the Escrow  Agent,  the Pass Through
Trustee and the Paying Agent that:

               (a) it is a bank duly  organized  and  validly  existing  in good
     standing under the laws of its  jurisdiction  of  organization  and is duly
     qualified to conduct banking  business in the State of New York through its
     New York Branch;

               (b) it has full power,  authority  and legal right to conduct its
     business  and  operations  as  currently  conducted  and to enter  into and
     perform its obligations under this Agreement;



               (c) the  execution,  delivery and  performance  of this Agreement
     have been duly authorized by all necessary  corporate action on the part of
     it and do not require any stockholder  approval,  or approval or consent of
     any trustee or holder of any  indebtedness  or  obligations of it, and such
     document has been duly  executed and  delivered by it and  constitutes  its
     legal, valid and binding  obligations  enforceable against it in accordance
     with the terms hereof;

               (d) no authorization,  consent or approval of or other action by,
     and no  notice  to or filing  with,  any  United  States  federal  or state
     governmental  authority or regulatory  body is required for the  execution,
     delivery or performance by it of this Agreement;

               (e) neither the execution,  delivery or performance by it of this
     Agreement,  nor compliance with the terms and provisions hereof,  conflicts
     or will conflict with or results or will result in a breach or violation of
     any of the terms,  conditions or provisions of, or will require any consent
     or approval under, any law,  governmental rule or regulation or the charter
     documents,  as  amended,  or  bylaws,  as  amended,  of it or  any  similar
     instrument  binding on it or any order,  writ,  injunction or decree of any
     court or  governmental  authority  against  it or by which it or any of its
     properties  is  bound  or any  indenture,  mortgage  or  contract  or other
     agreement or instrument to which it is a party or by which it or any of its
     properties is bound, or constitutes or will constitute a default thereunder
     or results  or will  result in the  imposition  of any lien upon any of its
     properties; and

               (f)  there  are  no  pending  or,  to its  knowledge,  threatened
     actions,  suits,  investigations or proceedings (whether or not purportedly
     on behalf of it) against or affecting  it or any of its property  before or
     by any court or administrative agency which, if adversely  determined,  (i)
     would adversely  affect the ability of it to perform its obligations  under
     this  Agreement or (ii) would call into  question or challenge the validity
     of this Agreement or the enforceability hereof in accordance with the terms
     hereof,  nor is the  Depositary in default with respect to any order of any
     court,  governmental authority,  arbitration board or administrative agency
     so as to adversely affect its ability to perform its obligations under this
     Agreement.



          SECTION 6. TRANSFER.  Neither party hereto shall be entitled to assign
or otherwise transfer this Agreement (or any interest herein) other than (in the
case of the  Escrow  Agent) to a  successor  escrow  agent  under the Escrow and
Paying Agent Agreement,  and any purported assignment in violation thereof shall
be void.  This  Agreement  shall be binding  upon the  parties  hereto and their
respective  successors and (in the case of the Escrow Agent) permitted  assigns.
Upon the  occurrence  of the Transfer  (as defined  below)  contemplated  by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee
shall  (without  further  act) be deemed to have  transferred  all of its right,
title and  interest in and to this  Agreement  to the  trustee of the  Successor
Trust (as defined  below) and,  thereafter,  the trustee of the Successor  Trust
shall be deemed to be the "Pass Through  Trustee"  hereunder  with the rights of
the "Pass Through Trustee" hereunder,  and each reference herein to "Continental
Airlines  Pass  Through  Trust  1998-1B-O"  shall be deemed to be a reference to
"Continental  Airlines Pass Through Trust  1998-1B-S".  The Escrow Agent and the
Depositary  hereby  acknowledge and consent to the Transfer  contemplated by the
Assignment  and  Assumption  Agreement.  For the  purposes  of this  Section  6,
"TRANSFER"  means the transfer  contemplated  by the  Assignment  and Assumption
Agreement;  "ASSIGNMENT  AND  ASSUMPTION  AGREEMENT"  means the  Assignment  and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor  Trust,  substantially  in the form of Exhibit C to the
Pass Through  Trust  Agreement;  and  "SUCCESSOR  TRUST"  means the  Continental
Airlines Pass Through Trust 1998-1B-S.

          SECTION 7. AMENDMENT,  ETC. This Agreement may not be amended,  waived
or otherwise  modified  except by an instrument  in writing  signed by the party
against  whom the  amendment,  waiver  or other  modification  is  sought  to be
enforced and by the Pass Through Trustee.

          SECTION 8. NOTICES.  Unless otherwise  expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit  Suisse  First  Boston,  11 Madison  Avenue,  New York,  New York  10010,
Attention:  Robert Finney and Charlyn Lusk (Telecopier:  212-325-8319) or (y) in
the case of the Escrow Agent,  First Security  Bank,  National  Association,  79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier:  (801)  246-5053),  in each case,  with a copy to the Pass  Through
Trustee,  Wilmington  Trust Company,  1100 North Market Street,  Wilmington,  DE
19890, Attention:  Corporate Trust Administration  (Telecopier:  (302) 651-8882)
and to Continental,  Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010,



Houston,  TX 77019,  Attention:  Executive  Vice  President and Chief  Financial
Officer (Telecopier: (713) 520-6329) (or at such other address as any such party
may specify from time to time in a written notice to the parties hereto).  On or
prior to the execution of this Agreement,  the Escrow Agent has delivered to the
Depositary a certificate  containing  specimen signatures of the representatives
of the Escrow Agent who are  authorized  to give notices and  instructions  with
respect  to  this  Agreement.  The  Depositary  may  conclusively  rely  on such
certificate  until the Depositary  receives written notice from the Escrow Agent
to the contrary.

          SECTION  9.   OBLIGATIONS   UNCONDITIONAL.   The   Depositary   hereby
acknowledges  and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute,  irrevocable and  unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.

          SECTION  10.  ENTIRE   AGREEMENT.   This   Agreement   (including  all
attachments  hereto)  sets  forth all of the  promises,  covenants,  agreements,
conditions and  understandings  between the Depositary and the Escrow Agent with
respect  to  the   subject   matter   hereof  and   supersedes   all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.

          SECTION  11.  GOVERNING  LAW.  This  Agreement,  and  the  rights  and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal  Reserve System (or any  successor),  as the same may be modified
and supplemented and in effect from time to time.

          SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND THE
ESCROW AGENT  ACKNOWLEDGES  AND ACCEPTS THAT IN ANY SUIT,  ACTION OR  PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY  IRREVOCABLY  WAIVES ITS
RIGHT TO A TRIAL BY JURY.

          SECTION 13.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.

          SECTION 14. HEAD OFFICE OBLIGATION.  Credit Suisse First Boston hereby
agrees that the obligations of the Depositary hereunder are also the obligations
of Credit Suisse First Boston's Head Office in Zurich, Switzerland. Accordingly,
any  beneficiary  of this  Agreement  will be able to proceed  directly  against



Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York branch  defaults in its  obligation to such  beneficiary
under this Agreement.

          SECTION 15. LAST DEPOSIT.  Notwithstanding anything to the contrary in
this  Agreement,  (i) the last  Deposit  listed  on  Schedule  I  hereto  ("LAST
DEPOSIT") shall not bear interest, but otherwise shall be treated as a "Deposit"
for all purposes of this Agreement,  (ii) the Escrow Agent many not withdraw any
Deposit  (other than the Last  Deposit)  unless the Last Deposit shall have been
withdrawn  prior to or  concurrently  with such Deposit and (iii) for so long as
the Last Deposit shall not have been  withdrawn in  accordance  with Section 2.3
hereof, the other Deposits shall be deemed to bear additional  interest from and
including  the date hereof to but  excluding  the date of withdrawal of the Last
Deposit in an amount equal to $1,466.15 per day (computed on the basis of a year
of twelve 30-day months).

          IN WITNESS  WHEREOF,  the Escrow Agent and the Depositary  have caused
this Deposit  Agreement  to be duly  executed as of the day and year first above
written.

                                        FIRST SECURITY BANK, NATIONAL
                                          ASSOCIATION,
                                          as Escrow Agent


                                        By______________________________________
                                          Name:
                                          Title:

                                          

                                        CREDIT SUISSE FIRST BOSTON,
                                          New York Branch,
                                          as Depositary


                                        By______________________________________
                                          Name:
                                          Title:

                                          


                                        By______________________________________
                                          Name:
                                          Title:

                                          

                                                                      Schedule I


                              SCHEDULE OF DEPOSITS
                              --------------------
                                    (Class B)

DATE DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE - ---- -------------- ----------- ------------- 2/20/98 15,674,400 3-98 7/30/99 2/20/98 7,854,000 4-98 7/30/99 2/20/98 7,821,800 6-98 7/30/99 2/20/98 13,648,026 8-98 7/30/99 2/20/98 11,891,682 9-98 7/30/99 2/20/98 16,796,000 10-98 7/30/99 2/20/98 25,817,872 11-98 7/30/99 2/20/98 43,045,420 12-98 7/30/99 2/20/98 7,821,800 2-98 7/30/99 _________________ Provided that if a Labor Strike occurs, each date below shall be extended by the Additional Days.
EXHIBIT A NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class B) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $_______, Account No. ____________. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [________________, Account No. _____, Reference: _________] on _________ __, 199_, upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________________ Name: Title: Dated: _______ __, 199_ EXHIBIT B NOTICE OF FINAL WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class B) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of all Deposits. The undersigned hereby directs the Depositary to pay the proceeds of the Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust Company, ABA# 031-100-092, Account No. _____________, Reference: Continental 1998-1. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________________ Name: Title: Dated: _______ __, 199_


                                                                       EXECUTION







                                DEPOSIT AGREEMENT
                                    (Class C)

                          Dated as of February 20, 1998

                                     between

                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent

                                       and

                           CREDIT SUISSE FIRST BOSTON,
                                 New York Branch
                                  as Depositary




          DEPOSIT AGREEMENT (Class C) dated as of February 20, 1998 (as amended,
modified or  supplemented  from time to time,  this  "AGREEMENT")  between FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  a national banking association,  as Escrow
Agent  under the Escrow and Paying  Agent  Agreement  referred to below (in such
capacity,  together with its successors in such capacity,  the "ESCROW  AGENT"),
and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution organized
under the laws of Switzerland  acting through its New York branch, as depositary
bank (the "DEPOSITARY").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL") and Wilmington
Trust Company,  not in its  individual  capacity  except as otherwise  expressly
provided  therein,  but solely as trustee (in such  capacity,  together with its
successors in such  capacity,  the "PASS THROUGH  TRUSTEE")  have entered into a
Trust  Supplement,  dated February 20, 1998, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together,  as amended,  modified or supplemented
from time to time in accordance with the terms thereof,  the "PASS THROUGH TRUST
AGREEMENT")  relating to  Continental  Airlines  Pass  Through  Trust  1998-1C-O
pursuant to which the Continental  Airlines Pass Through Trust, Series 1998-1C-O
Certificates referred to therein (the "CERTIFICATES") are being issued;

          WHEREAS,  Continental  and Credit  Suisse  First  Boston  Corporation,
Morgan Stanley & Co. Incorporated and Chase Securities Inc.  (collectively,  the
"UNDERWRITERS"  and,  together with their respective  transferees and assigns as
registered  owners of the  Certificates,  the "INVESTORS")  have entered into an
Underwriting  Agreement dated as of February 11, 1998 pursuant to which the Pass
Through Trustee will issue and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT
NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee
or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");

          WHEREAS, the Escrow Agent, the Underwriters,  the Pass Through Trustee
and  Wilmington  Trust  Company,  as paying  agent for the Escrow Agent (in such
capacity,  together with its  successors in such capacity,  the "PAYING  AGENT")
concurrently  herewith are entering  into an Escrow and Paying Agent  Agreement,
dated as of the date hereof (as amended,  modified or supplemented  from time to
time in  accordance  with the  terms  thereof,  the  "ESCROW  AND  PAYING  AGENT
AGREEMENT"); and

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net  Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors
pursuant to the Escrow and Paying Agent  Agreement,  subject to withdrawal  upon



request of and proper  certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which  provides  for the  Depositary  to pay interest  for  distribution  to the
Investors  and to  establish  accounts  from which the Escrow  Agent  shall make
withdrawals  upon  request  of and  proper  certification  by the  Pass  Through
Trustee.

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

          SECTION 1.1 ACCEPTANCE OF DEPOSITARY.  The Depositary hereby agrees to
act as depositary bank as provided herein and in connection  therewith to accept
all amounts to be delivered to or held by the  Depositary  pursuant to the terms
of this Agreement. The Depositary further agrees to hold, maintain and safeguard
the  Deposits  and the  Accounts  (as  defined  below)  during  the term of this
Agreement in accordance with the provisions of this Agreement.  The Escrow Agent
shall not have any right to withdraw,  assign or otherwise  transfer moneys held
in the Accounts except as permitted by this Agreement.

          SECTION  1.2  ESTABLISHMENT  OF  ACCOUNTS.  The  Escrow  Agent  hereby
instructs the Depositary,  and the Depositary  agrees, to establish the separate
deposit  accounts  listed on Schedule I hereto and to establish such  additional
separate  deposit  accounts as may be required in  connection  with the deposits
contemplated  by Section 2.4 hereof (each,  an "ACCOUNT" and  collectively,  the
"ACCOUNTS"),  each in the name of the  Escrow  Agent  and all on the  terms  and
conditions set forth in this Agreement.

          SECTION 2.1 DEPOSITS.  The Escrow Agent shall direct the  Underwriters
to deposit  with the  Depositary  on the date of this  Agreement  (the  "DEPOSIT
DATE") in Federal (same day) funds by official  check or checks or wire or other
transfer to: Credit Suisse First Boston, New York Branch, Reference: Continental
1998-1, and the Depositary shall accept from the Underwriters,  on behalf of the
Escrow  Agent,  the sum of  US$136,542,000.  Upon  acceptance  of such sum,  the
Depositary  shall (i)  establish  each of the  deposits  specified in Schedule I
hereto maturing on the respective dates set forth therein (including any deposit
made   pursuant  to  Section  2.4  hereof,   individually,   a  "DEPOSIT"   and,
collectively,  the  "DEPOSITS")  and (ii)  credit  each  Deposit to the  related
Account as set forth therein.  No amount shall be deposited in any Account other
than the related Deposit.

          SECTION  2.2  INTEREST.  Each  Deposit  shall bear  interest  from and
including  the date of deposit to but  excluding  the date of  withdrawal at the
rate of 6.541%  per  annum  (computed  on the  basis of a year of twelve  30-day
months) payable to the Paying Agent on behalf of the Escrow Agent  semi-annually
in  arrears  on each  March 15 and  September  15,  and on the date of the Final
Withdrawal (as defined below),  commencing on March 15, 1998 (each, an "INTEREST
PAYMENT DATE"),  all in accordance with the terms of this Agreement  (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as



defined below) shall be paid on the next Interest Payment Date,  notwithstanding
any intervening Final Withdrawal (as defined below).

          SECTION  2.3  WITHDRAWALS.  (a) On and after the date seven days after
the  establishment  of any Deposit,  the Escrow Agent may, by providing at least
one Business  Day's prior notice of withdrawal to the  Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire  balance  of such  Deposit,  except  that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the  Depositary,  cancel such  withdrawal  (including on the scheduled
date  therefor),  and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance  with the original  terms  thereof.  Following such
withdrawal  the balance in the related  Account shall be zero and the Depositary
shall close such Account.  As used herein,  "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.

               (b) The Escrow  Agent may, by  providing  at least 15 days' prior
notice  of  withdrawal  to the  Depositary  in the form of  Exhibit  B hereto (a
"NOTICE  OF  FINAL  WITHDRAWAL"),  withdraw  the  entire  amount  of  all of the
remaining  Deposits  together with the payment by the  Depositary of all accrued
and unpaid  interest on such Deposits to but  excluding  the  specified  date of
withdrawal  (a "FINAL  WITHDRAWAL"),  on such date as shall be specified in such
Notice of Final  Withdrawal.  If a Notice of Final Withdrawal has not been given
to the  Depositary on or before July 7, 1999  (provided  that, if a labor strike
occurs at The Boeing  Company  prior to June 30, 1999 (a "LABOR  STRIKE"),  such
date shall be  extended  by adding  thereto  the number of days that such strike
continued in effect (the "ADDITIONAL  DAYS") and there are unwithdrawn  Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on July 30, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).

               (c)  If  the  Depositary  receives  a duly  completed  Notice  of
Purchase Withdrawal or Notice of Final Withdrawal  complying with the provisions
of this Agreement,  it shall make the payments  specified  therein in accordance
with the provisions of this Agreement.

          SECTION 2.4 OTHER ACCOUNTS.  On the date of withdrawal of any Deposit,
the Escrow  Agent,  or the Pass Through  Trustee on behalf of the Escrow  Agent,
shall be entitled to re-deposit  with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully  provided in Section 2.1 hereof,  and thereafter the provisions of
this  Agreement  shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit  may  not  be  withdrawn   prior  to  the  date  seven  days  after  the
establishment  thereof  and (ii) such  Deposit  shall  mature  on July 30,  1999
(provided  that if a Labor  Strike  occurs,  such date shall be  extended by the
Additional  Days) and bear  interest as provided in Section 2.2. The  Depositary
shall  promptly  give  notice  to the  Escrow  Agent  of  receipt  of each  such
re-deposit and the account number assigned thereto.



          SECTION 3.  TERMINATION.  This Agreement  shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits  shall
have been withdrawn and paid as provided  herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein,  but in no event  prior to the date on which the  Depositary  shall have
performed in full its obligations hereunder.

          SECTION 4.  PAYMENTS.  All payments  (including,  without  limitation,
those  payments  made in respect of Taxes (as defined and  provided  for below))
made by the  Depositary  hereunder  shall be paid in United  States  Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the  Deposits  payable  under  Section  2.2  hereof or any Final  Withdrawal,
directly to the Paying Agent at Wilmington Trust Company,  Wilmington,  DE, ABA#
031-100-092,  Account No. 44226-0, Attention: Bruce Bisson, Telephone; No. (302)
651-8584, Reference: Continental 1998-1C, or to such other account as the Paying
Agent may direct from time to time in writing to the  Depositary  and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant to
a Notice of Purchase Withdrawal,  directly to or as directed by the Pass Through
Trustee as  specified  and in the manner  provided  in such  Notice of  Purchase
Withdrawal.  The  Depositary  hereby  waives  any and  all  rights  of  set-off,
combination of accounts,  right of retention or similar right  (whether  arising
under  applicable  law,  contract or otherwise) it may have against the Deposits
howsoever  arising.  All payments on or in respect of each Deposit shall be made
free and clear of and without  reduction for or on account of any and all taxes,
levies or other impositions or charges (collectively,  "TAXES"). However, if the
Depositary  or the Paying  Agent  (pursuant  to  Section  2.04 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable  hereunder,  the Depositary shall (i) make
such  deductions or  withholding,  (ii) pay the full amount deducted or withheld
(including  in respect of such  additional  amounts) to the  competent  taxation
authority and (iii) if the Taxes required to be deducted or withheld are imposed
by Switzerland or any political subdivision thereof, pay such additional amounts
as may be necessary in order that the actual amount  received by the  designated
recipient  of such sum under this  Agreement  or the  Escrow  and  Paying  Agent
Agreement  after  such  deduction  or  withholding  equals the sum it would have
received had no such  deduction or  withholding  been  required.  If the date on
which any payment due on any Deposit would  otherwise fall on a day which is not
a Business Day, such payment shall be made on the next succeeding  Business Day,
and no additional interest shall accrue in respect of such extension.

          SECTION  5.  REPRESENTATION  AND  WARRANTIES.  The  Depositary  hereby
represents  and  warrants to  Continental,  the Escrow  Agent,  the Pass Through
Trustee and the Paying Agent that:

               (a) it is a bank duly  organized  and  validly  existing  in good
     standing under the laws of its  jurisdiction  of  organization  and is duly
     qualified to conduct banking  business in the State of New York through its
     New York Branch;

               (b) it has full power,  authority  and legal right to conduct its
     business  and  operations  as  currently  conducted  and to enter  into and
     perform its obligations under this Agreement;



               (c) the  execution,  delivery and  performance  of this Agreement
     have been duly authorized by all necessary  corporate action on the part of
     it and do not require any stockholder  approval,  or approval or consent of
     any trustee or holder of any  indebtedness  or  obligations of it, and such
     document has been duly  executed and  delivered by it and  constitutes  its
     legal, valid and binding  obligations  enforceable against it in accordance
     with the terms hereof;

               (d) no authorization,  consent or approval of or other action by,
     and no  notice  to or filing  with,  any  United  States  federal  or state
     governmental  authority or regulatory  body is required for the  execution,
     delivery or performance by it of this Agreement;

               (e) neither the execution,  delivery or performance by it of this
     Agreement,  nor compliance with the terms and provisions hereof,  conflicts
     or will conflict with or results or will result in a breach or violation of
     any of the terms,  conditions or provisions of, or will require any consent
     or approval under, any law,  governmental rule or regulation or the charter
     documents,  as  amended,  or  bylaws,  as  amended,  of it or  any  similar
     instrument  binding on it or any order,  writ,  injunction or decree of any
     court or  governmental  authority  against  it or by which it or any of its
     properties  is  bound  or any  indenture,  mortgage  or  contract  or other
     agreement or instrument to which it is a party or by which it or any of its
     properties is bound, or constitutes or will constitute a default thereunder
     or results  or will  result in the  imposition  of any lien upon any of its
     properties; and

               (f)  there  are  no  pending  or,  to its  knowledge,  threatened
     actions,  suits,  investigations or proceedings (whether or not purportedly
     on behalf of it) against or affecting  it or any of its property  before or
     by any court or administrative agency which, if adversely  determined,  (i)
     would adversely  affect the ability of it to perform its obligations  under
     this  Agreement or (ii) would call into  question or challenge the validity
     of this Agreement or the enforceability hereof in accordance with the terms
     hereof,  nor is the  Depositary in default with respect to any order of any
     court,  governmental authority,  arbitration board or administrative agency
     so as to adversely affect its ability to perform its obligations under this
     Agreement.

          SECTION 6. TRANSFER.  Neither party hereto shall be entitled to assign
or otherwise transfer this Agreement (or any interest herein) other than (in the
case of the  Escrow  Agent) to a  successor  escrow  agent  under the Escrow and
Paying Agent Agreement,  and any purported assignment in violation thereof shall
be void.  This  Agreement  shall be binding  upon the  parties  hereto and their
respective  successors and (in the case of the Escrow Agent) permitted  assigns.
Upon the  occurrence  of the Transfer  (as defined  below)  contemplated  by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee
shall  (without  further  act) be deemed to have  transferred  all of its right,
title and  interest in and to this  Agreement  to the  trustee of the  Successor
Trust (as defined  below) and,  thereafter,  the trustee of the Successor  Trust
shall be deemed to be the "Pass Through  Trustee"  hereunder  with the rights of
the "Pass Through Trustee" hereunder,  and each reference herein to "Continental



Airlines  Pass  Through  Trust  1998-1C-O"  shall be deemed to be a reference to
"Continental  Airlines Pass Through Trust  1998-1C-S".  The Escrow Agent and the
Depositary  hereby  acknowledge and consent to the Transfer  contemplated by the
Assignment  and  Assumption  Agreement.  For the  purposes  of this  Section  6,
"TRANSFER"  means the transfer  contemplated  by the  Assignment  and Assumption
Agreement;  "ASSIGNMENT  AND  ASSUMPTION  AGREEMENT"  means the  Assignment  and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor  Trust,  substantially  in the form of Exhibit C to the
Pass Through  Trust  Agreement;  and  "SUCCESSOR  TRUST"  means the  Continental
Airlines Pass Through Trust 1998-1C-S.

          SECTION 7. AMENDMENT,  ETC. This Agreement may not be amended,  waived
or otherwise  modified  except by an instrument  in writing  signed by the party
against  whom the  amendment,  waiver  or other  modification  is  sought  to be
enforced and by the Pass Through Trustee.

          SECTION 8. NOTICES.  Unless otherwise  expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit  Suisse  First  Boston,  11 Madison  Avenue,  New York,  New York  10010,
Attention:  Robert Finney and Charlyn Lusk (Telecopier:  212-325-8319) or (y) in
the case of the Escrow Agent,  First Security  Bank,  National  Association,  79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier:  (801)  246-5053),  in each case,  with a copy to the Pass  Through
Trustee,  Wilmington  Trust Company,  1100 North Market Street,  Wilmington,  DE
19890, Attention:  Corporate Trust Administration  (Telecopier:  (302) 651-8882)
and to Continental,  Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010,
Houston,  TX 77019,  Attention:  Executive  Vice  President and Chief  Financial
Officer (Telecopier: (713) 520-6329) (or at such other address as any such party
may specify from time to time in a written notice to the parties hereto).  On or
prior to the execution of this Agreement,  the Escrow Agent has delivered to the
Depositary a certificate  containing  specimen signatures of the representatives
of the Escrow Agent who are  authorized  to give notices and  instructions  with
respect  to  this  Agreement.  The  Depositary  may  conclusively  rely  on such
certificate  until the Depositary  receives written notice from the Escrow Agent
to the contrary.

          SECTION  9.   OBLIGATIONS   UNCONDITIONAL.   The   Depositary   hereby
acknowledges  and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute,  irrevocable and  unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.

          SECTION  10.  ENTIRE   AGREEMENT.   This   Agreement   (including  all
attachments  hereto)  sets  forth all of the  promises,  covenants,  agreements,
conditions and  understandings  between the Depositary and the Escrow Agent with
respect  to  the   subject   matter   hereof  and   supersedes   all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.

          SECTION  11.  GOVERNING  LAW.  This  Agreement,  and  the  rights  and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,



shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal  Reserve System (or any  successor),  as the same may be modified
and supplemented and in effect from time to time.

          SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND THE
ESCROW AGENT  ACKNOWLEDGES  AND ACCEPTS THAT IN ANY SUIT,  ACTION OR  PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY  IRREVOCABLY  WAIVES ITS
RIGHT TO A TRIAL BY JURY.

          SECTION 13.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.

          SECTION 14. HEAD OFFICE OBLIGATION.  Credit Suisse First Boston hereby
agrees that the obligations of the Depositary hereunder are also the obligations
of Credit Suisse First Boston's Head Office in Zurich, Switzerland. Accordingly,
any  beneficiary  of this  Agreement  will be able to proceed  directly  against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York branch  defaults in its  obligation to such  beneficiary
under this Agreement.

          SECTION 15. LAST DEPOSIT.  Notwithstanding anything to the contrary in
this  Agreement,  (i) the last  Deposit  listed  on  Schedule  I  hereto  ("LAST
DEPOSIT") shall not bear interest, but otherwise shall be treated as a "Deposit"
for all purposes of this Agreement,  (ii) the Escrow Agent many not withdraw any
Deposit  (other than the Last  Deposit)  unless the Last Deposit shall have been
withdrawn  prior to or  concurrently  with such Deposit and (iii) for so long as
the Last Deposit shall not have been  withdrawn in  accordance  with Section 2.3
hereof, the other Deposits shall be deemed to bear additional  interest from and
including  the date hereof to but  excluding  the date of withdrawal of the Last
Deposit in an amount equal to $1,401.37 per day (computed on the basis of a year
of twelve 30-day months).



          IN WITNESS  WHEREOF,  the Escrow Agent and the Depositary  have caused
this Deposit  Agreement  to be duly  executed as of the day and year first above
written.

                                        FIRST SECURITY BANK, NATIONAL
                                          ASSOCIATION,
                                          as Escrow Agent


                                        By______________________________________
                                          Name:
                                          Title:



                                        CREDIT SUISSE FIRST BOSTON, New
                                          York Branch,
                                          as Depositary


                                        By______________________________________
                                          Name:
                                          Title:


                                        By______________________________________
                                          Name:
                                          Title:



                                                                      Schedule I



                              SCHEDULE OF DEPOSITS
                              --------------------
                                    (Class C)

DATE DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE - ---- -------------- ----------- ------------- 2/20/98 15,302,400 3-98 7/30/99 2/20/98 7,584,000 4-98 7/30/99 2/20/98 7,712,800 6-98 7/30/99 2/20/98 13,648,023 8-98 7/30/99 2/20/98 11,321,682 9-98 7/30/99 2/20/98 14,399,000 10-98 7/30/99 2/20/98 23,944,671 11-98 7/30/99 2/20/98 34,916,624 12-98 7/30/99 2/20/98 7,712,800 2-98 7/30/99 _________________ Provided that if a Labor Strike occurs, each date below shall be extended by the Additional Days.
EXHIBIT A NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class C) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $_______, Account No. ____________. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [________________, Account No. _____, Reference: _________] on _________ __, 199_, upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________________ Name: Title: Dated: _______ __, 199_ EXHIBIT B NOTICE OF FINAL WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, NY 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: 212-325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class C) dated as of February 20, 1998 (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of all Deposits. The undersigned hereby directs the Depositary to pay the proceeds of the Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust Company, ABA# 031-100-092, Account No. _____________, Reference: Continental 1998-1. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By______________________________________ Name: Title: Dated: _______ __, 199_


                                                                       EXECUTION




                        ESCROW AND PAYING AGENT AGREEMENT
                                    (Class A)

                          Dated as of February 20, 1998

                                      among

                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent

                     CREDIT SUISSE FIRST BOSTON CORPORATION,
                        MORGAN STANLEY & CO. INCORPORATED
                                       and
                              CHASE SECURITIES INC.

                                 as Underwriters

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       but solely as Pass Through Trustee
                              for and on behalf of
                Continental Airlines Pass Through Trust 1998-1A-O

                             as Pass Through Trustee

                                       and

                            WILMINGTON TRUST COMPANY

                                 as Paying Agent




                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1.  Escrow Agent................................................       2
   Section 1.01.  Appointment of Escrow Agent...........................       2
   Section 1.02.  Instruction; Etc......................................       3
   Section 1.03.  Initial Escrow Amount; Issuance of Escrow Receipts....       4
   Section 1.04.  Payments to Receiptholders............................       5
   Section 1.05.  Mutilated, Destroyed, Lost or Stolen Escrow Receipt...       5
   Section 1.06.  Additional Escrow Amounts.............................       6
   Section 1.07.  Resignation or Removal of Escrow Agent................       6
   Section 1.08.  Persons Deemed Owners.................................       7
   Section 1.09.  Further Assurances....................................       7

SECTION 2.  Paying Agent................................................       7
   Section 2.01.  Appointment of Paying Agent...........................       7
   Section 2.02.  Establishment of Paying Agent Account.................       8
   Section 2.03.  Payments from Paying Agent Account....................       8
   Section 2.04.  Withholding Taxes.....................................       9
   Section 2.05.  Resignation or Removal of Paying Agent................       9
   Section 2.06.  Notice of Final Withdrawal............................      10

SECTION 3.  Payments....................................................      10

SECTION 4.  Other Actions...............................................      11

SECTION 5.  Representations and Warranties of the Escrow Agent..........      11

SECTION 6.  Representations and Warranties of the Paying Agent..........      12

SECTION 7.  Indemnification.............................................      14

SECTION 8.  Amendment, Etc..............................................      14

SECTION 9.  Notices.....................................................      15

SECTION 10. Transfer....................................................      15

SECTION 11. Entire Agreement............................................      16

SECTION 12. Governing Law...............................................      16




                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
                                                                            ----

SECTION 13. Waiver of Jury Trial Right..................................      16

SECTION 14. Counterparts................................................      16



Exhibit A   Escrow Receipt

Exhibit B   Withdrawal Certificate




          ESCROW AND PAYING AGENT  AGREEMENT  (Class A) dated as of February 20,
1998 (as amended,  modified or supplemented from time to time, this "AGREEMENT")
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
as  Escrow  Agent  (in  such  capacity,  together  with its  successors  in such
capacity,  the "ESCROW AGENT");  CREDIT SUISSE FIRST BOSTON CORPORATION,  MORGAN
STANLEY & CO.  INCORPORATED  and CHASE  SECURITIES  INC., as Underwriters of the
Certificates  referred  to below (the  "Underwriters"  and  together  with their
respective transferees and assigns as registered owners of the Certificates, the
"INVESTORS")  under the  Underwriting  Agreement  referred to below;  WILMINGTON
TRUST COMPANY, a Delaware banking  corporation,  not in its individual  capacity
except as otherwise  expressly  provided herein,  but solely as trustee (in such
capacity,  together  with its  successors  in such  capacity,  the "PASS THROUGH
TRUSTEE")  under  the Pass  Through  Trust  Agreement  referred  to  below;  and
WILMINGTON  TRUST  COMPANY,  a Delaware  banking  corporation,  as paying  agent
hereunder (in such capacity,  together with its successors in such capacity, the
"PAYING AGENT").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL")  and the  Pass
Through Trustee have entered into a Trust  Supplement,  dated as of February 20,
1998 (the "TRUST SUPPLEMENT"),  to the Pass Through Trust Agreement, dated as of
September 25, 1997 (together, as amended,  modified or supplemented from time to
time in accordance with the terms thereof,  the "PASS THROUGH TRUST  AGREEMENT")
relating to Continental Airlines Pass Through Trust 1998-1A-O (the "PASS THROUGH
TRUST")  pursuant to which the Continental  Airlines Pass Through Trust,  Series
1998-1A-O  Certificates  referred  to  therein  (the  "CERTIFICATES")  are being
issued;

          WHEREAS,  Continental  and  the  Underwriters  have  entered  into  an
Underwriting  Agreement  dated as of February 11, 1998 (as amended,  modified or
supplemented  from  time to time in  accordance  with  the  terms  thereof,  the
"UNDERWRITING  AGREEMENT") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT



NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee
or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors,
subject to withdrawal upon request by the Pass Through Trustee and  satisfaction
of the  conditions  set forth in the Note Purchase  Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with Credit Suisse First Boston,  acting
through its New York branch, as Depositary (the "DEPOSITARY")  under the Deposit
Agreement,  dated as of the date hereof  between the  Depositary  and the Escrow
Agent relating to the Pass Through Trust (as amended,  modified or  supplemented
from time to time in accordance with the terms thereof, the "DEPOSIT AGREEMENT")
pursuant to which,  among other  things,  the  Depositary  will pay interest for
distribution to the Investors and establish accounts from which the Escrow Agent
shall make  withdrawals  upon  request of and proper  certification  by the Pass
Through Trustee;

          WHEREAS,  the Escrow  Agent  wishes to appoint the Paying Agent to pay
amounts  required to be  distributed  to the Investors in  accordance  with this
Agreement; and

          WHEREAS,  capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.

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

          SECTION 1. ESCROW AGENT.

               Section  1.01.   APPOINTMENT   OF  ESCROW  AGENT.   Each  of  the
     Underwriters,   for  and  on  behalf  of  each  of  the  Investors,  hereby
     irrevocably  appoints,  authorizes  and directs the Escrow  Agent to act as
     escrow agent and fiduciary  hereunder  and under the Deposit  Agreement for
     such specific  purposes and with such powers as are specifically  delegated
     to the  Escrow  Agent by the terms of this  Agreement,  together  with such
     other  powers  as are  reasonably  incidental  thereto.  Any and all  money
     received and held by the Escrow  Agent under this  Agreement or the Deposit
     Agreement  shall be held in escrow by the Escrow Agent in  accordance  with
     the  terms  of  this  Agreement.  This  Agreement  is  irrevocable  and the



     Investors' rights with respect to any monies received and held in escrow by
     the Escrow Agent under this Agreement or the Deposit  Agreement  shall only
     be as provided  under the terms and  conditions  of this  Agreement and the
     Deposit  Agreement.  The Escrow Agent (which term as used in this  sentence
     shall include  reference to its affiliates and its own and its  affiliates'
     officers,  directors,  employees  and agents):  (a) shall have no duties or
     responsibilities  except those expressly set forth in this  Agreement;  (b)
     shall not be responsible  to the Pass Through  Trustee or the Investors for
     any recitals, statements, representations or warranties of any person other
     then itself contained in this Agreement or the Deposit Agreement or for the
     failure by the Pass Through  Trustee,  the Investors or any other person or
     entity  (other  than the Escrow  Agent) to perform  any of its  obligations
     hereunder  (whether  or not the  Escrow  Agent  shall  have  any  knowledge
     thereof);  and (c) shall not be responsible for any action taken or omitted
     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section  1.02.  INSTRUCTION;  ETC. The  Underwriters,  for and on
     behalf of each of the  Investors,  hereby  irrevocably  instruct the Escrow
     Agent,  and  the  Escrow  Agent  agrees,  (a) to  enter  into  the  Deposit
     Agreement,  (b) to appoint the Paying Agent as provided in this  Agreement,
     (c) upon receipt at any time and from time to time prior to the Termination
     Date (as  defined  below)  of a  certificate  substantially  in the form of
     Exhibit B hereto (a "WITHDRAWAL  CERTIFICATE") executed by the Pass Through
     Trustee,  together  with an  attached  Notice  of  Purchase  Withdrawal  in
     substantially the form of Exhibit A to the Deposit Agreement duly completed
     by the Pass Through Trustee (the "APPLICABLE NOTICE OF PURCHASE WITHDRAWAL"
     and  the  withdrawal  to  which  it  relates,  a  "PURCHASE   WITHDRAWAL"),
     immediately  to execute the  Applicable  Notice of Purchase  Withdrawal  as
     Escrow Agent and transmit it to the Depositary by facsimile transmission in
     accordance with the Deposit  Agreement;  PROVIDED that, upon the request of
     the Pass Through  Trustee after such  transmission,  the Escrow Agent shall
     cancel such Applicable Notice of Purchase Withdrawal,  and (d) if there are
     any  undrawn  Deposits  (as  defined  in  the  Deposit  Agreement)  on  the
     "TERMINATION  DATE",  which  shall mean the  earlier  of (i) June 30,  1999
     (provided  that,  if a labor strike  occurs at The Boeing  Company prior to
     such date (a "LABOR STRIKE"), such date shall be extended by adding thereto
     the number of days that such strike  continued  in effect (the  "ADDITIONAL
     DAYS") and (ii) the day on which the Escrow Agent receives  notice from the
     Pass Through Trustee that the Pass Through Trustee's obligation to purchase



     Equipment Notes under the Note Purchase  Agreement has terminated,  to give
     notice to the Depositary (with a copy to the Paying Agent) substantially in
     the form of Exhibit B to the Deposit  Agreement  requesting a withdrawal of
     all of the remaining Deposits, together with accrued and unpaid interest on
     such  Deposits  to the date of  withdrawal,  on the 35th day after the date
     that such notice of  withdrawal  is given to the  Depositary  (or, if not a
     Business Day, on the next succeeding Business Day) (a "FINAL  WITHDRAWAL"),
     PROVIDED that if the day  scheduled for the Final  Withdrawal in accordance
     with the foregoing is within 10 days before or after a Regular Distribution
     Date,  then the  Escrow  Agent  shall  request  that such  requested  Final
     Withdrawal  be made on such  Regular  Distribution  Date  (the date of such
     requested  withdrawal,  the "FINAL WITHDRAWAL DATE"). If for any reason the
     Escrow Agent shall have failed to give the Final  Withdrawal  Notice to the
     Depositary  on or before  July 7,  1999  (PROVIDED  that if a Labor  Strike
     occurs,  such date shall be extended by the Additional Days), and there are
     unwithdrawn  Deposits  on such  date,  the Final  Withdrawal  Date shall be
     deemed to be July 30, 1999 (PROVIDED  that if a Labor Strike  occurs,  such
     date shall be extended by the Additional Days).

               Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW RECEIPTS.
     Agent  hereby  directs the  Underwriters  to, and the  Underwriters  hereby
     acknowledge that on the date hereof they shall,  irrevocably deliver to the
     Depositary  on  behalf of the  Escrow  Agent,  an  amount  in U.S.  dollars
     ("DOLLARS")  and  immediately  available  funds equal to  $485,605,000  for
     deposit on behalf of the Escrow  Agent with the  Depositary  in  accordance
     with Section 2.1 of the Deposit Agreement. The Underwriters hereby instruct
     the  Escrow  Agent,  upon  receipt  of such sum from the  Underwriters,  to
     confirm  such  receipt by  executing  and  delivering  to the Pass  Through
     Trustee  an Escrow  Receipt  in the form of  Exhibit A hereto  (an  "ESCROW
     RECEIPT"),  (a)  to  be  affixed  by  the  Pass  Through  Trustee  to  each
     Certificate and (b) to evidence the same  percentage  interest (the "ESCROW
     INTEREST")  in the Account  Amounts (as  defined  below) as the  Fractional
     Undivided  Interest in the Pass Through Trust  evidenced by the Certificate
     to which it is to be affixed.  The Escrow  Agent shall  provide to the Pass
     Through Trustee for attachment to each  Certificate  newly issued under and
     in  accordance  with the Pass Through  Trust  Agreement an executed  Escrow
     Receipt as the Pass  Through  Trustee may from time to time  request of the
     Escrow Agent.  Each Escrow  Receipt shall be registered by the Escrow Agent
     in a register (the  "REGISTER")  maintained by the Escrow Agent in the same



     name and same manner as the Certificate to which it is attached and may not
     thereafter be detached from such  Certificate  to which it is to be affixed
     prior  to  the   distribution   of  the  Final   Withdrawal   (the   "FINAL
     DISTRIBUTION"). After the Final Distribution, no additional Escrow Receipts
     shall be issued and the Pass Through  Trustee  shall  request the return to
     the Escrow Agent for cancellation of all outstanding Escrow Receipts.

               Section  1.04.  PAYMENTS  TO  RECEIPTHOLDERS.  All  payments  and
     distributions   made  to  holders  of  an  Escrow   Receipt   (collectively
     "RECEIPTHOLDERS")  in respect of the Escrow Receipt shall be made only from
     amounts  deposited in the Paying Agent Account (as defined below) ("ACCOUNT
     AMOUNTS").  Each  Receiptholder,  by its  acceptance of an Escrow  Receipt,
     agrees that (a) it will look solely to the Account  Amounts for any payment
     or  distribution  due to such  Receiptholder  pursuant  to the terms of the
     Escrow  Receipt  and this  Agreement  and (b) it will have no  recourse  to
     Continental,  the Pass  Through  Trustee,  the  Paying  Agent or the Escrow
     Agent,  except as expressly  provided  herein or in the Pass Through  Trust
     Agreement.  No Receiptholder  shall have any right to vote or in any manner
     otherwise  control the operation and management of the Paying Agent Account
     or the  obligations  of the parties  hereto,  nor shall  anything set forth
     herein, or contained in the terms of the Escrow Receipt, be construed so as
     to constitute the  Receiptholders  from time to time as partners or members
     of an association.

               Section  1.05.  MUTILATED,   DESTROYED,  LOST  OR  STOLEN  ESCROW
     RECEIPT.  If (a) any mutilated  Escrow Receipt is surrendered to the Escrow
     Agent or the Escrow  Agent  receives  evidence to its  satisfaction  of the
     destruction, loss or theft of any Escrow Receipt and (b) there is delivered
     to the Escrow Agent and the Pass Through  Trustee such security,  indemnity
     or bond,  as may be required by them to hold each of them  harmless,  then,
     absent  notice to the Escrow  Agent or the Pass  Through  Trustee that such
     destroyed,  lost or stolen Escrow  Receipt has been acquired by a bona fide
     purchaser,  and  provided  that the  requirements  of Section  8-405 of the
     Uniform  Commercial Code in effect in any applicable  jurisdiction are met,
     the Escrow Agent shall execute,  authenticate and deliver,  in exchange for
     or in lieu of any such mutilated, destroyed, lost or stolen Escrow Receipt,
     a new Escrow Receipt or Escrow  Receipts and of like Escrow Interest in the
     Account Amounts and bearing a number not contemporaneously outstanding.

          In connection  with the issuance of any new Escrow  Receipt under this
Section  1.05,  the Escrow Agent may require the payment of a sum  sufficient to



cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto  and any other  expenses  (including  the fees and  expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.

          Any  duplicate  Escrow  Receipt  issued  pursuant to this Section 1.05
shall constitute  conclusive  evidence of the appropriate Escrow Interest in the
Account Amounts,  as if originally  issued,  whether or not the lost,  stolen or
destroyed Escrow Receipt shall be found at any time.

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

               Section  1.06.  ADDITIONAL  ESCROW  AMOUNTS.  On the  date of any
     Purchase  Withdrawal,  the Pass  Through  Trustee may  re-deposit  with the
     Depositary  some or all of the  amounts so  withdrawn  in  accordance  with
     Section 2.4 of the Deposit Agreement.

               Section 1.07.  RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Escrow Agent as provided
     below,  the Escrow  Agent may  resign at any time by giving 30 days'  prior
     written notice  thereof to the Investors,  but may not otherwise be removed
     except for cause by the written  consent of the  Investors  with respect to
     Investors  representing  Escrow  Interests  aggregating  not  less  than  a
     majority in interest  in the  Account  Amounts (an "ACTION OF  INVESTORS").
     Upon any such  resignation  or  removal,  the  Investors,  by an  Action of
     Investors,  shall have the right to appoint a successor Escrow Agent. If no
     successor Escrow Agent shall have been so appointed and shall have accepted
     such appointment within 30 days after the retiring Escrow Agent's giving of
     notice of resignation or the removal of the retiring Escrow Agent, then the
     retiring Escrow Agent may appoint a successor  Escrow Agent.  Any successor
     Escrow Agent shall be a bank which has an office in the United  States with
     a  combined  capital  and  surplus  of  at  least  $100,000,000.  Upon  the
     acceptance  of any  appointment  as Escrow  Agent  hereunder by a successor
     Escrow Agent,  such successor  Escrow Agent shall enter into such documents
     as the Pass Through  Trustee shall require and shall  thereupon  succeed to
     and become vested with all the rights, powers, privileges and duties of the
     retiring  Escrow Agent,  and the retiring  Escrow Agent shall be discharged
     from its duties and obligations hereunder. No resignation or removal of the
     Escrow Agent shall be effective  unless a written  confirmation  shall have



     been obtained from each of Moody's Investors  Service,  Inc. and Standard &
     Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., that
     the  replacement  of the Escrow Agent with the successor  Escrow Agent will
     not result in (a) a reduction of the rating for the Certificates  below the
     then current rating for the  Certificates or (b) a withdrawal or suspension
     of the rating of the Certificates.

               Section 1.08. PERSONS DEEMED OWNERS.  Prior to due presentment of
     a Certificate for registration of transfer, the Escrow Agent and the Paying
     Agent may treat the Person in whose name any Escrow  Receipt is  registered
     (as of the day of  determination)  as the owner of such Escrow  Receipt for
     the purpose of receiving  distributions  pursuant to this Agreement and for
     all other purposes whatsoever,  and neither the Escrow Agent nor the Paying
     Agent shall be affected by any notice to the contrary.

               Section 1.09. FURTHER ASSURANCES. The Escrow Agent agrees to take
     such  actions,  and  execute  such other  documents,  as may be  reasonably
     requested by the Pass Through  Trustee in order to effectuate  the purposes
     of  this  Agreement  and  the  performance  by  the  Escrow  Agent  of  its
     obligations hereunder.

          SECTION 2. PAYING AGENT.

               Section  2.01.  APPOINTMENT  OF PAYING  AGENT.  The Escrow  Agent
     hereby  irrevocably  appoints and authorizes the Paying Agent to act as its
     paying agent hereunder, for the benefit of the Investors, for such specific
     purposes and with such powers as are  specifically  delegated to the Paying
     Agent by the terms of this  Agreement,  together  with such other powers as
     are reasonably  incidental thereto.  Any and all money received and held by
     the Paying  Agent under this  Agreement or the Deposit  Agreement  shall be
     held in the Paying  Agent  Account  for the benefit of the  Investors.  The
     Paying Agent (which term as used in this sentence  shall include  reference
     to its  affiliates  and its own and its  affiliates'  officers,  directors,
     employees and agents): (a) shall have no duties or responsibilities  except
     those  expressly  set forth in this  Agreement,  and shall not by reason of
     this  Agreement  be a  trustee  for the  Escrow  Agent;  (b)  shall  not be
     responsible   to  the   Escrow   Agent   for  any   recitals,   statements,
     representations  or warranties of any person other then itself contained in
     this  Agreement  or for the failure by the Escrow Agent or any other person
     or entity (other than the Paying  Agent) to perform any of its  obligations
     hereunder  (whether  or not the  Paying  Agent  shall  have  any  knowledge
     thereof);  and (c) shall not be responsible for any action taken or omitted



     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section 2.02.  ESTABLISHMENT OF PAYING AGENT ACCOUNT.  The Paying
     Agent shall  establish a deposit  account (the "PAYING  AGENT  ACCOUNT") at
     Wilmington  Trust Company in the name of the Escrow Agent.  It is expressly
     understood  by the parties  hereto  that the Paying  Agent is acting as the
     paying agent of the Escrow Agent  hereunder  and that no amounts on deposit
     in the Paying Agent Account constitute part of the Trust Property.

               Section  2.03.  PAYMENTS  FROM PAYING AGENT  ACCOUNT.  The Escrow
     Agent hereby  irrevocably  instructs the Paying Agent, and the Paying Agent
     agrees to act, as follows:

               (a) On each  Interest  Payment  Date (as  defined in the  Deposit
     Agreement) or as soon thereafter as the Paying Agent has confirmed  receipt
     in the Paying Agent Account from the Depositary of any amount in respect of
     accrued interest on the Deposits,  the Paying Agent shall distribute out of
     the  Paying  Agent  Account  the  entire  amount  deposited  therein by the
     Depositary.  There shall be so distributed to each  Receiptholder of record
     on the 15th day (whether or not a Business  Day)  preceding  such  Interest
     Payment  Date  by  check  mailed  to  such  Receiptholder,  at the  address
     appearing in the Register,  such  Receiptholder's  pro rata share (based on
     the Escrow Interest in the Account Amounts held by such  Receiptholder)  of
     the total  amount of interest  deposited  by the  Depositary  in the Paying
     Agent Account on such date,  except that,  with respect to Escrow  Receipts
     registered on the Record Date in the name of DTC, such  distribution  shall
     be made by wire  transfer  in  immediately  available  funds to the account
     designated by DTC.

               (b) Upon the  confirmation  by the Paying Agent of receipt in the
     Paying Agent  Account from the  Depositary  of any amount in respect of the
     Final  Withdrawal,  the Paying Agent shall forthwith  distribute the entire
     amount of the Final Withdrawal  deposited therein by the Depositary.  There
     shall be so  distributed  to each  Receiptholder  of record on the 15th day
     (whether or not a Business  Day)  preceding  the Final  Withdrawal  Date by
     check  mailed  to  such  Receiptholder,  at the  address  appearing  in the
     Register, such Receiptholder's pro rata share (based on the Escrow Interest
     in the Account Amounts held by such  Receiptholder)  of the total amount in
     the Paying Agent Account on account of such Final Withdrawal,  except that,



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

               (c) If any  payment of interest  or  principal  in respect of the
     Final  Withdrawal  is not  received by the Paying Agent within five days of
     the   applicable   date  when  due,  then  it  shall  be   distributed   to
     Receiptholders  after actual  receipt by the Paying Agent on the same basis
     as a Special Payment is distributed under the Pass Through Trust Agreement.

               (d) The Paying Agent shall include with any check mailed pursuant
     to this  Section  any  notice  required  to be  distributed  under the Pass
     Through Trust  Agreement  that is furnished to the Paying Agent by the Pass
     Through Trustee.

               Section 2.04.  WITHHOLDING  TAXES. The Paying Agent shall exclude
     and withhold from each distribution of accrued interest on the Deposits (as
     defined in the  Deposit  Agreement)  and any amount in respect of the Final
     Withdrawal any and all withholding taxes applicable  thereto as required by
     law.  The Paying  Agent  agrees to act as such  withholding  agent and,  in
     connection  therewith,  whenever  any  present  or future  taxes or similar
     charges are required to be withheld with respect to any amounts  payable in
     respect of the Deposits (as defined in the Deposit Agreement) or the escrow
     amounts,  to  withhold  such  amounts  and  timely  pay  the  same  to  the
     appropriate  authority in the name of and on behalf of the  Receiptholders,
     that it will file any necessary  withholding tax returns or statements when
     due, and that, as promptly as possible after the payment  thereof,  it will
     deliver to each such Receiptholder  appropriate  documentation  showing the
     payment thereof, together with such additional documentary evidence as such
     Receiptholder  may  reasonably  request from time to time. The Paying Agent
     agrees to file any other information  reports as it may be required to file
     under United States law.

               Section 2.05.  RESIGNATION OR REMOVAL OF PAYING AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Paying Agent as provided
     below,  the Paying  Agent may  resign at any time by giving 30 days'  prior
     written  notice  thereof  to the Escrow  Agent,  but may not  otherwise  be
     removed except for cause by the Escrow Agent.  Upon any such resignation or
     removal,  the Escrow  Agent  shall  have the right to  appoint a  successor
     Paying Agent. If no successor Paying Agent shall have been so appointed and



     shall have  accepted  such  appointment  within 30 days after the  retiring
     Paying  Agent's  giving of  notice of  resignation  or the  removal  of the
     retiring  Paying  Agent,  then the  retiring  Paying  Agent  may  appoint a
     successor  Paying Agent.  Any Successor  Paying Agent shall be a bank which
     has an office in the United  States with a combined  capital and surplus of
     at least  $100,000,000.  Upon the  acceptance of any  appointment as Paying
     Agent hereunder by a successor  Paying Agent,  such successor  Paying Agent
     shall enter into such documents as the Escrow Agent shall require and shall
     thereupon  succeed  to and  become  vested  with  all the  rights,  powers,
     privileges and duties of the retiring Paying Agent, and the retiring Paying
     Agent shall be discharged from its duties and obligations hereunder.

               Section 2.06. NOTICE OF FINAL WITHDRAWAL.  Promptly after receipt
     by the Paying Agent of notice that the Escrow  Agent has  requested a Final
     Withdrawal or that a Final  Withdrawal will be made, the Paying Agent shall
     cause notice of the  distribution  of the Final  Withdrawal to be mailed to
     each of the  Receiptholders  at its address as it appears in the  Register.
     Such  notice  shall be  mailed  not less  than 15 days  prior to the  Final
     Withdrawal Date. Such notice shall set forth:

                     (i) the Final  Withdrawal Date and the date for determining
          Receiptholders   of  record   who  shall  be   entitled   to   receive
          distributions in respect of the Final Withdrawal,

                    (ii) the  amount  of the  payment  in  respect  of the Final
          Withdrawal  for  each  $1,000  face  amount   Certificate   (based  on
          information  provided  by the Pass  Through  Trustee)  and the  amount
          thereof  constituting  unused  Deposits  (as  defined  in the  Deposit
          Agreement) and interest thereon, and

                   (iii) if the  Final  Withdrawal  Date is  the same  date as a
          Regular  Distribution  Date,  the total  amount to be received on such
          date for each  $1,000 face amount  Certificate  (based on  information
          provided by the Pass Through Trustee).

          Such  mailing  may  include  any  notice   required  to  be  given  to
Certificateholders  in connection  with such  distribution  pursuant to the Pass
Through Trust Agreement.

          SECTION 3. PAYMENTS. If, notwithstanding the instructions in Section 4
of the Deposit  Agreement that all amounts payable to the Escrow Agent under the



Deposit Agreement be paid by the Depositary  directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately  available  funds by wire transfer to (a) in the case
of a payment of accrued  interest  on the  Deposits  (as  defined in the Deposit
Agreement) or any Final Withdrawal, directly to the Paying Agent Account and (b)
in the case of any Purchase Withdrawal,  directly to the Pass Through Trustee or
its designee as specified and in the manner provided in the Applicable Notice of
Purchase  Withdrawal.  The  Escrow  Agent  hereby  waives  any and all rights of
set-off,  combination of accounts,  right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against amounts
payable to the Paying Agent howsoever arising.

          SECTION  4. OTHER  ACTIONS.  The Escrow  Agent  shall  take such other
actions  under  or in  respect  of the  Deposit  Agreement  (including,  without
limitation,  the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.

          SECTION  5. REPRESENTATIONS  AND  WARRANTIES OF THE ESCROW  AGENT. The
Escrow Agent represents and warrants to Continental,  the Investors,  the Paying
Agent and the Pass Through Trustee as follows:

                     (i) it is a national banking association duly organized and
          validly  existing in good standing under the laws of the United States
          of America;

                    (ii) it has full power, authority and legal right to conduct
          its business and  operations as currently  conducted and to enter into
          and  perform  its  obligations  under this  Agreement  and the Deposit
          Agreement;

                   (iii) the  execution,  delivery  and  performance  of each of
          this Agreement and the Deposit  Agreement have been duly authorized by
          all  necessary  corporate  action on the part of it and do not require
          any  stockholder  approval,  or  approval or consent of any trustee or
          holder  of any  indebtedness  or  obligations  of it,  and  each  such
          document has been duly  executed and  delivered by it and  constitutes
          its legal,  valid and binding  obligations  enforceable  against it in
          accordance   with  the  terms   hereof  or  thereof   except  as  such
          enforceability may be limited by bankruptcy,  insolvency,  moratorium,
          reorganization  or  other  similar  laws or  equitable  principles  of



          general  application  to or affecting  the  enforcement  of creditors'
          rights  generally   (regardless  of  whether  such  enforceability  is
          considered in a proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
          action by, and no notice to or filing with,  any United States federal
          or state governmental authority or regulatory body is required for the
          execution,  delivery or  performance  by it of this  Agreement  or the
          Deposit Agreement;

                     (v) neither the execution, delivery or performance by it of
          this Agreement or the Deposit Agreement, nor compliance with the terms
          and provisions  hereof or thereof,  conflicts or will conflict with or
          results or will result in a breach or  violation  of any of the terms,
          conditions or  provisions  of, or will require any consent or approval
          under,  any  law,  governmental  rule  or  regulation  or the  charter
          documents,  as amended,  or bylaws,  as amended,  of it or any similar
          instrument binding on it or any order,  writ,  injunction or decree of
          any court or governmental  authority  against it or by which it or any
          of its properties is bound or any  indenture,  mortgage or contract or
          other agreement or instrument to which it is a party or by which it or
          any of its properties is bound,  or  constitutes or will  constitute a
          default  thereunder or results or will result in the imposition of any
          lien upon any of its properties; and

                    (vi) there are no pending or, to its  knowledge,  threatened
          actions,   suits,   investigations  or  proceedings  (whether  or  not
          purportedly  on behalf of it)  against or  affecting  it or any of its
          property  before or by any court or  administrative  agency which,  if
          adversely determined,  (A) would adversely affect the ability of it to
          perform its obligations  under this Agreement or the Deposit Agreement
          or (B) would call into  question  or  challenge  the  validity of this
          Agreement  or the Deposit  Agreement or the  enforceability  hereof or
          thereof in  accordance  with the terms  hereof or thereof,  nor is the
          Escrow  Agent in  default  with  respect  to any  order of any  court,
          governmental authority,  arbitration board or administrative agency so
          as to adversely  affect its ability to perform its  obligations  under
          this Agreement or the Deposit Agreement.

          SECTION  6. REPRESENTATIONS  AND  WARRANTIES OF THE PAYING  AGENT. The
Paying Agent represents and warrants to Continental,  the Investors,  the Escrow
Agent and the Pass Through Trustee as follows:



                     (i) it is a Delaware  banking company  duly  organized  and
          validly  existing in good standing under the laws of its  jurisdiction
          of incorporation;

                    (ii) it has full power, authority and legal right to conduct
          its business and  operations as currently  conducted and to enter into
          and perform its obligations under this Agreement;

                   (iii) the   execution,  delivery  and  performance   of  this
          Agreement has been duly authorized by all necessary  corporate  action
          on the part of it and does not require any  stockholder  approval,  or
          approval  or consent of any trustee or holder of any  indebtedness  or
          obligations  of it,  and such  document  has been  duly  executed  and
          delivered  by  it  and  constitutes  its  legal,   valid  and  binding
          obligations enforceable against it in accordance with the terms hereof
          except  as  such   enforceability   may  be  limited  by   bankruptcy,
          insolvency,  moratorium,  reorganization  or  other  similar  laws  or
          equitable  principles  of  general  application  to or  affecting  the
          enforcement of creditors' rights generally (regardless of whether such
          enforceability is considered in a proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
          action by, and no notice to or filing with,  any United States federal
          or state governmental authority or regulatory body is required for the
          execution, delivery or performance by it of this Agreement;

                     (v) neither the execution, delivery or performance by it of
          this Agreement,  nor compliance with the terms and provisions  hereof,
          conflicts or will  conflict with or results or will result in a breach
          or violation of any of the terms, conditions or provisions of, or will
          require any consent or approval under, any law,  governmental  rule or
          regulation  or the  charter  documents,  as  amended,  or  bylaws,  as
          amended,  of it or any similar  instrument binding on it or any order,
          writ,  injunction  or decree of any  court or  governmental  authority
          against  it or by  which it or any of its  properties  is bound or any
          indenture,  mortgage or contract or other  agreement or  instrument to
          which it is a party or by which it or any of its  properties is bound,



          or constitutes or will  constitute a default  thereunder or results or
          will result in the imposition of any lien upon any of its  properties;
          and

                    (vi) there are no pending or, to its  knowledge,  threatened
          actions,   suits,   investigations  or  proceedings  (whether  or  not
          purportedly  on behalf of it)  against or  affecting  it or any of its
          property  before or by any court or  administrative  agency which,  if
          adversely determined,  (A) would adversely affect the ability of it to
          perform its  obligations  under this  Agreement or (B) would call into
          question  or  challenge   the  validity  of  this   Agreement  or  the
          enforceability  hereof in accordance with the terms hereof, nor is the
          Paying  Agent in  default  with  respect  to any  order of any  court,
          governmental authority,  arbitration board or administrative agency so
          as to adversely  affect its ability to perform its  obligations  under
          this Agreement.

          SECTION  7. INDEMNIFICATION. Except for actions expressly  required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder  unless it shall have been  indemnified by the party  requesting  such
action in a manner  reasonably  satisfactory to it against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.  In the event  Continental  requests any  amendment to any
Operative  Agreement  (as  defined  in the Note  Purchase  Agreement),  the Pass
Through  Trustee  agrees to pay all  reasonable  fees and  expenses  (including,
without  limitation,  fees and disbursements of counsel) of the Escrow Agent and
the Paying Agent in connection therewith.

          SECTION 8. AMENDMENT, ETC. Upon request  of  the  Pass Through Trustee
and  approval by an Action of  Investors,  the Escrow  Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon  request  of the Pass  Through  Trustee  and  without  any  consent  of the
Investors,  the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:

                    (1) to correct or supplement any provision in this Agreement
          which may be defective or inconsistent with any other provision herein
          or to cure any ambiguity or correct any mistake or to modify any other
          provision  with  respect to matters or  questions  arising  under this



          Agreement,   PROVIDED  that  any  such  action  shall  not  materially
          adversely affect the interests of the Investors; or

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

                    (3)  to  evidence   and  provide  for  the   acceptance   of
          appointment   under  this  Agreement  of  a  successor  Escrow  Agent,
          successor Paying Agent or successor Pass Through Trustee.

          SECTION  9. NOTICES.  Unless otherwise expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof.  All notices shall be sent to (a) in the case of the Investors,
as their respective  addresses shall appear in the Register,  (b) in the case of
the Escrow Agent,  First  Security  Bank,  National  Association,  79 South Main
Street,  Salt  Lake  City,  UT  84111,   Attention:   Corporate  Trust  Services
(Telecopier:  (801)  246-5053),  (c) in the  case of the Pass  Through  Trustee,
Wilmington  Trust  Company,  1100 North  Market  Street,  Wilmington,  DE 19890,
Attention: Corporate Trust Administration (Telecopier: (302) 651-8882) or (d) in
the case of the Paying  Agent,  Wilmington  Trust  Company,  1100  North  Market
Street,   Wilmington,  DE  19890,  Attention:   Corporate  Trust  Administration
(Telecopier:  (302)  651-8882),  in  each  case  with  a  copy  to  Continental,
Continental Airlines,  Inc., 2929 Allen Parkway,  Suite 2010, Houston, TX 77019,
Attention:  Executive Vice President and Chief  Financial  Officer  (Telecopier:
(713)  520-6329)  (or at such other  address as any such party may specify  from
time to time in a  written  notice  to the  other  parties).  On or prior to the
execution  of this  Agreement,  the Pass  Through  Trustee has  delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and  instructions
with respect to this Agreement.  The Escrow Agent may conclusively  rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.

          SECTION 10.  TRANSFER.  No party hereto shall be entitled to assign or
otherwise  transfer this  Agreement (or any interest  herein) other than (in the
case of the Escrow Agent) to a successor  escrow agent under Section 1.06 hereof
or (in the case of the Paying  Agent) to a successor  paying agent under Section
2.04 hereof,  and any purported  assignment in violation  thereof shall be void.
This  Agreement  shall be binding upon the parties  hereto and their  respective



successors  and (in the case of the  Escrow  Agent and the Paying  Agent)  their
respective  permitted  assigns.  Upon the occurrence of the Transfer (as defined
below)  contemplated  by the  Assignment  and  Assumption  Agreement (as defined
below),  the Pass Through Trustee shall (without  further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and,  thereafter,  the trustee
of the  Successor  Trust  shall  be  deemed  to be the  "Pass  Through  Trustee"
hereunder  with  the  rights  and  obligations  of the  "Pass  Through  Trustee"
hereunder and each reference herein to "Continental  Airlines Pass Through Trust
"1998-1A-O"  shall be deemed to be a reference  to  "Continental  Airlines  Pass
Through Trust 1998-1A-S".  The parties hereto hereby  acknowledge and consent to
the Transfer  contemplated by the Assignment and Assumption  Agreement.  As used
herein,  "TRANSFER"  means the  transfers of the assets to the  Successor  Trust
contemplated  by  the  Assignment  and  Assumption  Agreement;  "ASSIGNMENT  AND
ASSUMPTION  AGREEMENT"  means the  Assignment  and  Assumption  Agreement  to be
entered into between the Pass Through  Trustee and the trustee of the  Successor
Trust,  substantially  in  the  form  of  Exhibit  C to  the  Trust  Supplement;
"SUCCESSOR TRUST" means the Continental Airlines Pass Through Trust 1998-1A-S.

          SECTION 11. ENTIRE  AGREEMENT.  This  Agreement  sets forth all of the
promises, covenants, agreements,  conditions and understandings among the Escrow
Agent,  the Paying Agent,  the  Underwriters  and the Pass Through  Trustee with
respect  to  the  subject   matter   hereof,   and   supersedes  all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.

          SECTION 12.  GOVERNING LAW. This  Agreement  shall be governed by, and
construed in accordance with, the laws of the State of New York.

          SECTION 13. WAIVER OF JURY TRIAL RIGHT.  EACH OF THE ESCROW AGENT, THE
PAYING  AGENT,  THE  INVESTORS  AND THE PASS THROUGH  TRUSTEE  ACKNOWLEDGES  AND
ACCEPTS  THAT IN ANY SUIT,  ACTION OR  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.

          SECTION 14.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.



          IN  WITNESS   WHEREOF,   the  Escrow  Agent,  the  Paying  Agent,  the
Underwriters  and the Pass  Through  Trustee  have caused this Escrow and Paying
Agent Agreement (Class A) to be duly executed as of the day and year first above
written.

                                        FIRST SECURITY BANK, NATIONAL
                                        ASSOCIATION, as Escrow Agent


                                        By______________________________________
                                          Name:
                                          Title:


                                        CREDIT SUISSE FIRST BOSTON CORPORATION
                                        MORGAN STANLEY & CO. INCORPORATED and
                                        CHASE SECURITIES INC.,
                                          as Underwriters


                                        By: CREDIT SUISSE FIRST BOSTON
                                            CORPORATION


                                        By______________________________________
                                          Name:
                                          Title:

                                                                       
                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual capacity,  but solely as Pass
                                        Through  Trustee  for and on  behalf  of
                                        Continental  Airlines Pass Through Trust
                                        1998-1A-O



                                        By______________________________________
                                          Name:
                                          Title:



                                        WILMINGTON TRUST COMPANY,
                                        as Paying Agent


                                        By______________________________________
                                          Name:
                                          Title:



                                                                       EXHIBIT A

                   CONTINENTAL AIRLINES 1998-1A ESCROW RECEIPT

                                     No. __

          This Escrow  Receipt  evidences  a  fractional  undivided  interest in
amounts  ("ACCOUNT  AMOUNTS")  from time to time deposited into a certain paying
agent  account (the "PAYING AGENT  ACCOUNT")  described in the Escrow and Paying
Agent Agreement (Class A) dated as of February 20, 1998 (as amended, modified or
supplemented  from time to time, the "ESCROW AND PAYING AGENT  AGREEMENT") among
First Security Bank,  National  Association,  as Escrow Agent (in such capacity,
together  with its  successors in such  capacity,  the "ESCROW  AGENT"),  Credit
Suisse First Boston  Corporation,  Morgan Stanley & Co.  Incorporated  and Chase
Securities  Inc., as  Underwriters,  Wilmington  Trust Company,  as Pass Through
Trustee (in such capacity,  together with its  successors in such capacity,  the
"PASS THROUGH  TRUSTEE") and Wilmington Trust Company,  as paying agent (in such
capacity,  together with its successors in such capacity,  the "PAYING  AGENT").
Capitalized terms not defined herein shall have the meanings assigned to them in
the Escrow and Paying Agent Agreement.

          This  Escrow  Receipt  is issued  under and is  subject  to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.

          This Escrow  Receipt  represents  a fractional  undivided  interest in
amounts  deposited from time to time in the Paying Agent Account,  and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property  other than such  amounts.  This Escrow  Receipt  evidences the same
percentage interest in the Account Amounts as the Fractional  Undivided Interest
in the Pass  Through  Trust  evidenced by the  Certificate  to which this Escrow
Receipt is affixed.

          All payments and  distributions  made to  Receiptholders in respect of
the Escrow  Receipt  shall be made only from  Account  Amounts  deposited in the
Paying Agent Account.  The holder of this Escrow  Receipt,  by its acceptance of
this Escrow Receipt,  agrees that it will look solely to the Account Amounts for
any payment or  distribution  due to it pursuant to this Escrow Receipt and that
it will not have any  recourse to  Continental,  the Pass Through  Trustee,  the
Paying Agent or the Escrow Agent,  except as expressly provided herein or in the



Pass Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any  right  to  vote  or in any  manner  otherwise  control  the  operation  and
management of the Paying Agent Account,  nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt,  be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.

          This  Escrow  Receipt may not be  assigned  or  transferred  except in
connection  with the  assignment  or transfer of the  Certificate  to which this
Escrow  Receipt is  affixed.  After  payment to the holder  hereof of its Escrow
Interest  in the  Final  Distribution,  upon the  request  of the  Pass  Through
Trustee,  the holder hereof will return this Escrow  Receipt to the Pass Through
Trustee.

          The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes,  and
the Paying Agent shall not be affected by any notice to the contrary.

          THIS ESCROW  RECEIPT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

          IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to
be duly executed.

Dated: ______________, 199_

                                        FIRST SECURITY BANK,
                                        NATIONAL ASSOCIATION,
                                        as Escrow Agent


                                        By______________________________________
                                          Name:
                                          Title:



                                                                       EXHIBIT B

                             WITHDRAWAL CERTIFICATE
                                    (Class A)

                   First Security Bank, National Association,
                                 as Escrow Agent

Dear Sirs:

          Reference is made to the Escrow and Paying Agent  Agreement,  dated as
of  February  20,  1998 (the  "Agreement").  We hereby  certify  to you that the
conditions to the  obligations  of the  undersigned  to execute a  Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied.  Pursuant
to Section  1.02(c) of the  Agreement,  please  execute the  attached  Notice of
Withdrawal and  immediately  transmit by facsimile to the  Depositary,  at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.

                                        Very truly yours,

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


                                        By______________________________________
                                          Name:
                                          Title:

Dated:  ____________, 199_


                                                                       EXECUTION








                        ESCROW AND PAYING AGENT AGREEMENT
                                    (Class B)

                          Dated as of February 20, 1998

                                      among

                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent

                     CREDIT SUISSE FIRST BOSTON CORPORATION,
                        MORGAN STANLEY & CO. INCORPORATED
                                       and
                              CHASE SECURITIES INC.

                                 as Underwriters

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       but solely as Pass Through Trustee
                              for and on behalf of
                Continental Airlines Pass Through Trust 1998-1B-O

                             as Pass Through Trustee

                                       and

                            WILMINGTON TRUST COMPANY

                                 as Paying Agent












                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1.  Escrow Agent.....................................................  2
     Section 1.01. Appointment of Escrow Agent...............................  2
     Section 1.02. Instruction; Etc..........................................  3
     Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts........  4
     Section 1.04. Payments to Receiptholders................................  5
     Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.......  5
     Section 1.06. Additional Escrow Amounts.................................  6
     Section 1.07. Resignation or Removal of Escrow Agent....................  6
     Section 1.08. Persons Deemed Owners.....................................  7
     Section 1.09. Further Assurances........................................  7

SECTION 2.  Paying Agent.....................................................  7
     Section 2.01. Appointment of Paying Agent...............................  7
     Section 2.02. Establishment of Paying Agent Account.....................  8
     Section 2.03. Payments from Paying Agent Account........................  8
     Section 2.04. Withholding Taxes.........................................  9
     Section 2.05. Resignation or Removal of Paying Agent....................  9
     Section 2.06. Notice of Final Withdrawal................................ 10

SECTION 3.  Payments......................................................... 11

SECTION 4.  Other Actions.................................................... 11

SECTION 5.  Representations and Warranties of the Escrow Agent............... 11

SECTION 6.  Representations and Warranties of the Paying Agent............... 13

SECTION 7.  Indemnification.................................................. 14

SECTION 8.  Amendment, Etc................................................... 15

SECTION 9.  Notices.......................................................... 15

SECTION 10. Transfer......................................................... 16

SECTION 11. Entire Agreement................................................. 16

SECTION 12. Governing Law.................................................... 17





                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 13. Waiver of Jury Trial Right....................................... 17

SECTION 14. Counterparts..................................................... 17

Exhibit A   Escrow Receipt
Exhibit B   Withdrawal Certificate





          ESCROW AND PAYING AGENT  AGREEMENT  (Class B) dated as of February 20,
1998 (as amended,  modified or supplemented from time to time, this "Agreement")
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
as  Escrow  Agent  (in  such  capacity,  together  with its  successors  in such
capacity,  the "Escrow Agent");  CREDIT SUISSE FIRST BOSTON CORPORATION,  MORGAN
STANLEY & CO.  INCORPORATED  and CHASE  SECURITIES  INC., as Underwriters of the
Certificates  referred  to below (the  "Underwriters"  and  together  with their
respective transferees and assigns as registered owners of the Certificates, the
"Investors")  under the  Underwriting  Agreement  referred to below;  WILMINGTON
TRUST COMPANY, a Delaware banking  corporation,  not in its individual  capacity
except as otherwise  expressly  provided herein,  but solely as trustee (in such
capacity,  together  with its  successors  in such  capacity,  the "Pass Through
Trustee")  under  the Pass  Through  Trust  Agreement  referred  to  below;  and
WILMINGTON  TRUST  COMPANY,  a Delaware  banking  corporation,  as paying  agent
hereunder (in such capacity,  together with its successors in such capacity, the
"Paying Agent").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL")  and the  Pass
Through Trustee have entered into a Trust  Supplement,  dated as of February 20,
1998 (the "TRUST SUPPLEMENT"),  to the Pass Through Trust Agreement, dated as of
September 25, 1997 (together, as amended,  modified or supplemented from time to
time in accordance with the terms thereof,  the "PASS THROUGH TRUST  AGREEMENT")
relating to Continental Airlines Pass Through Trust 1998-1B-O (the "PASS THROUGH
TRUST")  pursuant to which the Continental  Airlines Pass Through Trust,  Series
1998-1B-O  Certificates  referred  to  therein  (the  "CERTIFICATES")  are being
issued;

          WHEREAS,  Continental  and  the  Underwriters  have  entered  into  an
Underwriting  Agreement  dated as of February 11, 1998 (as amended,  modified or
supplemented  from  time to time in  accordance  with  the  terms  thereof,  the
"UNDERWRITING  AGREEMENT") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT
NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee




or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors,
subject to withdrawal upon request by the Pass Through Trustee and  satisfaction
of the  conditions  set forth in the Note Purchase  Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with Credit Suisse First Boston,  acting
through its New York branch, as Depositary (the "DEPOSITARY")  under the Deposit
Agreement,  dated as of the date hereof  between the  Depositary  and the Escrow
Agent relating to the Pass Through Trust (as amended,  modified or  supplemented
from time to time in accordance with the terms thereof, the "DEPOSIT AGREEMENT")
pursuant to which,  among other  things,  the  Depositary  will pay interest for
distribution to the Investors and establish accounts from which the Escrow Agent
shall make  withdrawals  upon  request of and proper  certification  by the Pass
Through Trustee;

          WHEREAS,  the Escrow  Agent  wishes to appoint the Paying Agent to pay
amounts  required to be  distributed  to the Investors in  accordance  with this
Agreement; and

          WHEREAS,  capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.

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

          SECTION 1. ESCROW AGENT.

               Section  1.01.   APPOINTMENT   OF  ESCROW  AGENT.   Each  of  the
     Underwriters,   for  and  on  behalf  of  each  of  the  Investors,  hereby
     irrevocably  appoints,  authorizes  and directs the Escrow  Agent to act as
     escrow agent and fiduciary  hereunder  and under the Deposit  Agreement for
     such specific  purposes and with such powers as are specifically  delegated
     to the  Escrow  Agent by the terms of this  Agreement,  together  with such
     other  powers  as are  reasonably  incidental  thereto.  Any and all  money
     received and held by the Escrow  Agent under this  Agreement or the Deposit
     Agreement  shall be held in escrow by the Escrow Agent in  accordance  with
     the  terms  of  this  Agreement.  This  Agreement  is  irrevocable  and the
     Investors' rights with respect to any monies received and held in escrow by




     the Escrow Agent under this Agreement or the Deposit  Agreement  shall only
     be as provided  under the terms and  conditions  of this  Agreement and the
     Deposit  Agreement.  The Escrow Agent (which term as used in this  sentence
     shall include  reference to its affiliates and its own and its  affiliates'
     officers,  directors,  employees  and agents):  (a) shall have no duties or
     responsibilities  except those expressly set forth in this  Agreement;  (b)
     shall not be responsible  to the Pass Through  Trustee or the Investors for
     any recitals, statements, representations or warranties of any person other
     then itself contained in this Agreement or the Deposit Agreement or for the
     failure by the Pass Through  Trustee,  the Investors or any other person or
     entity  (other  than the Escrow  Agent) to perform  any of its  obligations
     hereunder  (whether  or not the  Escrow  Agent  shall  have  any  knowledge
     thereof);  and (c) shall not be responsible for any action taken or omitted
     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section  1.02.  INSTRUCTION;  ETC. The  Underwriters,  for and on
     behalf of each of the  Investors,  hereby  irrevocably  instruct the Escrow
     Agent,  and  the  Escrow  Agent  agrees,  (a) to  enter  into  the  Deposit
     Agreement,  (b) to appoint the Paying Agent as provided in this  Agreement,
     (c) upon receipt at any time and from time to time prior to the Termination
     Date (as  defined  below)  of a  certificate  substantially  in the form of
     Exhibit B hereto (a "WITHDRAWAL  CERTIFICATE") executed by the Pass Through
     Trustee,  together  with an  attached  Notice  of  Purchase  Withdrawal  in
     substantially the form of Exhibit A to the Deposit Agreement duly completed
     by the Pass Through Trustee (the "APPLICABLE NOTICE OF PURCHASE WITHDRAWAL"
     and  the  withdrawal  to  which  it  relates,  a  "PURCHASE   WITHDRAWAL"),
     immediately  to execute the  Applicable  Notice of Purchase  Withdrawal  as
     Escrow Agent and transmit it to the Depositary by facsimile transmission in
     accordance with the Deposit  Agreement;  PROVIDED that, upon the request of
     the Pass Through  Trustee after such  transmission,  the Escrow Agent shall
     cancel such Applicable Notice of Purchase Withdrawal,  and (d) if there are
     any  undrawn  Deposits  (as  defined  in  the  Deposit  Agreement)  on  the
     "TERMINATION  DATE",  which  shall mean the  earlier  of (i) June 30,  1999
     (provided  that,  if a labor strike  occurs at The Boeing  Company prior to
     such date (a "LABOR STRIKE"), such date shall be extended by adding thereto
     the number of days that such strike  continued  in effect (the  "ADDITIONAL
     DAYS") and (ii) the day on which the Escrow Agent receives  notice from the
     Pass Through Trustee that the Pass Through Trustee's obligation to purchase




     Equipment Notes under the Note Purchase  Agreement has terminated,  to give
     notice to the Depositary (with a copy to the Paying Agent) substantially in
     the form of Exhibit B to the Deposit  Agreement  requesting a withdrawal of
     all of the remaining Deposits, together with accrued and unpaid interest on
     such  Deposits  to the date of  withdrawal,  on the 35th day after the date
     that such notice of  withdrawal  is given to the  Depositary  (or, if not a
     Business Day, on the next succeeding Business Day) (a "FINAL  WITHDRAWAL"),
     PROVIDED that if the day  scheduled for the Final  Withdrawal in accordance
     with the foregoing is within 10 days before or after a Regular Distribution
     Date,  then the  Escrow  Agent  shall  request  that such  requested  Final
     Withdrawal  be made on such  Regular  Distribution  Date  (the date of such
     requested  withdrawal,  the "FINAL WITHDRAWAL DATE"). If for any reason the
     Escrow Agent shall have failed to give the Final  Withdrawal  Notice to the
     Depositary  on or before  July 7,  1999  (PROVIDED  that if a Labor  Strike
     occurs,  such date shall be extended by the Additional Days), and there are
     unwithdrawn  Deposits  on such  date,  the Final  Withdrawal  Date shall be
     deemed to be July 30, 1999 (PROVIDED  that if a Labor Strike  occurs,  such
     date shall be extended by the Additional Days).

               Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW RECEIPTS.
     The Escrow Agent hereby directs the  Underwriters  to, and the Underwriters
     hereby acknowledge that on the date hereof they shall,  irrevocably deliver
     to the Depositary on behalf of the Escrow Agent, an amount in U.S.  dollars
     ("DOLLARS")  and  immediately  available  funds equal to  $150,371,000  for
     deposit on behalf of the Escrow  Agent with the  Depositary  in  accordance
     with Section 2.1 of the Deposit Agreement. The Underwriters hereby instruct
     the  Escrow  Agent,  upon  receipt  of such sum from the  Underwriters,  to
     confirm  such  receipt by  executing  and  delivering  to the Pass  Through
     Trustee  an Escrow  Receipt  in the form of  Exhibit A hereto  (an  "ESCROW
     RECEIPT"),  (a)  to  be  affixed  by  the  Pass  Through  Trustee  to  each
     Certificate and (b) to evidence the same  percentage  interest (the "ESCROW
     INTEREST")  in the Account  Amounts (as  defined  below) as the  Fractional
     Undivided  Interest in the Pass Through Trust  evidenced by the Certificate
     to which it is to be affixed.  The Escrow  Agent shall  provide to the Pass
     Through Trustee for attachment to each  Certificate  newly issued under and
     in  accordance  with the Pass Through  Trust  Agreement an executed  Escrow
     Receipt as the Pass  Through  Trustee may from time to time  request of the
     Escrow Agent.  Each Escrow  Receipt shall be registered by the Escrow Agent
     in a register (the  "REGISTER")  maintained by the Escrow Agent in the same




     name and same manner as the Certificate to which it is attached and may not
     thereafter be detached from such  Certificate  to which it is to be affixed
     prior  to  the   distribution   of  the  Final   Withdrawal   (the   "FINAL
     DISTRIBUTION"). After the Final Distribution, no additional Escrow Receipts
     shall be issued and the Pass Through  Trustee  shall  request the return to
     the Escrow Agent for cancellation of all outstanding Escrow Receipts.

               Section  1.04.  PAYMENTS  TO  RECEIPTHOLDERS.  All  payments  and
     distributions   made  to  holders  of  an  Escrow   Receipt   (collectively
     "RECEIPTHOLDERS")  in respect of the Escrow Receipt shall be made only from
     amounts  deposited in the Paying Agent Account (as defined below) ("ACCOUNT
     AMOUNTS").  Each  Receiptholder,  by its  acceptance of an Escrow  Receipt,
     agrees that (a) it will look solely to the Account  Amounts for any payment
     or  distribution  due to such  Receiptholder  pursuant  to the terms of the
     Escrow  Receipt  and this  Agreement  and (b) it will have no  recourse  to
     Continental,  the Pass  Through  Trustee,  the  Paying  Agent or the Escrow
     Agent,  except as expressly  provided  herein or in the Pass Through  Trust
     Agreement.  No Receiptholder  shall have any right to vote or in any manner
     otherwise  control the operation and management of the Paying Agent Account
     or the  obligations  of the parties  hereto,  nor shall  anything set forth
     herein, or contained in the terms of the Escrow Receipt, be construed so as
     to constitute the  Receiptholders  from time to time as partners or members
     of an association.

               Section  1.05.  MUTILATED,   DESTROYED,  LOST  OR  STOLEN  ESCROW
     RECEIPT.  If (a) any mutilated  Escrow Receipt is surrendered to the Escrow
     Agent or the Escrow  Agent  receives  evidence to its  satisfaction  of the
     destruction, loss or theft of any Escrow Receipt and (b) there is delivered
     to the Escrow Agent and the Pass Through  Trustee such security,  indemnity
     or bond,  as may be required by them to hold each of them  harmless,  then,
     absent  notice to the Escrow  Agent or the Pass  Through  Trustee that such
     destroyed,  lost or stolen Escrow  Receipt has been acquired by a bona fide
     purchaser,  and  provided  that the  requirements  of Section  8-405 of the
     Uniform  Commercial Code in effect in any applicable  jurisdiction are met,
     the Escrow Agent shall execute,  authenticate and deliver,  in exchange for
     or in lieu of any such mutilated, destroyed, lost or stolen Escrow Receipt,
     a new Escrow Receipt or Escrow  Receipts and of like Escrow Interest in the
     Account Amounts and bearing a number not contemporaneously outstanding.

                    In  connection  with the issuance of any new Escrow  Receipt
     under this Section 1.05,  the Escrow Agent may require the payment of a sum




     sufficient  to  cover  any tax or  other  governmental  charge  that may be
     imposed in relation thereto and any other expenses  (including the fees and
     expenses  of the Pass  Through  Trustee  and the  Escrow  Agent)  connected
     therewith.

                    Any duplicate Escrow Receipt issued pursuant to this Section
     1.05  shall  constitute  conclusive  evidence  of  the  appropriate  Escrow
     Interest in the Account Amounts,  as if originally  issued,  whether or not
     the lost, stolen or destroyed Escrow Receipt shall be found at any time.

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

               Section  1.06.  ADDITIONAL  ESCROW  AMOUNTS.  On the  date of any
     Purchase  Withdrawal,  the Pass  Through  Trustee may  re-deposit  with the
     Depositary  some or all of the  amounts so  withdrawn  in  accordance  with
     Section 2.4 of the Deposit Agreement.

               Section 1.07.  RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Escrow Agent as provided
     below,  the Escrow  Agent may  resign at any time by giving 30 days'  prior
     written notice  thereof to the Investors,  but may not otherwise be removed
     except for cause by the written  consent of the  Investors  with respect to
     Investors  representing  Escrow  Interests  aggregating  not  less  than  a
     majority in interest  in the  Account  Amounts (an "ACTION OF  INVESTORS").
     Upon any such  resignation  or  removal,  the  Investors,  by an  Action of
     Investors,  shall have the right to appoint a successor Escrow Agent. If no
     successor Escrow Agent shall have been so appointed and shall have accepted
     such appointment within 30 days after the retiring Escrow Agent's giving of
     notice of resignation or the removal of the retiring Escrow Agent, then the
     retiring Escrow Agent may appoint a successor  Escrow Agent.  Any successor
     Escrow Agent shall be a bank which has an office in the United  States with
     a  combined  capital  and  surplus  of  at  least  $100,000,000.  Upon  the
     acceptance  of any  appointment  as Escrow  Agent  hereunder by a successor
     Escrow Agent,  such successor  Escrow Agent shall enter into such documents
     as the Pass Through  Trustee shall require and shall  thereupon  succeed to
     and become vested with all the rights, powers, privileges and duties of the
     retiring  Escrow Agent,  and the retiring  Escrow Agent shall be discharged
     from its duties and obligations hereunder. No resignation or removal of the
     Escrow Agent shall be effective  unless a written  confirmation  shall have




     been obtained from each of Moody's Investors  Service,  Inc. and Standard &
     Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., that
     the  replacement  of the Escrow Agent with the successor  Escrow Agent will
     not result in (a) a reduction of the rating for the Certificates  below the
     then current rating for the  Certificates or (b) a withdrawal or suspension
     of the rating of the Certificates.

               Section 1.08. PERSONS DEEMED OWNERS.  Prior to due presentment of
     a Certificate for registration of transfer, the Escrow Agent and the Paying
     Agent may treat the Person in whose name any Escrow  Receipt is  registered
     (as of the day of  determination)  as the owner of such Escrow  Receipt for
     the purpose of receiving  distributions  pursuant to this Agreement and for
     all other purposes whatsoever,  and neither the Escrow Agent nor the Paying
     Agent shall be affected by any notice to the contrary.

               Section 1.09. FURTHER ASSURANCES. The Escrow Agent agrees to take
     such  actions,  and  execute  such other  documents,  as may be  reasonably
     requested by the Pass Through  Trustee in order to effectuate  the purposes
     of  this  Agreement  and  the  performance  by  the  Escrow  Agent  of  its
     obligations hereunder.

          SECTION 2. PAYING AGENT.

               Section  2.01.  APPOINTMENT  OF PAYING  AGENT.  The Escrow  Agent
     hereby  irrevocably  appoints and authorizes the Paying Agent to act as its
     paying agent hereunder, for the benefit of the Investors, for such specific
     purposes and with such powers as are  specifically  delegated to the Paying
     Agent by the terms of this  Agreement,  together  with such other powers as
     are reasonably  incidental thereto.  Any and all money received and held by
     the Paying  Agent under this  Agreement or the Deposit  Agreement  shall be
     held in the Paying  Agent  Account  for the benefit of the  Investors.  The
     Paying Agent (which term as used in this sentence  shall include  reference
     to its  affiliates  and its own and its  affiliates'  officers,  directors,
     employees and agents): (a) shall have no duties or responsibilities  except
     those  expressly  set forth in this  Agreement,  and shall not by reason of
     this  Agreement  be a  trustee  for the  Escrow  Agent;  (b)  shall  not be
     responsible   to  the   Escrow   Agent   for  any   recitals,   statements,
     representations  or warranties of any person other then itself contained in
     this  Agreement  or for the failure by the Escrow Agent or any other person
     or entity (other than the Paying  Agent) to perform any of its  obligations
     hereunder  (whether  or not the  Paying  Agent  shall  have  any  knowledge




     thereof);  and (c) shall not be responsible for any action taken or omitted
     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section 2.02.  ESTABLISHMENT OF PAYING AGENT ACCOUNT.  The Paying
     Agent shall  establish a deposit  account (the "PAYING  AGENT  ACCOUNT") at
     Wilmington  Trust Company in the name of the Escrow Agent.  It is expressly
     understood  by the parties  hereto  that the Paying  Agent is acting as the
     paying agent of the Escrow Agent  hereunder  and that no amounts on deposit
     in the Paying Agent Account constitute part of the Trust Property.

               Section  2.03.  PAYMENTS  FROM PAYING AGENT  ACCOUNT.  The Escrow
     Agent hereby  irrevocably  instructs the Paying Agent, and the Paying Agent
     agrees to act, as follows:

                    (a) On each Interest Payment Date (as defined in the Deposit
     Agreement) or as soon thereafter as the Paying Agent has confirmed  receipt
     in the Paying Agent Account from the Depositary of any amount in respect of
     accrued interest on the Deposits,  the Paying Agent shall distribute out of
     the  Paying  Agent  Account  the  entire  amount  deposited  therein by the
     Depositary.  There shall be so distributed to each  Receiptholder of record
     on the 15th day (whether or not a Business  Day)  preceding  such  Interest
     Payment  Date  by  check  mailed  to  such  Receiptholder,  at the  address
     appearing in the Register,  such  Receiptholder's  pro rata share (based on
     the Escrow Interest in the Account Amounts held by such  Receiptholder)  of
     the total  amount of interest  deposited  by the  Depositary  in the Paying
     Agent Account on such date,  except that,  with respect to Escrow  Receipts
     registered on the Record Date in the name of DTC, such  distribution  shall
     be made by wire  transfer  in  immediately  available  funds to the account
     designated by DTC.

                    (b) Upon the  confirmation by the Paying Agent of receipt in
     the Paying Agent  Account from the  Depositary  of any amount in respect of
     the Final  Withdrawal,  the Paying  Agent shall  forthwith  distribute  the
     entire amount of the Final Withdrawal  deposited therein by the Depositary.
     There shall be so distributed to each  Receiptholder  of record on the 15th
     day (whether or not a Business Day) preceding the Final  Withdrawal Date by
     check  mailed  to  such  Receiptholder,  at the  address  appearing  in the
     Register, such Receiptholder's pro rata share (based on the Escrow Interest




     in the Account Amounts held by such  Receiptholder)  of the total amount in
     the Paying Agent Account on account of such Final Withdrawal,  except that,
     with respect to Escrow  Receipts  registered on the Record Date in the name
     of DTC, such  distribution  shall be made by wire  transfer in  immediately
     available funds to the account designated by DTC.

                    (c) If any payment of interest  or  principal  in respect of
     the Final  Withdrawal  is not received by the Paying Agent within five days
     of  the  applicable  date  when  due,  then  it  shall  be  distributed  to
     Receiptholders  after actual  receipt by the Paying Agent on the same basis
     as a Special Payment is distributed under the Pass Through Trust Agreement.

                    (d) The Paying  Agent shall  include  with any check  mailed
     pursuant to this Section any notice  required to be  distributed  under the
     Pass Through Trust  Agreement  that is furnished to the Paying Agent by the
     Pass Through Trustee.

               Section 2.04.  WITHHOLDING  TAXES. The Paying Agent shall exclude
     and withhold from each distribution of accrued interest on the Deposits (as
     defined in the  Deposit  Agreement)  and any amount in respect of the Final
     Withdrawal any and all withholding taxes applicable  thereto as required by
     law.  The Paying  Agent  agrees to act as such  withholding  agent and,  in
     connection  therewith,  whenever  any  present  or future  taxes or similar
     charges are required to be withheld with respect to any amounts  payable in
     respect of the Deposits (as defined in the Deposit Agreement) or the escrow
     amounts,  to  withhold  such  amounts  and  timely  pay  the  same  to  the
     appropriate  authority in the name of and on behalf of the  Receiptholders,
     that it will file any necessary  withholding tax returns or statements when
     due, and that, as promptly as possible after the payment  thereof,  it will
     deliver to each such Receiptholder  appropriate  documentation  showing the
     payment thereof, together with such additional documentary evidence as such
     Receiptholder  may  reasonably  request from time to time. The Paying Agent
     agrees to file any other information  reports as it may be required to file
     under United States law.

               Section 2.05.  RESIGNATION OR REMOVAL OF PAYING AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Paying Agent as provided
     below,  the Paying  Agent may  resign at any time by giving 30 days'  prior
     written  notice  thereof  to the Escrow  Agent,  but may not  otherwise  be
     removed except for cause by the Escrow Agent.  Upon any such resignation or




     removal,  the Escrow  Agent  shall  have the right to  appoint a  successor
     Paying Agent. If no successor Paying Agent shall have been so appointed and
     shall have  accepted  such  appointment  within 30 days after the  retiring
     Paying  Agent's  giving of  notice of  resignation  or the  removal  of the
     retiring  Paying  Agent,  then the  retiring  Paying  Agent  may  appoint a
     successor  Paying Agent.  Any Successor  Paying Agent shall be a bank which
     has an office in the United  States with a combined  capital and surplus of
     at least  $100,000,000.  Upon the  acceptance of any  appointment as Paying
     Agent hereunder by a successor  Paying Agent,  such successor  Paying Agent
     shall enter into such documents as the Escrow Agent shall require and shall
     thereupon  succeed  to and  become  vested  with  all the  rights,  powers,
     privileges and duties of the retiring Paying Agent, and the retiring Paying
     Agent shall be discharged from its duties and obligations hereunder.

               Section 2.06. NOTICE OF FINAL WITHDRAWAL.  Promptly after receipt
     by the Paying Agent of notice that the Escrow  Agent has  requested a Final
     Withdrawal or that a Final  Withdrawal will be made, the Paying Agent shall
     cause notice of the  distribution  of the Final  Withdrawal to be mailed to
     each of the  Receiptholders  at its address as it appears in the  Register.
     Such  notice  shall be  mailed  not less  than 15 days  prior to the  Final
     Withdrawal Date. Such notice shall set forth:

                    (i) the Final  Withdrawal  Date and the date for determining
               Receiptholders  of  record  who  shall  be  entitled  to  receive
               distributions in respect of the Final Withdrawal,

                    (ii) the  amount  of the  payment  in  respect  of the Final
               Withdrawal  for each  $1,000 face  amount  Certificate  (based on
               information  provided by the Pass Through Trustee) and the amount
               thereof  constituting  unused Deposits (as defined in the Deposit
               Agreement) and interest thereon, and

                    iii) if the  Final  Withdrawal  Date is the  same  date as a
               Regular  Distribution  Date,  the total  amount to be received on
               such  date for each  $1,000  face  amount  Certificate  (based on
               information provided by the Pass Through Trustee).

                    Such mailing may include any notice  required to be given to
     Certificateholders  in connection  with such  distribution  pursuant to the
     Pass Through Trust Agreement.




          SECTION 3. PAYMENTS. If, notwithstanding the instructions in Section 4
of the Deposit  Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary  directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately  available  funds by wire transfer to (a) in the case
of a payment of accrued  interest  on the  Deposits  (as  defined in the Deposit
Agreement) or any Final Withdrawal, directly to the Paying Agent Account and (b)
in the case of any Purchase Withdrawal,  directly to the Pass Through Trustee or
its designee as specified and in the manner provided in the Applicable Notice of
Purchase  Withdrawal.  The  Escrow  Agent  hereby  waives  any and all rights of
set-off,  combination of accounts,  right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against amounts
payable to the Paying Agent howsoever arising.

          SECTION  4. OTHER  ACTIONS.  The  Escrow  Agent  shall take such other
actions  under  or in  respect  of the  Deposit  Agreement  (including,  without
limitation,  the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.

          SECTION 5.  REPRESENTATIONS  AND  WARRANTIES OF THE ESCROW AGENT.  The
Escrow Agent represents and warrants to Continental,  the Investors,  the Paying
Agent and the Pass Through Trustee as follows:

                    (i) it is a national banking  association duly organized and
               validly  existing in good  standing  under the laws of the United
               States of America;

                    (ii) it has full power, authority and legal right to conduct
               its business and  operations as currently  conducted and to enter
               into and perform its  obligations  under this  Agreement  and the
               Deposit Agreement;

                    (iii) the  execution,  delivery and  performance  of each of
               this   Agreement  and  the  Deposit   Agreement  have  been  duly
               authorized  by all necessary  corporate  action on the part of it
               and do not  require  any  stockholder  approval,  or  approval or
               consent  of  any  trustee  or  holder  of  any   indebtedness  or
               obligations  of it, and each such document has been duly executed
               and delivered by it and constitutes its legal,  valid and binding




               obligations  enforceable  against it in accordance with the terms
               hereof or thereof except as such enforceability may be limited by
               bankruptcy,  insolvency,  moratorium,   reorganization  or  other
               similar laws or equitable principles of general application to or
               affecting  the   enforcement  of  creditors'   rights   generally
               (regardless  of whether such  enforceability  is  considered in a
               proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
               action by,  and no notice to or filing  with,  any United  States
               federal or state  governmental  authority or  regulatory  body is
               required for the execution, delivery or performance by it of this
               Agreement or the Deposit Agreement;

                    (v) neither the execution,  delivery or performance by it of
               this Agreement or the Deposit Agreement,  nor compliance with the
               terms  and  provisions  hereof  or  thereof,  conflicts  or  will
               conflict  with or results or will result in a breach or violation
               of any of the terms, conditions or provisions of, or will require
               any  consent or approval  under,  any law,  governmental  rule or
               regulation or the charter  documents,  as amended,  or bylaws, as
               amended,  of it or any  similar  instrument  binding on it or any
               order,  writ,  injunction or decree of any court or  governmental
               authority  against it or by which it or any of its  properties is
               bound or any indenture,  mortgage or contract or other  agreement
               or instrument to which it is a party or by which it or any of its
               properties is bound,  or constitutes or will constitute a default
               thereunder  or results or will  result in the  imposition  of any
               lien upon any of its properties; and

                    (vi) there are no pending or, to its  knowledge,  threatened
               actions,  suits,  investigations  or proceedings  (whether or not
               purportedly  on behalf of it) against or  affecting  it or any of
               its  property  before  or by any court or  administrative  agency
               which, if adversely  determined,  (A) would adversely  affect the
               ability of it to perform its obligations  under this Agreement or
               the  Deposit  Agreement  or  (B)  would  call  into  question  or
               challenge the validity of this Agreement or the Deposit Agreement




               or the  enforceability  hereof or thereof in accordance  with the
               terms hereof or thereof,  nor is the Escrow Agent in default with
               respect  to any  order  of  any  court,  governmental  authority,
               arbitration  board or  administrative  agency so as to  adversely
               affect  its  ability  to  perform  its  obligations   under  this
               Agreement or the Deposit Agreement.

          SECTION 6.  REPRESENTATIONS  AND  WARRANTIES OF THE PAYING AGENT.  The
Paying Agent represents and warrants to Continental,  the Investors,  the Escrow
Agent and the Pass Through Trustee as follows:

                    (i) it is a Delaware  banking  company  duly  organized  and
               validly   existing  in  good  standing  under  the  laws  of  its
               jurisdiction of incorporation;

                    (ii) it has full power, authority and legal right to conduct
               its business and  operations as currently  conducted and to enter
               into and perform its obligations under this Agreement;

                    (iii)  the  execution,  delivery  and  performance  of  this
               Agreement has been duly  authorized  by all  necessary  corporate
               action  on the part of it and does not  require  any  stockholder
               approval,  or approval or consent of any trustee or holder of any
               indebtedness  or  obligations  of it, and such  document has been
               duly  executed  and  delivered by it and  constitutes  its legal,
               valid  and  binding   obligations   enforceable   against  it  in
               accordance  with the terms hereof  except as such  enforceability
               may   be   limited   by   bankruptcy,   insolvency,   moratorium,
               reorganization  or other similar laws or equitable  principles of
               general application to or affecting the enforcement of creditors'
               rights generally  (regardless of whether such  enforceability  is
               considered in a proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
               action by,  and no notice to or filing  with,  any United  States
               federal or state  governmental  authority or  regulatory  body is
               required for the execution, delivery or performance by it of this
               Agreement;




                    (v) neither the execution,  delivery or performance by it of
               this  Agreement,  nor  compliance  with the terms and  provisions
               hereof, conflicts or will conflict with or results or will result
               in a breach  or  violation  of any of the  terms,  conditions  or
               provisions of, or will require any consent or approval under, any
               law, governmental rule or regulation or the charter documents, as
               amended,  or bylaws, as amended,  of it or any similar instrument
               binding on it or any  order,  writ,  injunction  or decree of any
               court or governmental  authority against it or by which it or any
               of its properties is bound or any indenture, mortgage or contract
               or other  agreement  or  instrument  to which it is a party or by
               which it or any of its  properties is bound,  or  constitutes  or
               will constitute a default thereunder or results or will result in
               the imposition of any lien upon any of its properties; and

                    (vi) there are no pending or, to its  knowledge,  threatened
               actions,  suits,  investigations  or proceedings  (whether or not
               purportedly  on behalf of it) against or  affecting  it or any of
               its  property  before  or by any court or  administrative  agency
               which, if adversely  determined,  (A) would adversely  affect the
               ability of it to perform its obligations  under this Agreement or
               (B) would call into  question or  challenge  the validity of this
               Agreement or the  enforceability  hereof in  accordance  with the
               terms hereof,  nor is the Paying Agent in default with respect to
               any order of any court, governmental authority, arbitration board
               or administrative agency so as to adversely affect its ability to
               perform its obligations under this Agreement.

          SECTION 7.  INDEMNIFICATION.  Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder  unless it shall have been  indemnified by the party  requesting  such
action in a manner  reasonably  satisfactory to it against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.  In the event  Continental  requests any  amendment to any
Operative  Agreement  (as  defined  in the Note  Purchase  Agreement),  the Pass
Through  Trustee  agrees to pay all  reasonable  fees and  expenses  (including,




without  limitation,  fees and disbursements of counsel) of the Escrow Agent and
the Paying Agent in connection therewith.

          SECTION 8.  AMENDMENT,  ETC. Upon request of the Pass Through  Trustee
and  approval by an Action of  Investors,  the Escrow  Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, PROVIDED that
upon  request  of the Pass  Through  Trustee  and  without  any  consent  of the
Investors,  the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:

                    (1) to correct or supplement any provision in this Agreement
          which may be defective or inconsistent with any other provision herein
          or to cure any ambiguity or correct any mistake or to modify any other
          provision  with  respect to matters or  questions  arising  under this
          Agreement,   PROVIDED  that  any  such  action  shall  not  materially
          adversely affect the interests of the Investors; or

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

                    (3)  to  evidence   and  provide  for  the   acceptance   of
          appointment   under  this  Agreement  of  a  successor  Escrow  Agent,
          successor Paying Agent or successor Pass Through Trustee.

          SECTION 9. NOTICES.  Unless otherwise  expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof.  All notices shall be sent to (a) in the case of the Investors,
as their respective  addresses shall appear in the Register,  (b) in the case of
the Escrow Agent,  First  Security  Bank,  National  Association,  79 South Main
Street,  Salt  Lake  City,  UT  84111,   Attention:   Corporate  Trust  Services
(Telecopier:  (801)  246-5053),  (c) in the  case of the Pass  Through  Trustee,
Wilmington  Trust  Company,  1100 North  Market  Street,  Wilmington,  DE 19890,
Attention: Corporate Trust Administration (Telecopier: (302) 651-8882) or (d) in
the case of the Paying  Agent,  Wilmington  Trust  Company,  1100  North  Market
Street,   Wilmington,  DE  19890,  Attention:   Corporate  Trust  Administration
(Telecopier:  (302)  651-8882),  in  each  case  with  a  copy  to  Continental,
Continental Airlines,  Inc., 2929 Allen Parkway,  Suite 2010, Houston, TX 77019,
Attention:  Executive Vice President and Chief  Financial  Officer  (Telecopier:
(713)  520-6329)  (or at such other  address as any such party may specify  from




time to time in a  written  notice  to the  other  parties).  On or prior to the
execution  of this  Agreement,  the Pass  Through  Trustee has  delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and  instructions
with respect to this Agreement.  The Escrow Agent may conclusively  rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.

          SECTION 10.  TRANSFER.  No party hereto shall be entitled to assign or
otherwise  transfer this  Agreement (or any interest  herein) other than (in the
case of the Escrow Agent) to a successor  escrow agent under Section 1.06 hereof
or (in the case of the Paying  Agent) to a successor  paying agent under Section
2.04 hereof,  and any purported  assignment in violation  thereof shall be void.
This  Agreement  shall be binding upon the parties  hereto and their  respective
successors  and (in the case of the  Escrow  Agent and the Paying  Agent)  their
respective  permitted  assigns.  Upon the occurrence of the Transfer (as defined
below)  contemplated  by the  Assignment  and  Assumption  Agreement (as defined
below),  the Pass Through Trustee shall (without  further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and,  thereafter,  the trustee
of the  Successor  Trust  shall  be  deemed  to be the  "Pass  Through  Trustee"
hereunder  with  the  rights  and  obligations  of the  "Pass  Through  Trustee"
hereunder and each reference herein to "Continental  Airlines Pass Through Trust
"1998-1B-O"  shall be deemed to be a reference  to  "Continental  Airlines  Pass
Through Trust 1998-1B-S".  The parties hereto hereby  acknowledge and consent to
the Transfer  contemplated by the Assignment and Assumption  Agreement.  As used
herein,  "TRANSFER"  means the  transfers of the assets to the  Successor  Trust
contemplated  by  the  Assignment  and  Assumption  Agreement;  "ASSIGNMENT  AND
ASSUMPTION  AGREEMENT"  means the  Assignment  and  Assumption  Agreement  to be
entered into between the Pass Through  Trustee and the trustee of the  Successor
Trust,  substantially  in  the  form  of  Exhibit  C to  the  Trust  Supplement;
"SUCCESSOR TRUST" means the Continental Airlines Pass Through Trust 1998-1B-S.

          SECTION 11. ENTIRE  AGREEMENT.  This  Agreement  sets forth all of the
promises, covenants, agreements,  conditions and understandings among the Escrow
Agent,  the Paying Agent,  the  Underwriters  and the Pass Through  Trustee with
respect  to  the  subject   matter   hereof,   and   supersedes  all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.




          SECTION 12.  GOVERNING LAW. This  Agreement  shall be governed by, and
construed in accordance with, the laws of the State of New York.

          SECTION 13. WAIVER OF JURY TRIAL RIGHT.  EACH OF THE ESCROW AGENT, THE
PAYING  AGENT,  THE  INVESTORS  AND THE PASS THROUGH  TRUSTEE  ACKNOWLEDGES  AND
ACCEPTS  THAT IN ANY SUIT,  ACTION OR  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.

          SECTION 14.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.



          IN  WITNESS   WHEREOF,   the  Escrow  Agent,  the  Paying  Agent,  the
Underwriters  and the Pass  Through  Trustee  have caused this Escrow and Paying
Agent Agreement (Class B) to be duly executed as of the day and year first above
written.

                                             FIRST SECURITY BANK, NATIONAL
                                               ASSOCIATION, as Escrow Agent



                                             By ________________________________
                                                Name:
                                                Title:

                                             CREDIT SUISSE FIRST BOSTON
                                               CORPORATION
                                             MORGAN STANLEY & CO. INCORPORATED
                                               and
                                             CHASE SECURITIES INC.,
                                               as Underwriters


                                             By: CREDIT SUISSE FIRST BOSTON
                                                 CORPORATION



                                             By ______________________________
                                                Name:
                                                Title:



                                            WILMINGTON  TRUST  COMPANY,  not  in
                                              its   individual  capacity,   but 
                                              solely  as  Pass  Through  Trustee
                                              for  and on  behalf of Continental
                                              Airlines   Pass   Through   Trust
                                              1998-1B-O



                                            By _________________________________
                                               Name:
                                               Title:


                                            WILMINGTON TRUST COMPANY,
                                              as Paying Agent



                                            By _________________________________
                                               Name:
                                               Title:




                                                                       EXHIBIT A


                   CONTINENTAL AIRLINES 1998-1B ESCROW RECEIPT

                                     No. __

          This Escrow  Receipt  evidences  a  fractional  undivided  interest in
amounts  ("ACCOUNT  AMOUNTS")  from time to time deposited into a certain paying
agent  account (the "PAYING AGENT  ACCOUNT")  described in the Escrow and Paying
Agent Agreement (Class B) dated as of February 20, 1998 (as amended, modified or
supplemented  from time to time, the "ESCROW AND PAYING AGENT  AGREEMENT") among
First Security Bank,  National  Association,  as Escrow Agent (in such capacity,
together  with its  successors in such  capacity,  the "ESCROW  AGENT"),  Credit
Suisse First Boston  Corporation,  Morgan Stanley & Co.  Incorporated  and Chase
Securities  Inc., as  Underwriters,  Wilmington  Trust Company,  as Pass Through
Trustee (in such capacity,  together with its  successors in such capacity,  the
"PASS THROUGH  TRUSTEE") and Wilmington Trust Company,  as paying agent (in such
capacity,  together with its successors in such capacity,  the "PAYING  AGENT").
Capitalized terms not defined herein shall have the meanings assigned to them in
the Escrow and Paying Agent Agreement.

          This  Escrow  Receipt  is issued  under and is  subject  to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.

          This Escrow  Receipt  represents  a fractional  undivided  interest in
amounts  deposited from time to time in the Paying Agent Account,  and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property  other than such  amounts.  This Escrow  Receipt  evidences the same
percentage interest in the Account Amounts as the Fractional  Undivided Interest
in the Pass  Through  Trust  evidenced by the  Certificate  to which this Escrow
Receipt is affixed.

          All payments and  distributions  made to  Receiptholders in respect of
the Escrow  Receipt  shall be made only from  Account  Amounts  deposited in the
Paying Agent Account.  The holder of this Escrow  Receipt,  by its acceptance of
this Escrow Receipt,  agrees that it will look solely to the Account Amounts for
any payment or  distribution  due to it pursuant to this Escrow Receipt and that
it will not have any  recourse to  Continental,  the Pass Through  Trustee,  the
Paying Agent or the Escrow Agent,  except as expressly provided herein or in the
Pass Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have





any  right  to  vote  or in any  manner  otherwise  control  the  operation  and
management of the Paying Agent Account,  nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt,  be construed so as to constitute
the  Receiptholders  from time to time as partners or members of an association.

          This  Escrow  Receipt may not be  assigned  or  transferred  except in
connection  with the  assignment  or transfer of the  Certificate  to which this
Escrow  Receipt is  affixed.  After  payment to the holder  hereof of its Escrow
Interest  in the  Final  Distribution,  upon the  request  of the  Pass  Through
Trustee,  the holder hereof will return this Escrow  Receipt to the Pass Through
Trustee.

          The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes,  and
the Paying Agent shall not be affected by any notice to the contrary.

          THIS ESCROW  RECEIPT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

          IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to
be duly executed.

Dated: ______________, 199_

                                          FIRST SECURITY BANK,
                                            NATIONAL ASSOCIATION,
                                            as Escrow Agent



                                          By ___________________________________
                                             Name:
                                             Title:






                                                                       EXHIBIT B


                             WITHDRAWAL CERTIFICATE
                                    (Class B)

                   First Security Bank, National Association,
                                 as Escrow Agent


Dear Sirs:

          Reference is made to the Escrow and Paying Agent  Agreement,  dated as
of  February  20,  1998 (the  "Agreement").  We hereby  certify  to you that the
conditions to the  obligations  of the  undersigned  to execute a  Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied.  Pursuant
to Section  1.02(c) of the  Agreement,  please  execute the  attached  Notice of
Withdrawal and  immediately  transmit by facsimile to the  Depositary,  at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.

                                          Very truly yours,

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



                                          By ___________________________________
                                             Name:
                                             Title:

Dated:  ____________, 199_

                                                                      EXECUTION



                        ESCROW AND PAYING AGENT AGREEMENT
                                    (Class C)

                          Dated as of February 20, 1998

                                      among

                    FIRST SECURITY BANK, NATIONAL ASSOCIATION

                                 as Escrow Agent

                     CREDIT SUISSE FIRST BOSTON CORPORATION,
                        MORGAN STANLEY & CO. INCORPORATED
                                       and
                              CHASE SECURITIES INC.

                                 as Underwriters

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       but solely as Pass Through Trustee
                              for and on behalf of
                Continental Airlines Pass Through Trust 1998-1C-O

                             as Pass Through Trustee

                                       and

                            WILMINGTON TRUST COMPANY

                                 as Paying Agent













                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1.  Escrow Agent.....................................................  2
     Section 1.01. Appointment of Escrow Agent...............................  2
     Section 1.02. Instruction; Etc..........................................  3
     Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts........  4
     Section 1.04. Payments to Receiptholders................................  5
     Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.......  5
     Section 1.06. Additional Escrow Amounts.................................  6
     Section 1.07. Resignation or Removal of Escrow Agent....................  6
     Section 1.08. Persons Deemed Owners.....................................  7
     Section 1.09. Further Assurances........................................  7

SECTION 2.  Paying Agent.....................................................  7
     Section 2.01. Appointment of Paying Agent...............................  7
     Section 2.02. Establishment of Paying Agent Account.....................  8
     Section 2.03. Payments from Paying Agent Account........................  8
     Section 2.04. Withholding Taxes.........................................  9
     Section 2.05. Resignation or Removal of Paying Agent....................  9
     Section 2.06. Notice of Final Withdrawal................................ 10

SECTION 3.  Payments......................................................... 10

SECTION 4.  Other Actions.................................................... 11

SECTION 5.  Representations and Warranties of the Escrow Agent............... 11

SECTION 6.  Representations and Warranties of the Paying Agent............... 12

SECTION 7.  Indemnification.................................................. 14

SECTION 8.  Amendment, Etc................................................... 14

SECTION 9.  Notices.......................................................... 15

SECTION 10. Transfer......................................................... 15

SECTION 11. Entire Agreement................................................. 16

SECTION 12. Governing Law ................................................... 16





                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                            PAGE
                                                                            ----


SECTION 13. Waiver of Jury Trial Right....................................... 16

SECTION 14. Counterparts..................................................... 16



Exhibit A   Escrow Receipt

Exhibit B   Withdrawal Certificate





          ESCROW AND PAYING AGENT  AGREEMENT  (Class C) dated as of February 20,
1998 (as amended,  modified or supplemented from time to time, this "AGREEMENT")
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
as  Escrow  Agent  (in  such  capacity,  together  with its  successors  in such
capacity,  the "ESCROW AGENT");  CREDIT SUISSE FIRST BOSTON CORPORATION,  MORGAN
STANLEY & CO.  INCORPORATED  and CHASE  SECURITIES  INC., as Underwriters of the
Certificates  referred  to below (the  "Underwriters"  and  together  with their
respective transferees and assigns as registered owners of the Certificates, the
"INVESTORS")  under the  Underwriting  Agreement  referred to below;  WILMINGTON
TRUST COMPANY, a Delaware banking  corporation,  not in its individual  capacity
except as otherwise  expressly  provided herein,  but solely as trustee (in such
capacity,  together  with its  successors  in such  capacity,  the "PASS THROUGH
TRUSTEE")  under  the Pass  Through  Trust  Agreement  referred  to  below;  and
WILMINGTON  TRUST  COMPANY,  a Delaware  banking  corporation,  as paying  agent
hereunder (in such capacity,  together with its successors in such capacity, the
"PAYING AGENT").

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

          WHEREAS,  Continental  Airlines,  Inc.  ("CONTINENTAL")  and the  Pass
Through Trustee have entered into a Trust  Supplement,  dated as of February 20,
1998 (the "TRUST SUPPLEMENT"),  to the Pass Through Trust Agreement, dated as of
September 25, 1997 (together, as amended,  modified or supplemented from time to
time in accordance with the terms thereof,  the "PASS THROUGH TRUST  AGREEMENT")
relating to Continental Airlines Pass Through Trust 1998-1C-O (the "PASS THROUGH
TRUST")  pursuant to which the Continental  Airlines Pass Through Trust,  Series
1998-1C-O  Certificates  referred  to  therein  (the  "CERTIFICATES")  are being
issued;

          WHEREAS,  Continental  and  the  Underwriters  have  entered  into  an
Underwriting  Agreement  dated as of February 11, 1998 (as amended,  modified or
supplemented  from  time to time in  accordance  with  the  terms  thereof,  the
"UNDERWRITING  AGREEMENT") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;

          WHEREAS,  Continental,  the Pass Through  Trustee,  certain other pass
through  trustees and certain other persons  concurrently  herewith are entering
into the  Note  Purchase  Agreement,  dated as of the  date  hereof  (the  "NOTE
PURCHASE  AGREEMENT"),  pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery  Period  Termination  Date
(as defined in the Note  Purchase  Agreement)  equipment  notes (the  "EQUIPMENT




NOTES") issued to finance the acquisition of aircraft by Continental,  as lessee
or as  owner,  utilizing  a  portion  of  the  proceeds  from  the  sale  of the
Certificates (the "NET PROCEEDS");

          WHEREAS, the Underwriters and the Pass Through Trustee intend that the
Net Proceeds be held in escrow by the Escrow  Agent on behalf of the  Investors,
subject to withdrawal upon request by the Pass Through Trustee and  satisfaction
of the  conditions  set forth in the Note Purchase  Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with Credit Suisse First Boston,  acting
through its New York branch, as Depositary (the "DEPOSITARY")  under the Deposit
Agreement,  dated as of the date hereof  between the  Depositary  and the Escrow
Agent relating to the Pass Through Trust (as amended,  modified or  supplemented
from time to time in accordance with the terms thereof, the "DEPOSIT AGREEMENT")
pursuant to which,  among other  things,  the  Depositary  will pay interest for
distribution to the Investors and establish accounts from which the Escrow Agent
shall make  withdrawals  upon  request of and proper  certification  by the Pass
Through Trustee;

          WHEREAS,  the Escrow  Agent  wishes to appoint the Paying Agent to pay
amounts  required to be  distributed  to the Investors in  accordance  with this
Agreement; and

          WHEREAS,  capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.

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

          SECTION 1. ESCROW AGENT.

               Section  1.01.   APPOINTMENT   OF  ESCROW  AGENT.   Each  of  the
     Underwriters,   for  and  on  behalf  of  each  of  the  Investors,  hereby
     irrevocably  appoints,  authorizes  and directs the Escrow  Agent to act as
     escrow agent and fiduciary  hereunder  and under the Deposit  Agreement for
     such specific  purposes and with such powers as are specifically  delegated
     to the  Escrow  Agent by the terms of this  Agreement,  together  with such
     other  powers  as are  reasonably  incidental  thereto.  Any and all  money
     received and held by the Escrow  Agent under this  Agreement or the Deposit
     Agreement  shall be held in escrow by the Escrow Agent in  accordance  with
     the  terms  of  this  Agreement.  This  Agreement  is  irrevocable  and the
     Investors' rights with respect to any monies received and held in escrow by




     the Escrow Agent under this Agreement or the Deposit  Agreement  shall only
     be as provided  under the terms and  conditions  of this  Agreement and the
     Deposit  Agreement.  The Escrow Agent (which term as used in this  sentence
     shall include  reference to its affiliates and its own and its  affiliates'
     officers,  directors,  employees  and agents):  (a) shall have no duties or
     responsibilities  except those expressly set forth in this  Agreement;  (b)
     shall not be responsible  to the Pass Through  Trustee or the Investors for
     any recitals, statements, representations or warranties of any person other
     then itself contained in this Agreement or the Deposit Agreement or for the
     failure by the Pass Through  Trustee,  the Investors or any other person or
     entity  (other  than the Escrow  Agent) to perform  any of its  obligations
     hereunder  (whether  or not the  Escrow  Agent  shall  have  any  knowledge
     thereof);  and (c) shall not be responsible for any action taken or omitted
     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section  1.02.  INSTRUCTION;  ETC. The  Underwriters,  for and on
     behalf of each of the  Investors,  hereby  irrevocably  instruct the Escrow
     Agent,  and  the  Escrow  Agent  agrees,  (a) to  enter  into  the  Deposit
     Agreement,  (b) to appoint the Paying Agent as provided in this  Agreement,
     (c) upon receipt at any time and from time to time prior to the Termination
     Date (as  defined  below)  of a  certificate  substantially  in the form of
     Exhibit B hereto (a "WITHDRAWAL  CERTIFICATE") executed by the Pass Through
     Trustee,  together  with an  attached  Notice  of  Purchase  Withdrawal  in
     substantially the form of Exhibit A to the Deposit Agreement duly completed
     by the Pass Through Trustee (the "APPLICABLE NOTICE OF PURCHASE WITHDRAWAL"
     and  the  withdrawal  to  which  it  relates,  a  "PURCHASE   WITHDRAWAL"),
     immediately  to execute the  Applicable  Notice of Purchase  Withdrawal  as
     Escrow Agent and transmit it to the Depositary by facsimile transmission in
     accordance with the Deposit  Agreement;  PROVIDED that, upon the request of
     the Pass Through  Trustee after such  transmission,  the Escrow Agent shall
     cancel such Applicable Notice of Purchase Withdrawal,  and (d) if there are
     any  undrawn  Deposits  (as  defined  in  the  Deposit  Agreement)  on  the
     "TERMINATION  DATE",  which  shall mean the  earlier  of (i) June 30,  1999
     (provided  that,  if a labor strike  occurs at The Boeing  Company prior to
     such date (a "LABOR STRIKE"), such date shall be extended by adding thereto
     the number of days that such strike  continued  in effect (the  "ADDITIONAL
     DAYS") and (ii) the day on which the Escrow Agent receives  notice from the
     Pass Through Trustee that the Pass Through Trustee's obligation to purchase




     Equipment Notes under the Note Purchase  Agreement has terminated,  to give
     notice to the Depositary (with a copy to the Paying Agent) substantially in
     the form of Exhibit B to the Deposit  Agreement  requesting a withdrawal of
     all of the remaining Deposits, together with accrued and unpaid interest on
     such  Deposits  to the date of  withdrawal,  on the 35th day after the date
     that such notice of  withdrawal  is given to the  Depositary  (or, if not a
     Business Day, on the next succeeding Business Day) (a "FINAL  WITHDRAWAL"),
     PROVIDED that if the day  scheduled for the Final  Withdrawal in accordance
     with the foregoing is within 10 days before or after a Regular Distribution
     Date,  then the  Escrow  Agent  shall  request  that such  requested  Final
     Withdrawal  be made on such  Regular  Distribution  Date  (the date of such
     requested  withdrawal,  the "FINAL WITHDRAWAL DATE"). If for any reason the
     Escrow Agent shall have failed to give the Final  Withdrawal  Notice to the
     Depositary  on or before  July 7,  1999  (PROVIDED  that if a Labor  Strike
     occurs,  such date shall be extended by the Additional Days), and there are
     unwithdrawn  Deposits  on such  date,  the Final  Withdrawal  Date shall be
     deemed to be July 30, 1999 (PROVIDED  that if a Labor Strike  occurs,  such
     date shall be extended by the Additional Days).

               Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW RECEIPTS.
     The Escrow Agent hereby directs the  Underwriters  to, and the Underwriters
     hereby acknowledge that on the date hereof they shall,  irrevocably deliver
     to the Depositary on behalf of the Escrow Agent, an amount in U.S.  dollars
     ("DOLLARS")  and  immediately  available  funds equal to  $136,542,000  for
     deposit on behalf of the Escrow  Agent with the  Depositary  in  accordance
     with Section 2.1 of the Deposit Agreement. The Underwriters hereby instruct
     the  Escrow  Agent,  upon  receipt  of such sum from the  Underwriters,  to
     confirm  such  receipt by  executing  and  delivering  to the Pass  Through
     Trustee  an Escrow  Receipt  in the form of  Exhibit A hereto  (an  "ESCROW
     RECEIPT"),  (a)  to  be  affixed  by  the  Pass  Through  Trustee  to  each
     Certificate and (b) to evidence the same  percentage  interest (the "ESCROW
     INTEREST")  in the Account  Amounts (as  defined  below) as the  Fractional
     Undivided  Interest in the Pass Through Trust  evidenced by the Certificate
     to which it is to be affixed.  The Escrow  Agent shall  provide to the Pass
     Through Trustee for attachment to each  Certificate  newly issued under and
     in  accordance  with the Pass Through  Trust  Agreement an executed  Escrow
     Receipt as the Pass  Through  Trustee may from time to time  request of the
     Escrow Agent.  Each Escrow  Receipt shall be registered by the Escrow Agent
     in a register (the  "REGISTER")  maintained by the Escrow Agent in the same




     name and same manner as the Certificate to which it is attached and may not
     thereafter be detached from such  Certificate  to which it is to be affixed
     prior  to  the   distribution   of  the  Final   Withdrawal   (the   "FINAL
     DISTRIBUTION"). After the Final Distribution, no additional Escrow Receipts
     shall be issued and the Pass Through  Trustee  shall  request the return to
     the Escrow Agent for cancellation of all outstanding Escrow Receipts.

               Section  1.04.  PAYMENTS  TO  RECEIPTHOLDERS.  All  payments  and
     distributions   made  to  holders  of  an  Escrow   Receipt   (collectively
     "RECEIPTHOLDERS")  in respect of the Escrow Receipt shall be made only from
     amounts  deposited in the Paying Agent Account (as defined below) ("ACCOUNT
     AMOUNTS").  Each  Receiptholder,  by its  acceptance of an Escrow  Receipt,
     agrees that (a) it will look solely to the Account  Amounts for any payment
     or  distribution  due to such  Receiptholder  pursuant  to the terms of the
     Escrow  Receipt  and this  Agreement  and (b) it will have no  recourse  to
     Continental,  the Pass  Through  Trustee,  the  Paying  Agent or the Escrow
     Agent,  except as expressly  provided  herein or in the Pass Through  Trust
     Agreement.  No Receiptholder  shall have any right to vote or in any manner
     otherwise  control the operation and management of the Paying Agent Account
     or the  obligations  of the parties  hereto,  nor shall  anything set forth
     herein, or contained in the terms of the Escrow Receipt, be construed so as
     to constitute the  Receiptholders  from time to time as partners or members
     of an association.

               Section  1.05.  MUTILATED,   DESTROYED,  LOST  OR  STOLEN  ESCROW
     RECEIPT.  If (a) any mutilated  Escrow Receipt is surrendered to the Escrow
     Agent or the Escrow  Agent  receives  evidence to its  satisfaction  of the
     destruction, loss or theft of any Escrow Receipt and (b) there is delivered
     to the Escrow Agent and the Pass Through  Trustee such security,  indemnity
     or bond,  as may be required by them to hold each of them  harmless,  then,
     absent  notice to the Escrow  Agent or the Pass  Through  Trustee that such
     destroyed,  lost or stolen Escrow  Receipt has been acquired by a bona fide
     purchaser,  and  provided  that the  requirements  of Section  8-405 of the
     Uniform  Commercial Code in effect in any applicable  jurisdiction are met,
     the Escrow Agent shall execute,  authenticate and deliver,  in exchange for
     or in lieu of any such mutilated, destroyed, lost or stolen Escrow Receipt,
     a new Escrow Receipt or Escrow  Receipts and of like Escrow Interest in the
     Account Amounts and bearing a number not contemporaneously outstanding.

          In connection  with the issuance of any new Escrow  Receipt under this
Section  1.05,  the Escrow Agent may require the payment of a sum  sufficient to




cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto  and any other  expenses  (including  the fees and  expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.

          Any  duplicate  Escrow  Receipt  issued  pursuant to this Section 1.05
shall constitute  conclusive  evidence of the appropriate Escrow Interest in the
Account Amounts,  as if originally  issued,  whether or not the lost,  stolen or
destroyed Escrow Receipt shall be found at any time.

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

               Section  1.06.  ADDITIONAL  ESCROW  AMOUNTS.  On the  date of any
     Purchase  Withdrawal,  the Pass  Through  Trustee may  re-deposit  with the
     Depositary  some or all of the  amounts so  withdrawn  in  accordance  with
     Section 2.4 of the Deposit Agreement.

               Section 1.07.  RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Escrow Agent as provided
     below,  the Escrow  Agent may  resign at any time by giving 30 days'  prior
     written notice  thereof to the Investors,  but may not otherwise be removed
     except for cause by the written  consent of the  Investors  with respect to
     Investors  representing  Escrow  Interests  aggregating  not  less  than  a
     majority in interest  in the  Account  Amounts (an "ACTION OF  INVESTORS").
     Upon any such  resignation  or  removal,  the  Investors,  by an  Action of
     Investors,  shall have the right to appoint a successor Escrow Agent. If no
     successor Escrow Agent shall have been so appointed and shall have accepted
     such appointment within 30 days after the retiring Escrow Agent's giving of
     notice of resignation or the removal of the retiring Escrow Agent, then the
     retiring Escrow Agent may appoint a successor  Escrow Agent.  Any successor
     Escrow Agent shall be a bank which has an office in the United  States with
     a  combined  capital  and  surplus  of  at  least  $100,000,000.  Upon  the
     acceptance  of any  appointment  as Escrow  Agent  hereunder by a successor
     Escrow Agent,  such successor  Escrow Agent shall enter into such documents
     as the Pass Through  Trustee shall require and shall  thereupon  succeed to
     and become vested with all the rights, powers, privileges and duties of the
     retiring  Escrow Agent,  and the retiring  Escrow Agent shall be discharged
     from its duties and obligations hereunder. No resignation or removal of the
     Escrow Agent shall be effective  unless a written  confirmation  shall have




     been obtained from each of Moody's Investors  Service,  Inc. and Standard &
     Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., that
     the  replacement  of the Escrow Agent with the successor  Escrow Agent will
     not result in (a) a reduction of the rating for the Certificates  below the
     then current rating for the  Certificates or (b) a withdrawal or suspension
     of the rating of the Certificates.

               Section 1.08. PERSONS DEEMED OWNERS.  Prior to due presentment of
     a Certificate for registration of transfer, the Escrow Agent and the Paying
     Agent may treat the Person in whose name any Escrow  Receipt is  registered
     (as of the day of  determination)  as the owner of such Escrow  Receipt for
     the purpose of receiving  distributions  pursuant to this Agreement and for
     all other purposes whatsoever,  and neither the Escrow Agent nor the Paying
     Agent shall be affected by any notice to the contrary.

               Section 1.09. FURTHER ASSURANCES. The Escrow Agent agrees to take
     such  actions,  and  execute  such other  documents,  as may be  reasonably
     requested by the Pass Through  Trustee in order to effectuate  the purposes
     of  this  Agreement  and  the  performance  by  the  Escrow  Agent  of  its
     obligations hereunder.

          SECTION 2. PAYING AGENT.

               Section  2.01.  APPOINTMENT  OF PAYING  AGENT.  The Escrow  Agent
     hereby  irrevocably  appoints and authorizes the Paying Agent to act as its
     paying agent hereunder, for the benefit of the Investors, for such specific
     purposes and with such powers as are  specifically  delegated to the Paying
     Agent by the terms of this  Agreement,  together  with such other powers as
     are reasonably  incidental thereto.  Any and all money received and held by
     the Paying  Agent under this  Agreement or the Deposit  Agreement  shall be
     held in the Paying  Agent  Account  for the benefit of the  Investors.  The
     Paying Agent (which term as used in this sentence  shall include  reference
     to its  affiliates  and its own and its  affiliates'  officers,  directors,
     employees and agents): (a) shall have no duties or responsibilities  except
     those  expressly  set forth in this  Agreement,  and shall not by reason of
     this  Agreement  be a  trustee  for the  Escrow  Agent;  (b)  shall  not be
     responsible   to  the   Escrow   Agent   for  any   recitals,   statements,
     representations  or warranties of any person other then itself contained in
     this  Agreement  or for the failure by the Escrow Agent or any other person
     or entity (other than the Paying  Agent) to perform any of its  obligations
     hereunder  (whether  or not the  Paying  Agent  shall  have  any  knowledge
     thereof);  and (c) shall not be responsible for any action taken or omitted




     to be taken  by it  hereunder  or  provided  for  herein  or in  connection
     herewith,  except for its own willful  misconduct or gross  negligence  (or
     simple negligence in connection with the handling of funds).

               Section 2.02.  ESTABLISHMENT OF PAYING AGENT ACCOUNT.  The Paying
     Agent shall  establish a deposit  account (the "PAYING  AGENT  ACCOUNT") at
     Wilmington  Trust Company in the name of the Escrow Agent.  It is expressly
     understood  by the parties  hereto  that the Paying  Agent is acting as the
     paying agent of the Escrow Agent  hereunder  and that no amounts on deposit
     in the Paying Agent Account constitute part of the Trust Property.

               Section  2.03.  PAYMENTS  FROM PAYING AGENT  ACCOUNT.  The Escrow
     Agent hereby  irrevocably  instructs the Paying Agent, and the Paying Agent
     agrees to act, as follows:

               (a) On each  Interest  Payment  Date (as  defined in the  Deposit
     Agreement) or as soon thereafter as the Paying Agent has confirmed  receipt
     in the Paying Agent Account from the Depositary of any amount in respect of
     accrued interest on the Deposits,  the Paying Agent shall distribute out of
     the  Paying  Agent  Account  the  entire  amount  deposited  therein by the
     Depositary.  There shall be so distributed to each  Receiptholder of record
     on the 15th day (whether or not a Business  Day)  preceding  such  Interest
     Payment  Date  by  check  mailed  to  such  Receiptholder,  at the  address
     appearing in the Register,  such  Receiptholder's  pro rata share (based on
     the Escrow Interest in the Account Amounts held by such  Receiptholder)  of
     the total  amount of interest  deposited  by the  Depositary  in the Paying
     Agent Account on such date,  except that,  with respect to Escrow  Receipts
     registered on the Record Date in the name of DTC, such  distribution  shall
     be made by wire  transfer  in  immediately  available  funds to the account
     designated by DTC.

               (b) Upon the  confirmation  by the Paying Agent of receipt in the
     Paying Agent  Account from the  Depositary  of any amount in respect of the
     Final  Withdrawal,  the Paying Agent shall forthwith  distribute the entire
     amount of the Final Withdrawal  deposited therein by the Depositary.  There
     shall be so  distributed  to each  Receiptholder  of record on the 15th day
     (whether or not a Business  Day)  preceding  the Final  Withdrawal  Date by
     check  mailed  to  such  Receiptholder,  at the  address  appearing  in the
     Register, such Receiptholder's pro rata share (based on the Escrow Interest
     in the Account Amounts held by such  Receiptholder)  of the total amount in
     the Paying Agent Account on account of such Final Withdrawal,  except that,




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

               (c) If any  payment of interest  or  principal  in respect of the
     Final  Withdrawal  is not  received by the Paying Agent within five days of
     the   applicable   date  when  due,  then  it  shall  be   distributed   to
     Receiptholders  after actual  receipt by the Paying Agent on the same basis
     as a Special Payment is distributed under the Pass Through Trust Agreement.

               (d) The Paying Agent shall include with any check mailed pursuant
     to this  Section  any  notice  required  to be  distributed  under the Pass
     Through Trust  Agreement  that is furnished to the Paying Agent by the Pass
     Through Trustee.

               Section 2.04.  WITHHOLDING  TAXES. The Paying Agent shall exclude
     and withhold from each distribution of accrued interest on the Deposits (as
     defined in the  Deposit  Agreement)  and any amount in respect of the Final
     Withdrawal any and all withholding taxes applicable  thereto as required by
     law.  The Paying  Agent  agrees to act as such  withholding  agent and,  in
     connection  therewith,  whenever  any  present  or future  taxes or similar
     charges are required to be withheld with respect to any amounts  payable in
     respect of the Deposits (as defined in the Deposit Agreement) or the escrow
     amounts,  to  withhold  such  amounts  and  timely  pay  the  same  to  the
     appropriate  authority in the name of and on behalf of the  Receiptholders,
     that it will file any necessary  withholding tax returns or statements when
     due, and that, as promptly as possible after the payment  thereof,  it will
     deliver to each such Receiptholder  appropriate  documentation  showing the
     payment thereof, together with such additional documentary evidence as such
     Receiptholder  may  reasonably  request from time to time. The Paying Agent
     agrees to file any other information  reports as it may be required to file
     under United States law.

               Section 2.05.  RESIGNATION OR REMOVAL OF PAYING AGENT. Subject to
     the  appointment  and  acceptance  of a successor  Paying Agent as provided
     below,  the Paying  Agent may  resign at any time by giving 30 days'  prior
     written  notice  thereof  to the Escrow  Agent,  but may not  otherwise  be
     removed except for cause by the Escrow Agent.  Upon any such resignation or
     removal,  the Escrow  Agent  shall  have the right to  appoint a  successor
     Paying Agent. If no successor Paying Agent shall have been so appointed and




     shall have  accepted  such  appointment  within 30 days after the  retiring
     Paying  Agent's  giving of  notice of  resignation  or the  removal  of the
     retiring  Paying  Agent,  then the  retiring  Paying  Agent  may  appoint a
     successor  Paying Agent.  Any Successor  Paying Agent shall be a bank which
     has an office in the United  States with a combined  capital and surplus of
     at least  $100,000,000.  Upon the  acceptance of any  appointment as Paying
     Agent hereunder by a successor  Paying Agent,  such successor  Paying Agent
     shall enter into such documents as the Escrow Agent shall require and shall
     thereupon  succeed  to and  become  vested  with  all the  rights,  powers,
     privileges and duties of the retiring Paying Agent, and the retiring Paying
     Agent shall be discharged from its duties and obligations hereunder.

               Section 2.06. NOTICE OF FINAL WITHDRAWAL.  Promptly after receipt
     by the Paying Agent of notice that the Escrow  Agent has  requested a Final
     Withdrawal or that a Final  Withdrawal will be made, the Paying Agent shall
     cause notice of the  distribution  of the Final  Withdrawal to be mailed to
     each of the  Receiptholders  at its address as it appears in the  Register.
     Such  notice  shall be  mailed  not less  than 15 days  prior to the  Final
     Withdrawal Date. Such notice shall set forth:

                    (i) the Final  Withdrawal  Date and the date for determining
          Receiptholders   of  record   who  shall  be   entitled   to   receive
          distributions in respect of the Final Withdrawal,

                    (ii) the  amount  of the  payment  in  respect  of the Final
          Withdrawal  for  each  $1,000  face  amount   Certificate   (based  on
          information  provided  by the Pass  Through  Trustee)  and the  amount
          thereof  constituting  unused  Deposits  (as  defined  in the  Deposit
          Agreement) and interest thereon, and

                    (iii) if the  Final  Withdrawal  Date is the same  date as a
          Regular  Distribution  Date,  the total  amount to be received on such
          date for each  $1,000 face amount  Certificate  (based on  information
          provided by the Pass Through Trustee).

          Such  mailing  may  include  any  notice   required  to  be  given  to
Certificateholders  in connection  with such  distribution  pursuant to the Pass
Through Trust Agreement.

          SECTION 3. PAYMENTS. If, notwithstanding the instructions in Section 4
of the Deposit  Agreement that all amounts payable to the Escrow Agent under the




Deposit Agreement be paid by the Depositary  directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately  available  funds by wire transfer to (a) in the case
of a payment of accrued  interest  on the  Deposits  (as  defined in the Deposit
Agreement) or any Final Withdrawal, directly to the Paying Agent Account and (b)
in the case of any Purchase Withdrawal,  directly to the Pass Through Trustee or
its designee as specified and in the manner provided in the Applicable Notice of
Purchase  Withdrawal.  The  Escrow  Agent  hereby  waives  any and all rights of
set-off,  combination of accounts,  right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against amounts
payable to the Paying Agent howsoever arising.

          SECTION  4. OTHER  ACTIONS.  The  Escrow  Agent  shall take such other
actions  under  or in  respect  of the  Deposit  Agreement  (including,  without
limitation,  the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.

          SECTION 5.  REPRESENTATIONS  AND  WARRANTIES OF THE ESCROW AGENT.  The
Escrow Agent represents and warrants to Continental,  the Investors,  the Paying
Agent and the Pass Through Trustee as follows:

                    (i) it is a national banking  association duly organized and
          validly  existing in good standing under the laws of the United States
          of America;

                    (ii) it has full power, authority and legal right to conduct
          its business and  operations as currently  conducted and to enter into
          and  perform  its  obligations  under this  Agreement  and the Deposit
          Agreement;

                    (iii) the  execution,  delivery and  performance  of each of
          this Agreement and the Deposit  Agreement have been duly authorized by
          all  necessary  corporate  action on the part of it and do not require
          any  stockholder  approval,  or  approval or consent of any trustee or
          holder  of any  indebtedness  or  obligations  of it,  and  each  such
          document has been duly  executed and  delivered by it and  constitutes
          its legal,  valid and binding  obligations  enforceable  against it in
          accordance   with  the  terms   hereof  or  thereof   except  as  such
          enforceability may be limited by bankruptcy,  insolvency,  moratorium,
          reorganization  or  other  similar  laws or  equitable  principles  of




          general  application  to or affecting  the  enforcement  of creditors'
          rights  generally   (regardless  of  whether  such  enforceability  is
          considered in a proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
          action by, and no notice to or filing with,  any United States federal
          or state governmental authority or regulatory body is required for the
          execution,  delivery or  performance  by it of this  Agreement  or the
          Deposit Agreement;

                    (v) neither the execution,  delivery or performance by it of
          this Agreement or the Deposit Agreement, nor compliance with the terms
          and provisions  hereof or thereof,  conflicts or will conflict with or
          results or will result in a breach or  violation  of any of the terms,
          conditions or  provisions  of, or will require any consent or approval
          under,  any  law,  governmental  rule  or  regulation  or the  charter
          documents,  as amended,  or bylaws,  as amended,  of it or any similar
          instrument binding on it or any order,  writ,  injunction or decree of
          any court or governmental  authority  against it or by which it or any
          of its properties is bound or any  indenture,  mortgage or contract or
          other agreement or instrument to which it is a party or by which it or
          any of its properties is bound,  or  constitutes or will  constitute a
          default  thereunder or results or will result in the imposition of any
          lien upon any of its properties; and

                    (vi) there are no pending or, to its  knowledge,  threatened
          actions,   suits,   investigations  or  proceedings  (whether  or  not
          purportedly  on behalf of it)  against or  affecting  it or any of its
          property  before or by any court or  administrative  agency which,  if
          adversely determined,  (A) would adversely affect the ability of it to
          perform its obligations  under this Agreement or the Deposit Agreement
          or (B) would call into  question  or  challenge  the  validity of this
          Agreement  or the Deposit  Agreement or the  enforceability  hereof or
          thereof in  accordance  with the terms  hereof or thereof,  nor is the
          Escrow  Agent in  default  with  respect  to any  order of any  court,
          governmental authority,  arbitration board or administrative agency so
          as to adversely  affect its ability to perform its  obligations  under
          this Agreement or the Deposit Agreement.




          SECTION 6.  REPRESENTATIONS  AND  WARRANTIES OF THE PAYING AGENT.  The
Paying Agent represents and warrants to Continental,  the Investors,  the Escrow
Agent and the Pass Through Trustee as follows:

                    (i) it is a Delaware  banking  company  duly  organized  and
          validly  existing in good standing under the laws of its  jurisdiction
          of incorporation;

                    (ii) it has full power, authority and legal right to conduct
          its business and  operations as currently  conducted and to enter into
          and perform its obligations under this Agreement;

                    (iii)  the  execution,  delivery  and  performance  of  this
          Agreement has been duly authorized by all necessary  corporate  action
          on the part of it and does not require any  stockholder  approval,  or
          approval  or consent of any trustee or holder of any  indebtedness  or
          obligations  of it,  and such  document  has been  duly  executed  and
          delivered  by  it  and  constitutes  its  legal,   valid  and  binding
          obligations enforceable against it in accordance with the terms hereof
          except  as  such   enforceability   may  be  limited  by   bankruptcy,
          insolvency,  moratorium,  reorganization  or  other  similar  laws  or
          equitable  principles  of  general  application  to or  affecting  the
          enforcement of creditors' rights generally (regardless of whether such
          enforceability is considered in a proceeding in equity or at law);

                    (iv) no  authorization,  consent  or  approval  of or  other
          action by, and no notice to or filing with,  any United States federal
          or state governmental authority or regulatory body is required for the
          execution, delivery or performance by it of this Agreement;

                    (v) neither the execution,  delivery or performance by it of
          this Agreement,  nor compliance with the terms and provisions  hereof,
          conflicts or will  conflict with or results or will result in a breach
          or violation of any of the terms, conditions or provisions of, or will
          require any consent or approval under, any law,  governmental  rule or
          regulation  or the  charter  documents,  as  amended,  or  bylaws,  as
          amended,  of it or any similar  instrument binding on it or any order,
          writ,  injunction  or decree of any  court or  governmental  authority
          against  it or by  which it or any of its  properties  is bound or any
          indenture,  mortgage or contract or other  agreement or  instrument to
          which it is a party or by which it or any of its  properties is bound,
          or constitutes or will  constitute a default  thereunder or results or





          will result in the imposition of any lien upon any of its  properties;
          and

                    (vi) there are no pending or, to its  knowledge,  threatened
          actions,   suits,   investigations  or  proceedings  (whether  or  not
          purportedly  on behalf of it)  against or  affecting  it or any of its
          property  before or by any court or  administrative  agency which,  if
          adversely determined,  (A) would adversely affect the ability of it to
          perform its  obligations  under this  Agreement or (B) would call into
          question  or  challenge   the  validity  of  this   Agreement  or  the
          enforceability  hereof in accordance with the terms hereof, nor is the
          Paying  Agent in  default  with  respect  to any  order of any  court,
          governmental authority,  arbitration board or administrative agency so
          as to adversely  affect its ability to perform its  obligations  under
          this Agreement.

          SECTION 7.  INDEMNIFICATION.  Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder  unless it shall have been  indemnified by the party  requesting  such
action in a manner  reasonably  satisfactory to it against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action.  In the event  Continental  requests any  amendment to any
Operative  Agreement  (as  defined  in the Note  Purchase  Agreement),  the Pass
Through  Trustee  agrees to pay all  reasonable  fees and  expenses  (including,
without  limitation,  fees and disbursements of counsel) of the Escrow Agent and
the Paying Agent in connection therewith.

          SECTION 8.  AMENDMENT,  ETC. Upon request of the Pass Through  Trustee
and  approval by an Action of  Investors,  the Escrow  Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, PROVIDED that
upon  request  of the Pass  Through  Trustee  and  without  any  consent  of the
Investors,  the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:

               (1) to correct or  supplement  any  provision  in this  Agreement
     which may be defective or inconsistent  with any other provision  herein or
     to cure any  ambiguity  or  correct  any  mistake  or to  modify  any other
     provision  with  respect  to  matters  or  questions   arising  under  this




     Agreement,  PROVIDED  that any such action shall not  materially  adversely
     affect the interests of the Investors; or

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

               (3) to evidence  and provide for the  acceptance  of  appointment
     under this Agreement of a successor Escrow Agent, successor Paying Agent or
     successor Pass Through Trustee.

          SECTION 9. NOTICES.  Unless otherwise  expressly  provided herein, any
notice  or  other  communication  under  this  Agreement  shall  be  in  writing
(including  by  facsimile)  and shall be deemed to be given and  effective  upon
receipt thereof.  All notices shall be sent to (a) in the case of the Investors,
as their respective  addresses shall appear in the Register,  (b) in the case of
the Escrow Agent,  First  Security  Bank,  National  Association,  79 South Main
Street,  Salt  Lake  City,  UT  84111,   Attention:   Corporate  Trust  Services
(Telecopier:  (801)  246-5053),  (c) in the  case of the Pass  Through  Trustee,
Wilmington  Trust  Company,  1100 North  Market  Street,  Wilmington,  DE 19890,
Attention: Corporate Trust Administration (Telecopier: (302) 651-8882) or (d) in
the case of the Paying  Agent,  Wilmington  Trust  Company,  1100  North  Market
Street,   Wilmington,  DE  19890,  Attention:   Corporate  Trust  Administration
(Telecopier:  (302)  651-8882),  in  each  case  with  a  copy  to  Continental,
Continental Airlines,  Inc., 2929 Allen Parkway,  Suite 2010, Houston, TX 77019,
Attention:  Executive Vice President and Chief  Financial  Officer  (Telecopier:
(713)  520-6329)  (or at such other  address as any such party may specify  from
time to time in a  written  notice  to the  other  parties).  On or prior to the
execution  of this  Agreement,  the Pass  Through  Trustee has  delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and  instructions
with respect to this Agreement.  The Escrow Agent may conclusively  rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.

          SECTION 10.  TRANSFER.  No party hereto shall be entitled to assign or
otherwise  transfer this  Agreement (or any interest  herein) other than (in the
case of the Escrow Agent) to a successor  escrow agent under Section 1.06 hereof
or (in the case of the Paying  Agent) to a successor  paying agent under Section
2.04 hereof,  and any purported  assignment in violation  thereof shall be void.
This  Agreement  shall be binding upon the parties  hereto and their  respective




successors  and (in the case of the  Escrow  Agent and the Paying  Agent)  their
respective  permitted  assigns.  Upon the occurrence of the Transfer (as defined
below)  contemplated  by the  Assignment  and  Assumption  Agreement (as defined
below),  the Pass Through Trustee shall (without  further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and,  thereafter,  the trustee
of the  Successor  Trust  shall  be  deemed  to be the  "Pass  Through  Trustee"
hereunder  with  the  rights  and  obligations  of the  "Pass  Through  Trustee"
hereunder and each reference herein to "Continental  Airlines Pass Through Trust
"1998-1C-O"  shall be deemed to be a reference  to  "Continental  Airlines  Pass
Through Trust 1998-1C-S".  The parties hereto hereby  acknowledge and consent to
the Transfer  contemplated by the Assignment and Assumption  Agreement.  As used
herein,  "TRANSFER"  means the  transfers of the assets to the  Successor  Trust
contemplated  by  the  Assignment  and  Assumption  Agreement;  "ASSIGNMENT  AND
ASSUMPTION  AGREEMENT"  means the  Assignment  and  Assumption  Agreement  to be
entered into between the Pass Through  Trustee and the trustee of the  Successor
Trust,  substantially  in  the  form  of  Exhibit  C to  the  Trust  Supplement;
"SUCCESSOR TRUST" means the Continental Airlines Pass Through Trust 1998-1C-S.

          SECTION 11. ENTIRE  AGREEMENT.  This  Agreement  sets forth all of the
promises, covenants, agreements,  conditions and understandings among the Escrow
Agent,  the Paying Agent,  the  Underwriters  and the Pass Through  Trustee with
respect  to  the  subject   matter   hereof,   and   supersedes  all  prior  and
contemporaneous agreements and undertakings,  inducements or conditions, express
or implied, oral or written.

          SECTION 12.  GOVERNING LAW. This  Agreement  shall be governed by, and
construed in accordance with, the laws of the State of New York.

          SECTION 13. WAIVER OF JURY TRIAL RIGHT.  EACH OF THE ESCROW AGENT, THE
PAYING  AGENT,  THE  INVESTORS  AND THE PASS THROUGH  TRUSTEE  ACKNOWLEDGES  AND
ACCEPTS  THAT IN ANY SUIT,  ACTION OR  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.

          SECTION 14.  COUNTERPARTS.  This  Agreement  may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.







          IN  WITNESS   WHEREOF,   the  Escrow  Agent,  the  Paying  Agent,  the
Underwriters  and the Pass  Through  Trustee  have caused this Escrow and Paying
Agent Agreement (Class C) to be duly executed as of the day and year first above
written.

                                                  FIRST SECURITY BANK, NATIONAL 
                                                  ASSOCIATION, as Escrow Agent


                                                  By__________________________
                                                    Name:
                                                    Title:


                                                  CREDIT SUISSE FIRST BOSTON 
                                                    CORPORATION
                                                  MORGAN STANLEY & CO.
                                                    INCORPORATED and
                                                  CHASE SECURITIES INC.,
                                                    as Underwriters


                                                  By: CREDIT SUISSE FIRST BOSTON
                                                      CORPORATION


                                                  By__________________________
                                                    Name:
                                                    Title:

                                                                       
                                                  WILMINGTON TRUST COMPANY,  not
                                                  in  its  individual  capacity,
                                                  but  solely as   Pass  Through
                                                  Trustee for and  on  behalf of
                                                  Continental    Airline    Pass
                                                  Through  Trust 1998-1C-O


                                                  By__________________________
                                                    Name:
                                                    Title:





                                                  WILMINGTON TRUST COMPANY,
                                                  as Paying Agent


                                                  By__________________________
                                                    Name:
                                                    Title:






                                                                       EXHIBIT A


                   CONTINENTAL AIRLINES 1998-1C ESCROW RECEIPT

                                     No. __

          This Escrow  Receipt  evidences  a  fractional  undivided  interest in
amounts  ("ACCOUNT  AMOUNTS")  from time to time deposited into a certain paying
agent  account (the "PAYING AGENT  ACCOUNT")  described in the Escrow and Paying
Agent Agreement (Class C) dated as of February 20, 1998 (as amended, modified or
supplemented  from time to time, the "ESCROW AND PAYING AGENT  AGREEMENT") among
First Security Bank,  National  Association,  as Escrow Agent (in such capacity,
together  with its  successors in such  capacity,  the "ESCROW  AGENT"),  Credit
Suisse First Boston  Corporation,  Morgan Stanley & Co.  Incorporated  and Chase
Securities  Inc., as  Underwriters,  Wilmington  Trust Company,  as Pass Through
Trustee (in such capacity,  together with its  successors in such capacity,  the
"PASS THROUGH  TRUSTEE") and Wilmington Trust Company,  as paying agent (in such
capacity,  together with its successors in such capacity,  the "PAYING  AGENT").
Capitalized terms not defined herein shall have the meanings assigned to them in
the Escrow and Paying Agent Agreement.

          This  Escrow  Receipt  is issued  under and is  subject  to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.

          This Escrow  Receipt  represents  a fractional  undivided  interest in
amounts  deposited from time to time in the Paying Agent Account,  and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property  other than such  amounts.  This Escrow  Receipt  evidences the same
percentage interest in the Account Amounts as the Fractional  Undivided Interest
in the Pass  Through  Trust  evidenced by the  Certificate  to which this Escrow
Receipt is affixed.

          All payments and  distributions  made to  Receiptholders in respect of
the Escrow  Receipt  shall be made only from  Account  Amounts  deposited in the
Paying Agent Account.  The holder of this Escrow  Receipt,  by its acceptance of
this Escrow Receipt,  agrees that it will look solely to the Account Amounts for
any payment or  distribution  due to it pursuant to this Escrow Receipt and that
it will not have any  recourse to  Continental,  the Pass Through  Trustee,  the




Paying Agent or the Escrow Agent,  except as expressly provided herein or in the
Pass Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any  right  to  vote  or in any  manner  otherwise  control  the  operation  and
management of the Paying Agent Account,  nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt,  be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.

          This  Escrow  Receipt may not be  assigned  or  transferred  except in
connection  with the  assignment  or transfer of the  Certificate  to which this
Escrow  Receipt is  affixed.  After  payment to the holder  hereof of its Escrow
Interest  in the  Final  Distribution,  upon the  request  of the  Pass  Through
Trustee,  the holder hereof will return this Escrow  Receipt to the Pass Through
Trustee.

          The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes,  and
the Paying Agent shall not be affected by any notice to the contrary.

          THIS ESCROW  RECEIPT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

          IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to
be duly executed.

Dated: ______________, 199_

                                                      FIRST SECURITY BANK,
                                                      NATIONAL ASSOCIATION,
                                                      as Escrow Agent


                                                      By________________________
                                                        Name:
                                                        Title:




                                                                       EXHIBIT B

                             WITHDRAWAL CERTIFICATE
                                    (Class C)

                   First Security Bank, National Association,
                                 as Escrow Agent

Dear Sirs:

          Reference is made to the Escrow and Paying Agent  Agreement,  dated as
of  February  20,  1998 (the  "Agreement").  We hereby  certify  to you that the
conditions to the  obligations  of the  undersigned  to execute a  Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied.  Pursuant
to Section  1.02(c) of the  Agreement,  please  execute the  attached  Notice of
Withdrawal and  immediately  transmit by facsimile to the  Depositary,  at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.

                                                  Very truly yours,

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


                                                  By____________________________
                                                    Name:
                                                    Title:

Dated:  ____________, 199_


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


                             NOTE PURCHASE AGREEMENT

                          Dated as of February 20, 1998

                                      Among

                           CONTINENTAL AIRLINES, INC.,

                            WILMINGTON TRUST COMPANY,
                    as Pass Through Trustee under each of the
                          Pass Through Trust Agreements

                            WILMINGTON TRUST COMPANY,
                             as Subordination Agent

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                                 as Escrow Agent

                                       and

                            WILMINGTON TRUST COMPANY,
                                 as Paying Agent






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


                        INDEX TO NOTE PURCHASE AGREEMENT

                                                                            Page

SECTION 1.     Financing of New Aircraft...................................    3
SECTION 2.     Conditions Precedent........................................    8
SECTION 3.     Representations and Warranties..............................    8
SECTION 4.     Covenants...................................................   13
SECTION 5.     Notices.....................................................   14
SECTION 6.     Expenses....................................................   14
SECTION 7.     Further Assurances..........................................   15
SECTION 8.     Miscellaneous...............................................   15
SECTION 9.     Governing Law...............................................   16

                                    SCHEDULES
                                    ---------

Schedule I     New Aircraft and Scheduled Delivery Months
Schedule II    Trust Supplements
Schedule III   Deposit Agreements
Schedule IV    Escrow and Paying Agent Agreements
Schedule V     Mandatory Document Terms
Schedule VI    Mandatory Economic Terms
Schedule VII   Aggregate Amortization Schedule

                                      ANNEX
                                      -----

Annex A        Definitions

                                    EXHIBITS
                                    --------

Exhibit A-1    Form of Leased Aircraft Participation Agreement
Exhibit A-2    Form of Lease
Exhibit A-3    Form of Leased Aircraft Indenture
Exhibit A-4    Form of Aircraft Purchase Agreement Assignment
Exhibit A-5    Form of Leased Aircraft Trust Agreement
Exhibit A-6    Form of Special Indenture
Exhibit B      Form of Delivery Notice
Exhibit C-1    Form of Owned Aircraft Participation
               Agreement
Exhibit C-2    Form of Owned Aircraft Indenture
Exhibit D      Form of Special Addition to Participation Agreement
Exhibit E      Special Revisions to Section 6.2 of the
               Participation Agreement



                            NOTE PURCHASE AGREEMENT

          This NOTE  PURCHASE  AGREEMENT,  dated as of February 20, 1998,  among
(i)CONTINENTAL   AIRLINES,   INC.,  a  Delaware   corporation  (the  "COMPANY"),
(ii)WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking corporation, not in its
individual capacity except as otherwise expressly provided herein, but solely as
trustee (in such capacity  together with its  successors in such  capacity,  the
"PASS  THROUGH  TRUSTEE")  under each of the three  separate  Pass Through Trust
Agreements  (as defined  below),  (iii)  WILMINGTON  TRUST  COMPANY,  a Delaware
banking  corporation,  as  subordination  agent and  trustee  (in such  capacity
together with its successors in such capacity,  the "SUBORDINATION AGENT") under
the  Intercreditor  Agreement  (as  defined  below),  (iv)FIRST  SECURITY  BANK,
NATIONAL ASSOCIATION,  a national banking association,  as Escrow Agent (in such
capacity  together with its  successors in such capacity,  the "ESCROW  AGENT"),
under each of the Escrow and Paying Agent  Agreements (as defined below) and (v)
WILMINGTON TRUST COMPANY,  a Delaware banking  corporation,  as Paying Agent (in
such capacity together with its successors in such capacity, the "PAYING AGENT")
under each of the Escrow and Paying Agent Agreements.

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

          WHEREAS,  capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in Annex A hereto;

          WHEREAS,  the Company has obtained  commitments  from the Manufacturer
pursuant to the Aircraft Purchase Agreements for the delivery of the 24 aircraft
listed in Schedule I hereto (together with any aircraft  substituted therefor in
accordance with an Aircraft  Purchase  Agreement prior to the delivery  thereof,
the "NEW AIRCRAFT");

          WHEREAS,  pursuant to the Basic Pass Through Trust  Agreement and each
of the Trust Supplements set forth in Schedule II hereto,  and concurrently with
the  execution  and  delivery  of  this  Agreement,   separate   grantor  trusts
(collectively,  the "PASS  THROUGH  TRUSTS" and,  individually,  a "PASS THROUGH
TRUST") have been created to facilitate certain of the transactions contemplated
hereby,  including,  without  limitation,  the issuance and sale of pass through
certificates pursuant thereto (collectively,  the "CERTIFICATES") to provide for
a portion of the financing of the New Aircraft;

          WHEREAS, the Company has entered into the Underwriting Agreement dated
as of  February  11,  1998  (the  "UNDERWRITING  AGREEMENT")  with  the  several
underwriters (the "UNDERWRITERS") named therein, which provides that the Company




will cause each Pass Through  Trustee to issue and sell the  Certificates to the
Underwriters;

          WHEREAS,   concurrently  with  the  execution  and  delivery  of  this
Agreement,  (i) the Escrow  Agents and the  Depositary  entered into the Deposit
Agreements set forth in Schedule III hereto (the "DEPOSIT  AGREEMENTS")  whereby
the applicable  Escrow Agent agreed to direct the  Underwriters  to make certain
deposits  referred to therein on the Issuance Date (the "INITIAL  DEPOSITS") and
to permit the applicable Pass Through  Trustee to make additional  deposits from
time to time  thereafter  (the Initial  Deposits  together with such  additional
deposits  are  collectively  referred  to as the  "DEPOSITS")  and (ii) the Pass
Through  Trustees,  the  Underwriters,  the Paying  Agents and the Escrow Agents
entered  into the Escrow and Paying  Agent  Agreements  set forth in Schedule IV
hereto (the "ESCROW AND PAYING AGENT AGREEMENTS")  whereby,  among other things,
(a) the  Underwriters  agreed to  deliver  an amount  equal to the amount of the
Initial Deposits to the Depositary on behalf of the applicable  Escrow Agent and
(b) the applicable Escrow Agent, upon the Depositary  receiving such amount, has
agreed to deliver escrow receipts to be affixed to each Certificate;

          WHEREAS,  prior to the delivery of each New Aircraft, the Company will
determine  whether to enter into a leveraged  lease  transaction  as lessee with
respect to such New Aircraft (a "LEASED  AIRCRAFT") or to purchase as owner such
New Aircraft (an "OWNED  AIRCRAFT") and will give to the Pass Through  Trustee a
Delivery Notice (as defined below) specifying its election;

          WHEREAS,  upon  receipt of a  Delivery  Notice  with  respect to a New
Aircraft,  subject to the terms and conditions of this Agreement, the applicable
Pass  Through  Trustees  will enter  into the  applicable  Financing  Agreements
relating to such New Aircraft;

          WHEREAS,  upon the  delivery of each New  Aircraft,  each Pass Through
Trustee will fund its  purchase of  Equipment  Notes with the proceeds of one or
more Deposits withdrawn by the applicable Escrow Agent under the related Deposit
Agreement bearing the same interest rate as the Certificates issued by such Pass
Through Trust; and

          WHEREAS,   concurrently  with  the  execution  and  delivery  of  this
Agreement, (i) AIG Matched Funding Corp., a Delaware corporation (the "LIQUIDITY
PROVIDER"),  has  entered  into  three  revolving  credit  agreements  (each,  a
"LIQUIDITY  FACILITY"),  one each for the benefit of the  Certificateholders  of
each Pass Through Trust,  with the  Subordination  Agent,  as agent for the Pass




Through  Trustee  on behalf of each such Pass  Through  Trust and  (ii)the  Pass
Through Trustee, the Liquidity Provider and the Subordination Agent have entered
into  the   Intercreditor   Agreement,   dated  as  of  the  date   hereof  (the
"INTERCREDITOR AGREEMENT");

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

          SECTION 1. FINANCING OF NEW AIRCRAFT. (a) The Company confirms that it
has entered into the Aircraft Purchase Agreements with the Manufacturer pursuant
to which the Company has agreed to purchase,  and the Manufacturer has agreed to
deliver,  the New Aircraft in the months specified in Schedule I hereto,  all on
and  subject  to terms  and  conditions  specified  in the  applicable  Aircraft
Purchase Agreement. The Company agrees to finance the New Aircraft in the manner
provided  herein,  all on and subject to the terms and conditions  hereof and of
the relevant Financing Agreements.

          (b) In furtherance  of the  foregoing,  the Company agrees to give the
parties hereto, the Depositary and each of the Rating Agencies not less than two
Business Days' prior notice (a "DELIVERY NOTICE") of the scheduled delivery date
(the "SCHEDULED DELIVERY DATE") (or, in the case of a substitute Delivery Notice
under Section 1(e) or (f) hereof, one Business Day's prior notice) in respect of
each New Aircraft under the applicable Aircraft Purchase Agreement, which notice
shall:

          (i) specify whether the Company has elected to treat such New Aircraft
     as a Leased Aircraft or an Owned Aircraft;

          (ii) specify the Scheduled  Delivery Date of such New Aircraft  (which
     shall be a Business Day before the Cut-off Date and,  except as provided in
     Section 1(f) hereof,  the date (the "FUNDING  DATE") on which the financing
     therefor in the manner provided herein shall be consummated);

          (iii)  instruct  the Pass  Through  Trustee to instruct  the  relevant
     Escrow Agent to provide a Notice of Purchase  Withdrawal to the  Depositary
     with respect to the  Equipment  Notes to be issued in  connection  with the
     financing of such New Aircraft;

          (iv) instruct the Pass Through Trustee to enter into the Participation
     Agreement  included  in the  Financing  Agreements  with  respect  to  such
     Aircraft  in such form and at such a time on or  before  the  Funding  Date



     specified  in  such  Delivery   Notice  and  to  perform  its   obligations
     thereunder;

          (v) specify the aggregate principal amount of each series of Equipment
     Notes  to be  issued,  and  purchased  by the  Pass  Through  Trustees,  in
     connection  with  the  financing  of  such  New  Aircraft  scheduled  to be
     delivered on such Funding Date (which shall in all respects comply with the
     Mandatory Economic Terms); and

          (vi) if such New Aircraft is to be a Leased Aircraft, certify that the
     related  Owner  Participant  (A) is not an Affiliate of the Company and (B)
     based on the  representations  of such Owner  Participant,  is either (1) a
     Qualified  Owner  Participant  or (2) any other person the  obligations  of
     which under the Owner Participant  Agreements (as defined in the applicable
     Participation Agreement) are guaranteed by a Qualified Owner Participant.

Notwithstanding  the  foregoing,  in the  event  the  date  of  issuance  of the
Certificates coincides with the Scheduled Delivery Date of the first Aircraft to
be financed  pursuant to the terms hereof,  the Delivery  Notice therefor may be
delivered to the parties hereto on such Scheduled Delivery Date.

          (c) Upon  receipt  of a Delivery  Notice,  the Pass  Through  Trustees
shall, and shall cause the Subordination  Agent to, enter into and perform their
obligations under the Participation Agreement specified in such Delivery Notice,
PROVIDED  that  such  Participation  Agreement  and the  other  Lease  Financing
Agreements  or Owner  Financing  Agreements  to be entered into pursuant to such
Participation  Agreement  shall be in the forms  thereof  annexed  hereto in all
material  respects with such changes therein as shall have been requested by the
related Owner Participant (in the case of Lease Financing  Agreements) or by the
initial  purchasers  of the  Series D  Equipment  Notes or Class D Pass  Through
Certificates (in the case of the Owner Financing  Agreements),  agreed to by the
Company and, if modified in any  material  respect,  as to which  Rating  Agency
Confirmation shall have been obtained from each Rating Agency by the Company (to
be delivered by the Company to the applicable  Pass Through Trustee on or before
the  relevant   Delivery  Date,  it  being  understood  that  if  Rating  Agency
Confirmation  shall have been received with respect to any Financing  Agreements
and such  Financing  Agreements  are  utilized for  subsequent  New Aircraft (or
Substitute Aircraft) without material modifications, no additional Rating Agency
Confirmation shall be required);  PROVIDED, HOWEVER, that the relevant Financing
Agreements as executed and delivered shall not vary the Mandatory Economic Terms
and shall contain the Mandatory Document Terms.  Notwithstanding  the foregoing,



(i)  if The  Boeing  Company  or  General  Electric  Company,  or  any of  their
respective  Affiliates,  is the Owner  Participant  with  respect  to any Leased
Aircraft,  the  Leased  Aircraft  Participation  Agreement  to be  entered  into
pursuant to the  Delivery  Notice with  respect to such Leased  Aircraft  may be
modified, if agreed to by the Company, from the form annexed hereto (A) to add a
Section 16 thereto  substantially in the form of Exhibit D hereto and (B) in the
case of The Boeing Company or any of its Affiliates,  Section 6.2 may be changed
as set  forth in  Exhibit  E  hereto,  and such  Leased  Aircraft  Participation
Agreement,  as so modified,  shall be deemed (1) to be substantially in the form
thereof  annexed  hereto  and  (2) by  virtue  of  such  modification  not to be
inconsistent  with  the  Mandatory  Document  Terms  and  (ii) if any  Financing
Document  annexed  hereto shall not have been  reviewed by either  Rating Agency
prior to the Issuance Date,  then,  prior to the use thereof in connection  with
the  financing of any  Aircraft  hereunder,  the Company  shall obtain from each
Rating Agency a confirmation that the use of such Financing  Documents would not
result in (A) a reduction of the rating for any Class of Certificates  below the
then  current  rating  for such Class of  Certificates  or (B) a  withdrawal  or
suspension of the rating of any Class of Certificates.  With respect to each New
Aircraft,  the  Company  shall  cause WTC (or such other  person  that meets the
eligibility  requirements  to act as loan  trustee  under  the  Leased  Aircraft
Indenture,  Owned  Aircraft  Indenture or Special  Indenture) to execute as Loan
Trustee the  Financing  Agreements  relating to such Aircraft to which such Loan
Trustee is intended to be a party, and shall concurrently therewith execute such
Financing  Agreements to which the Company is intended to be a party and perform
its respective obligations thereunder. Upon the request of either Rating Agency,
the Company  shall deliver or cause to be delivered to each Rating Agency a true
and complete copy of each Financing  Agreement relating to the financing of each
New Aircraft together with a true and complete set of the closing  documentation
(including legal opinions) delivered to the related Loan Trustee,  Subordination
Agent and Pass Through Trustee under the related Participation Agreement.

          (d) [Intentionally omitted.]

          (e) If after giving any Delivery Notice, there shall be a delay in the
delivery  of a New  Aircraft,  or if on the  Scheduled  Delivery  Date  of a New
Aircraft the financing  thereof in the manner  contemplated  hereby shall not be
consummated  for  whatever  reason,  the Company  shall give the parties  hereto
prompt  notice  thereof.   Concurrently  with  the  giving  of  such  notice  of
postponement  or  subsequently,  the  Company  shall give the  parties  hereto a
substitute  Delivery  Notice  specifying  the date to which  such  delivery  and
related  financing shall have been  re-scheduled  (which shall be a Business Day
before the Cut-off Date on which the Escrow Agents shall be entitled to withdraw




one or more Deposits under each of the applicable  Deposit  Agreements to enable
each  applicable  Pass  Through  Trustee  to fund its  purchase  of the  related
Equipment  Notes).  Upon  receipt  of any  such  notice  of  postponement,  each
applicable Pass Through Trustee shall comply with its obligations  under Section
5.01 of each of the  Trust  Supplements  and  thereafter  the  financing  of the
relevant  New  Aircraft  shall  take  place on the  re-scheduled  Delivery  Date
therefor  (all on and  subject  to the  terms  and  conditions  of the  relevant
Financing Agreements) unless further postponed as provided herein.

          (f) Anything in this Section 1 to the  contrary  notwithstanding,  the
Company  shall  have the right at any time on or before the  Scheduled  Delivery
Date of any New  Aircraft,  and  subsequent  to its  giving  a  Delivery  Notice
therefor,  to postpone the Scheduled Delivery Date of such New Aircraft so as to
enable the Company to change its election to treat such New Aircraft as a Leased
Aircraft or an Owned  Aircraft  by written  notice of such  postponement  to the
other parties hereto.  The Company shall  subsequently give the parties hereto a
substitute  Delivery Notice complying with the provisions of Section 1(b) hereof
and specifying the new Funding Date for such postponed New Aircraft (which shall
be a Business  Day  occurring  before the  Cut-off  Date and on which the Escrow
Agents  shall be  entitled  to withdraw  Deposits  under each of the  applicable
Deposit Agreements  sufficient to enable each applicable Pass Through Trustee to
fund its purchase of the related  Equipment  Notes).  In  addition,  the Company
shall  have the  further  right,  anything  in this  Section  1 to the  contrary
notwithstanding,  to accept  delivery  of a New  Aircraft  under the  applicable
Aircraft  Purchase  Agreement on the Delivery  Date  thereof by  utilization  of
bridge  financing of such New Aircraft and promptly  thereafter give the parties
hereto a Delivery Notice  specifying a Funding Date not later than 30 days after
the  Delivery  Date of such New  Aircraft and no later than the Cut-off Date and
otherwise  complying with the provisions of Section 1(b) hereof. All other terms
and conditions of this Note Purchase  Agreement  shall apply to the financing of
any such New Aircraft on the  re-scheduled  Funding Date therefor  except (i)the
re-scheduled Funding Date shall be deemed the Delivery Date of such New Aircraft
for all  purposes of this  Section 1 and (ii)the  related  Financing  Agreements
shall be amended to reflect the  original  delivery of such New  Aircraft to the
Company.

          (g) If the Scheduled Delivery Date for any New Aircraft is delayed (a)
more than 30 days beyond the last day of the month set forth  opposite  such New
Aircraft under the heading  "Scheduled  Delivery Months" in Schedule I hereto or
(b) beyond  January 31, 1999, the Company may identify for delivery a substitute
aircraft therefor meeting the following conditions (together with the substitute




aircraft  referred to in the next  sentence,  a  "SUBSTITUTE  AIRCRAFT"):  (i) a
Substitute  Aircraft  must be a Boeing  777-200,  757-200,  737-500,  737-700 or
737-800 aircraft manufactured after the date of this Agreement, (ii) one or more
Substitute Aircraft of the same or different types may be substituted for one or
more New Aircraft of the same or different  types so long as after giving effect
thereto such substitution  does not vary the Mandatory  Economic Terms and (iii)
the Company shall be obligated to obtain Rating Agency  Confirmation  in respect
of the replacement of any New Aircraft by Substitute Aircraft. In addition,  the
Company may elect by notice to the Pass  Through  Trustees  given prior to March
31, 1998, to  substitute  the Boeing  757-224  aircraft,  manufacturer's  serial
number 28972 and expected  registration number N33132,  which shall be deemed to
have a "Scheduled  Delivery  Month" of June 1998 for purposes of this Agreement,
in lieu of the New Aircraft with manufacturer's serial number 27566 and expected
registration  number N17126.  Upon the  satisfaction of the conditions set forth
above with  respect to a  Substitute  Aircraft,  the New Aircraft to be replaced
shall cease to be subject to this  Agreement and all rights and  obligations  of
the parties hereto concerning such New Aircraft shall cease, and such Substitute
Aircraft  shall become and  thereafter be subject to the terms and conditions of
this Agreement to the same extent as such New Aircraft.

          (h) The Company  shall have no  liability  for the failure of the Pass
Through Trustees to purchase Equipment Notes with respect to any New Aircraft or
Substitute  Aircraft,  other than the Company's  obligation,  if any, to pay the
Deposit Make-Whole Premium pursuant to Section 4(a)(i) of this Agreement.

          (i) The parties  agree that if, in  connection  with the delivery of a
New Aircraft or Substitute Aircraft,  any Owner Participant who is to be a party
to any Lease Financing  Agreement or Special Financing  Agreement shall not be a
"Citizen of the United States" within the meaning of Section 40102(a)(15) of the
Act,  then  the  applicable  Lease  Financing   Agreements  shall  be  modified,
consistent with the Mandatory  Document Terms, to require such Owner Participant
to enter into a voting trust, voting powers or similar arrangement  satisfactory
to the Company that (A) enables such New Aircraft or  Substitute  Aircraft to be
registered in the United States and (B) complies with the FAA regulations issued
under the Act applicable thereto.

          (j) Anything herein to the contrary notwithstanding, the Company shall
not have the  right,  and  shall not be  entitled,  at any time to  request  the
issuance  of  Equipment  Notes of any series to any Pass  Through  Trustee in an
aggregate  principal  amount  in  excess  of the  amount  of the  Deposits  then



available for  withdrawal  by the Escrow Agent under and in accordance  with the
provisions of the related Deposit Agreement.

          SECTION 2.  CONDITIONS  PRECEDENT.  The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination  Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations under such Participation Agreement is subject to satisfaction of
the following conditions:

          (a) no Triggering Event shall have occurred; and

          (b) the Company shall have  delivered a certificate  to each such Pass
     Through  Trustee  and  each  Liquidity   Provider  stating  that  (i)  such
     Participation  Agreement and the other  Financing  Agreements to be entered
     into  pursuant to such  Participation  Agreement do not vary the  Mandatory
     Economic  Terms and  contain  the  Mandatory  Document  Terms  and  (ii)any
     substantive  modification  of such  Financing  Agreements  from  the  forms
     thereof  attached to this Agreement do not materially and adversely  affect
     the Certificateholders, and such certification shall be true and correct.

          Anything  herein to the contrary  notwithstanding,  the  obligation of
each Pass Through  Trustee to purchase  Equipment  Notes shall  terminate on the
Cut-off Date.

          SECTION 3. REPRESENTATIONS AND WARRANTIES.  (a) The Company represents
and warrants that:

               (i) the Company is duly  incorporated,  validly  existing  and in
          good  standing  under  the  laws of the  State  of  Delaware  and is a
          "citizen of the United States" as defined in 49 U.S.C.  Section 40102,
          and has the full corporate power,  authority and legal right under the
          laws of the State of Delaware to execute  and deliver  this  Agreement
          and each Financing  Agreement to which it will be a party and to carry
          out the  obligations  of the  Company  under this  Agreement  and each
          Financing Agreement to which it will be a party;

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



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

          (b) WTC represents and warrants that:

               (i)  WTC is  duly  incorporated,  validly  existing  and in  good
          standing  under the laws of the State of Delaware and is a "citizen of
          the United States" as defined in 49 U.S.C.  Section 40102, and has the
          full corporate power,  authority and legal right under the laws of the
          State of Delaware  and the United  States  pertaining  to its banking,
          trust and fiduciary  powers to execute and deliver this  Agreement and
          each Financing  Agreement to which it will be a party and to carry out
          the obligations of WTC, in its capacity as Subordination  Agent,  Pass
          Through  Trustee  or  Paying  Agent,  as the case may be,  under  this
          Agreement and each Financing Agreement to which it will be a party;

               (ii) the  execution  and  delivery  by WTC,  in its  capacity  as
          Subordination Agent, Pass Through Trustee or Paying Agent, as the case
          may be, of this Agreement and the  performance by WTC, in its capacity
          as Subordination  Agent,  Pass Through Trustee or Paying Agent, as the
          case may be, of its  obligations  under this  Agreement have been duly
          authorized  by WTC,  in its  capacity  as  Subordination  Agent,  Pass
          Through  Trustee  or Paying  Agent,  as the case may be,  and will not
          violate its articles of  association  or by-laws or the  provisions of
          any indenture,  mortgage, contract or other agreement to which it is a
          party or by which it is bound; and

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



          (c) The Pass  Through  Trustee  hereby  confirms  to each of the other
parties hereto that its representations and warranties set forth in Section 7.15
of the Basic  Pass  Through  Trust  Agreement  and  Section  5.04 of each  Trust
Supplement are true and correct as of the date hereof.

          (d) The Subordination Agent represents and warrants that:

               (i)  the  Subordination  Agent  is  duly  incorporated,   validly
          existing and in good standing under the laws of the State of Delaware,
          and has the full corporate power,  authority and legal right under the
          laws of the State of Delaware and the United States  pertaining to its
          banking,  trust and  fiduciary  powers to  execute  and  deliver  this
          Agreement  and each  Financing  Agreement  to which it is or will be a
          party and to perform its  obligations  under this  Agreement  and each
          Financing Agreement to which it is or will be a party;

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

               (iii) none of the  execution,  delivery  and  performance  by the
          Subordination  Agent of this  Agreement  contravenes  any law, rule or
          regulation of the State of Delaware or any United States  governmental
          authority or agency  regulating  the  Subordination  Agent's  banking,
          trust or fiduciary  powers or any judgment or order  applicable  to or
          binding  on  the  Subordination   Agent  and  do  not  contravene  the
          Subordination  Agent's articles of association or by-laws or result in
          any  breach  of, or  constitute  a default  under,  any  agreement  or
          instrument to which the Subordination  Agent is a party or by which it
          or any of its properties may be bound;

               (iv)  neither the  execution  and  delivery by the  Subordination
          Agent of this  Agreement  nor the  consummation  by the  Subordination
          Agent of any of the  transactions  contemplated  hereby  requires  the
          consent or  approval  of,  the  giving of notice to, the  registration



          with,  or the taking of any other action with respect to, any Delaware
          governmental authority or agency or any federal governmental authority
          or agency  regulating  the  Subordination  Agent's  banking,  trust or
          fiduciary powers;

               (v) there are no Taxes payable by the Subordination Agent imposed
          by the  State of  Delaware  or any  political  subdivision  or  taxing
          authority  thereof in  connection  with the  execution,  delivery  and
          performance by the  Subordination  Agent of this Agreement (other than
          franchise  or  other  taxes  based  on or  measured  by  any  fees  or
          compensation received by the Subordination Agent for services rendered
          in connection with the transactions  contemplated by the Intercreditor
          Agreement or any of the Liquidity Facilities),  and there are no Taxes
          payable by the Subordination Agent imposed by the State of Delaware or
          any political  subdivision thereof in connection with the acquisition,
          possession  or  ownership  by the  Subordination  Agent  of any of the
          Equipment  Notes  (other  than  franchise  or other  taxes based on or
          measured by any fees or  compensation  received  by the  Subordination
          Agent  for  services  rendered  in  connection  with the  transactions
          contemplated  by the  Intercreditor  Agreement or any of the Liquidity
          Facilities); and

               (vi) there are no pending or  threatened  actions or  proceedings
          against the  Subordination  Agent  before any court or  administrative
          agency which individually or in the aggregate, if determined adversely
          to  it,  would   materially   adversely  affect  the  ability  of  the
          Subordination Agent to perform its obligations under this Agreement.

          (e) The Escrow Agent represents and warrants that:

               (i) the  Escrow  Agent is a  national  banking  association  duly
          incorporated,  validly existing and in good standing under the laws of
          the United  States and has the full  corporate  power,  authority  and
          legal  right  under the laws of the United  States  pertaining  to its
          banking,  trust and  fiduciary  powers to  execute  and  deliver  this
          Agreement,  each  Deposit  Agreement  and each Escrow and Paying Agent
          Agreement  (collectively,  the "ESCROW AGENT AGREEMENTS") and to carry
          out the obligations of the Escrow Agent under each of the Escrow Agent
          Agreements;



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

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

          (f) The Paying Agent represents and warrants that:

               (i) the Paying Agent is duly  incorporated,  validly existing and
          in good  standing  under the laws of the State of Delaware and has the
          full corporate power,  authority and legal right under the laws of the
          United States pertaining to its banking, trust and fiduciary powers to
          execute and deliver  this  Agreement  and the Escrow and Paying  Agent
          Agreement  (collectively,  the "PAYING AGENT AGREEMENTS") and to carry
          out the obligations of the Paying Agent under each of the Paying Agent
          Agreements;

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

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



          SECTION 4. COVENANTS. (a) The Company covenants with each of the other
parties hereto that:

          (i) on the date that the  Depositary is obligated to pay the amount of
     the Final  Withdrawal to the Paying Agent  pursuant to a Deposit  Agreement
     relating to any Trust, the Company shall pay to the Pass Through Trustee of
     such Trust no later than 12:30 p.m.  (New York time) an amount equal to the
     Deposit Make-Whole  Premium, if any, required to be paid in respect of such
     Final Withdrawal amount;

          (ii) subject to Section 4(a)(iv) of this Agreement,  the Company shall
     at all  times  maintain  its  corporate  existence  and  shall not wind up,
     liquidate or dissolve or take any action, or fail to take any action,  that
     would have the effect of any of the foregoing;

          (iii) the  Company  shall at all times  remain a U.S.  Air Carrier (as
     defined in the  Financing  Agreements)  and shall at all times be otherwise
     certificated  and registered to the extent  necessary to entitle (i) in the
     case of  Leased  Aircraft,  the  Owner  Trustee  (and the Loan  Trustee  as
     assignee  of the Owner  Trustee's  rights  under each  Lease) to the rights
     afforded to lessors of aircraft  equipment  under  Section 1110 and (ii) in
     the case of Owned  Aircraft,  the Loan  Trustee to the rights  afforded  to
     secured parties of aircraft equipment under Section 1110;

          (iv) Section 13.2.1 of each Lease is hereby  incorporated by reference
     herein;

          (v) the  Company  agrees  to  provide  written  notice  to each of the
     parties  hereto of the  occurrence  of the  Cut-off  Date no later than one
     Business Day after the date thereof;  such notice to refer  specifically to
     the Pass Through Trustee's  obligation to assign,  transfer and deliver all
     of its right,  title and interest to the Trust Property (as defined in each
     Pass  Through  Trust  Agreement)  to the trustee of the  Related  Trust (as
     defined in each Pass Through Trust  Agreement)  in accordance  with Section
     7.01 of each of the Trust Supplements; and

          (vi) the Company shall not issue Series D Equipment  Notes pursuant to
     any  Leased  Aircraft  Indenture;  the  Company  shall not  issue  Series D
     Equipment Notes pursuant to any Owned Aircraft  Indenture,  unless it shall
     have  obtained  written  confirmation  from  each  Rating  Agency  that the
     issuance  of such  Series  D  Equipment  Notes  will  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.

          (b) WTC, in its individual capacity,  covenants with each of the other
parties to this Agreement 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" as defined in 49 U.S.C.  Section  40102 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.  Upon WTC giving any such notice, WTC
shall,  subject to Section 8.02 of any Indenture  then entered  into,  resign as
Loan Trustee in respect of such Indenture.

          SECTION 5. NOTICES. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing,  and any such notice shall become effective upon being delivered
personally or, if promptly  confirmed by mail,  when  dispatched by facsimile or
other written  telecommunication,  addressed to such party hereto at its address
or facsimile  number set forth below the  signature of such party at the foot of
this Agreement.

          SECTION  6.   EXPENSES.   (a)  The  Company   agrees  to  pay  to  the
Subordination  Agent when due an amount or amounts  equal to the fees payable to
the 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 amount
of the Deposits under the Deposit  Agreements and the denominator of which shall
be the sum of (x) the then outstanding  aggregate principal amount of the Series
A Equipment Notes,  Series B Equipment Notes and Series C Equipment Notes issued
under all of the Indentures and (y) the then outstanding aggregate amount of the
Deposits under the Deposit Agreements.

          (b) So long as no  Equipment  Notes have been issued in respect of any
Aircraft,  the Company agrees to pay (i) to the Subordination Agent when due (A)
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 while such Downgrade Advance shall be outstanding,  (B) 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 while such Non-Extension  Advance shall be outstanding
and (C) 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  (A) or (B)),  (ii) all  compensation  and
reimbursement  of expenses,  disbursements  and advances  payable by the Company
under  the  Pass  Through  Trust   Agreements,   (iii)  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 (iv) in the event the Company
requests any  amendment to any  Operative  Agreement,  all  reasonable  fees and
expenses (including,  without limitation,  fees and disbursements of counsel) of
the Escrow Agent and/or the Paying Agent in connection  therewith.  For purposes
of  this  Section  6(b),  the  terms  "Applied  Downgrade   Advance",   "Applied
Non-Extension   Advance",   "Downgrade  Advance",   "Investment   Earnings"  and
"Non-Extension  Advance"  shall have the meanings  specified  in each  Liquidity
Facility.

          SECTION 7. FURTHER  ASSURANCES.  Each party hereto 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
any  other  party  hereto  shall  reasonably  request  in  connection  with  its
administration  of,  or to carry out more  effectually  the  purposes  of, or to
better assure and confirm unto it the rights and benefits to be provided  under,
this Agreement.

          SECTION  8.   MISCELLANEOUS.   (a)  Provided  that  the   transactions
contemplated hereby have been consummated,  and except as otherwise provided for
herein,  the  representations,  warranties and agreements herein of the Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's,  the Subordination  Agent's, the Escrow Agent's, the
Paying  Agent's and the Pass  Through  Trustee's  obligations  under any and all
thereof, shall survive the expiration or other termination of this Agreement and
the other agreements referred to herein.

          (b) This Agreement may be executed in any number of counterparts  (and
each  of  the  parties  hereto  shall  not  be  required  to  execute  the  same
counterpart).  Each  counterpart of this  Agreement,  including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement,   but  all  of  such  counterparts   together  shall  constitute  one
instrument.  Neither  this  Agreement  nor  any  of  the  terms  hereof  may  be
terminated,  amended,  supplemented,  waived or modified orally,  but only by an
instrument in writing  signed by the party against which the  enforcement of the
termination,  amendment, supplement, waiver or modification is sought. The index



preceding  this  Agreement  and the  headings  of the  various  Sections of this
Agreement are for  convenience of reference  only and shall not modify,  define,
expand  or  limit  any of the  terms or  provisions  hereof.  The  terms of this
Agreement  shall be binding upon, and shall inure to the benefit of, the Company
and its  successors  and  permitted  assigns,  the Pass Through  Trustee and its
successors as Pass Through Trustee (and any additional  trustee appointed) under
any of the Pass Through Trust Agreements, the Escrow Agent and its successors as
Escrow Agent under the Escrow and Paying Agent Agreements,  the Paying Agent and
its  successors as Paying Agent under the Escrow and Paying Agent  Agreement and
the  Subordination  Agent and its  successors as  Subordination  Agent under the
Intercreditor Agreement.

          (c) This  Agreement  is not  intended  to, and shall not,  provide any
person  not a  party  hereto  (other  than  the  Underwriters  and  each  of the
beneficiaries  of Section 6 hereof)  with any  rights of any  nature  whatsoever
against any of the parties hereto,  and no person not a party hereto (other than
the Underwriters  and each of the  beneficiaries of Section 6 hereof) shall have
any right,  power or  privilege  in respect  of, or have any benefit or interest
arising out of, this Agreement.

          SECTION 9.  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.



          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.

                                        CONTINENTAL AIRLINES, INC.


                                        By______________________________________
                                        Name:
                                        Title:

                                        Address: 2929 Allen Parkway
                                                 Suite 2010
                                                 Houston, TX 77019
                                                 Attention: Executive Vice
                                                  President and Chief
                                                  Financial Officer
                                                 Facsimile: (713) 520-6329


                                        WILMINGTON TRUST COMPANY,
                                        not in its individual  capacity,  except
                                        as otherwise provided herein, but solely
                                        as Pass Through Trustee


                                        By______________________________________
                                        Name:
                                        Title:

                                        Address: Rodney Square North
                                                 1100 North Market Street
                                                 Wilmington, Delaware 19890
                                                 Attention: Corporate Trust
                                                  Administration
                                                 Facsimile: (302) 651-8882



                                        WILMINGTON TRUST COMPANY,
                                        not in its individual  capacity,  except
                                        as otherwise provided herein, but solely
                                        as Subordination Agent


                                        By______________________________________
                                        Name:
                                        Title:

                                        Address: Rodney Square North
                                        1100 North Market Street
                                        Wilmington, Delaware 19890
                                        Attention: Corporate Trust
                                                   Administration
                                        Facsimile: (302) 651-8882



                                        FIRST SECURITY BANK, NATIONAL
                                        ASSOCIATION, as Escrow Agent


                                        By______________________________________
                                        Name:
                                        Title:

                                        Address: 79 South Main Street
                                                 Salt Lake City, Utah 84111
                                                 Attention: Corporate Trust
                                                  Department
                                                 Facsimile: (801) 246-5053



                                        WILMINGTON  TRUST  COMPANY,
                                        as Paying Agent


                                        By______________________________________
                                        Name:
                                        Title:

                                        Address: Rodney Square North
                                                 1100 North Market Street
                                                 Wilmington, Delaware 19890
                                                 Attention: Corporate Trust
                                                  Administration
                                                 Facsimile: (302) 651-8882



SCHEDULE I to NOTE PURCHASE AGREEMENT ----------------------- NEW AIRCRAFT AND SCHEDULED DELIVERY MONTHS New Aircraft Expected Manufacturer's Scheduled Type Registration Number Serial Number Delivery Months ------------ ------------------- -------------- --------------- Boeing 737-524 N14664 28925 September 1998 Boeing 737-524 N13665 28926 September 1998 Boeing 737-524 N14667 28927 October 1998 Boeing 737-524 N14668 28928 October 1998 Boeing 737-724 N54711 28782 August 1998 Boeing 737-724 N15712 28783 August 1998 Boeing 737-724 N16713 28784 August 1998 Boeing 737-724 N33714 28785 September 1998 Boeing 737-724 N24715 28786 October 1998 Boeing 737-724 N13716 28787 November 1998 Boeing 737-824 N18220 28929 October 1998 Boeing 737-824 N12221 28930 November 1998 Boeing 737-824 N34222 28931 December 1998 Boeing 737-824 N18223 28932 December 1998 Boeing 737-824 N24224 28933 December 1998 Boeing 737-824 N12225 28934 December 1998 Boeing 737-824 N26226 28935 December 1998 Boeing 757-224 N17126 27566 February 1998 Boeing 757-224 N48127 28968 February 1998 Boeing 757-224 N17128 27567 March 1998 Boeing 757-224 N29129 28969 March 1998 Boeing 757-224 N19130 28970 April 1998 Boeing 777-224 N78004 27580 November 1998 Boeing 777-224 N78005 27581 December 1998
SCHEDULE II to NOTE PURCHASE AGREEMENT ----------------------- TRUST SUPPLEMENTS Trust Supplement dated as of the Issuance Date between the Company and the Pass Through Trustee in respect of Continental Airlines Pass Through Trust, Series 1998-1A-O. Trust Supplement dated as of the Issuance Date between the Company and the Pass Through Trustee in respect of Continental Airlines Pass Through Trust, Series 1998-1B-O. Trust Supplement dated as of the Issuance Date between the Company and the Pass Through Trustee in respect of Continental Airlines Pass Through Trust, Series 1998-1C-O. SCHEDULE III to NOTE PURCHASE AGREEMENT ----------------------- DEPOSIT AGREEMENTS Deposit Agreement (Class A) dated as of the Issuance Date between the Depositary and the Escrow Agent. Deposit Agreement (Class B) dated as of the Issuance Date between the Depositary and the Escrow Agent. Deposit Agreement (Class C) dated as of the Issuance Date between the Depositary and the Escrow Agent. SCHEDULE IV to NOTE PURCHASE AGREEMENT ----------------------- ESCROW AND PAYING AGENT AGREEMENTS Escrow and Paying Agent Agreement (Class A) dated as of the Issuance Date among the Escrow Agent, the Underwriters, the Pass Through Trustee and the Paying Agent. Escrow and Paying Agent Agreement (Class B) dated as of the Issuance Date among the Escrow Agent, the Underwriters, the Pass Through Trustee and the Paying Agent. Escrow and Paying Agent Agreement (Class C) dated as of the Issuance Date among the Escrow Agent, the Underwriters, the Pass Through Trustee and the Paying Agent. SCHEDULE V to NOTE PURCHASE AGREEMENT ----------------------- MANDATORY DOCUMENT TERMS The terms "Trust Indenture Form," "Lease Form" and "Participation Agreement Form" shall have the respective meanings specified in Schedule VI to the Note Purchase Agreement. 1. May not modify in any material adverse respect the Granting Clause of the Trust Indenture Form so as to deprive the Note Holders of a first priority security interest in and mortgage lien on the Aircraft and the Lease or to eliminate any of the obligations secured thereby or otherwise modify in any material adverse respect as regards the interests of the Note Holders, the Subordination Agent, the Liquidity Provider or the Mortgagee the provisions of Article II or III or Section 4.02, 4.03, 4.04, 5.02, 5.06, 9.01(b), 10.04, 10.11 or 10.12 of the Trust Indenture Form. 2. May not modify in any material adverse respect as regards the interests of the Note Holders, the Subordination Agent, the Liquidity Provider or the Mortgagee the provisions of Section 3.2.1(e), 3.3(c), 4.7, the final sentence of 7.1.1, 10.3.1(d)(ii), 13.3, 16, 18.3 or 18.7(a) of the Lease Form or otherwise modify the terms of the Lease Form so as to deprive the Mortgagee of rights expressly granted to the "Mortgagee" therein. 3. May not modify in any material adverse respect as regards the interests of the Note Holders, the Subordination Agent, the Liquidity Provider or the Mortgagee the provisions of Section 5.1.9, 5.1.10, 5.1.11, 5.1.12, 7.5, 12, 15.8(a) or 15.9 of the Participation Agreement Form or of the provisions of Section 5.1.2(xxiii) or 10.1.1(a)(iv) of the Participation Agreement Form so as to eliminate the requirement to deliver to the Loan Participant or the Mortgagee, as the case may be, the legal opinions to be provided to such Persons thereunder (recognizing that the lawyers rendering such opinions may be changed) or of the provisions of Section 7.6.11(a)(ii) of the Participation Agreement Form as regards the rights of the Mortgagee thereunder or otherwise modify the terms of the Participation Agreement Form to deprive the Trustees, the Subordination Agent, the Liquidity Provider or the Mortgagee of any indemnity or right of reimbursement in its favor for Expenses or Taxes. 4. May not modify, in any material adverse respect as regards the interests of the Note Holders, the Subordination Agent, the Liquidity Provider or the Mortgagee, the definition of "Make Whole Amount" in Annex A to the Participation Agreement Form. Notwithstanding the foregoing, any such Mandatory Document Term may be modified to correct or supplement any such provision which may be defective or to cure any ambiguity or correct any mistake, PROVIDED that any such action shall not materially adversely affect the interests of the Note Holders, the Subordination Agent, the Liquidity Provider, the Mortgagee or the Certificateholders. SCHEDULE VI to NOTE PURCHASE AGREEMENT ----------------------- MANDATORY ECONOMIC TERMS EQUIPMENT NOTES - --------------- Obligor: Continental or an Owner Trust Maximum Principal Amount: The maximum principal amount of all the Equipment Notes issued with respect to an Aircraft shall not exceed the maximum principal amount of Equipment Notes indicated for each such Aircraft as set forth in the Prospectus Supplement in "Prospectus Supplement Summary--Equipment Notes and the Aircraft" under the column "Maximum Principal Amount of Equipment Notes". Aggregate Maximum Principal Amount: For all Boeing 777-224 Aircraft $170,000,000.00 For all Boeing 757-224 Aircraft $195,000,000.00 For all Boeing 737-524 Aircraft $77,520,000.00 For all Boeing 737-724 Aircraft $146,880,000.00 For all Boeing 737-824 Aircraft $204,680,000.00 The original aggregate principal amount of all Equipment Notes for all Aircraft shall not exceed the aggregate face amount of all Certificates issued on the Issuance Date. The original aggregate principal amount of all Equipment Notes of any series shall not exceed the original aggregate face amount of all Certificates of the related Class issued on the Issuance Date. Initial Loan to Aircraft Value (with the value of any Aircraft for these purposes equal to the value ("the ASSUMED APPRAISED VALUE") for such Aircraft set forth in the Prospectus Supplement in "Prospectus Supplement Summary--Equipment Notes and the Aircraft" under the column "Appraised Value"): For each Boeing 777-224 Aircraft Series A: not in excess of 40.50% Series B: not in excess of 53.80% Series C: not in excess of 64.85% For each Boeing 757-224 Aircraft Series A: not in excess of 42.00% Series B: not in excess of 56.00% Series C: not in excess of 69.81% For each Boeing 737-524 Aircraft Series A: not in excess of 43.00% Series B: not in excess of 56.00% Series C: not in excess of 68.00% For each Boeing 737-724 Aircraft Series A: not in excess of 43.00% Series B: not in excess of 53.80% Series C: not in excess of 64.42% For each Boeing 737-824 Aircraft Series A: not in excess of 42.00% Series B: not in excess of 54.00% Series C: not in excess of 65.48% The Loan to Aircraft Value for each series of Equipment Notes issued in respect of each Aircraft (computed as of the date of the issuance thereof on the basis of the Assumed Appraised Value of such Aircraft and the Depreciation Assumption (as defined in the Prospectus Supplement in "Description of the Equipment Notes--Loan to Value Ratios of Equipment Notes")) will not exceed as of any Regular Distribution Date thereafter (assuming no default in the payment of the Equipment Notes) the Initial Loan to Aircraft Value for such series of Equipment Notes set forth in the preceding paragraph. Initial Average Life (in years) from the Issuance Date For each Boeing 777-224 Aircraft Series A: not more than 14.4 years Series B: not more than 13.3 years Series C: not more than 6.8 years For each Boeing 757-224 Aircraft Series A: not more than 11.5 years Series B: not more than 11.5 years Series C: not more than 6.8 years For each Boeing 737-524 Aircraft Series A: not more than 11.75 years Series B: not more than 11.5 years Series C: not more than 6.8 years For each Boeing 737-724 Aircraft Series A: not more than 13.9 years Series B: not more than 12.0 years Series C: not more than 6.8 years For each Boeing 737-824 Aircraft Series A: not more than 13.9 years Series B: not more than 12.0 years Series C: not more than 6.8 years AVERAGE LIFE (IN YEARS) - ----------------------- As of the Delivery Period Termination Date (or if earlier, the date of the occurrence of a Triggering Event), the average life of the Class A Certificates, the Class B Certificates and the Class C Certificates shall not be less than, respectively, 10.90 years, 10.00 years, and 5.00 years from the Issuance Date (computed without regard to the acceleration of any Equipment Notes and after giving effect to any special distribution on the Certificates thereafter required in respect of unused Deposits). FINAL MATURITY DATE - ------------------- Series A: not in excess of 19.6 years from the Issuance Date Series B: not in excess of 19.1 years from the Issuance Date Series C: not in excess of 10.1 years from the Issuance Date Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day months, payable semi-annually in arrears) Series A: 6.648% Series B: 6.748% Series C: 6.541% Payment Due Rate: Debt Rate plus 2% per annum Payment Dates: March 15 and September 15 Make-Whole Premiums: as provided in Article II of the form of Trust Indenture marked as Exhibit A-3 or A-6 (whichever shall be utilized for a Leased Aircraft) of the Note Purchase Agreement (the "TRUST INDENTURE FORM") or the Owned Aircraft Indenture marked as Exhibit C-2 of the Note Purchase Agreement Redemption and Purchase: as provided in Article II of the Trust Indenture Form LEASE - ----- Term: The Base Lease Term shall expire by its terms on or after final maturity date of the related Series A Equipment Notes Lease Payment Dates: March 15 and September 15 Minimum Rent: 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 related Equipment Notes prior to such Date), the aggregate principal amount of scheduled installments due on the related Equipment Notes outstanding on such Payment Date, together with accrued and unpaid interest thereon. Supplemental Rent: Sufficient to cover the sums described in clauses (a) through (d) of such term as defined in Annex A to the form of Lease (the "LEASE FORM") marked as Exhibit A-2 of the Note Purchase Agreement Stipulated Loss Value: At all times equal to or greater than the then outstanding principal amount of the related Equipment Notes together with accrued interest thereon Termination Value: At all times equal to or greater than the then outstanding principal amount of the related Equipment Notes together with accrued interest thereon All-risk hull insurance: not less than Stipulated Loss Value, subject to Lessee's right to self-insure on terms no more favorable to Lessee in any material respect than those set forth in Section G of Annex D to the Lease Form. Minimum Liability as set forth in Schedule 1 to the Lease Form. Insurance Amount: Payment Due Rate: as set forth in Schedule 1 to the Lease Form. SLV Rate: as set forth in Schedule 1 Lease Form. PARTICIPATION AGREEMENT - ----------------------- Mortgagee, Subordination Agent, Liquidity Provider, Pass Through Trustees, Escrow Agents and Note Holders indemnified against Expenses and Taxes to the extent set forth in Section 9 of the form of the Participation Agreement (the "PARTICIPATION FORM") marked as Exhibit A-1 to the Note Purchase Agreement
SCHEDULE VII to NOTE PURCHASE AGREEMENT ----------------------- AGGREGATE AMORTIZATION SCHEDULE 1998-1A Trust 1998-1B Trust 1998-1C Trust Scheduled Scheduled Scheduled Principal Principal Principal Date Payment Payment Payment ---- ------- ------- ------- February 20, 1998 $ 0.00 $ 0.00 $ 0.00 March 15, 1998 0.00 0.00 0.00 September 15, 1998 0.00 0.00 0.00 March 15, 1999 3,102,625.04 7,834,400.00 0.00 September 15, 1999 3,300,080.60 4,815,324.46 1,423,578.38 March 15, 2000 5,881,546.35 16,737,613.60 1,542,284.10 September 15, 2000 1,956,193.60 2,557,238.30 930,191.45 March 15, 2001 8,953,348.17 4,886,525.21 10,150,933.42 September 15, 2001 1,014,978.60 514,540.04 543,499.32 March 15, 2002 9,431,760.70 6,104,644.73 17,673,331.45 September 15, 2002 69,849.53 59,013.75 59,013.76 March 15, 2003 13,846,399.75 4,386,283.20 22,025,561.82 September 15, 2003 2,651,630.11 65,981.91 1,663,506.75 March 15, 2004 11,487,695.20 1,153,314.46 19,115,075.90 September 15, 2004 1,645,194.60 0.00 3,115,592.67 March 15, 2005 12,118,076.61 195,754.12 20,137,912.41 September 15, 2005 1,445,539.92 0.00 0.00 March 15, 2006 22,012,006.70 0.00 16,381,703.56 September 15, 2006 2,642,212.60 0.00 200,158.89 March 15, 2007 21,838,831.91 1,401,026.35 9,880,972.92 September 15, 2007 2,267,152.60 240,593.59 4,795,982.96 March 15, 2008 22,334,748.67 297,494.54 6,902,700.24 September 15, 2008 1,205,485.60 0.00 0.00 March 15, 2009 30,215,098.50 740,591.12 0.00 September 15, 2009 3,926,814.59 3,625,941.60 0.00 March 15, 2010 37,838,098.35 3,625,941.60 0.00 September 15, 2010 0.00 1,885,548.46 0.00 March 15, 2011 42,776,566.03 5,041,710.54 0.00 September 15, 2011 0.00 0.00 0.00 March 15, 2012 45,016,150.23 10,621,095.78 0.00 September 15, 2012 0.00 0.00 0.00 March 15, 2013 50,603,677.21 11,121,109.41 0.00 September 15, 2013 0.00 0.00 0.00 March 15, 2014 45,827,094.03 19,617,749.24 0.00 September 15, 2014 0.00 0.00 0.00 March 15, 2015 31,403,470.56 15,649,858.40 0.00 September 15, 2015 0.00 0.00 0.00 March 15, 2016 32,257,640.10 18,048,776.11 0.00 September 15, 2016 0.00 0.00 0.00 March 15, 2017 3,939,642.34 9,142,929.48 0.00 September 15, 2017 12,595,391.20 0.00 0.00
ANNEX A to NOTE PURCHASE AGREEMENT ----------------------- DEFINITIONS "ACT" means 49 U.S.C. ss.ss. 40101-46507. "ADJUSTED TREASURY YIELD" means the Treasury Yield plus, in the case of a distribution to holders of Class A Certificates, 105 basis points, in the case of a distribution to holders of Class B Certificates, 115 basis points and, in the case of a distribution to holders of Class C Certificates, 100 basis points. "AFFILIATE" means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such person. For purposes of this definition, "control" means the power, directly or indirectly, to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by contract or otherwise and "controlling," "controlled by" and "under common control with" have correlative meanings. "AIRCRAFT PURCHASE AGREEMENT" means, in the case of the Boeing 777-200 Aircraft, the Purchase Agreement No. 2061 dated October 10, 1997, or, in the case of the Boeing 757-224 Aircraft, the Boeing 737-524 Aircraft, the Boeing 737-724 Aircraft and the Boeing 737-824 Aircraft, the Purchase Agreement No. 1951 dated July 23, 1996, as amended, each between the Company and the Manufacturer (including all exhibits thereto, together with all letter agreements entered into that by their terms constitute part of any such Purchase Agreement); and "AIRCRAFT PURCHASE AGREEMENTS" means all such agreements. "AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT" means a Purchase Agreement and Engine Warranties Assignment substantially in the form of Exhibit A-4-I or A-4-II to the Note Purchase Agreement. "ASSUMED AMORTIZATION SCHEDULE" means Schedule VII to the Note Purchase Agreement. "AVERAGE LIFE DATE" means, for any Equipment Note, the date which follows the time of determination by a period equal to the Remaining Weighted Average Life of such Equipment Note. "BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C. ss.ss. 102 ET SEQ. "BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust Agreement, dated September 25, 1997, between the Company and Pass Through Trustee, as such agreement may be supplemented, amended or modified, but does not include any Trust Supplement. "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. "CERTIFICATE" has the meaning set forth in the third recital to the Note Purchase Agreement. "CERTIFICATEHOLDER" means the Person in whose name a Certificate is registered in the Register. "CLASS" means the class of Certificates issued by each Pass Through Trust. "CLASS D CERTIFICATES" means pass through certificates issued by the Continental Airlines Pass Through Trust, Series 1998-1D, if any. "COMPANY" means Continental Airlines, Inc., a Delaware corporation. "CORPORATE TRUST OFFICE" with respect to any Pass Through Trustee or any Loan Trustee, means the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. "CUT-OFF DATE" means the earlier of (a) the day after the Delivery Period Termination Date and (b) the date on which a Triggering Event occurs. "DELIVERY PERIOD TERMINATION DATE" means the earlier of (a) January 31, 1999, or, if the Equipment Notes relating to all of the New Aircraft (or Substitute Aircraft in lieu thereof) have not been purchased by the Pass Through Trustees on or prior to such date due to any reason beyond the control of the Company and not occasioned by the Company's fault or negligence, June 30, 1999 (provided that, if a labor strike occurs at the Manufacturer on or prior to either or both of such dates referred to in this clause (a), such date or dates on or following the commencement of such strike shall be extended by adding thereto the number of days that such strike continued in effect) and (b) the date on which Equipment Notes issued with respect to all of the New Aircraft (or Substitute Aircraft in lieu thereof) have been purchased by the Pass Through Trustees in accordance with the Note Purchase Agreement. "DELIVERY DATE" means the Business Day on which a New Aircraft is delivered to and accepted by the Company. "DEPOSIT" has the meaning set forth in the fifth recital to the Note Purchase Agreement. "DEPOSIT AGREEMENT" has the meaning set forth in the fifth recital to the Note Purchase Agreement. "DEPOSIT MAKE-WHOLE PREMIUM" means, with respect to the distribution of unused Deposits to holders of any Class of Certificates, as of any date of determination, an amount equal to the excess, if any, of (a) the present value of the excess of (i) the scheduled payment of principal and interest to maturity of the Equipment Notes, assuming the maximum principal amount thereof (the "Maximum Amount") minus such Class of Certificates' Pro Rata Share were issued, on each remaining Regular Distribution Date for such Class under the Assumed Amortization Schedule (assuming for purposes of giving effect to the subtraction above, if such Class of Certificates' Pro Rata Share is greater than zero, that each scheduled payment of principal on such Schedule is reduced in an amount equal to such scheduled payment multiplied by a fraction, the numerator of which shall be the Pro Rata Share and the denominator of which shall be the Maximum Amount) over (ii) the scheduled payment of principal and interest to maturity of the Equipment Notes actually acquired by the Pass Through Trustee for such Class on each such Regular Distribution Date, such present value computed by discounting such excess on a semiannual basis on each Regular Distribution Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to the Adjusted Treasury Yield over (b) the amount of such unused Deposits to be distributed to the holders of such Certificates minus such Class of Certificates' Pro Rata Share (the remainder of such subtraction, the "Net Deposits") plus accrued and unpaid interest on the Net Deposits to but excluding such date of determination from and including the preceding Regular Distribution Date (or if such date of determination precedes the first Regular Distribution Date, the Issuance Date). "DEPOSITARY" means Credit Suisse First Boston, New York branch, a banking institution organized under the laws of Switzerland. "EQUIPMENT NOTES" means and includes any equipment notes issued under any Indenture in the form specified in Section 2.01 thereof (as such form may be varied pursuant to the terms of such Indenture) and any Equipment Note issued under any Indenture in exchange for or replacement of any other Equipment Note. "ESCROW AGENT" has the meaning set forth in the first paragraph of the Note Purchase Agreement. "ESCROW AND PAYING AGENT AGREEMENT" has the meaning set forth in the fifth recital to the Note Purchase Agreement. "FAA" means the Federal Aviation Administration of the United States. "FINAL WITHDRAWAL" with respect to each Escrow and Paying Agent Agreement, has the meaning set forth in Section 1.02 thereof. "FINANCING AGREEMENTS" means, collectively, the Lease Financing Agreements and the Owner Financing Agreements. "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. "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. "INDENTURES" means, collectively, the Leased Aircraft Indentures, the Special Indentures and the Owned Aircraft Indentures. "INTERCREDITOR AGREEMENT" has the meaning set forth in the ninth recital to the Note Purchase Agreement. "ISSUANCE DATE" means the date of the original issuance of the Certificates. "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" means a Lease Agreement substantially in the form of Exhibit A-2 to the Note Purchase Agreement. "LEASE FINANCING AGREEMENTS" means, collectively, the Aircraft Purchase Agreement Assignment, the Leased Aircraft Participation Agreement, the Lease, the Leased Aircraft Indenture (or, in a case where The Boeing Company or any of its Affiliates is the Owner Participant and if so specified in the Delivery Notice, the Special Indenture), the Equipment Notes issued thereunder and the Trust Agreement relating to the financing of a Leased Aircraft. "LEASED AIRCRAFT" means a New Aircraft subject to a Lease. "LEASED AIRCRAFT INDENTURE" means a Trust Indenture and Mortgage substantially in the form of Exhibit A-3 to the Note Purchase Agreement. "LEASED AIRCRAFT PARTICIPATION AGREEMENT" means a Participation Agreement substantially in the form of Exhibit A-1 to the Note Purchase Agreement. "LIQUIDITY FACILITY" has the meaning set forth in the ninth recital to the Note Purchase Agreement. "LIQUIDITY PROVIDER" has the meaning set forth in the ninth recital to the Note Purchase Agreement. "LOAN TRUSTEE" means the "Mortgagee" as defined in the Financing Agreements. "MANDATORY DOCUMENT TERMS" means the terms set forth on Schedule V to the Note Purchase Agreement. "MANDATORY ECONOMIC TERMS" means the terms set forth on Schedule VI to the Note Purchase Agreement. "MANUFACTURER" means The Boeing Company, a Delaware corporation, solely in its capacity as manufacturer or seller of New Aircraft. "NEW AIRCRAFT" has the meaning set forth in the second recital to the Note Purchase Agreement. "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement to which this Annex A is attached. "NOTICE OF PURCHASE WITHDRAWAL" with respect to each Deposit Agreement, has the meaning set forth in Section 2.3 thereof. "OPERATIVE AGREEMENTS" means, collectively, the Pass Through Trust Agreements, the Escrow and Paying Agent Agreements, the Deposit Agreements, the Liquidity Facilities, the Intercreditor Agreement, the Trust Agreements, the Equipment Notes, the Certificates and the Financing Agreements. "OWNED AIRCRAFT" means a New Aircraft subject to an Owned Aircraft Indenture. "OWNED AIRCRAFT INDENTURE" means a Trust Indenture and Mortgage substantially in the form of Exhibit C-2 to the Note Purchase Agreement. "OWNED AIRCRAFT PARTICIPATION AGREEMENT" means a Participation Agreement substantially in the form of Exhibit C-1 to the Note Purchase Agreement. "OWNER FINANCING AGREEMENTS" means, collectively, the Owned Aircraft Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes issued thereunder. "OWNER PARTICIPANT" means, with respect to any Leased Aircraft, the Person named as the Owner Participant in the Participation Agreement with respect to such Leased Aircraft. "OWNER TRUST" means with respect to any Leased Aircraft, the trust created by the "Trust Agreement" referred to in the Leased Aircraft Indenture or Special Indenture related thereto. "OWNER TRUSTEE" means with respect to any Leased Aircraft, the "Owner Trustee" party to the "Trust Agreement" referred to in the Leased Aircraft Indenture or Special Indenture related thereto. "PARTICIPATION AGREEMENTS" means, collectively, the Leased Aircraft Participation Agreements and the Owned Aircraft Participation Agreements. "PASS THROUGH TRUST" has the meaning set forth in the third recital to the Note Purchase Agreement. "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 Pass Through Trustee. "PASS THROUGH TRUSTEE" has the meaning set forth in the first paragraph of the Note Purchase Agreement. "PAYING AGENT" has the meaning set forth in the first paragraph of the Note Purchase Agreement. "PERSON" means any individual, firm, partnership, joint venture, trust, trustee, Government Entity, organization, association, corporation, government agency, committee, department, authority and other body, corporate or incorporate, whether having distinct legal status or not, or any member of any of the same. "PRO RATA SHARE" means, with respect to any Class of Certificates, the sum of (i) $15,000,000 multiplied by a fraction, the numerator of which shall be the amount of unused Deposits to be distributed to holders of such Class of Certificates in connection with the Final Withdrawal and the denominator of which shall be the amount of unused Deposits to be distributed to holders of all Classes of Certificates in connection with the Final Withdrawal plus (ii) if any Aircraft has not been delivered by the Manufacturer on or prior to the Delivery Period Termination Date due to any reason not occasioned by the Company's fault or negligence and no Substitute Aircraft has been provided in lieu of such Aircraft, an amount equal to the maximum principal amount of Equipment Notes with respect to such Aircraft that could have been issued and acquired by the Pass Through Trust that issued such Class of Certificates in accordance with the Mandatory Economic Terms. "QUALIFIED OWNER PARTICIPANT" means any bank, trust company, insurance company, financial institution or corporation (other than, without the Company's consent, a commercial air carrier, a commercial aircraft operator, a freight forwarder or Affiliate of any of the foregoing), in each case with a combined capital and surplus or net worth of at least $50,000,000. "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 Investors Service, Inc. and Standard & Poor's Ratings Services, a division of McGraw-Hill Inc. "RATING AGENCY CONFIRMATION" means, with respect to any Financing Agreement that has been modified in any material respect from the forms thereof attached to the Note Purchase Agreement or with respect to Substitute Aircraft, a written confirmation from each of the Rating Agencies that the use of such Financing Agreement with such modifications or the substituting of such Substitute Aircraft for a New Aircraft, whichever of the foregoing shall in a particular case require Rating Agency Confirmation, 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. "REGISTER" means the register maintained pursuant to Sections 3.04 and 7.12 of the Basic Pass Through Trust Agreement with respect to each Pass Through Trust. "REGULAR DISTRIBUTION DATES" shall mean March 15 and September 15 of each year, commencing March 15, 1998. "REMAINING WEIGHTED AVERAGE LIFE" means, on a given date with respect to any Equipment Note, 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. "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. "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and designated as "Series A" thereunder. "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and designated as "Series B" thereunder. "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and designated as "Series C" thereunder. "SERIES D EQUIPMENT NOTES" means Equipment Notes issued under an Owned Aircraft Indenture and designated as "Series D" thereunder, if any. "SPECIAL INDENTURE" means a Trust Indenture and Mortgage substantially in the form of Exhibit A-6 to the Note Purchase Agreement. "SUBORDINATION AGENT" has the meaning set forth in the first paragraph of the Note Purchase Agreement. "SUBSTITUTE AIRCRAFT" has the meaning set forth in Section 1(g) of the Note Purchase Agreement. "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. "TREASURY YIELD" means, as of any date of determination, with respect to any Equipment Note (utilizing the Assumed Amortization Schedule applicable thereto), 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). "TRIGGERING EVENT" has the meaning assigned to such term in the Intercreditor Agreement. "TRUST AGREEMENT" means a Trust Agreement substantially in the form of Exhibit E to the Note Purchase Agreement. "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. "UNDERWRITERS" has the meaning set forth in the fourth recital to the Note Purchase Agreement. "WTC" has the meaning set forth in the first paragraph of the Note Purchase Agreement. EXHIBIT A-1 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT [FILED SEPARATELY] EXHIBIT A-2 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF LEASE [FILED SEPARATELY] EXHIBIT A-3 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF LEASED AIRCRAFT INDENTURE [FILED SEPARATELY] EXHIBIT A-4-I to NOTE PURCHASE AGREEMENT ----------------------- FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT - ROLLS ----------------------------------------------------------------------------- | CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION | | SET FORTH IN SECTION 8 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN) | ----------------------------------------------------------------------------- PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___ PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___, dated as of ____________, between Continental Airlines, Inc., a Delaware corporation ("Assignor"), and First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee ("Assignee") under Trust Agreement ___ dated as of ____________ (the "Trust Agreement"), between the Owner Participant named therein and Assignee, in its individual capacity, and otherwise not in its individual capacity but solely as trustee thereunder. Assignor and Manufacturer (as such term and other capitalized terms are hereinafter defined) are parties to the Purchase Agreement, providing, among other things, for the manufacture and sale by Manufacturer or Manufacturer's wholly owned subsidiary to Assignor of certain aircraft, engines and related equipment, including the Aircraft. Assignor and Engine Manufacturer are parties to the General Terms Agreement, containing, among other terms and conditions, the Engine Warranties. Assignee wishes to acquire the Aircraft from Assignor and Assignor, on the terms and conditions hereinafter set forth, is willing to assign to Assignee certain of Assignor's rights and interests under the Purchase Agreement and the General Terms Agreement and Assignee is willing to accept such assignment, as hereinafter set forth. AGREEMENTS ---------- The parties hereto agree as follows: Section 1. DEFINITIONS. For all purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following meanings: AIRCRAFT - The Boeing Model 757-224 aircraft bearing Manufacturer's Serial No. _________ and U.S. Registration No. ________, to be financed pursuant to the Participation Agreement, including the Engines. ENGINES - Two Rolls-Royce Model RB211-535E4-B-37 series engines bearing manufacturer's serial numbers ________ and ________, respectively, installed on the Aircraft. ENGINE MANUFACTURER - Rolls-Royce plc, a corporation organized under the laws of England, and its successors and assigns. ENGINE WARRANTIES - Engine Manufacturer's "Engine and Parts Warranty" reference CE28, "Nacelle Warranty" reference CE49A and "Non-Installation Items Warranty" reference CE7/Audit 1, as set forth in Exhibit C which forms a part of the General Terms Agreement, and as limited by the applicable terms of the General Terms Agreement and such Exhibit C. GENERAL TERMS AGREEMENT - The Purchase Contract reference RR/CAL/DEG2124 dated December 7, 1993, by and between Engine Manufacturer and Assignor, including Exhibit C - "Warranties" thereto, insofar as such Exhibit C relates to the Engine Warranties, but excluding any and all Side Letter Agreements attached thereto(which do not detract or limit the Engine Warranties in any material respect), to the extent that such Purchase Contract and such Exhibit relate to the Engines, as such Purchase Contract may hereafter be amended, supplemented and modified to the extent relating to the Engines. LEASE - The Lease Agreement ___, dated as of ____________ 1997, as at any time amended, supplemented and modified, between Assignee, as lessor, and Assignor, as lessee, providing for the lease of the Aircraft. MANUFACTURER - The Boeing Company, a Delaware corporation, and its successors and assigns. PARTICIPATION AGREEMENT - The Participation Agreement ___, dated as of ____________ 1997, among Assignor, the Participants, Assignee and Mortgagee, as at any time amended, supplemented and modified. PURCHASE AGREEMENT - Purchase Agreement No. 1783, dated March 18, 1993, between Manufacturer and Assignor, providing, among other things, for the manufacture and sale by Manufacturer to Assignor of certain Boeing Model 757 aircraft (including the Aircraft) and including as part thereof Exhibits A, B, D, E and F thereto, but excluding all other exhibits and letter and supplemental agreements, to the extent that such Purchase Agreement and such Exhibits relate to the Aircraft, as such Purchase Agreement may hereafter be amended, supplemented and modified to the extent permitted by the terms of this Assignment. 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 the Participation Agreement. Section 2. ASSIGNMENT. Assignor does hereby sell, assign, transfer and set over unto Assignee and its successors and permitted assigns all of Assignor's rights and interests in and to the Purchase Agreement, as and only to the extent that the same relates to the Aircraft, and in and to the General Terms Agreement, as and only to the extent that the Engine Warranties contained therein relate to the Engines, except to the extent reserved below, including without limitation in such assignment (a) all claims for damages in respect of the Aircraft and the Engines arising as a result of any default by Manufacturer under the Purchase Agreement or Engine Manufacturer or any other vendor or supplier of other parts or equipment installed on or in the Aircraft, including without limitation all warranty service life policies, aircraft performance guarantees and indemnity provisions contained in the Purchase Agreement and the Engine Warranties, and all claims arising thereunder, in respect of the Aircraft and the Engines, (b) any and all rights of Assignor to compel performance of the terms of the Purchase Agreement in respect of the Aircraft and the Engine Warranties in respect of the Engines and (c) the right to purchase and take title to the Aircraft pursuant to the Purchase Agreement; RESERVING TO ASSIGNOR, HOWEVER, with respect to the Aircraft and each Engine, (i) all rights to receive any credits due to Assignor with respect to the purchase price of the Aircraft pursuant to the Purchase Agreement and of the Engines pursuant to the General Terms Agreement, (ii) all of Assignor's rights and interests in or arising out of any payments or deposits made relating to the Aircraft or to be made by Assignor on amounts credited or to be credited or paid or to be paid by the Manufacturer to Assignor in respect of the Aircraft, and, (iii) so long and only so long as, the Aircraft and each Engine shall be subject to the Lease and no Lease Event of Default shall have occurred and be continuing thereunder, the rights (A) to demand, accept and retain all rights in and to all property (other than the Aircraft), data and services that Manufacturer or Engine Manufacturer is obligated to provide or does provide pursuant to the Purchase Agreement or the General Terms Agreement, as the case may be, and (B) to obtain services, training, data and demonstration and test flights pursuant to the Purchase Agreement or the General Terms Agreement, as the case may be. Assignee hereby accepts such assignment subject to the terms hereof. Assignor has furnished a true copy of the Purchase Agreement and a true copy of the General Terms Agreement to Assignee and has specifically directed Assignee's attention to Paragraph 10 of Part A, Paragraph 5 of Part C, Paragraph 3 of Part D, Paragraph 2 of Part D-1, and Paragraph 5 of Part F of Exhibit B to the Purchase Agreement. Section 3. EXERCISE OF RIGHTS OF "BUYER" UNDER PURCHASE AGREEMENT AND OF "CONTINENTAL" UNDER GENERAL TERMS AGREEMENT. Notwithstanding the foregoing, if and so long as no Lease Event of Default shall have occurred and be continuing, Assignee authorizes Assignor, to the exclusion of Assignee, during the Term, to exercise in Assignor's name all rights and powers of the "Buyer" in respect of the Aircraft under the Purchase Agreement and of "Continental" in respect of each Engine under the General Terms Agreement, and of Assignee in respect of a default by any vendor or supplier of parts and equipment (as specified in clause (b) of Section 2 above) and to retain any recovery or benefit resulting from the enforcement of any warranty or indemnity under the Purchase Agreement or the General Terms Agreement in respect of the Aircraft or each Engine, as the case may be, except that Assignor may not enter into any change order or other amendment, modification or supplement to the Purchase Agreement without the written consent or countersignature of Assignee if such change order, amendment, modification or supplement would (i) result in any rescission, cancellation or termination of the Purchase Agreement in respect of the Aircraft or (ii) materially diminish the rights assigned hereunder to Assignee. Assignee agrees that, as between Assignee and Manufacturer or Engine Manufacturer, as the case may be (and without affecting Assignor's duties or obligations under the Participation Agreement or the Lease), neither Manufacturer nor Engine Manufacturer, as the case may be, shall be deemed to have knowledge of any Lease Default, Lease Event of Default, declaration of default or the discontinuance or remedy thereof or the Aircraft or either Engine being no longer subject to the Lease or any change in the authority of Assignor or Assignee, as the case may be, to exercise any of the rights established hereunder unless and until Manufacturer shall have received written notice thereof from Assignee or Mortgagee addressed to its Treasurer at P.O. Box 3707, Seattle, Washington 98124-3707, if by mail, or to (206) 237-8746, if by facsimile, or, in the case of Engine Manufacturer, Engine Manufacturer shall have received written notice thereof from Assignee or Mortgagee addressed to its Contract Manager __535, 524 and large Fleet Engines at P.O. Box 31, Derby DE24 8BJ, England, if by mail, or to 011-44-332-248514, if by facsimile. So long as Manufacturer and Engine Manufacturer act in good faith, Manufacturer and Engine Manufacturer may rely conclusively on any such notice without inquiring as to the accuracy of, or the entitlement of the party to give, such notice. Section 4. CERTAIN AGREEMENTS. It is expressly agreed that, anything herein contained to the contrary notwithstanding: (a) Assignor shall at all times remain liable (i) to Manufacturer under the Purchase Agreement to perform all the duties and obligations of the "Buyer" thereunder and (ii) to Engine Manufacturer under the General Terms Agreement to perform all the duties and obligations of the "Continental" thereunder, in each case to the same extent as if this Assignment had not been executed, (b) the exercise by Assignee of any of the rights assigned hereunder shall not release Assignor from any of its duties or obligations to Manufacturer under the Purchase Agreement or to Engine Manufacturer under the General Terms Agreement except to the extent that such exercise by Assignee shall constitute performance of such duties and obligations, and (c) except as provided in the next sentence, none of Assignee, Mortgagee or any Participant shall have any obligation or liability under the Purchase Agreement or the General Terms Agreement by reason of, or arising out of, this Assignment or be obligated to perform any of the obligations or duties of Assignor under the Purchase Agreement or the General Terms Agreement or to make any payment thereunder or to make any inquiry as to the sufficiency of any payment received by any of them or to present or file any claim or to take any other action to collect or enforce any claim for any payment assigned hereunder. Anything contained in this Assignment, the Consent and Agreement or the Engine Consent and Agreement to the contrary notwithstanding, but without in any way releasing Assignor from any of its duties or obligations under the Purchase Agreement, the General Terms Agreement or this Assignment, Assignee and Mortgagee confirm for the benefit of Manufacturer and Engine Manufacturer, respectively, that, insofar as the provisions of the Purchase Agreement or the Engine Warranties relate to the Aircraft or the Engines, as the case may be, in exercising any rights under the Purchase Agreement or the Engine Warranties, or in making any claim with respect to the Aircraft or other goods and services delivered or to be delivered pursuant to the Purchase Agreement or the Engine Warranties, the terms and conditions of the Purchase Agreement and the Engine Warranties, including without limitation Exhibit C thereto shall apply to, and be binding upon, Assignee and Mortgagee to the same extent as Assignor. Each of Assignee and Mortgagee agree that, in the event it intends to sell, re-lease or otherwise dispose of one or more of the Engines to any Person, it will use reasonable efforts to ensure that such Person enters into a direct warranty agreement with Engine Manufacturer prior to delivery of such Engine or Engines to such Person. Section 5. PRESERVATION OF RIGHTS. Nothing contained in this Assignment shall in any way diminish or limit the provisions of Assignor's indemnity in Section 9 of the Participation Agreement with respect to any liability of Assignee to Manufacturer in any way relating to or arising out of the Purchase Agreement. Nothing contained in this Assignment shall subject Manufacturer or Engine Manufacturer to any obligation or liability to which it would not otherwise be subject under the Purchase Agreement or under the General Terms Agreement, as the case may be, or modify in any respect the contract rights of Manufacturer or Engine Manufacturer thereunder, except as may be provided in their respective consents attached hereto, or require Manufacturer to divest itself of title to or possession of the Aircraft or other goods and services until delivery thereof and payment therefor as provided in the Purchase Agreement or subject Manufacturer or Engine Manufacturer to any multiple or duplicative liability or obligation under the Purchase Agreement or the General Terms Agreement, as the case may be. No further assignment of the Engine Warranties, including without limitation assignments for security purposes (other than under the Trust Indenture), are permitted without the express written consent of Engine Manufacturer. Section 6. APPOINTMENT OF ATTORNEY. Effective at any time when a Lease Event of Default shall have occurred and be continuing, (i) unless Assignee and Mortgagee (so long as the Lien of the Trust Indenture has not been discharged), in their sole discretion, shall notify Manufacturer or Engine Manufacturer, as the case may be, to the contrary, the authorization given to Assignor under Section 3 hereof to enforce such rights and claims shall henceforth cease to be effective and Assignee and its successors and permitted assigns shall, to the exclusion of Assignor, be entitled to assert and enforce such rights and claims as substitute party plaintiff or otherwise, and Assignor shall, at the request of Assignee or its successors or permitted assigns and at Assignor's expense, cooperate with and take such action as is reasonably necessary to enable Assignee and its successors and permitted assigns to enforce such rights and claims, and (ii) Assignor does hereby constitute Assignee, its successors and permitted assigns, Assignor's true and lawful attorney, irrevocably, with full power (in the name of Assignor or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for monies due and to become due under, or arising out of, the Purchase Agreement in respect of the Aircraft or the Engine Warranties in respect of the Engines, as the case may be, to the extent that the same have been assigned by this Assignment and, for such period as Assignee may exercise rights with respect thereto under this Assignment, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute (or, if previously commenced, assume control of) any proceeding and to obtain any recovery in connection therewith which Assignee may deem to be necessary or advisable in the premises. Section 7. OTHER ACTION. Assignor agrees that, at Assignor's sole cost and expense, at any time and from time to time, upon the written request of Assignee or, so long as the Lien of the Trust Indenture has not been discharged, Mortgagee, Assignor will promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Assignee or, so long as the Lien of the Trust Indenture has not been discharged, Mortgagee, may reasonably request in order to obtain the full benefits of this Assignment and of the rights and powers herein granted. Section 8. ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor does hereby represent and warrant that the Purchase Agreement and the General Terms Agreement are in full force and effect as to Assignor and are enforceable against Assignor in accordance with their respective terms. Assignor does hereby further represent and warrant that Assignor has, with the authorized execution of the Consent and Agreement and the Engine Consent and Agreement, (i) received all necessary consents to the assignment and transfer contemplated herein (including without limitation the assignment and transfer contemplated herein of Assignor's rights under the Purchase Agreement and the General Terms Agreement) and (ii) assuming that the Consent and Agreement and the Engine Consent and Agreement are in full force and effect, such consents are in full force and effect and Assignor further represents and warrants that Assignor has not assigned (except as assigned hereby) or pledged (except pursuant to (i) Purchase Contract Security Agreement dated December 7, 1993, between Lessee and Engine Manufacturer and (ii) the 757 Purchase Agreement Assignment dated February 7, 1994 between Lessee and Manufacturer, the Lien of which will have been released at or prior to the delivery of this Agreement), and hereby covenants that it will not during the Term assign (except as assigned hereby) or pledge so long as this Assignment shall remain in effect, the whole or any part of the rights hereby assigned or any of its rights with respect to the Aircraft under the Purchase Agreement or with respect to the Engines under the General Terms Agreement not assigned hereby to anyone other than Assignee. Section 9. PAYMENTS. Notwithstanding this Assignment and anything herein to the contrary, all amounts that Manufacturer or Engine Manufacturer is obligated to pay to Assignor under the Purchase Agreement with respect to the Aircraft or under the General Terms Agreement with respect to the Engines, including, without limitation, resulting from the enforcement of any warranty, covenant, representation, indemnity or product support agreement thereunder or the enforcement or exercise of any right or power thereunder or hereunder (in the case of Manufacturer, a "Manufacturer Payment," and in the case of Engine Manufacturer, an "Engine Manufacturer Payment") (excluding, however, from Manufacturer Payments and Engine Manufacturer Payments any amounts Manufacturer is obligated to pay to Assignor with respect to the rights reserved to Assignor in Section 2 hereof), will be payable and applicable as follows: all Manufacturer Payments and Engine Manufacturer Payments shall be paid to Assignor unless and until Manufacturer or Engine Manufacturer, as the case may be, shall have received written notice as set forth in Section 3 hereof from Assignee or Mortgagee that a Lease Event of Default has occurred and is continuing, whereupon Manufacturer or Engine Manufacturer, as the case may be, will, until Manufacturer or Engine Manufacturer, as the case may be, shall have received written notice from Assignee or Mortgagee that all Lease Events of Default have been cured or waived, make any and all such payments directly to Assignee (or, so long as the Trust Indenture has not been discharged and Manufacturer or Engine Manufacturer, as the case may be, shall have received notice thereof, to Mortgagee). Any amounts received by Assignee pursuant to the immediately preceding sentence shall, to the extent not theretofore applied in satisfaction of sums owing to Assignee in accordance with the terms of the Operative Agreements, be held and invested as provided in Section 4.4 of the Lease. Section 10. ASSIGNEE'S AGREEMENT. Assignee agrees that, during the Term, except as otherwise contemplated by Section 2 hereof and unless a Lease Event of Default shall have occurred and be continuing, it will not enter into any agreement that would amend, modify, supplement, rescind, cancel or terminate the Purchase Agreement or the General Terms Agreement in respect of the Aircraft or the Engines without the prior written consent of Assignor. Section 11. EXECUTION; COUNTERPARTS, ETC. This Assignment is executed by Assignor and Assignee concurrently with the execution and delivery of the Lease. This Assignment may be executed by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and both of which counterparts, taken together, shall constitute one and the same instrument. The section headings in this Assignment are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. Section 12. CONFIDENTIAL TREATMENT. Assignee agrees that it will not disclose to any third party the terms of the Purchase Agreement or the General Terms Agreement except (i) as required by applicable law or governmental regulation, (ii) in connection with the financing of the Aircraft, (iii) as permitted under Section 8 of the Participation Agreement as if this Assignment were specifically referred to therein, (iv) with the consent of Assignor, Manufacturer and the Engine Manufacturer (as the case may be) or (v) in connection with any sale or lease of the Aircraft. Section 13. ASSIGNMENT TO MORTGAGEE. The right, title and interest of Assignee in and to this Assignment has been assigned to and is subject to a security interest in favor of Wilmington Trust Company, as Mortgagee under the Trust Indenture, for the benefit of the Noteholders and the Indenture Indemnitees referred to in such Trust Indenture, all to the extent provided in such Trust Indenture. Assignor hereby consents to such assignment and to the creation of such security interest in and to this Assignment. SECTION 14. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. [This space intentionally left blank.] IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement and Engine Warranties Assignment ___ to be duly executed as of the day and year first above written. CONTINENTAL AIRLINES, INC. By ________________________________ Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ________________________________ Name: Title: The undersigned, as Mortgagee for the benefit of the Note Holders and Indenture Indemnitees and as assignee of, and holder of a security interest in, the estate, right, title and interest of Assignee in and to the foregoing Assignment pursuant to the terms of the Trust Indenture agrees to the terms of the foregoing Assignment and agrees that its rights and remedies under the Trust Indenture shall be subject to the terms and conditions of the foregoing Assignment, including Sections 4 and 5 therein, and of the Purchase Agreement and the General Terms Agreement. WILMINGTON TRUST COMPANY, as Mortgagee By ________________________________ Name: Title: MANUFACTURER CONSENT AND AGREEMENT ___ The undersigned, THE BOEING COMPANY, a Delaware corporation, hereby acknowledges notice of and consents to all of the terms of Purchase Agreement and Engine Warranties Assignment ___ (herein called the "Assignment") (the defined terms therein being hereinafter used with the same meanings unless otherwise defined herein) between Continental Airlines, Inc., as Assignor, and First Security Bank, National Association, as Owner Trustee, as Assignee, and hereby confirms to Assignee that: (i) all representations, warranties, indemnities and agreements of Manufacturer under the Purchase Agreement with respect to the Aircraft shall inure to the benefit of Assignee to the same extent as if originally named the "Buyer" therein, except as provided by Section 2 of the Assignment; (ii) Assignee shall not be liable for any of the obligations or duties of Assignor under the Purchase Agreement, nor shall the Assignment give rise to any duties or obligations whatsoever on the part of Assignee owing to Manufacturer, except as provided in Section 4 of the Assignment; (iii) Manufacturer consents to the lease of the Aircraft by Assignee to Assignor under the Lease, consents to the grant of a security interest in the Aircraft pursuant to the Trust Indenture by Assignee and agrees that the Assignment constitutes an agreement by Assignee as required by Article 10.2 of the Purchase Agreement; and (iv) Manufacturer will continue to pay to Assignor or its order all payments that Manufacturer may be required to make in respect of the Aircraft under the Purchase Agreement unless and until Manufacturer shall have received written notice from Assignee or Mortgagee addressed to its Treasurer at P.O. Box 3707, Seattle, Washington 98124-3707, if by mail, or to (206) 237-8746, if by facsimile, that a Lease Event of Default has occurred and is continuing, whereupon Manufacturer will not be required to make further inquiry into the content of such notice and will make any and all payments that it may be required thereafter to make in respect of the Aircraft under the Purchase Agreement and the right to receive that has been assigned under the Assignment, directly to Assignee at its address at 79 South Main Street, Salt Lake City, Utah 84111, Attn: Corporate Trust Department (or, so long as the Trust Indenture has not been discharged, directly to Mortgagee at its address at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attn: Corporate Trust Administration), unless and until Manufacturer shall have received notice in writing from Assignee or Mortgagee that no Lease Event of Default is continuing, whereupon Manufacturer shall make all payments that Manufacturer may be required to make in respect of the Aircraft under the Purchase Agreement to Assignor or its order, as aforesaid. Manufacturer hereby represents and warrants that: (i) Manufacturer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) the making and performance of the Purchase Agreement and this Manufacturer Consent and Agreement ___ have been duly authorized by all necessary corporate action on the part of Manufacturer, do not require any stockholder approval and do not contravene Manufacturer's Certificate of Incorporation or by-laws or any indenture, credit agreement or other contractual agreement to which Manufacturer is a party or by which it is bound and the making of the Purchase Agreement and this Manufacturer Consent and Agreement ___, the performance of its obligations to sell and deliver the Aircraft thereunder and the giving of the warranty obligations thereunder, do not, as to such making, performance or giving, contravene any law binding on Manufacturer; and (iii) the Purchase Agreement constituted, as of the date thereof and at all times thereafter to and including the date of this Manufacturer Consent and Agreement ___, and this Manufacturer Consent and Agreement ___ constitutes, binding obligations of Manufacturer enforceable against Manufacturer in accordance with their respective terms subject to (A) the limitations of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), which principles do not make the remedies available at law or in equity with respect to the Purchase Agreement and this Manufacturer Consent and Agreement ___ inadequate for the practical realization of the benefits intended to be provided thereby. It is understood that the execution of this Manufacturer Consent and Agreement ___ by Manufacturer is subject to the condition that, concurrently with the delivery of the Aircraft to Assignee, Assignee shall lease the Aircraft to Assignor under the Lease. [This space intentionally left blank.] THIS MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL RESPECTS BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF WASHINGTON, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REFERENCE TO CONFLICTS OF LAWS PRINCIPLES. Dated as of _______________. THE BOEING COMPANY By ______________________________ Name: Title: ENGINE MANUFACTURER CONSENT AND AGREEMENT ___ The undersigned, ROLL-ROYCE plc, a corporation organized under the laws of England whose registered office is at 65 Buckingham Gate, London SWIE 6AT, England, hereby acknowledges notice of and consents to all of the terms of Purchase Agreement and Engine Warranties Assignment ___ (herein called the "Assignment") (the defined terms therein being hereinafter used with the same meanings unless otherwise defined herein) between Continental Airlines, Inc., as Assignor, and First Security Bank, National Association, as Owner Trustee, as Assignee. Under the General Terms Agreement, Engine Manufacturer has agreed to support certain Rolls-Royce Model RB211-535E4-B-37 engines and spare parts therefor purchased by Assignor from Engine Manufacturer, as installed on certain Boeing Model 757 aircraft. Engine Manufacturer hereby confirms to Assignor and Assignee that the Engine Warranties, as and to the extent that such relate to the Engines, shall inure to the benefit of Assignee (and, so long as the Trust Indenture has not been discharged, Mortgagee) to the same extent as if originally named "Continental" in the General Terms Agreement and to the benefit of Assignor (but only to the extent provided for in the Assignment) in each case subject to the terms and conditions of the Assignment; PROVIDED, that Engine Manufacturer shall not owe any liability or obligation under the Engine Warranties more than once in total. Engine Manufacturer represents and warrants that: 1. It is a corporation duly organized and validly existing in good standing under the laws of England; 2. The making and performance of this Engine Manufacturer Consent and Agreement ___ in accordance with its terms have been duly authorized by all necessary corporate action on the part of Engine Manufacturer, do not require any stockholder approval and do not contravene its Articles of Association or by-laws or any debenture, credit agreement or other contractual agreement to which Engine Manufacturer is a party or by which it is bound or any law binding on Engine Manufacturer; 3. The making and performance of the Engine Warranties in accordance with their terms have been duly authorized by all necessary corporate action on the part of Engine Manufacturer, do not require any stockholder approval and do not contravene Engine Manufacturer's Articles of Association or by-laws or any debenture, credit agreement or other contractual agreement to which Engine Manufacturer is a party or by which it is bound, and do not, as to the making thereof, contravene any law binding on Engine Manufacturer, and to the best of its knowledge, do not as to the performance thereof contravene any law binding on Engine Manufacturer; and 4. The Engine Warranties constituted as of the date on which they were made and at all times thereafter to and including the date of this Engine Manufacturer Consent and Agreement ___, and this Engine Manufacturer Consent and Agreement ___ constitute binding obligations of Engine Manufacturer enforceable against Engine Manufacturer in accordance with their respective terms subject to: (a) the limitations of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally; and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). [This space intentionally left blank.] THIS ENGINE MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. Dated as of ______________. ROLLS-ROYCE PLC By ______________________________ Name: Title: EXHIBIT A-4-II to NOTE PURCHASE AGREEMENT ----------------------- FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT - CFM ----------------------------------------------------------------------------- | CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION | | SET FORTH IN SECTION 8 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN) | ----------------------------------------------------------------------------- PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___ PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___, dated as of __________, between Continental Airlines, Inc., a Delaware corporation ("Assignor"), and First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee ("Assignee") under Trust Agreement ___ dated as of __________ (the "Trust Agreement"), between the Owner Participant named therein and Assignee, in its individual capacity, and otherwise not in its individual capacity but solely as trustee thereunder. Assignor and Manufacturer (as such term and other capitalized terms are hereinafter defined) are parties to the Purchase Agreement, providing, among other things, for the manufacture and sale by Manufacturer or Manufacturer's wholly owned subsidiary to Assignor of certain aircraft, engines and related equipment, including the Aircraft. Assignor and Engine Manufacturer are parties to the General Terms Agreement, containing, among other terms and conditions, the Engine Warranties. Assignee wishes to acquire the Aircraft and Assignor, on the terms and conditions hereinafter set forth, is willing to assign to Assignee certain of Assignor's rights and interests under the Purchase Agreement and the General Terms Agreement and Assignee is willing to accept such assignment, as hereinafter set forth. AGREEMENTS The parties hereto agree as follows: Section 1. DEFINITIONS. For all purposes of this Assignment, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following meanings: AIRCRAFT - The Boeing Model 737-___ aircraft bearing Manufacturer's Serial No. _______ and U.S. Registration No. __________, to be financed pursuant to the Participation Agreement, including the Engines. - ---------- This form is to be utilized for Boeing 737 aircraft and will be modified, as appropriate, for Boeing 777 aircraft. ENGINES - Two CFM Model ________ series engines bearing manufacturer's serial numbers ________ and ________, respectively, installed on the Aircraft. ENGINE MANUFACTURER - CFM International, Inc., a Delaware corporation, and its successors and assigns. ENGINE WARRANTIES - Engine Manufacturer's "New Engine Warranty," "New Parts Warranty," "Ultimate Life Warranty" and "Campaign Change Warranty," as set forth in the Engine Manufacturer's Engine Product Support Plan which forms a part of the General Terms Agreement, and as limited by the applicable terms of the General Terms Agreement and such Engine Product Support Plan. GENERAL TERMS AGREEMENT - The Agreement No. 6-7075, dated as of June 10, 1985, by and between Engine Manufacturer and Assignor, including the "Engine Product Support Plan" at Exhibit B thereto, insofar as such Engine Product Support Plan relates to the Engine Warranties, but excluding any and all letter agreements attached thereto (which do not detract or limit the Engine Warranties in any material respect), to the extent that such General Terms Agreement and such Exhibit relate to the Engines, as such General Terms Agreement may hereafter be amended, supplemented and modified to the extent permitted by the terms of this Assignment to the extent relating to the Engines. LEASE - The Lease Agreement ___, dated as of __________, as at any time amended, supplemented and modified, between Assignee, as lessor, and Assignor, as lessee, providing for the lease of the Aircraft. MANUFACTURER - The Boeing Company, a Delaware corporation, and its successors and assigns. PARTICIPATION AGREEMENT - The Participation Agreement ___, dated as of ___________, among Assignor, the Participants, Assignee and Mortgagee, as at any time amended, supplemented and modified. PURCHASE AGREEMENT - Purchase Agreement No. 1951, dated July 23, 1996, between Manufacturer and Assignor, providing, among other things, for the manufacture and sale by Manufacturer to Assignor of certain Boeing Model 737 aircraft (including the Aircraft) and including as part thereof Exhibits A, B, D, E and F thereto, but excluding all other exhibits and letter and supplemental agreements, to the extent that such Purchase Agreement and such Exhibits relate to the Aircraft, as such Purchase Agreement may hereafter be amended, supplemented and modified to the extent permitted by the terms of this Assignment. 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 the Participation Agreement. Section 2. ASSIGNMENT. Assignor does hereby sell, assign, transfer and set over unto Assignee and its successors and permitted assigns all of Assignor's rights and interests in and to the Purchase Agreement, as and only to the extent that the same relates to the Aircraft, and in and to the General Terms Agreement, as and only to the extent that the Engine Warranties contained therein relate to the Engines, except to the extent reserved below, including without limitation in such assignment (a) all claims for damages in respect of the Aircraft and the Engines arising as a result of any default by Manufacturer under the Purchase Agreement or Engine Manufacturer or any other vendor or supplier of other parts or equipment installed on or in the Aircraft, including without limitation all warranty service life policies, aircraft performance guarantees and indemnity provisions contained in the Purchase Agreement and the Engine Warranties, and all claims arising thereunder, in respect of the Aircraft and the Engines, (b) any and all rights of Assignor to compel performance of the terms of the Purchase Agreement in respect of the Aircraft and the Engine Warranties in respect of the Engines and (c) the right to purchase and take title to the Aircraft pursuant to the Purchase Agreement; reserving to Assignor, however, with respect to the Aircraft and each Engine, (i) all rights to receive any credits due to Assignor with respect to the purchase price of the Aircraft pursuant to the Purchase Agreement and of the Engines pursuant to the General Terms Agreement, (ii) all of Assignor's rights and interests in or arising out of any payments or deposits made relating to the Aircraft or to be made by Assignor on amounts credited or to be credited or paid or to be paid by the Manufacturer to the Assignor in respect of the Aircraft and (iii) so long and only so long as the Aircraft and each Engine shall be subject to the Lease and no Lease Event of Default shall have occurred and be continuing thereunder, the rights (A) to demand, accept and retain all rights in and to all property (other than the Aircraft), data and services that Manufacturer or Engine Manufacturer is obligated to provide or does provide pursuant to the Purchase Agreement or the General Terms Agreement, as the case may be, and (B) to obtain services, training, data and demonstration and test flights pursuant to the Purchase Agreement or the General Terms Agreement, as the case may be. Assignee hereby accepts such assignment subject to the terms hereof. Assignor has furnished a true copy of the Purchase Agreement and a true copy of the General Terms Agreement to Assignee and has specifically directed Assignee's attention to Paragraph 10 of Part A, Paragraph 5 of Part C, Paragraph 3 of Part D, Paragraph 2 of Part D-1, Paragraph 5 of Part I, and Paragraph 9 and 10 of Part F-2 of Exhibit B to the Purchase Agreement. Section 3. EXERCISE OF RIGHTS OF "BUYER" UNDER PURCHASE AGREEMENT AND OF "AIRLINE" UNDER GENERAL TERMS Agreement. Notwithstanding the foregoing, if and so long as no Lease Event of Default shall have occurred and be continuing, Assignee authorizes Assignor, to the exclusion of Assignee, during the Term, to exercise in Assignor's name all rights and powers of the "Buyer" in respect of the Aircraft under the Purchase Agreement and of the "Airline" in respect of each Engine under the General Terms Agreement, and of Assignee in respect of a default by any vendor or supplier of parts and equipment (as specified in clause (a) of Section 2 above) and to retain any recovery or benefit resulting from the enforcement of any warranty or indemnity under the Purchase Agreement or the General Terms Agreement in respect of the Aircraft or each Engine, as the case may be, except that Assignor may not enter into any change order or other amendment, modification or supplement to the Purchase Agreement without the written consent or countersignature of Assignee if such change order, amendment, modification or supplement would (i) result in any rescission, cancellation or termination of the Purchase Agreement in respect of the Aircraft or (ii) materially diminish the rights assigned hereunder to Assignee. Assignee agrees that, as between Assignee and Manufacturer or Engine Manufacturer, as the case may be (and without affecting Assignor's duties or obligations under the Participation Agreement or the Lease), neither Manufacturer nor Engine Manufacturer, as the case may be, shall be deemed to have knowledge of any Lease Default, Lease Event of Default, declaration of default or the discontinuance or remedy thereof or the Aircraft or either Engine being no longer subject to the Lease or any change in the authority of Assignor or Assignee, as the case may be, to exercise any of the rights established hereunder unless and until Manufacturer shall have received written notice thereof from Assignee or Mortgagee addressed to its Vice President - Contracts at P.O. Box 3707, Mail Stop 75-38, Seattle, Washington 98124-2207, if by mail, or to (425) 237-1706, if by facsimile, or, in the case of Engine Manufacturer, Engine Manufacturer shall have received written notice thereof from Assignee or Mortgagee addressed to its Commercial Contract Director at P.O. Box 15514, Cincinnati, Ohio 45215-6301, if by mail, or to (513) 243-1345, if by facsimile. So long as Manufacturer and Engine Manufacturer act in good faith, Manufacturer and Engine Manufacturer may rely conclusively on any such notice without inquiring as to the accuracy of, or the entitlement of the party to give, such notice. The Engine Manufacturer shall not be deemed to have knowledge of the replacement of an Engine with another CFM engine, until the Engine Manufacturer has received written notice thereof. Such notice shall include the serial number of the Engine being replaced, as well as the serial number of the replacement Engine and shall be sent to: Lease Pool Manager, Customer Support Operation, GE Aircraft Engines, 111 Merchant Street, Room 450, Cincinnati, Ohio 45246. Section 4. CERTAIN AGREEMENTS. It is expressly agreed that, anything herein contained to the contrary notwithstanding: (a) Assignor shall at all times remain liable (i) to Manufacturer under the Purchase Agreement to perform all the duties and obligations of the "Buyer" thereunder and (ii) to Engine Manufacturer under the General Terms Agreement to perform all the duties and obligations of the "Airline" thereunder, in each case to the same extent as if this Assignment had not been executed, (b) the exercise by Assignee of any of the rights assigned hereunder shall not release Assignor from any of its duties or obligations to Manufacturer under the Purchase Agreement or to Engine Manufacturer under the General Terms Agreement except to the extent that such exercise by Assignee shall constitute performance of such duties and obligations, and (c) except as provided in the next sentence, none of Assignee, Mortgagee or any Participant shall have any obligation or liability under the Purchase Agreement or the General Terms Agreement by reason of, or arising out of, this Assignment or be obligated to perform any of the obligations or duties of Assignor under the Purchase Agreement or the General Terms Agreement or to make any payment thereunder or to make any inquiry as to the sufficiency of any payment received by any of them or to present or file any claim or to take any other action to collect or enforce any claim for any payment assigned hereunder. Anything contained in this Assignment, the Consent and Agreement or the Engine Consent and Agreement to the contrary notwithstanding, but without in any way releasing Assignor from any of its duties or obligations under the Purchase Agreement, the General Terms Agreement or this Assignment, Assignee and Mortgagee confirm for the benefit of Manufacturer and Engine Manufacturer, respectively, that, insofar as the provisions of the Purchase Agreement or the Engine Warranties relate to the Aircraft or the Engines, as the case may be, in exercising any rights under the Purchase Agreement or the Engine Warranties, or in making any claim with respect to the Aircraft or other goods and services delivered or to be delivered pursuant to the Purchase Agreement or the Engine Warranties, the terms and conditions of the Purchase Agreement including, without limitation, the Disclaimer and Release and Exclusion of Liabilities provisions of Sections 12.1 through 12.4 of Article 12 and the Engine Warranties, including without limitation Exhibit B (the "Product Assurance Document") shall apply to, and be binding upon, Assignee and Mortgagee to the same extent as Assignor. Section 5. PRESERVATION OF RIGHTS. Nothing contained in this Assignment shall in any way diminish or limit the provisions of Assignor's indemnity in Section 9 of the Participation Agreement with respect to any liability of Assignee to Manufacturer in any way relating to or arising out of the Purchase Agreement. Nothing contained in this Assignment shall subject Manufacturer or Engine Manufacturer to any obligation or liability to which it would not otherwise be subject under the Purchase Agreement or under the General Terms Agreement, as the case may be, or modify in any respect the contract rights of Manufacturer or Engine Manufacturer thereunder, except as may be provided in the Consent and Agreement and the Engine Consent and Agreement, or require Manufacturer to divest itself of title to or possession of the Aircraft or other goods and services until delivery thereof and payment therefor as provided in the Purchase Agreement or subject Manufacturer or Engine Manufacturer to any multiple or duplicative liability or obligation under the Purchase Agreement or the General Terms Agreement, as the case may be. No further assignment of the Engine Warranties, including without limitation assignments for security purposes (other than under the Trust Indenture), are permitted without the express written consent of Engine Manufacturer. Section 6. APPOINTMENT OF ATTORNEY. Effective at any time when a Lease Event of Default shall have occurred and be continuing, (i) unless Assignee and Mortgagee (so long as the Lien of the Trust Indenture has not been discharged), in their sole discretion, shall notify Manufacturer or Engine Manufacturer, as the case may be, to the contrary, the authorization given to Assignor under Section 3 hereof to enforce such rights and claims shall henceforth cease to be effective and Assignee and its successors and permitted assigns shall, to the exclusion of Assignor, be entitled to assert and enforce such rights and claims as substitute party plaintiff or otherwise, and Assignor shall, at the request of Assignee or its successors or permitted assigns and at Assignor's expense, cooperate with and take such action as is reasonably necessary to enable Assignee and its successors and permitted assigns to enforce such rights and claims, and (ii) Assignor does hereby constitute Assignee, its successors and permitted assigns, Assignor's true and lawful attorney, irrevocably, with full power (in the name of Assignor or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for monies due and to become due under, or arising out of, the Purchase Agreement in respect of the Aircraft or the Engine Warranties in respect of the Engines, as the case may be, to the extent that the same have been assigned by this Assignment and, for such period as Assignee may exercise rights with respect thereto under this Assignment, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute (or, if previously commenced, assume control of) any proceeding and to obtain any recovery in connection therewith which Assignee may deem to be necessary or advisable in the premises. Section 7. OTHER ACTION. Assignor agrees that, at Assignor's sole cost and expense, at any time and from time to time, upon the written request of Assignee or, so long as the Lien of the Trust Indenture has not been discharged, Mortgagee, Assignor will promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Assignee or, so long as the Lien of the Trust Indenture has not been discharged, Mortgagee, may reasonably request in order to obtain the full benefits of this Assignment and of the rights and powers herein granted. Section 8. ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor does hereby represent and warrant that the Purchase Agreement and the General Terms Agreement are in full force and effect as to Assignor and are enforceable against Assignor in accordance with their respective terms. Assignor does hereby further represent and warrant that Assignor has, with the authorized execution of the Consent and Agreement and the Engine Consent and Agreement, (i) received all necessary consents to the assignment and transfer contemplated herein (including without limitation the assignment and transfer contemplated herein of Assignor's rights under the Purchase Agreement and the General Terms Agreement) and (ii) assuming that the Consent and Agreement and the Engine Consent and Agreement are in full force and effect, such consents are in full force and effect and Assignor further represents and warrants that Assignor has not assigned (except as assigned hereby) or pledged (except pursuant to the 737 Purchase Agreement Assignment dated as of November 27, 1996 between Lessee and Manufacturer, the Lien of which will have been released at or prior to the delivery of this Agreement), and hereby covenants that it will not during the Term assign (except as assigned hereby) or pledge so long as this Assignment shall remain in effect, the whole or any part of the rights hereby assigned or any of its rights with respect to the Aircraft under the Purchase Agreement or with respect to the Engines under the General Terms Agreement not assigned hereby to anyone other than Assignee. Section 9. PAYMENTS. Notwithstanding this Assignment and anything herein to the contrary, all amounts that Manufacturer or Engine Manufacturer is obligated to pay to Assignor under the Purchase Agreement with respect to the Aircraft or under the General Terms Agreement with respect to the Engines, including, without limitation, resulting from the enforcement of any warranty, covenant, representation, indemnity or product support agreement thereunder or the enforcement or exercise of any right or power thereunder or hereunder (in the case of Manufacturer, a "Manufacturer Payment," and in the case of Engine Manufacturer, an "Engine Manufacturer Payment") (excluding, however, from Manufacturer Payments and Engine Manufacturer Payments any amounts Manufacturer is obligated to pay to Assignor with respect to the rights reserved to Assignor in Section 2 hereof), will be payable and applicable as follows: all Manufacturer Payments and Engine Manufacturer Payments shall be paid to Assignor unless and until Manufacturer or Engine Manufacturer, as the case may be, shall have received written notice as set forth in Section 3 hereof from Assignee or Mortgagee that a Lease Event of Default has occurred and is continuing, whereupon Manufacturer or Engine Manufacturer, as the case may be, will, until Manufacturer or Engine Manufacturer, as the case may be, shall have received written notice from Assignee or Mortgagee that all Lease Events of Default have been cured or waived, make any and all such payments directly to Assignee (or, so long as the Trust Indenture has not been discharged and Manufacturer or Engine Manufacturer, as the case may be, shall have received notice thereof, to Mortgagee). Any amounts received by Assignee pursuant to the immediately preceding sentence shall, to the extent not theretofore applied in satisfaction of sums owing to Assignee in accordance with the terms of the Operative Agreements, be held and invested as provided in Section 4.5 of the Lease. Section 10. ASSIGNEE'S AGREEMENT. Assignee agrees that, during the Term, except as otherwise contemplated by Section 2 hereof and unless a Lease Event of Default shall have occurred and be continuing, it will not enter into any agreement that would amend, modify, supplement, rescind, cancel or terminate the Purchase Agreement or the General Terms Agreement in respect of the Aircraft or the Engines without the prior written consent of Assignor. Section 11. EXECUTION; COUNTERPARTS, ETC. This Assignment is executed by Assignor and Assignee concurrently with the execution and delivery of the Lease. This Assignment may be executed by the parties hereto in separate 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. The section headings in this Assignment are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. Section 12. CONFIDENTIAL TREATMENT. Assignee agrees that it will not disclose to any third party the terms of the Purchase Agreement or the General Terms Agreement except (i) as required by applicable law or governmental regulation, (ii) in connection with the financing of the Aircraft, (iii) as permitted under Section 8 of the Participation Agreement as if this Assignment were specifically referred to therein, (iv) with the consent of Assignor, Manufacturer and the Engine Manufacturer (as the case may be) or (v) in connection with any sale or lease of the Aircraft. Assignee further agrees that in connection with any disclosures made as contemplated by clauses (ii) (except in connection with the financing contemplated by the Participation Agreement), (iii) (except as to clauses (C) and (E) and (F) of Section 8 of the Participation Agreement) or (iv) of the preceding sentence, Assignee shall instruct the entity to which such information is disclosed to treat such information as confidential on the terms set forth in this Section 12. Section 13. ASSIGNMENT TO MORTGAGEE. The right, title and interest of Assignee in and to this Assignment has been assigned to and is subject to a security interest in favor of Wilmington Trust Company, as Mortgagee under the Trust Indenture, for the benefit of the Noteholders and the Indenture Indemnitees referred to in such Trust Indenture, all to the extent provided in such Trust Indenture. Assignor hereby consents to such assignment and to the creation of such security interest in and to this Assignment. SECTION 14. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. [This space intentionally left blank.] IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement and Engine Warranties Assignment ___ to be duly executed as of the day and year first above written. CONTINENTAL AIRLINES, INC. By Name: Title: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By Name: Title: The undersigned, as Mortgagee for the benefit of the Note Holders and Indenture Indemnitees and as assignee of, and holder of a security interest in, the estate, right, title and interest of Assignee in and to the foregoing Assignment pursuant to the terms of the Trust Indenture agrees to the terms of the foregoing Assignment and agrees that its rights and remedies under the Trust Indenture shall be subject to the terms and conditions of the foregoing Assignment, including Sections 4 and 5 therein, and of the Purchase Agreement and the General Terms Agreement. WILMINGTON TRUST COMPANY, as Mortgagee By__________________________________ Name: Title: MANUFACTURER CONSENT AND AGREEMENT ___ The undersigned, THE BOEING COMPANY, a Delaware corporation, hereby acknowledges notice of and consents to all of the terms of Purchase Agreement and Engine Warranties Assignment ___ (herein called the "Assignment") (the defined terms therein being hereinafter used with the same meanings unless otherwise defined herein) between Continental Airlines, Inc., as Assignor, and First Security Bank, National Association, as Owner Trustee, as Assignee, and hereby confirms to Assignee that: (i) all representations, warranties, indemnities and agreements of Manufacturer under the Purchase Agreement with respect to the Aircraft shall inure to the benefit of Assignee to the same extent as if originally named the "Buyer" therein, except as provided by Section 2 of the Assignment; (ii) Assignee shall not be liable for any of the obligations or duties of Assignor under the Purchase Agreement, nor shall the Assignment give rise to any duties or obligations whatsoever on the part of Assignee owing to Manufacturer, except as provided in Section 4 of the Assignment; (iii) Manufacturer consents to the lease of the Aircraft by Assignee to Assignor under the Lease, consents to the grant of a security interest in the Aircraft pursuant to the Trust Indenture by Assignee and agrees that the Assignment constitutes an agreement by Assignee as required by Article 10.2 of the Purchase Agreement; and (iv) Manufacturer will continue to pay to Assignor or its order all payments that Manufacturer may be required to make in respect of the Aircraft under the Purchase Agreement unless and until Manufacturer shall have received written notice from Assignee or Mortgagee addressed to its Vice - President - Contracts at P.O. Box 3707, Mail Stop 75-38, Seattle, Washington 98124-2207, if by mail, or to (425) 237-1706, if by facsimile, that a Lease Event of Default has occurred and is continuing, whereupon Manufacturer will not be required to make further inquiry into the content of such notice and will make any and all payments that it may be required thereafter to make in respect of the Aircraft under the Purchase Agreement and the right to receive that has been assigned under the Assignment, directly to Assignee at its address at 79 South Main Street, Salt Lake City, Utah 84111, Attn: Corporate Trust Department (or, so long as the Trust Indenture has not been discharged, directly to Mortgagee at its address at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attn: Corporate Trust Administration), unless and until Manufacturer shall have received notice in writing from Assignee or Mortgagee that no Lease Event of Default is continuing, whereupon Manufacturer shall make all payments that Manufacturer may be required to make in respect of the Aircraft under the Purchase Agreement to Assignor or its order, as aforesaid. Manufacturer hereby represents and warrants that: (i) Manufacturer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) the making and performance of the Purchase Agreement and this Manufacturer Consent and Agreement ___ have been duly authorized by all necessary corporate action on the part of Manufacturer, do not require any stockholder approval and do not contravene Manufacturer's Certificate of Incorporation or by-laws or any indenture, credit agreement or other contractual agreement to which Manufacturer is a party or by which it is bound and the making of the Purchase Agreement and this Manufacturer Consent and Agreement ___, the giving of the warranty obligations thereunder, do not, as to such making or giving, contravene any law binding on Manufacturer; and (iii) the Purchase Agreement constituted, as of the date thereof and at all times thereafter to and including the date of this Manufacturer Consent and Agreement ___, and this Manufacturer Consent and Agreement ___ constitutes, binding obligations of Manufacturer enforceable against Manufacturer in accordance with their respective terms subject to (A) the limitations of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), which principles do not make the remedies available at law or in equity with respect to the Purchase Agreement and this Manufacturer Consent and Agreement ___ inadequate for the practical realization of the benefits intended to be provided thereby. It is understood that the execution of this Manufacturer Consent and Agreement ___ by Manufacturer is subject to the condition that, concurrently with the delivery of the Aircraft to Assignee, Assignee shall lease the Aircraft to Assignor under the Lease. THIS MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL RESPECTS BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF WASHINGTON, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REFERENCE TO CONFLICTS OF LAWS PRINCIPLES. Dated as of ____________. THE BOEING COMPANY By Name: Title: ENGINE MANUFACTURER CONSENT AND AGREEMENT ___ The undersigned, CFM INTERNATIONAL INC., a Delaware corporation, hereby acknowledges notice of and consents to all of the terms of Purchase Agreement and Engine Warranties Assignment ___ (herein called the "Assignment") (the defined terms therein being hereinafter used with the same meanings unless otherwise defined herein) between Continental Airlines, Inc., as Assignor, and First Security Bank, National Association, as Owner Trustee, as Assignee. Under the General Terms Agreement, Engine Manufacturer has agreed to support certain CFM Model ________ engines and spare parts therefor purchased by Assignor from Engine Manufacturer, as installed on certain Boeing Model 737 aircraft. Engine Manufacturer hereby confirms to Assignor and Assignee that the Engine Warranties, as and to the extent that such relate to the Engines, shall inure to the benefit of Assignee (and, so long as the Trust Indenture has not been discharged, Mortgagee) to the same extent as if originally named "Airline" in the General Terms Agreement and to the benefit of Assignor (but only to the extent provided for in the Assignment) in each case subject to the terms and conditions of the Assignment; PROVIDED, that Engine Manufacturer shall not owe any liability or obligation under the Engine Warranties more than once in total. Engine Manufacturer represents and warrants that: 1. It is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware; 2. The making and performance of this Engine Manufacturer Consent and Agreement ___ in accordance with its terms have been duly authorized by all necessary corporate action on the part of Engine Manufacturer, do not require any stockholder approval and do not contravene its Certificate of Incorporation or by-laws or any debenture, credit agreement or other contractual agreement to which Engine Manufacturer is a party or by which it is bound or any law binding on Engine Manufacturer; 3. The making and performance of the Engine Warranties in accordance with their terms have been duly authorized by all necessary corporate action on the part of Engine Manufacturer, do not require any stockholder approval and do not contravene Engine Manufacturer's Certificate of Incorporation or by-laws or any debenture, credit agreement or other contractual agreement to which Engine Manufacturer is a party or by which it is bound, and do not, as to the making thereof, contravene any law binding on Engine Manufacturer, and to the best of its knowledge, do not as to the performance thereof contravene any law binding on Engine Manufacturer; and 4. The Engine Warranties constituted as of the date on which they were made and at all times thereafter to and including the date of this Engine Manufacturer Consent and Agreement ___, and this Engine Manufacturer Consent and Agreement ___ constitute binding obligations of Engine Manufacturer enforceable against Engine Manufacturer in accordance with their respective terms subject to: (a) the limitations of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally; and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). [This space intentionally left blank.] THIS ENGINE MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. Dated as of _____________. CFM INTERNATIONAL, INC. By_____________________________ Name: Title: EXHIBIT A-5 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF LEASED AIRCRAFT TRUST AGREEMENT [FILED SEPARATELY] EXHIBIT A-6 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF SPECIAL INDENTURE [FILED SEPARATELY] EXHIBIT B EXHIBIT B to NOTE PURCHASE AGREEMENT ----------------------- FORM OF DELIVERY NOTICE EXHIBIT B DELIVERY NOTICE Dated as of [__________] To each of the addressees listed in Schedule A hereto RE: DELIVERY NOTICE IN ACCORDANCE WITH NOTE PURCHASE AGREEMENT REFERRED TO BELOW Gentlemen: Reference is made to the Note Purchase Agreement, dated as of [_____________] among Continental Airlines, Inc. (the "COMPANY"), Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements (as defined therein) (the "PASS THROUGH TRUSTEE"), Wilmington Trust Company, as Subordination Agent (the "SUBORDINATION AGENT"), First Security Bank, National Association, as Escrow Agent (the "ESCROW AGENT") and Wilmington Trust Company, as Paying Agent (the "PAYING AGENT") (as in effect from time to time, the "NOTE PURCHASE AGREEMENT"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the Note Purchase Agreement or, to the extent not defined therein, the Intercreditor Agreement. Pursuant to Sections 1(b) of the Note Purchase Agreement, the undersigned hereby notifies you, in respect of the Boeing [_______] aircraft with manufacturer's serial number [______] (the "AIRCRAFT"), of the following: (1) The Company has elected to treat the Aircraft as [a Leased Aircraft] [an Owned Aircraft]; (2) The Scheduled Delivery Date of the Aircraft is [_________]; (3) The Funding Date for the Aircraft shall be [__________]; and (4) The aggregate amount of each series of Equipment Notes to be issued, and purchased by the respective Pass Through Trustees, on the Funding Date, in connection with the financing of such Aircraft is as follows: (a) the Class A Trustee shall purchase Series A Equipment Notes in the amount of $[__________]; (b) the Class B Trustee shall purchase Series B Equipment Notes in the amount of $[__________]; and (c) the Class C Trustee shall purchase Series C Equipment Notes in the amount of $[__________]. The Company hereby instructs the Class A Trustee to (i) execute a Withdrawal Certificate in the form of Annex A hereto dated as of [__________] and attach thereto a Notice of Purchase Withdrawal dated such date completed as set forth on Exhibit A hereto and (ii) deliver such Withdrawal Certificate and Notice of Purchase Withdrawal to the applicable Escrow Agent. The Company hereby instructs the Class B Trustee to (i) execute a Withdrawal Certificate in the form of Annex A hereto dated as of [__________] and attach thereto a Notice of Purchase Withdrawal dated such date completed as set forth on Exhibit B hereto and (ii) deliver such Withdrawal Certificate and Notice of Purchase Withdrawal to the applicable Escrow Agent. The Company hereby instructs the Class C Trustee to (i) execute a Withdrawal Certificate in the form of Annex A hereto dated as of [__________] and attach thereto a Notice of Purchase Withdrawal dated such date completed as set forth on Exhibit C hereto and (ii) deliver such Withdrawal Certificate and Notice of Purchase Withdrawal to the applicable Escrow Agent. The Company hereby instructs each Pass Through Trustee to (i) purchase Equipment Notes of a series and in an amount set forth opposite such Pass Through Trustee in clause (4) above with a portion of the proceeds of the withdrawals of Deposits referred to in the applicable Notice of Purchase Withdrawal referred to above and (ii) re-deposit with the Depositary the excess, if any, of the amount so withdrawn OVER the purchase price of such Equipment Notes. The Company hereby instructs each Pass Through Trustee to (a) enter into the Participation Agreement [____] dated as of [__________] among the Company, as Lessee, the Subordination Agent, the Pass Through Trustee, Wilmington Trust Company, as Mortgagee and Loan Participant, First Security Bank, National Association, as Owner Trustee and [__________], as Owner Participant, (b) perform its obligations thereunder and (c) deliver such certificates, documents and legal opinions relating to such Pass Through Trustee as required thereby. [The Company confirms that the Special Indenture shall be utilized in lieu of the Leased Aircraft Indenture.] The Company hereby certifies that the Owner Participant with respect to the Aircraft (A) is not an Affiliate of the Company and (B) based on the representations of such Owner Participant, is either a Qualified Owner Participant or a person whose obligations under the Owner Participant Agreements (as defined in the Participation Agreement) are guaranteed by a Qualified Owner Participant. Yours faithfully, Continental Airlines, Inc. By:________________________ Name: Title: SCHEDULE A Wilmington Trust Company, as Pass Through Trustee, Subordination Agent and Paying Agent Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: Corporate Trust Administration Facsimile: (302) 651-8882 First Security Bank, National Association, as Escrow Agent 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Department Facsimile: (801) 246-5053 Standard & Poor's Ratings Service 25 Broadway, 16th Floor New York, New York 10004 Attention: Michael K. Vernier Facsimile: (212) 208-0300 Moody's Investors Service, Inc. 99 Church Street New York, New York 10007 Attention: Monica Rodriguez Facsimile: (212) 553-4600 Annex A WITHDRAWAL CERTIFICATE (Class ___) First Security Bank, National Association, as Escrow Agent Ladies and Gentlemen: Reference is made to the Escrow and Paying Agent Agreement, dated as of [_____________] (the "Agreement"). We hereby certify to you that the conditions to the obligations of the undersigned to execute a Participation Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section 1.02(c) of the Agreement, please execute the attached Notice of Withdrawal and immediately transmit by facsimile to the Depositary, at (212) 325-8319. Capitalized terms used herein but not defined herein shall have the meanings set forth in the Agreement. Very truly yours, WILMINGTON TRUST COMPANY not in its individual capacity by solely as Pass Through Trustee By:______________________________ Name: Title: Dated: As of [__________] Exhibit A NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, N.Y. 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: (212) 325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class A) dated as of [_____________] (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $[_______], Account No. [____]. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [___________________] on [__________], upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By _______________________ Name: Title: Dated: As of [__________] Exhibit B NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, N.Y. 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: (212) 325-8319 Gentlemen: Reference is made to the Deposit Agreement (Class B) dated as of [_____________] (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $[_______], Account No. [_____]. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [________________] on [__________], upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By _______________________ Name: Title: Dated: As of [__________] NOTICE OF PURCHASE WITHDRAWAL CREDIT SUISSE FIRST BOSTON New York Branch 11 Madison Avenue New York, N.Y. 10010 Attention: Robert Finney and Charlyn Lusk Telecopier: (212) 325-8319 Gentlemen: Reference is made to (i) the Deposit Agreement (Class C) dated as of [_____________] (the "DEPOSIT AGREEMENT") between First Security Bank, National Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the "DEPOSITARY"). In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned hereby requests the withdrawal of the entire amount of the Deposit, $[________], Account No. [____]. The undersigned hereby directs the Depositary to pay the proceeds of the Deposit to [______________] on [__________], upon the telephonic request of a representative of the Pass Through Trustee. FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Escrow Agent By ________________________ Name: Title: Dated: As of [__________] EXHIBIT C-1 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF OWNED AIRCRAFT PARTICIPATION AGREEMENT [FILED SEPARATELY] EXHIBIT C-2 to NOTE PURCHASE AGREEMENT ----------------------- FORM OF OWNED AIRCRAFT INDENTURE [FILED SEPARATELY] EXHIBIT D to NOTE PURCHASE AGREEMENT ----------------------- SECTION 16. OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE 16.1 GENERAL RIGHT TO RESTRUCTURE Lessee, Loan Participant and each Note Holder agree that after the Delivery Date and subject to the limitations of Section 16.2, the original Owner Participant (or any transferee Owner Participant that is an Affiliate of the original Owner Participant) shall have the right to restructure the Transactions using (a) a "cross-border lease," a tax lease or a head-lease/sublease structure and (b) any other type of transaction, which may involve special structural arrangements, as such Owner Participant may elect (any such structure described above, a "Special Structure"). Any Special Structure may result in additional persons participating in the Transactions, which persons shall agree to provisions comparable to Sections 7.6.4(a) and 7.6.13. Subject to the provisions of Sections 16.2 and 16.3, Lessee, Loan Participant and each Note Holder agree to cooperate in the implementation of any such restructuring and take such action as may reasonably be requested by the original Owner Participant to accomplish such restructuring, including taking such actions as may be reasonable or customary in the type of Special Structure selected. In connection with any proposed Special Structure, Owner Participant shall provide all information reasonably requested by Lessee, Loan Participant or any Note Holder with respect thereto. The original Owner Participant shall be entitled to retain all of the benefits of any such transaction. 16.2 LIMITATIONS ON RESTRUCTURING PROVISIONS; ADDITIONAL TERMS 16.2.1 LESSEE (a) Notwithstanding Section 16.1 or 16.2.1(b), in no event shall any such Special Structure (a) change the terms and conditions of Lessee's rights and obligations, from those which Lessee would otherwise possess or be subject to in the absence of any such Special Structure, in a manner which is materially adverse to Lessee, (b) expose Lessee to any additional risks (including overall tax risks) beyond those to which Lessee would be exposed in the absence of any such Special Structure unless Lessee shall have been indemnified against such additional risks by the original Owner Participant, or other participants in such transaction (so long as such original Owner Participant or other participants shall, as to their creditworthiness at the time any such indemnity is given, be reasonably acceptable to Lessee) in a manner reasonably satisfactory to Lessee. In no event shall Lessee be required to provide an indemnity with respect to any foreign tax benefit of a Special Structure or to indemnify against the failure of a head-lease not to constitute a true lease for U.S. federal income tax purposes. (b) In any Special Structure that may be entered into pursuant to this Section 16, the Termination Values under the Lease (as the same may be restructured) shall not be affected by the termination values under any head-lease, except that any prepayment premiums and any funding or swap breakage costs under such head-lease or similar arrangement will be added in calculating the Termination Values and Stipulated Loss Values under the Lease (as the same may be restructured). Further, upon implementation of any Special Structure, the Stipulated Loss Values payable by Lessee under the Lease (as the same may be restructured) shall in no event be less than the stipulated loss values payable under the applicable head-lease or similar arrangement. 16.2.2 LOAN PARTICIPANT AND CERTIFICATE HOLDERS Notwithstanding Section 16.1, any such Special Structure shall not, and prior to the exercise of its rights thereunder, the Owner Participant shall deliver an officer's certificate to the Pass Through Trustee that provides that any such Special Structure shall not, (a) change the terms and conditions of Loan Participant's, any Note Holder's or any Pass Through Indemnitee's rights and obligations under the Operative Agreements or rights and obligations of holders of Pass Through Certificates, from those which Loan Participant, Note Holders, Pass Through Indemnitees and such Pass Through Certificate holders would otherwise possess or be subject to in the absence of such Special Structure (including, without limitation, the amount and timing of any payment of principal, interest and Make-Whole Amount under the Equipment Notes, the relative rights of the Note Holders with respect to such payments and such holder of Pass Through Certificates and the priority of Mortgagee's Lien on the Trust Indenture Estate under the Trust Indenture) or (b) expose Loan Participant, any such Note Holder, any such Pass Through Indemnitee or any such holder of Pass Through Certificates to any additional risks beyond those to which Loan Participant, such Note Holder, Pass Through Indemnitee or such holder of such Pass Through Certificates would be exposed in the absence of such Special Structure. In addition, in no event shall any Special Structure be permitted unless a written confirmation from the Rating Agencies (as defined in the Note Purchase Agreement) is obtained prior to the implementation of such Special Structure to the effect that such Special Structure will not adversely affect the ratings of the Pass Through Certificates. 16.3 TRANSACTION EXPENSES Whether or not any proposed restructuring transaction under this Section 16 is consummated, the original Owner Participant shall pay (or cause to be paid) the reasonable costs and expenses incurred by all parties in connection therewith; PROVIDED, that, only in connection with a consummated transaction (unless Lessee shall have, by failing to act in good faith, caused a transaction not to be consummated), Lessee shall pay or reimburse such original Owner Participant for the original Owner Participant's reasonable estimate of the costs and expenses that would have been incurred by all parties if the Transactions had been restructured as a head-lease/sublease transaction in which the original Owner Participant, or an Affiliate or designee thereof, were the head-lessee/sublessor and Lessee were the sublessee. EXHIBIT E to NOTE PURCHASE AGREEMENT ----------------------- Section 6.2 may be amended to delete Section 6.2.9 in its entirety.




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     |      CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION         |
     |             SET FORTH IN SECTION 8 OF THIS AGREEMENT                |
     ----------------------------------------------------------------------

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

                          PARTICIPATION AGREEMENT ____
                           Dated as of _______________

                                      Among

                           CONTINENTAL AIRLINES, INC.,
                                     Lessee,

                               [               ],

                               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 Boeing Model _____ Aircraft
                     Bearing Manufacturer's Serial No. ____
                         and U.S. Registration 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.................................   3
     2.2     Nature of Obligations of Participants..........................   3
     2.3     Termination of Obligation to Participate.......................   3

SECTION 3.   COMMITMENT TO LEASE AIRCRAFT...................................   4

SECTION 4.   PROCEDURE FOR PARTICIPATION IN PAYMENT OF
             LESSOR'S COST; POSTPONEMENT OF SCHEDULED
             DELIVERY DATE ................................................    4
     4.1     Notices of Scheduled Delivery Date............................    4
     4.2     Payment of Lessor's Cost......................................    4
     4.3     Postponement of Scheduled Delivery Date.......................    5
     4.4     Closing.......................................................    6

SECTION 5.   CONDITIONS PRECEDENT..........................................    6
     5.1     Conditions Precedent to Obligations of Participants...........    6
     5.2     Conditions Precedent to Obligations of Owner Trustee..........   13
     5.3     Conditions Precedent to Obligations of Mortgagee..............   14
     5.4     Conditions Precedent to Obligations of Lessee.................   15
     5.5     Post-Registration Opinion.....................................   16

SECTION 6.   REPRESENTATIONS AND WARRANTIES................................   16
     6.1     Lessee's Representations and Warranties.......................   16
     6.2     Owner Participant's Representations and Warranties............   20
     6.3     First Security's Representations and Warranties...............   23
     6.4     WTC's Representations and Warranties..........................   26

SECTION 7.   COVENANTS, UNDERTAKINGS AND AGREEMENTS........................   29
     7.1     Covenants of Lessee...........................................   29
     7.2     Covenants of Owner Participant................................   31
     7.3     Covenants of First Security and Owner Trustee.................   34
     7.4     Covenants of WTC..............................................   36
     7.5     Covenants of Note Holders.....................................   37
     7.6     Agreements....................................................   39



SECTION 8.   CONFIDENTIALITY...............................................   46

SECTION 9.   INDEMNIFICATION AND EXPENSES..................................   47
     9.1     General Indemnity.............................................   47
     9.2     Expenses......................................................   54
     9.3     General Tax Indemnity.........................................   55
     9.4     Payments......................................................   66
     9.5     Interest......................................................   66
     9.6     Benefit of Indemnities........................................   67

SECTION 10.  ASSIGNMENT OR TRANSFER OF INTERESTS...........................   67
    10.1     Participants, Owner Trustee and Note Holders..................   67
    10.2     Effect of Transfer............................................   69

SECTION 11.  REFUNDING AND CERTAIN OTHER MATTERS...........................   70
    11.1     Refunding Generally...........................................   70
    11.2     Limitations on Obligation to Refund...........................   72
    11.3     Execution of Certain Documents................................   72
    11.4     ERISA.........................................................   72
    11.5     Consent to Optional Redemptions...............................   73

SECTION 12.  SECTION 1110..................................................   73

SECTION 13.  CHANGE OF CITIZENSHIP.........................................   73
    13.1     Generally.....................................................   73
    13.2     Owner Participant.............................................   74
    13.3     Owner Trustee.................................................   74
    13.4     Mortgagee.....................................................   74

SECTION 14.  CONCERNING OWNER TRUSTEE......................................   75

SECTION 15.  MISCELLANEOUS.................................................   75
    15.1     Amendments....................................................   75
    15.2     Severability..................................................   76
    15.3     Survival......................................................   76
    15.4     Reproduction of Documents.....................................   76
    15.5     Counterparts..................................................   76
    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 - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee and the Loan Participants
EXHIBIT F - Opinion of special counsel to Owner Participant
EXHIBIT G - Opinion of special counsel in Oklahoma City, Oklahoma





                          PARTICIPATION AGREEMENT ____


     PARTICIPATION   AGREEMENT   ____,   dated  as  of   _______________   (this
"Agreement"),  among (a)  CONTINENTAL  AIRLINES,  INC.,  a Delaware  corporation
("Lessee"),  (b) [           ] ("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.  Owner  Participant  and  First  Security,  concurrently  herewith,  are
entering into the Trust Agreement,  pursuant to which, among other things, Owner
Trustee  agrees  to hold  the  Trust  Estate  for the use and  benefit  of Owner
Participant upon and subject to the terms and conditions set forth therein.

     B.  Lessee  and  Airframe  Manufacturer  have  entered  into  the  Purchase
Agreement,  pursuant to which,  among other things,  Airframe  Manufacturer  has
agreed to manufacture  and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.

     C.  On the Delivery  Date,  Lessee  and Owner  Trustee  will enter into the
Purchase Agreement  Assignment,  pursuant to which,  among other things,  Lessee
will assign to Owner  Trustee its right to purchase the Aircraft  from  Airframe
Manufacturer  upon and  subject  to the  terms and  conditions  set forth in the
Purchase Agreement and the Purchase Agreement Assignment.

     D. Pursuant to each of the Pass Through Trust  Agreements,  on the Issuance
Date the Pass Through Trusts were created and the Pass Through Certificates were
issued and sold.



     E. Pursuant to the Note Purchase  Agreement,  each Pass Through Trustee has
agreed to use a portion of the  proceeds  from the issuance and sale of the Pass
Through  Certificates  issued by each Pass  Through  Trust to purchase  from the
Owner Trustee,  on behalf of the related Pass Through Trust,  the Equipment Note
bearing the same interest rate as the Pass Through  Certificates  issued by such
Pass Through Trust.

     F.  Owner  Trustee  and  Mortgagee,  concurrently  with the  execution  and
delivery  hereof,  have entered into the Trust  Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1) to
issue  Equipment  Notes,  in the amounts and  otherwise as provided in the Trust
Indenture,  the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to  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.

     G. On the  Delivery  Date,  Lessor  and  Lessee  will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee  shall lease the  Aircraft  from Lessor upon and subject to the terms
and conditions set forth therein.

     H. 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  Delivery
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 Delivery  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 either  Participant to perform its  obligations  hereunder  shall not
affect the  obligations  of Lessee toward the other  Participant,  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. COMMITMENT TO LEASE AIRCRAFT

     Subject to the terms and conditions of this  Agreement,  concurrently  with
the issuance of the Equipment  Notes on the Delivery  Date,  Owner Trustee shall
purchase and accept  delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase  Agreement  Assignment,  and thereupon  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 DELIVERY DATE

     4.1   NOTICES OF SCHEDULED DELIVERY DATE

     Without limiting its obligations to the Loan Participant under Section 1(b)
of the Note  Purchase  Agreement,  Lessee  agrees  to give  Participants,  Owner
Trustee,  and  Mortgagee  at least  one  Business  Day's  written  notice of the
Scheduled  Delivery  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.  920-1-014363
at The Chase  Manhattan Bank, New York, New York ABA# 021000021  (contact:  Emma
Budget,  tel. (718)  242-3795),  reference  Continental  Lease ___, at or before
12:00 Noon,  New York City time, on the Scheduled  Delivery Date. All such funds
made  available  by each  Participant  to WTC shall,  until  payment  thereof to
Airframe  Manufacturer  and 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  Delivery  Date
pursuant to this Section 4.2, Owner Trustee shall:

           (i) purchase, take title to, and accept delivery of, the Aircraft;

          (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, all or a specified portion of its Commitment



     either to (A) Airframe Manufacturer,  which payments in the aggregate shall
     be equal to Manufacturer's  Purchase Price, by wire transfer of immediately
     available funds to Airframe  Manufacturer's account set forth in Schedule 1
     and (B) Lessee,  which payments in the aggregate shall be equal to Lessor's
     Cost minus  Manufacturer's  Purchase Price, 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 Delivery Date by the terms of any Operative Agreement.

     4.3   POSTPONEMENT OF SCHEDULED DELIVERY DATE

           4.3.1 POSTPONEMENT

     If  for  any  reason  whatsoever  the  Closing  is not  consummated  on the
Scheduled  Delivery Date,  Lessee may,  subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New York City
time (such  telephonic  notice to be promptly  confirmed  in writing by personal
delivery or  facsimile),  on the Scheduled  Delivery  Date to each  Participant,
Owner Trustee and  Mortgagee,  designate a Delayed  Delivery Date, 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  Delivery
Date,  PROVIDED that any funds made available by the Loan  Participant  shall be
returned on such Scheduled Delivery Date.




     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 Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, 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 Sections 5.1.2(iii),  (xv) and
(xxiii)  (H)  shall  not be  conditions  precedent  to the  obligation  of  Loan
Participant and Sections 5.1.15 and 5.1.16 shall not be conditions  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  Delivery 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 Purchase Agreement Assignment;

        (viii) the Consent and Agreement and the Engine Consent and Agreement;

          (ix) the Equipment Notes dated the Delivery Date; PROVIDED,  that only
     the Subordination Agent shall receive the authenticated Equipment Notes;

           (x) an  excerpted  copy   of   the  Purchase  Agreement to the extent
     relating to Airframe  Manufacturer's  or Engine  Manufacturer's  respective
     warranties or related  obligations  or any right in the Purchase  Agreement
     assigned to Owner Trustee  pursuant to the Purchase  Agreement  Assignment;
     PROVIDED,  that only Owner  Trustee and Mortgagee  shall receive  copies of
     such agreements (copies of which may be inspected by Participants and their
     respective  special  counsel on the Delivery  Date,  but after the Delivery
     Date such copies shall be retained by Owner  Trustee and  Mortgagee and may
     be inspected and reviewed by Owner Participant or Loan Participant or their
     respective  counsel  if and  only  if  there  shall  have  occurred  and be
     continuing a Lease Default or Lease Event of Default);

          (xi) the Bills of Sale;

         (xii)  an  invoice  from  Airframe  Manufacturer  to Owner  Trustee  in
     respect of the Aircraft  (except for the BFE)  specifying the amount of the
     Manufacturer's  Purchase  Price and an invoice from Lessee  specifying  the
     amount due to Lessee in respect of the Aircraft and the BFE, which amounts,
     in the aggregate, shall equal Lessor's Cost of the Aircraft;

        (xiii)  an  appointment of authorized  representatives by Owner Trustee,
     and an acceptance  thereof by such  representatives in each case, dated the
     Delivery Date;

         (xiv)  the  broker's  report and  insurance  certificates  required  by
     Section 11 of the Lease;

          (xv)  an appraisal or appraisals from an Appraiser, which appraisal or
     appraisals shall be reasonably  satisfactory in form and substance to Owner




     Participant; PROVIDED, that only Owner Participant and Lessee shall receive
     copies of such appraisal or appraisals;

         (xvi)  (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 Delivery
     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 Delivery 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; and (C)
     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
     Owner  Participant,  First  Security and WTC,  certified as of the Delivery
     Date by the  Secretary  or an  Assistant  or  Attesting  Secretary of Owner
     Participant,  First  Security and WTC,  respectively,  which  authorize the
     execution,  delivery and performance by Owner  Participant,  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;

        (xvii)  an  Officer's  Certificate  of Lessee,  dated as of the Delivery
     Date,  stating that its  representations  and  warranties set forth in this
     Agreement  are true and correct as of the Delivery  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);

       (xviii)  an  Officer's  Certificate  of First  Security,  dated as of the
     Delivery 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  Delivery  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);

         (xix) an  Officer's  Certificate of Owner Participant,  dated as of the
     Delivery Date, stating that its representations and warranties set forth in



     this  Agreement  are true and correct as of the  Delivery  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);

          (xx)  an Officer's Certificate  of WTC, dated as of the Delivery 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 Delivery
     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);

         (xxi) 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;

        (xxii) the Financing Statements;

       (xxiii)  the   following   opinions  of  counsel,  in each case dated the
     Delivery Date:

               (A) an opinion of Hughes Hubbard & Reed LLP,  special  counsel to
          Lessee, substantially in the form of Exhibit A;

               (B) an opinion of Lessee's Legal Department, substantially in the
          form of Exhibit B;

               (C) an opinion of  _____________,  corporate  counsel to Airframe
          Manufacturer, substantially in the form of Exhibit C;

               (D) an opinion  of Ray,  Quinney &  Nebeker,  special  counsel to
          Owner Trustee, substantially in the form of Exhibit D;

               (E) an opinion of _____________, special counsel to Mortgagee and
          the Loan Participants, substantially in the form of Exhibit E;

               (F)  an  opinion  of  _____________,  special  counsel  to  Owner
          Participant, substantially in the form of Exhibit F;

               (G) an  opinion  of Lytle  Soule &  Curlee,  special  counsel  in
          Oklahoma City, Oklahoma, substantially in the form of Exhibit G; and



               (H) an  opinion  of  ___________,  special  tax  counsel to Owner
          Participant,   with  respect  to  certain  tax   consequences  of  the
          transactions   contemplated   hereby;   PROVIDED,   that  only   Owner
          Participant shall receive such opinion;

        (xxiv)   a   copy  of  a  current,   valid   Standard   Certificate   of
     Airworthiness for the Aircraft duly issued by the FAA;

        (xxv)   the   Participants  and  their  respective  counsel  shall  have
     received  copies of such  documents  and  papers as such  Participants  may
     reasonably  request,  other than (A) in the case of the Loan  Participants,
     copies of the Purchase  Agreement,  provided  that special  counsel for the
     Loan Participants may inspect the Purchase Agreement in connection with the
     transactions  contemplated  hereby or as a basis for such counsel's closing
     opinion,  and (B) 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 Delivery  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  Delivery  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  Delivery  Date,  specifying  such
Adverse  Change in Tax Law;  and  failure  to give such  notice on or before the
Delivery 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 Delivery 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 Delivery Date.

           5.1.7 NO EVENT OF DEFAULT

     On the Delivery  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 in accordance with the terms of the Purchase Agreement.

           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 Delivery 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 (or shall be in the  process of being so
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 Delivery
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  Delivery  Date  in  connection  with  the  transactions
contemplated by this Agreement shall have been issued.

           5.1.15 NOTE PURCHASE AGREEMENT

     The conditions  precedent to the obligations of the Loan  Participants  and
the other  requirements  relating to the  Aircraft and the  Equipment  Notes set
forth in the Note Purchase Agreement shall have been satisfied.



           5.1.16 PERFECTED SECURITY INTEREST

     On the Delivery  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.

     5.2   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 Delivery Date is subject to satisfaction
or waiver by Owner Trustee,  on or prior to the Delivery Date, 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  Delivery 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
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the  Delivery  Date,  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 Delivery 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 lease the  Aircraft on the  Delivery  Date is
subject to the  satisfaction  or waiver by Lessee,  on or prior to the  Delivery
Date, 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  Delivery  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 Delivery 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 Delivery 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  Delivery  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 Delivery 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 Delivery 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 the filing of (x) the
FAA Filed Documents and the Financing  Statements (and  continuation  statements
periodically) and (y) 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.

           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 Delivery  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 the Delivery Date,
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 or (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 the date hereof.

           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  jurisdictions  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.

     6.2  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 corporation duly incorporated,  validly existing and
in good standing under the Laws of the OP Jurisdiction,  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 Owner Participant Agreements, and has a tangible net worth
(exclusive of goodwill) greater than $75,000,000.




           6.2.2 CORPORATE AUTHORIZATION

     Owner Participant 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  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  Delivery  Date  of  the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws 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  Delivery  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 Delivery Date, Owner Participant is a Citizen of the United States.

           6.2.7 NO LIENS

     On the  Delivery  Date,  there are no Lessor  Liens  attributable  to Owner
Participant 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  before any court,
governmental body,  arbitration board,  administrative agency or tribunal which,
if determined adversely to Owner Participant,  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
Participant, 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 Delivery 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 Delivery  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 Delivery 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 Delivery Date, Owner Trustee shall have received  whatever title (a)
to the  Aircraft  (other  than  the  BFE)  as  was  conveyed  to it by  Airframe
Manufacturer and (b) to the BFE as was conveyed to it by Lessee.

           6.3.9 NO LIENS; FINANCING STATEMENTS

     On the  Delivery  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 Delivery



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 Delivery
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  Delivery  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
thereof  (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 Lessee and
Mortgagee 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  provide such
additional tax  indemnification as Owner Participant and the Note Holders or the
Pass  Through   Trustees  may   reasonably   request  to  cover  any  additional
unindemnified  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(xxiii)(D)  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 SECURITIES ACT

     Owner  Participant  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
Owner  Participant any  responsibility  with respect to any such offer,  sale or
solicitation by any other party hereto.

           7.2.6 REGARDING THE OWNER TRUSTEE

     Owner Participant will cause 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 Delivery  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 for the transfer of the  interests of each Pass Through  Trustee
in the  Equipment  Notes to the trustee of the Related Trust (as defined in each
Pass Through Trust  Agreement) in accordance with the related Pass Through Trust
Agreement  and 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 (A) 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) any other  provision of the Trust Indenture or Equipment Notes in
a manner that could 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 if 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 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  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 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 Delivery Date;

          (ii) the Owner Trustee and Mortgagee shall have received an opinion of
     counsel (subject to customary  exceptions)  reasonably  satisfactory to the
     Owner Participant addressed to each such party as to the effect that:

               (A) such country would  recognize the Owner  Trustee's  ownership
          interest in the Aircraft;

               (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  and  Mortgagee   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
               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 and Mortgagee, afford such protection).

           7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED

     Notwithstanding  anything  to the  contrary  set  forth  in  any  Operative
Agreement:

     (a)  Except  as set forth in the  Purchase  Agreement  Assignment,  nothing
contained in the  Operative  Agreements  shall  constitute  or be deemed to be a
waiver by Lessee of any rights,  remedies or claims it may have against Airframe
Manufacturer or Engine  Manufacturer or any subcontractor or supplier of either;
and the  Operative  Agreements  do not and shall not be  construed  or deemed to
create any  rights,  waivers,  immunities  or  indemnities  in favor of Airframe
Manufacturer,  Engine  Manufacturer or any  subcontractor  or supplier of either
with respect to any such rights, remedies or claims of Lessee; and

     (b) None of Airframe  Manufacturer,  by its  execution  and delivery of the
Consent and Agreement, and Engine Manufacturer, by its execution and delivery of
the Engine  Consent  and  Agreement,  shall be deemed to have waived any rights,



remedies or claims which Airframe  Manufacturer or Engine  Manufacturer  (or any
subcontractor  or  supplier  of  either),  as the case may be, may have  against
Lessee; and the Operative Agreements do not and shall not be construed or deemed
to create any rights, waivers, immunities or indemnities in favor of Lessee with
respect to any such  rights,  remedies  or claims of  Airframe  Manufacturer  or
Engine Manufacturer (or any subcontractor or supplier of either).

           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
keep  Annexes  B,  C and D and  Schedules  1,  2,  3  and 4 to  the  Lease,  the
Participation Agreement, the Purchase Agreement Assignment 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,  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,  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 or (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;  PROVIDED,  that any and
all  disclosures  permitted by clauses (C),  (D), (E) or (F) 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; and

     (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.

           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;

     (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 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), 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),  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 any Indemnitee (other than the Escrow Agent), to
the extent attributable to the failure of the Escrow Agent to pay funds received



and payable by it in accordance with any Escrow Agreement,  (vi) with respect to
any Indemnitee (other than the Paying Agent), to the extent  attributable to the
failure of the Paying Agent to distribute funds received and distributable by it
in accordance with any Escrow Agreement, (vii) to the extent attributable to the
failure of the  Depositary  to pay funds  payable by it in  accordance  with any
Deposit Agreement,  (viii) 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,
(ix) 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,  (x) 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,  (xi) 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,  (xii)  with  respect  to the  Escrow  Agent,  to the  extent
attributable to the negligence or willful  misconduct of the Escrow Agent in the
payment  of funds  received  and  payable  by it in  accordance  with any Escrow
Agreement,  and  (xiii)  with  respect  to  the  Paying  Agent,  to  the  extent
attributable to the negligence or willful  misconduct of the Paying Agent in the
distribution  of funds received and  distributable  by it in accordance with any
Escrow Agreement.

     (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 Owner  Trustee,  or any  related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);

     (o) For any Lessor  Lien  attributable  to such  Indemnitee  or any related
Indemnitee;

     (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) 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; or

     (r) To the extent incurred by or asserted against an Indemnitee as a result
of any "prohibited  transaction",  within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code.

     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 or a successor or permitted  assignee of
any of the foregoing.

           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 Delivery  Date). If so submitted and approved,
the Owner Participant agrees promptly,  but in any event no later than the 105th
day after the Delivery  Date, to pay (but not in excess of 2% of Lessor's  Cost)
Transaction Expenses.  Notwithstanding the foregoing,  Lessee at its sole option
shall have the right to pay directly any and all  Transaction  Expenses.  Lessee
shall be obligated to pay directly any and all Transaction Expenses which are in
excess  of 2% 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,  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.



           9.2.3 PAYMENTS IF TRANSACTIONS DO NOT CLOSE

     In the event that the  transaction  contemplated by this Agreement fails to
close  as a  result  of the  Owner  Participant's  failure  to  comply  with its
obligations  under this Agreement or any breach of a representation  or warranty
of  Owner   Participant  made  in  or  pursuant  to  any  Operative   Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant,  the Owner Participant will be responsible for all of
its fees and  expenses,  including  but not  limited to the fees,  expenses  and
disbursements  of its special counsel and the fees of the Appraiser  referred to
in Section 5.1.2(xv).

     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 Loan Trustee  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, (B) a transfer pursuant to an exercise of
remedies  upon a Lease Event of Default  that shall have  occurred and have been
continuing, or (C) a transfer to Lessee pursuant to Section 17.3 of the Lease);

     (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

     Any payments  made  pursuant to Section 9.1 or 9.3 shall be due on the 60th
day after 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) Lessee shall not be obligated to pay any greater amount or incur
     any greater obligation than that which it would have been obliged to pay or
     incur under the Lease or other Lessee Operative Agreement if no transfer or
     assignment had taken place,  and 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  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 that such transfer
     will not violate the Act, the  registration  provisions  of the  Securities
     Act, or any other applicable Federal law;

          (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,  a commercial  air  carrier,  a commercial  aircraft  operator,  a
     freight  forwarder 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 Participant or Note
Holder,  shall be deemed to have  paid its  ratable  portion  of  Lessor's  Cost
previously made by Owner Participant or Loan Participant,  respectively,  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 foregoing,  Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:

     (a) If such  transaction  would  have,  or creates a  material  risk of, an
adverse tax consequence to Owner  Participant  unless Lessee agrees to indemnify
Owner Participant against such adverse tax consequence;

     (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 shall have occurred and be continuing; or

     (d) If  there  shall  have  previously  been  consummated  three  refunding
transactions at Lessee's request pursuant to this Section 11.

     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 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.

     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, the Escrow Agent and the Paying
Agent,  each of which is an intended third party beneficiary with respect to the
provisions of Section 9.1) 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,  the Escrow Agent and the Paying Agent, with respect to the provisions
of Section 9.1) 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:




                                            _____________________,
                                              Owner Participant



                                            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-
                                              1A-0



                                            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-
                                              1B-0



                                            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-
                                              1C-0



                                            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
     (including,  without  limitation,  in the case of each Pass  Through  Trust
     Agreement, the "Related Pass Through Trust Agreement" as defined therein);

          (iv) any provision of any Law includes any such  provision as amended,
     modified,  supplemented,  substituted,  reissued or reenacted  prior to the
     Delivery Date, and thereafter from time to time;

           (v) the words  "Agreement,"  "this  Agreement,"  "hereby,"  "herein,"
     "hereto," "hereof" and "hereunder" and words of similar import when used in
     any Operative  Agreement  refer to such Operative  Agreement as a whole and
     not to any particular provision of such Operative Agreement;

          (vi)  the  words   "including,"   "including,   without   limitation,"
     "including,  but not  limited  to," and terms or phrases of similar  import
     when used in any Operative Agreement,  with respect to any matter or thing,
     mean including, without limitation, such matter or thing; and




         (vii)  a "Section,"  an  "Exhibit,"  an "Annex" or a "Schedule"  in any
     Operative  Agreement,  or in any annex thereto, is a reference to a section
     of, or an exhibit,  an annex or a schedule to, such Operative  Agreement or
     such annex, respectively.

     (b) Each  exhibit,  annex  and  schedule  to each  Operative  Agreement  is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.

     (c) Unless otherwise defined or specified in any Operative  Agreement,  all
accounting  terms therein shall be construed and all  accounting  determinations
thereunder shall be made in accordance with GAAP.

     (d) Headings used in any Operative  Agreement are for convenience  only and
shall not in any way affect the construction of, or be taken into  consideration
in interpreting, such Operative Agreement.

     (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 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 Owner Participant or Lessee,  respectively,  or any other
officer of Owner Participant or Lessee, respectively,  having responsibility for



the transactions contemplated by the Operative Agreements; PROVIDED that each of
Lessee,  Owner Participant,  Owner Trustee and Mortgagee shall be deemed to have
"Actual Knowledge" of any matter as to which it has received notice from Lessee,
Owner  Participant,  any Note Holder,  Owner Trustee or  Mortgagee,  such notice
having been given pursuant to Section 15.7 of the Participation Agreement.

     "ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.

     "ADVERSE CHANGE IN TAX LAW" means (a) for Lessee,  a Change in Tax Law that
Lessee regards as one that could adversely  affect the economic  consequences of
the  transactions  contemplated  by the  Participation  Agreement  and the other
Operative   Agreements   that  are  anticipated  by  Lessee  or  (b)  for  Owner
Participant,  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.

     "AIRCRAFT" means, collectively, the Airframe and Engines.

     "AIRCRAFT  BILL OF SALE" means the full  warranty bill of sale covering the
Aircraft  delivered by Airframe  Manufacturer  to Owner  Trustee on the Delivery
Date.

     "AIRCRAFT  DOCUMENTS" means all technical data,  manuals and log books, and
all inspection,  modification  and overhaul  records and other service,  repair,
maintenance and technical  records that are required by the FAA (or the relevant
Aviation  Authority),  to be maintained with respect to the Aircraft,  Airframe,



Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations,  and in each case in
whatever form and by whatever means or medium  (including,  without  limitation,
microfiche,  microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee  (PROVIDED,  that all such materials shall
be maintained in the English language).

     "AIRFRAME" means (a) the aircraft  (excluding  Engines or engines from time
to time installed thereon)  manufactured by Airframe Manufacturer and identified
by Airframe  Manufacturer's model number,  United States registration number and
Airframe  Manufacturer's  serial number set forth in Lease  Supplement No. 1 and
any Replacement  Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe,  and any and all Parts removed from
such  airframe,  unless  title to such  Parts  shall  not be vested in Lessor in
accordance  with Section 8.1 and Annex C of the Lease.  Upon  substitution  of a
Replacement  Airframe under and in accordance with the Lease,  such  Replacement
Airframe  shall become  subject to the Lease and shall be the "Airframe" for all
purposes  of the Lease and the other  Operative  Agreements  and  thereupon  the
Airframe  for which the  substitution  is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."

     "AIRFRAME MANUFACTURER" means The Boeing Company, a Delaware corporation.

     "AMORTIZATION  AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date,  the amount  determined by  multiplying  the  percentage set forth
opposite such Payment Date on the  Amortization  Schedule by the Original Amount
of such Equipment Note.

     "AMORTIZATION  SCHEDULE"  means,  with respect to each Equipment  Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.

     "APPRAISER"  means  a  firm  of  internationally  recognized,   independent
aircraft appraisers.

     "AVERAGE LIFE DATE" for any Equipment  Note shall be the date which follows
the time of  determination  by a period equal to the Remaining  Weighted Average
Life of such Equipment Note.  "Remaining  Weighted Average Life" on a given date
with  respect  to any  Equipment  Note  shall be the number of days equal to the
quotient  obtained by dividing (a) the sum of each of the  products  obtained by



multiplying (i) the amount of each then remaining scheduled payment of principal
of such  Equipment  Note by (ii) the  number  of days  from and  including  such
determination  date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then  outstanding  principal  amount of such
Equipment Note.

     "AVIATION  AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.

     "BANKRUPTCY  CODE" means the United States  Bankruptcy  Code, 11 U.S.C. ss.
101 ET SEQ.

     "BASE  LEASE  TERM"  means  the  period  beginning  on  and  including  the
Commencement  Date and ending on the Scheduled  Expiration Date, or such earlier
date on which the Term  terminates  in  accordance  with the  provisions  of the
Lease.

     "BASIC  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.

     "BFE" means all appliances, parts, instruments, appurtenances, accessories,
furnishings  or other  equipment  of  whatever  nature  sold by  Lessee to Owner
Trustee pursuant to the BFE Bill of Sale.

     "BFE AMOUNT"  means the amount paid by Owner  Trustee to Lessee to purchase
the BFE, and is designated  by Dollar amount in Schedule 3 to the  Participation
Agreement.

     "BFE BILL OF SALE" means the full  warranty bill of sale executed by Lessee
in favor of Owner Trustee, dated the Delivery Date, identifying and covering the
BFE.



     "BILLS OF SALE" means the FAA Bill of Sale,  the Aircraft  Bill of Sale and
the BFE 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  closing  of  the  transactions  contemplated  by the
Participation Agreement on the Delivery Date.

     "CODE" means the Internal Revenue Code of 1986, as amended;  PROVIDED, that
when used in relation to a Plan,  "Code" shall mean the Internal Revenue Code of
1986 and any  regulations and rulings issued  thereunder,  all as amended and in
effect from time to time.

     "COMMENCEMENT DATE" is defined in Schedule 1 to the Lease.




     "COMMITMENT" means, for any Participant, the amount of its participation in
the payment of Lessor's Cost.

     "COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation
Agreement.

     "CONSENT  AND  AGREEMENT"  means the  Manufacturer  Consent  and  Agreement
________,  dated as of even date with the Participation  Agreement,  of Airframe
Manufacturer.

     "CONTINUOUS  STAY  PERIOD"  is  defined  in  Section  4.04(a)  of the Trust
Indenture.

     "CORPORATE  TRUST   DEPARTMENT"  or  "TRUST  OFFICE"  means  the  principal
corporate  trust  office  of Owner  Trustee  located  from time to time at Owner
Trustee's  address for notices under the  Participation  Agreement or such other
office at which Owner  Trustee's  corporate trust business shall be administered
which  Owner  Trustee  shall  have  specified  by notice in  writing  to Lessee,
Mortgagee and each Note Holder.

     "CORPORATE TRUST OFFICE" means the 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  DELIVERY  DATE" means a delayed  Delivery  Date  notified to each
Participant,  Owner Trustee and  Mortgagee by Lessee  pursuant to Section 4.3 of
the Participation Agreement, which delayed Delivery Date shall be a Business Day
not later than the Commitment Termination Date.

     "DELIVERY DATE" means the Business Day specified in Lease  Supplement No. 1
as the date on which,  among other  things,  the  Aircraft is  delivered  to and
accepted by Lessee under the Lease and the Closing occurs.

     "DEPOSIT  AGREEMENT" means each of the three Deposit Agreements between the
Depositary and the Escrow Agent,  dated as of the Issuance  Date,  each of which
relates to one of the Pass Through  Trusts,  PROVIDED  that, for purposes of any
obligation  of  Lessee,   no  amendment,   modification  or  supplement  to,  or
substitution  or replacement  of, any such Deposit  Agreement shall be effective
unless consented to by Lessee.

     "DEPOSITARY"  means  Credit  Suisse  First  Boston,  New  York  branch,  as
Depositary under each Deposit Agreement.

     "DOLLARS,"  "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.

     "DOT" means the  Department of  Transportation  of the United States or any
Government   Entity   succeeding  to  the   functions  of  such   Department  of
Transportation.

     "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 CONSENT AND AGREEMENT"  means the Engine  Manufacturer  Consent and
Agreement   _______________  dated  as  of  even  date  with  the  Participation
Agreement, of Engine Manufacturer.

     "ENGINE  MANUFACTURER" means [CFM INTERNATIONAL,  A DELAWARE  CORPORATION.]
[GENERAL  ELECTRIC  COMPANY,  A  NEW  YORK  CORPORATION.]  [ROLLS-ROYCE  PLC,  A
CORPORATION ORGANIZED UNDER THE LAWS OF ENGLAND.]

     "EQUIPMENT  NOTE  REGISTER"  is  defined  in  Section  2.07  of  the  Trust
Indenture.

     "EQUIPMENT  NOTES" means and includes any equipment  notes issued under the
Trust  Indenture in the form specified in Section 2.01 thereof (as such form may
be varied  pursuant to the terms of the Trust  Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.

     "ERISA" means the Employee  Retirement  Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.

     "ESCROW AGENT" means First Security Bank, National  Association,  as Escrow
Agent under each of the Escrow Agreements.




     "ESCROW  AGREEMENT"  means  each  of the  three  Escrow  and  Paying  Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass  Through  Certificates  named  therein  and one of the Pass  Through
Trustees,  dated as of the Issuance  Date,  each of which  relates to one of the
Pass Through Trusts, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of, any
such Escrow Agreement shall be effective unless consented to by Lessee.

     "EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.

     "EVENT OF LOSS"  means,  with  respect  to the  Aircraft,  Airframe  or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:

     (a)  the  destruction  of such  property,  damage to such  property  beyond
          economic  repair or rendition of such property  permanently  unfit for
          normal use by Lessee;

     (b)  the actual or  constructive  total loss of such property or any damage
          to such  property,  or  requisition  of title or use of such property,
          which results in an insurance settlement with respect to such property
          on the basis of a total  loss or  constructive  or  compromised  total
          loss;

     (c)  any theft, hijacking or disappearance of such property for a period of
          180 consecutive days or more;

     (d)  any  seizure,  condemnation,   confiscation,   taking  or  requisition
          (including loss of title) of such property by any Government Entity or
          purported  Government  Entity  (other than a  requisition  of use by a
          Permitted  Government  Entity) for a period  exceeding 180 consecutive
          days or, if earlier, at the end of the Term;

     (e)  any seizure, condemnation,  confiscation, taking or requisition of use
          of such property by any  Permitted  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 two  consecutive  years,  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 two-year  period,  shall have
          conformed  at least  one  unit of such  property  in its  fleet to the
          requirements of any such law, rule, regulation,  order or other action
          and commenced regular  commercial use of the same 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 three years or such use shall be prohibited
          at the expiration of the Term.

     "EXCLUDED  PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in  respect  of Owner  Participant,  or Owner  Trustee  in its  individual
capacity,  their  respective  Affiliates,  successors and permitted  assigns and
their directors,  officers, employees, servants and agents pursuant to 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.

     "EXPENSES" means any and all  liabilities,  obligations,  losses,  damages,
settlements,   penalties,   claims,   actions,   suits,   costs,   expenses  and
disbursements (including, without limitation,  reasonable fees and disbursements
of legal counsel,  accountants,  appraisers,  inspectors or other professionals,
and costs of investigation).

     "FAA" means the Federal Aviation Administration of the United States or any
Government   Entity  succeeding  to  the  functions  of  such  Federal  Aviation
Administration.

     "FAA BILL OF SALE" means a bill of sale for the  Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Delivery Date by Airframe Manufacturer.

     "FAA FILED  DOCUMENTS"  means the Lease,  Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement,  the FAA
Bill of Sale and an application for registration of the Aircraft with the FAA in
the name of Owner Trustee.

     "FAA  REGULATIONS"  means  the  Federal  Aviation   Regulations  issued  or
promulgated pursuant to the Act from time to time.

     "FAIR MARKET  RENTAL  VALUE" means the fair market  rental value in Dollars
for the  Aircraft  that would apply in an  arm's-length  transaction  between an
informed and willing  lessee under no compulsion  to lease,  and an informed and
willing  lessor under no compulsion to lease,  the Aircraft,  for the applicable
Renewal  Lease Term,  assuming  that (a) the  Aircraft  has been  maintained  in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any




such Renewal Lease Term on the same terms and conditions as are set forth in the
Lease with respect to the Base Lease Term.

     "FAIR  MARKET SALES VALUE" means the fair market sales value in Dollars for
the Aircraft that would apply in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, the Aircraft,  in a transaction that would close on
or about the relevant time of determination,  assuming that (a) the Aircraft has
been  maintained in accordance  with,  and is in the condition  required by, the
Lease and (b) the Aircraft would be delivered to such informed and willing buyer
in the return condition required by the Lease.

     "FINANCING STATEMENTS" means, collectively,  UCC-1 (and, where appropriate,
UCC-3) financing  statements (a) covering the Trust Indenture  Estate,  by Owner
Trustee,  as debtor,  showing Mortgagee as secured party, for filing in Utah and
each other  jurisdiction  that,  in the opinion of  Mortgagee,  is  necessary to
perfect its Lien on the Trust  Indenture  Estate and (b)  covering the Lease and
the Aircraft,  as a precautionary  matter, by Lessee,  as lessee,  showing Owner
Trustee as lessor and  Mortgagee  as  assignee of Owner  Trustee,  for filing in
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.

     "FIXED  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.

     "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
Purchase  Agreement,   the  Purchase  Agreement  Assignment,   the  Consent  and
Agreement,  the Engine  Consent and  Agreement,  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,
(vi) the Paying Agent,  (vii) the Escrow Agent and (viii) each of the respective



directors,  officers,  employees,  agents and  servants  of each of the  persons
described in clauses (i) through (vii) inclusive above.

     "INTERCREDITOR  AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustees,  the Liquidity 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.

     "INTERIM  LEASE  TERM" means the period  commencing  on and  including  the
Delivery  Date,  and ending on and including the day  immediately  preceding the
Commencement  Date  or such  earlier  date  on  which  the  Term  terminates  in
accordance with the provisions of the Lease.

     "INTERIM RENT" is defined in Schedule 1 to the Lease.

     "IRS"  means the  Internal  Revenue  Service  of the  United  States or any
Government Entity succeeding to the functions of such Internal Revenue Service.

     "ISSUANCE DATE" means February 20, 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
Delivery 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 BFE Bill of Sale, the
Purchase  Agreement  Assignment and each other agreement  between Lessee and any
other  party  to the  Participation  Agreement,  relating  to the  Transactions,
delivered on the Delivery Date.

     "LESSEE PERSON" means Lessee, any sublessee,  assignee,  successor or other
user or person in  possession  of the  Aircraft,  Airframe  or an Engine with or
without color of right, or any Affiliate of any of the foregoing  (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly  by or  through  any of the  persons  in  this  parenthetical,  but not
excluding  any  Person  claiming  directly  or  indirectly  through or under the
Lease).

     "LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation Agreement.

     "LESSOR" means Owner Trustee in its capacity as lessor under the Lease.

     "LESSOR  LIEN"  means,  with  respect  to any  person and in respect of any
property (including,  without limitation,  the Trust Estate, the Trust Indenture
Estate, the Aircraft,  Airframe,  Engines,  Parts or Aircraft  Documents) or any
payments,  any Lien on such  property or  payments  which (a) arises from claims
against  such  person (if such  person is a trustee,  whether in its  individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements,  (b) results from acts or omissions of
such person (if such person is a trustee,  whether in its individual capacity or
in its capacity as a trustee) in violation of such  person's  obligations  under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated  by the Operative  Agreements,  (c) is imposed as a result of Taxes
against  such  person (if such  person is a trustee,  whether in its  individual
capacity or in its capacity as a trustee) or any of its  Affiliates not required
to be indemnified  by Lessee under the  Participation  Agreement,  or (d) claims
against  such person  arising out of any transfer by such person of its interest
in the  Aircraft,  the Trust Estate or the  Operative  Agreements,  other than a
Transfer  permitted by the terms of the Operative  Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.

     "LESSOR'S COST" means the aggregate of the amounts paid by Owner Trustee to
Airframe  Manufacturer  and Lessee to purchase  the Aircraft and BFE pursuant to



the  Purchase  Agreement  Assignment  and the  Participation  Agreement,  and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.

     "LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,  lease
or security interest affecting the title to or any interest in property.

     "LIQUIDITY   FACILITIES"   means  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  AIG  Matched   Funding  Corp.,  a  Delaware
corporation, as 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.

     "MANUFACTURER'S PURCHASE PRICE" means the amount required to be paid to the
Airframe  Manufacturer  to  purchase  the  Aircraft  pursuant  to  the  Purchase
Agreement Assignment.

     "MATERIAL  ADVERSE  CHANGE" means,  with respect to any person,  any event,
condition or circumstance  that  materially and adversely  affects such person's
business  or  consolidated  financial  condition,  or its  ability to observe or
perform  its  obligations,   liabilities  and  agreements  under  the  Operative
Agreements.




     "MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the Lease.

     "MOODY'S" means Moody's Investors Service, Inc.

     "MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.

     "MORTGAGEE" means Wilmington Trust Company, a Delaware banking corporation,
not in its  individual  capacity  but  solely  as loan  trustee  under the Trust
Indenture.

     "MORTGAGEE AGREEMENTS" means,  collectively,  the Participation  Agreement,
the Trust  Indenture and each other  agreement  between  Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Delivery Date.

     "MORTGAGEE  EVENT"  means (i) in the event of a  reorganization  proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such  proceeding  or  the  Lessee  not  assuming  or  agreeing  to  perform  its
obligations  under the Lease,  as  contemplated  under Section 1110,  during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy  Code) or (B) at any
time after agreeing to perform or assuming such obligations, such trustee or the
Lessee ceasing to perform such  obligations  with the result that the Continuous
Stay Period comes to an end or (ii) either the Equipment Notes shall have become
due and payable  pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee
has taken  action or notified  Owner  Trustee  that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise  commence the exercise of
any  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 Delivery  Date,  as such  assumptions  may be adjusted for events that
have been the basis for  adjustments to Basic Rent pursuant to Section  3.2.1(b)
of the Lease or events giving rise to indemnity  payments  pursuant to Section 5
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.

     "NOTE PURCHASE  AGREEMENT" means the Note Purchase  Agreement,  dated as of
the Issuance Date, among Continental  Airlines,  Inc., the Subordination  Agent,
the Escrow Agent,  the Paying Agent and the Pass Through Trustee under each Pass
Through Trust Agreement providing for, among other things, the issuance and sale
of certain equipment notes.

     "OFFICER'S CERTIFICATE" means, in respect of any party to the Participation
Agreement,  a  certificate  signed  by the  Chairman,  the  President,  any Vice
President  (including  those  with  varying  ranks  such as  Executive,  Senior,
Assistant  or Staff Vice  President),  the  Treasurer  or the  Secretary of such
party.

     "OPERATIVE AGREEMENTS" means,  collectively,  the Participation  Agreement,
the  Trust  Agreement,  the  Purchase  Agreement  Assignment,  the  Consent  and
Agreement,  the Engine Consent and Agreement, the Lease, Lease Supplement No. 1,
the Trust Indenture, the initial Trust Indenture Supplement,  the Bills of Sale,
the Tax Indemnity Agreement and the Equipment Notes.




     "OPERATIVE  INDENTURES" means each of the indentures under which notes have
been issued and  purchased  by the Pass  Through  Trustees  pursuant to the Note
Purchase Agreement.

     "OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.

     "ORIGINAL  AMOUNT,"  with  respect to an Equipment  Note,  means the stated
original  principal  amount of such  Equipment  Note and,  with  respect  to all
Equipment Notes,  means the aggregate stated original  principal  amounts of all
Equipment Notes.

     "OWNER PARTICIPANT" means the person executing the Participation  Agreement
as "Owner  Participant"  or, if a second person  becomes an "Owner  Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED  that if an  Owner  Participant  Transfers  100% of its  interest  to a
successor  Owner   Participant,   such  transferring   Owner  Participant  shall
thereafter no longer be considered an "Owner Participant".

     "OWNER  PARTICIPANT  AGREEMENTS"  means,  collectively,  the  Participation
Agreement,  the Tax  Indemnity  Agreement,  the Trust  Agreement  and each other
agreement  between Owner  Participant  and any other party to the  Participation
Agreement relating to the Transactions, delivered on the Delivery Date.

     "OWNER  PARTICIPANT'S  PERCENTAGE"  means the  percentage  of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.

     "OWNER TRUSTEE" means First Security Bank, National Association, a national
banking  association,  not in  its  individual  capacity,  except  as  expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.

     "OWNER  TRUSTEE   AGREEMENTS"   means,   collectively,   the  Participation
Agreement,  the Lease,  Lease Supplement No. 1, the Trust  Agreement,  the Trust
Indenture,  the initial Trust Indenture  Supplement,  the Equipment  Notes,  the
Purchase  Agreement  Assignment,  and each other agreement between Owner Trustee
and  any  other  party  to  the   Participation   Agreement,   relating  to  the
Transactions, delivered on the Delivery Date.

     "PARTICIPANTS"  means,  collectively,   Owner  Participant  and  each  Loan
Participant and  "Participant"  means Owner  Participant or a Loan  Participant,
individually.

     "PARTICIPATION  AGREEMENT" means the Participation  Agreement _____________
dated as of _____________ among Lessee,  Owner Participant,  Owner Trustee,  the
Pass Through Trustees, Subordination Agent and Mortgagee.




     "PARTS"   means   all   appliances,    parts,   components,    instruments,
appurtenances,  accessories,  furnishings, seats and other equipment of whatever
nature  (other than (a) Engines or engines,  and (b) any items  leased by Lessee
from a third party other than Lessor)),  that may from time to time be installed
or incorporated in or attached or appurtenant to the Airframe or any Engine.

     "PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the Note
Purchase  Agreement,  the  Deposit  Agreements,   the  Escrow  Agreements,   the
Intercreditor  Agreement,  the Liquidity Facilities and the Fee Letters referred
to in  Section  2.03 of  each of the  Liquidity  Facilities,  PROVIDED,  that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective  for  purposes of any  obligation  of Lessee,
unless consented to by Lessee.

     "PASS THROUGH  CERTIFICATES" means the pass through  certificates issued by
the Pass Through Trusts (and any other pass through  certificates for which such
pass through certificates may be exchanged).

     "PASS THROUGH  INDEMNITEES"  means (i) the Subordination  Agent, the Paying
Agent, the Escrow Agent, the Liquidity 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 Pass Through
Trustee.

     "PASS THROUGH TRUSTEE" means  Wilmington Trust Company,  a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.

     "PASS THROUGH TRUSTEE  AGREEMENTS" means the Participation  Agreement,  the
Pass  Through  Trust  Agreements,  the  Note  Purchase  Agreement,  the  Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.




     "PAYMENT  DATE"  means  each  March 15 and  September  15 during  the Term,
commencing with the first such date to occur after the Commencement Date.

     "PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.

     "PAYMENT  PERIOD" means each of the consecutive  semiannual  periods during
the Term  ending on a Payment  Date,  the first such  period  commencing  on and
including the Commencement Date.

     "PAYING AGENT" means Wilmington  Trust Company,  as Paying Agent under each
of the Escrow Agreements.

     "PERMITTED AIR CARRIER" means (i) any manufacturer of airframes or aircraft
engines,  or any Affiliate of a manufacturer  of airframes or aircraft  engines,
(ii) any Permitted Foreign Air Carrier,  (iii) any person approved in writing by
Lessor or (iv) any U.S. Air Carrier.

     "PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.

     "PERMITTED  FOREIGN AIR CARRIER"  means any air carrier with its  principal
executive  offices in any  Permitted  Country and which is authorized to conduct
commercial  airline  operations  and to  operate  jet  aircraft  similar  to the
Aircraft under the applicable Laws of such Permitted Country.

     "PERMITTED  GOVERNMENT  ENTITY"  means (i) the U.S.  Government or (ii) any
Government  Entity  if the  Aircraft  is then  registered  under the laws of the
country of such Government Entity.

     "PERMITTED  INSTITUTION"  means  (a) any  bank,  trust  company,  insurance
company,  financial  institution or corporation  (other than,  without  Lessee's
consent,  a commercial air carrier, a commercial  aircraft  operator,  a freight
forwarder or Affiliate  of any of the  foregoing),  in each case with a combined
capital and surplus or net worth of at least $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.

     "PTT  PERCENTAGE"  means,  with respect to each Pass Through  Trustee,  the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.

     "PURCHASE  AGREEMENT"  means the Purchase  Agreement _____ between Airframe
Manufacturer  and Lessee  (including  all exhibits  thereto,  together  with all
letter  agreements  entered  into that by their  terms  constitute  part of such
Purchase  Agreement),  to the extent assigned pursuant to the Purchase Agreement
Assignment.

     "PURCHASE  AGREEMENT  ASSIGNMENT"  means the Purchase  Agreement and Engine
Warranties  Assignment  _____,  dated as of even  date  with  the  Participation
Agreement, between Lessee and Owner Trustee.

     "PURCHASE  DATE" means the last  Business Day of the Base Lease Term or any
Renewal Lease Term, as specified in any Purchase Notice.

     "PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.

     "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, collectively, the Fixed Renewal Lease Terms and
the Subsequent Renewal Lease Terms, in each case, if any.

     "RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.

     "RENEWAL RENT" for the Aircraft means the rent payable  therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.

     "RENT"  means,  collectively,  Interim Rent,  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 DELIVERY DATE" means the expected Delivery Date notified to each
Participant,  Owner Trustee and  Mortgagee by Lessee  pursuant to Section 4.1 of
the  Participation  Agreement,  which expected Delivery Date shall be a Business
Day not later than the Commitment Termination Date.

     "SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.

     "SCHEDULED  RENEWAL TERM  EXPIRATION  DATE" means, in the case of the first
Fixed Renewal Lease Term,  the second  anniversary  of the Scheduled  Expiration
Date, in the case of the second Fixed Renewal Lease Term, the fourth anniversary
of the  Scheduled  Expiration  Date and, in the case of any  Subsequent  Renewal
Lease Term, the day preceding the first  anniversary of the commencement date of
such Subsequent Renewal Lease Term.

     "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
Interim Rent,  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.

     "STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the
Base Lease Term,  the amount  determined by  multiplying  (i) the percentage set



forth in Schedule 3 to the Lease (as  adjusted  from time to time in  accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's  Cost and (b) during any  Renewal  Lease  Term,  the amount  determined
pursuant  to  Section  17.2.3  of the  Lease.  Notwithstanding  anything  to the
contrary in any  Operative  Agreement,  Stipulated  Loss Value  shall  always be
sufficient to pay in full, as of the date of payment  thereof  (assuming  timely
payment  of the  Equipment  Notes  prior to such  date),  the  aggregate  unpaid
principal  amount of all Equipment Notes  outstanding as of such date,  together
with accrued and unpaid interest on all such Equipment Notes as of such date.

     "STIPULATED  LOSS VALUE DATE" means,  for any month,  the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business  Day, the
immediately succeeding Business Day.

     "SUBORDINATION  AGENT" means  Wilmington  Trust Company,  as  subordination
agent under the Intercreditor Agreement.

     "SUBORDINATION  AGENT AGREEMENTS" means the  Participation  Agreement,  the
Liquidity Facilities and the Intercreditor Agreement.

     "SUBSEQUENT  RENEWAL  LEASE  TERM"  means  each term for which the Lease is
extended by Lessee, if any, after the second Fixed Renewal Lease Term.

     "SUPPLEMENTAL   RENT"   means,   without   duplication   (a)  all  amounts,
liabilities, indemnities and obligations (other than Interim Rent, Basic Rent or
Renewal Rent but including  Make-Whole  Amount,  if any) that Lessee  assumes or
becomes obligated to or agrees to pay under any Lessee Operative Agreement to or
on behalf of Lessor or any other person, including, without limitation, payments
of Stipulated Loss Value,  Termination  Value and payments of indemnities  under
Section 9 of the Participation  Agreement,  but excluding any amount as to which
Lessee is  obligated  to pay a pro rata  share  pursuant  to clause  (e) of this
definition,  (b) (i) to the extent  not  payable  (whether  or not in fact paid)
under  Section 6(a) of the Note Purchase  Agreement (as  originally in effect or
amended with the consent of the Owner  Participant),  an amount or amounts equal
to the  fees  payable  to the  Liquidity  Provider  under  Section  2.03 of each
Liquidity  Facility and the related Fee Letter (as defined in the  Intercreditor
Agreement)  multiplied  by a fraction  the  numerator of which shall be the then
outstanding aggregate principal amount of the Series A Equipment Notes, Series B
Equipment  Notes and Series C Equipment Notes and the denominator of which shall
be the then  outstanding  aggregate  principal amount of all "Series A Equipment




Notes",  "Series B  Equipment  Notes" and "Series C  Equipment  Notes"  (each as
defined in the Note Purchase  Agreement);  (ii) (x) the amount equal to interest
on any Downgrade  Advance  (other than any Applied  Downgrade  Advance)  payable
under Section 3.07 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 the Note
Purchase  Agreement)  (other than interest  becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Lessee's pro rata
share of any other amounts owed to the Liquidity  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, (e) Lessee's pro rata share of any amount payable under
Section 9.1 (and, if  attributable  thereto,  Section 9.5) of the  Participation
Agreement to any Pass Through  Indemnitee to the extent such amount  relates to,



results  from or  arises  out of or in  connection  with  (i) the  Pass  Through
Agreements  or the  enforcement  of any of the terms of any of the Pass  Through
Agreements,  (ii) the offer, sale, or delivery or the Pass Through  Certificates
or any interest therein or represented thereby or (iii) any breach of or failure
to  perform  or  observe,  or any other  noncompliance  with,  any  covenant  or
agreement or other  obligation  to be performed by Lessee under any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any Pass
Through  Agreement  and (f) in the event Lessee  requests  any  amendment to any
Operative  Agreement or Pass Through  Agreement,  Lessee's pro rata share of all
reasonable  fees  and  expenses   (including,   without  limitation,   fees  and
disbursements  of  counsel)  of the  Escrow  Agents  and the  Paying  Agents  in
connection  therewith  payable  by the Pass  Through  Trustees  under the Escrow
Agreements.  As used  herein,  "Lessee's  pro rata share" means as of any time a
fraction,  the numerator of which is the principal  balance then  outstanding of
Equipment Notes and the denominator of which is the aggregate  principal balance
then  outstanding of all  "Equipment  Notes" (as such term is defined in each of
the Operative Indentures).  For purposes of this definition,  the terms "Applied
Downgrade Advance",  "Applied Non-Extension Advance", "Cash Collateral Account",
"Downgrade  Advance",  "Final Advance",  "Investment  Earnings",  "Non-Extension
Advance"  and  "Unpaid  Advance"  shall  have  the  meanings  specified  in each
Liquidity Facility.

     "TAX  ATTRIBUTE  PERIOD" 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.  For purposes of this definition,
the term "Owner  Participant"  shall include any member of an  affiliated  group
(within the meaning of Section 1504 of the Code) of which Owner  Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.

     "TAX INDEMNITY  AGREEMENT" means the Tax Indemnity  Agreement,  dated as of
even  date  with  the   Participation   Agreement,   between  Lessee  and  Owner
Participant.

     "TAXES" means all license, recording,  documentary,  registration and other
similar fees and all taxes, levies,  imposts,  duties,  charges,  assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority,  together



with any  penalties,  additions to tax,  fines or interest  thereon or additions
thereto.

     "TAXING  AUTHORITY"  means any federal,  state or local government or other
taxing authority in the United States,  any foreign  government or any political
subdivision or taxing authority thereof,  any international  taxing authority or
any  territory  or  possession  of the  United  States or any  taxing  authority
thereof.

     "TERM"  means the term,  commencing  on the  Delivery  Date,  for which the
Aircraft  is leased  pursuant to Section 3 of the Lease,  and shall  include the
Interim Lease Term,  the Base Lease Term and, if  applicable,  any Renewal Lease
Term; PROVIDED that if at the scheduled end of the Term the Aircraft or Airframe
is being used,  or was within six (6) months prior  thereto  being used,  by the
U.S.  Government  pursuant to CRAF,  the Term shall be deemed  extended  for the
period  necessary to accommodate  usage of the Aircraft or Airframe  pursuant to
CRAF plus six months thereafter, and Lessee shall be obligated to pay Basic Rent
with respect to any such period of  extension at a semiannual  rate equal to the
average  of the Basic Rent paid  during  the Base  Lease Term or the  applicable
Renewal  Lease  Term,  whichever  shall  have  ended  immediately  prior to such
extension.

     "TERMINATION  DATE"  means  any  Payment  Date  occurring  after  the fifth
anniversary  of the  Delivery  Date  on  which  the  Lease  shall  terminate  in
accordance with Section 9 of the Lease.

     "TERMINATION  VALUE"  means,  with  respect  to the  Aircraft,  the  amount
determined  by  multiplying  (a) the  percentage  set forth in Schedule 4 to the
Lease (as adjusted  from time to time in  accordance  with Section  3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any  Operative  Agreement,  Termination  Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date),  the aggregate unpaid
principal  amount of all Equipment Notes  outstanding as of such date,  together
with accrued and unpaid interest on all such Equipment Notes as of such date.

     "TERMINATION  VALUE  DATE"  means,  for any  month,  the day in such  month
specified in Schedule 4 to the Lease or, if such day is not a Business  Day, the
immediately succeeding Business Day.

     "TRANSACTIONS"  means the  transactions  contemplated by the  Participation
Agreement and the other Operative Agreements.




     "TRANSACTION  EXPENSES" means: (i) the reasonable and actual fees, expenses
and  disbursements  incurred in connection with the  negotiation,  execution and
delivery of the Operative Agreements of (1) 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,  (v)  the fee of the  Appraiser  with  respect  to the
appraisal of the Aircraft  referred to in Section 5.1.2(xv) of the Participation
Agreement,  such information to be furnished by the Owner Participant,  (vi) the
reasonable and actual fees,  out-of-pocket expenses and disbursements of special
counsel to the Owner  Participant (as defined in Schedule 3 to the Participation
Agreement), such information to be furnished by the Owner Participant, and (vii)
the equity placement fee and reasonable  disbursements of Lessee's Advisor, such
information to be furnished by Lessee.

     "TRANSFER" means the transfer,  sale, assignment or other conveyance of all
or any interest in any property, right or interest.

     "TRANSFEREE" means a person to which any Owner  Participant,  Owner Trustee
or any Loan  Participant  or Note Holder  purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.

     "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 Facsimile: (713) 520-6329 Lease _____ OWNER PARTICIPANT THE BOEING COMPANY The Chase Manhattan Bank The Boeing Company New York, New York 10081 P.O. Box 3707 Account No.: 910-1-012764 Seattle, Washington 98124-3707 ABA#: 021-000021 Attention: Treasurer Attention: Paul Trupia M/S 68-34 Voice: 212-552-2829 Facsimile: (206) 237-8746 Facsimile: 212-552-0107 Reference: Continental Lease _____ FIRST SECURITY BANK, NATIONAL First Security Bank, First Security Bank, ASSOCIATION 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 Administration Attention: Corporate Trust Administration Reference: Continental Lease____ Facsimile: (302) 651-8882 WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank 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 Reference: Continental Facsimile: (302) 651-8882 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 1998-1A PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental Facsimile: (302) 651-8882 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 1998-1B PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental Facsimile: (302) 651-8882 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 1998-1C PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental Facsimile: (302) 651-8882 Lease ___
----------------------------- | SCHEDULE 2 | | TO | | PARTICIPATION AGREEMENT | ----------------------------- COMMITMENTS PARTICIPANT PERCENTAGE OF LESSOR'S DOLLAR AMOUNT - ----------- ---------------------- ------------- COST ---- OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE PASS THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE TOTAL 100% ----------------------------- | SCHEDULE 3 | | TO | | PARTICIPATION AGREEMENT | ----------------------------- CERTAIN TERMS DEFINED TERM DEFINITION BFE Amount ______________________ Commitment Termination Date ______________________ Lessor's Cost ______________________ Lessee's Advisor OP Jurisdiction ______________________ Special counsel to the Owner Participant ______________________

 -----------------------------------------------------------------------------
 |   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 _______________

                                     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 Boeing Model [777-200] [757-224] [737-524] [737-724] [737-824] Aircraft
               Bearing United States Registration No. N______ and
                Bearing Manufacturer's Serial No. ______ with two
 [GE MODEL 90] [ROLLS-ROYCE MODEL RB211-535E4-B-37][CFM MODEL 56-3-B1]
                 [CFM MODEL 56-7B24] [CFM MODEL 56-7B26] 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 _______________,  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.......................................................    6

SECTION 4.  DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
            SECTION 1110 MATTERS...........................................    7

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

SECTION 5.  RETURN OF AIRCRAFT.............................................   10

       5.1  Compliance with Annex B........................................   10
       5.2  Storage and Related Matters....................................   10
       5.3  Return of Other Engines........................................   11
       5.4  Fuel ..........................................................   11

SECTION 6.  LIENS .........................................................   11

SECTION 7.  REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS....   12

       7.1  Registration and Operation.....................................   12
       7.2  Possession.....................................................   14
       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

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.........................  28
      10.3  Conditions to any Replacement...................................  29
      10.4  Conveyance to Lessee............................................  31
      10.5  Application of Payments.........................................  31
      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.......................................   33

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.............   34
      11.4  Application of Insurance Proceeds..............................   35
      11.5  Application of Payments During Existence of Default............   35

SECTION 12.  INSPECTION ...................................................   35

SECTION 13.  ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...................   36

      13.1  In General.....................................................   36
      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.......................................   38

      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............................................   45

SECTION 16.  LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC............   46

SECTION 17.  RENEWAL AND PURCHASE OPTIONS..................................   47
      17.1  Notices Generally..............................................   47
      17.2  Renewal Options................................................   47
      17.3  Purchase Option................................................   49
      17.4  Appraisals.....................................................   50

SECTION 18.  MISCELLANEOUS.................................................   51
      18.1  Amendments.....................................................   51
      18.2  Severability...................................................   51
      18.3  Third-Party Beneficiary........................................   51
      18.4  Reproduction of Documents......................................   52
      18.5  Counterparts...................................................   52
      18.6  Notices........................................................   52
      18.7  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE...............   53
      18.8  No Waiver......................................................   54
      18.9  Entire Agreement...............................................   54



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
SCHEDULE 6   Placards





                                                   -----------------------------
                                                   |   SCHEDULE 6 - PLACARDS   |
                                                   |   LEASE AGREEMENT ____    |
                                                   -----------------------------


                             LEASE AGREEMENT ______


     LEASE AGREEMENT ______,  dated as of  _______________  (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,  commencing  immediately  upon
acquisition  of the  Aircraft  by  Lessor  pursuant  to the  Purchase  Agreement
Assignment.



     2.2  ACCEPTANCE BY LESSEE

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

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

SECTION 3. TERM AND RENT 

     3.1   TERM

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

     3.2   RENT

           3.2.1  INTERIM RENT; BASIC RENT; ADJUSTMENTS TO BASIC RENT AND
                  CERTAIN OTHER AMOUNTS

     (a) Lessee  shall pay Interim Rent to Lessor on the last day of the Interim
Lease Term, which shall be allocated to the Interim Lease Term.  During the Base
Lease Term,  Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the
amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such
Payment  Date,  which shall be  allocated to the Payment  Period  ending on such
Payment Date, if designated as a payment in arrears, or allocated to the Payment
Period  commencing  on such Payment Date, if designated as a payment in advance,
in each case as  specified  in Schedule  2, as such  amount may be (i)  adjusted
pursuant  to  Section  3.2.1(b)  or (ii)  increased  in an  amount  equal to any
increase in the amount of interest  due on the  Equipment  Notes on the relevant
Payment Date pursuant to Section 2(e) of the Registration Rights Agreement.




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

          (i) In the event that Transaction  Expenses paid by Lessor pursuant to
     Section 9.2 of the Participation  Agreement are determined to be other than
     1.0% of Lessor's  Cost,  then in each case the Basic Rent  percentages  set
     forth in  Schedule  2,  Stipulated  Loss  Value  percentages  set  forth in
     Schedule 3 and the  Termination  Value  percentages set forth in Schedule 4
     shall be recalculated  (upwards or downwards) by the Owner Participant,  on
     or prior to the 120th day after the  Delivery  Date using the same  methods
     and  assumptions  used to calculate  original Basic Rent,  Stipulated  Loss
     Value and Termination  Value percentages in order to (1) maintain the Owner
     Participant's Net Economic Return and (2) minimize the Net Present Value of
     Rents to Lessee to the extent possible consistent with clause (1) hereof.

          (ii) In the event of a refinancing  as  contemplated  by Section 11 of
     the Participation  Agreement,  then the Basic Rent percentages set forth in
     Schedule 2, Stipulated  Loss Value  percentages set forth in Schedule 3 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.

          (iii) In the event that  Lessee is  required  to  indemnify  the Owner
     Participant under the Tax Indemnity  Agreement,  then (A) in the event that
     the Lessee agrees to satisfy such indemnity  obligation pursuant to SECTION
     __ OF THE TAX INDEMNITY AGREEMENT,  the Basic Rent percentages set forth in
     Schedule 2, and (B) in any event, the Stipulated Loss Value percentages set
     forth in  Schedule 3 and the  Termination  Value  percentages  set forth in
     Schedule  4  shall  be   recalculated   (upwards  or  downwards)  by  Owner
     Participant,  using the same methods and assumptions  (except to the extent
     such  assumptions  shall be  varied to take  into  account  the Tax Loss 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  Delivery  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
verification at the request of Lessee in accordance with this Section  3.2.1(c),
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 Delivery 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 reflects the effect of such  characterization and (ii)
be in compliance with the  requirements of Sections  4.02(5),  4.07(l) and, on a
prospective basis, 4.08(1) of Revenue Procedure 75-28, except to the extent that
on the  Delivery  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.

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

     3.3   PAYMENTS

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



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

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

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

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

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


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

     4.1   DISCLAIMER

     LESSOR  LEASES AND LESSEE  TAKES THE  AIRCRAFT  "AS-IS,  WHERE-IS."  LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND
ANY  PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND  MANUFACTURER  THEREOF



AND (ii) NONE OF LESSOR,  MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL
BE DEEMED TO HAVE MADE,  AND EACH WILL BE DEEMED TO HAVE  EXPRESSLY  DISCLAIMED,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:

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

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

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

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

     (z)  THE ABSENCE OF OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT, OR ANY
          OTHER REPRESENTATION OR WARRANTY WHATSOEVER,  EXPRESS OR IMPLIED, WITH
          RESPECT TO THE AIRFRAME,  ANY ENGINE OR ANY PART THEREOF.


     4.2   CERTAIN AGREEMENTS OF LESSOR

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

     4.3   QUIET ENJOYMENT

     So long as no Lease Event of Default shall have occurred and be continuing,
Lessor  shall  not  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  using its best
efforts;  provided,  that so long as the Lien of the Trust  Indenture  shall not
have been  discharged,  such moneys shall be invested and held by Mortgagee,  as
assignee of Lessor,  in  accordance  with this Lease and upon  discharge of such
Lien,  Mortgagee  shall pay any such  money  held by it to Lessor to be held and
invested in accordance with this Section.

           4.4.2 PAYMENT OF GAIN OR LOSS

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

           4.4.3 LIMITATION OF LIABILITY

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

     4.5   TITLE TRANSFERS BY LESSOR

     If Lessor shall be required to transfer title to the Aircraft,  Airframe or
any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor
shall (1)  transfer to Lessee or such other  person,  as the case may be, all of
Lessor's  right,  title and  interest in and to the  Aircraft,  Airframe or such
Engine,  as the case may be, free and clear of all Lessor Liens,  (2) so long as
the Lien of the Trust Indenture has not been  discharged,  comply with the Trust



Indenture relating to the release of the Aircraft,  Airframe or such Engine, (3)
assign to Lessee or such other person,  as the case may be, if and to the extent
permitted under the Purchase Agreement,  all warranties of Airframe Manufacturer
and Engine  Manufacturer with respect to the Aircraft,  Airframe or such Engine,
and (4) assign to Lessee or such other person, as the case may be, if and to the
extent permitted,  all claims,  if any, for damage to the Aircraft,  Airframe or
such Engine, in each case free of Lessor Liens, and without recourse or warranty
of any kind whatsoever  (except as to the transfer described in clause (1) above
and as to the absence of such Lessor Liens, as aforesaid),  and (b) Lessor shall
promptly  deliver to Lessee or such other person,  as the case may be, a bill of
sale and agreements of assignment,  evidencing such transfer and assignment, and
such  other  instruments  of  transfer,  all in form  and  substance  reasonably
satisfactory to Lessee (or such other person, as the case may be), as Lessee (or
such other  person,  as the case may be) may  reasonably  request.

     4.6   LESSOR'S INTEREST IN CERTAIN ENGINES

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

     4.7   LEASE  FOR U.S.  FEDERAL  INCOME  TAX LAW  PURPOSES;
           SECTION  1110 OF BANKRUPTCY CODE

     (a) Lessee and Lessor  agree that this Lease is, and shall be treated as, a
lease for U.S.  federal income tax purposes of the Aircraft,  Airframe,  Engines
and Parts.

     (b) It is the  intention  of each of Lessee and  Lessor  that  Lessor  (and
Mortgagee as assignee of Lessor under the Trust  Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft,  Airframe,  Engines and Parts as  provided  in this Lease.  




SECTION 5. RETURN OF AIRCRAFT

     5.1   COMPLIANCE WITH ANNEX B

     Lessee shall comply with each of the  provisions  of Annex B hereto,  which
provisions  are hereby  incorporated  by this  reference as if set forth in full
herein.

     5.2   STORAGE AND RELATED MATTERS

     If Lessor  gives  written  notice to Lessee  not less than 60 days nor more
than 120 days prior to the end of the Term  requesting  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,  and upon  request  of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 30 day period  commencing  upon expiration of such initial period,
at such 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 Lessor  entering  into an  agreement  prior to the
commencement of the storage period with the storage  facility  providing,  among
other  things,  that Lessor shall bear all  maintenance  charges and other costs
(other than parking fees for the initial 30 day period) incurred.

     5.3   RETURN OF OTHER ENGINES

     In the event that any Engine  owned by Lessor shall not be installed on the
Airframe at the time of return hereunder, Lessee shall be required to return the
Airframe hereunder with a Replacement Engine meeting the requirements of, and in
accordance with,  Section 10 hereof and Annex B hereto.  Thereupon,  Lessor will
transfer  to  Lessee  the  Engine  constituting  part of such  Aircraft  but not
installed on such Airframe at the time of the return of the Airframe.

     5.4   FUEL

     Upon the return of the Airframe upon any termination of this Lease,  Lessor
shall pay Lessee,  as compensation  for any fuel or oil contained in the fuel or
oil tanks of such  Airframe,  the value of such fuel or oil at the price paid by



Lessee for such fuel or oil,  PROVIDED that if the Aircraft is being returned in
connection  with the exercise of remedies  pursuant to Section 15,  Lessor shall
have no  obligation  to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to Section 15.

SECTION 6. LIENS

     Lessee shall not, directly or indirectly,  create,  incur, assume or suffer
to exist any Lien on or with respect to the Aircraft,  the Airframe,  any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted  Sublease,  except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative  Agreements,  or  of  any  Permitted  Sublessee  under  any  Permitted
Sublease;  (b)  Lessor  Liens;  (c) the  rights of others  under  agreements  or
arrangements  to the extent  permitted by the terms of Sections 7.2 and 7.3; (d)
Liens for Taxes of Lessee (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 such proceedings do
not involve any material  risk of the sale,  forfeiture or loss of the Aircraft,
the Airframe,  any Engine or the interest of any  Participant  therein or impair
the lien of the Trust Indenture;  (f) Liens arising out of any judgment or award
against  Lessee (or against any Permitted  Sublessee),  so long as such judgment
shall, within 60 days after the entry thereof,  have been discharged or vacated,
or  execution  thereof  stayed  pending  appeal or shall  have been  discharged,
vacated or reversed  within 60 days after the  expiration  of such stay,  and so
long as during any such  60-day  period  there is not,  or any such  judgment or
award does not involve, any material risk of the sale, forfeiture or loss of the
Aircraft, the Airframe, any Engine or the interest of any Participant therein or
impair the lien of the Trust  Indenture,  and (g) any other Lien with respect to
which  Lessee (or any  Permitted  Sublessee)  shall have  provided a bond,  cash



collateral  or other  security  adequate  in the  reasonable  opinion of Lessor.
Lessee  shall  promptly  take  (or  cause to be  taken)  such  action  as may be
necessary  duly to  discharge  (by bonding or  otherwise)  any Lien not excepted
above if the same  shall at any time  arise  in  respect  of the  Aircraft,  the
Airframe, any Engine or any Part during the Term.

SECTION 7.  REGISTRATION,  OPERATION,  POSSESSION,  SUBLEASING
            AND  RECORDS

     7.1   REGISTRATION AND OPERATION

           7.1.1  REGISTRATION AND RECORDATION

     Subject  to the  compliance  by Lessor  and Owner  Participant  with  their
respective obligations under Section 13 of the Participation  Agreement,  Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered  with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor  (except to the  extent  that such  registration  under the Act cannot be
effected  with the FAA  because of Lessor's  or Owner  Participant's  failure to
comply with the citizenship  requirements for registration of the Aircraft under
the Act).  Lessor shall execute and deliver all such documents as Lessee (or any
Permitted  Sublessee)  may  reasonably  request for the purpose of effecting and
continuing such registration.  Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times  maintained  of record as a  first-priority
perfected  mortgage  (subject to Permitted Liens) on the Aircraft,  the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be  maintained  solely as a result of the  failure  by  Lessor or  Mortgagee  to
execute and deliver any necessary documents).

           7.1.2 REREGISTRATION

     So long as no Lease Event of Default shall have occurred and be continuing,
Lessee  may,  by  written  notice to Lessor,  request  to change the  country of
registration of the Aircraft.  Any such change in registration shall be effected
only in  compliance  with,  and subject to all of the  conditions  set forth in,
Section 7.6.11 of the Participation Agreement.

           7.1.3 MARKINGS

     If  permitted  by  applicable  Law,  on or  reasonably  promptly  after the
Delivery  Date,  Lessee  will cause to be affixed  to,  and  maintained  in, the



cockpit of the Airframe and on each Engine,  in each case, in a clearly  visible
location (it being understood that the location of such placards,  as identified
to the Owner  Participant  prior to the Delivery Date,  shall be deemed to be in
compliance  with this  requirement),  a placard of a  reasonable  size and shape
bearing the legend,  in English,  set forth in Schedule 6. Such  placards may be
removed temporarily,  if necessary, in the course of maintenance of the Airframe
or Engines.  If any such placard is 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,  the Airframe or any Engine,  except
(1)  immaterial or  non-recurring  violations  with respect to which  corrective
measures are taken promptly by Lessee or a Permitted Sublessee,  as the case may
be,  upon  discovery  thereof,  and (2) to the  extent  Lessee or any  Permitted
Sublessee  is  contesting  the  validity  or  application  of  any  such  Law or
requirement  relating to any such  certificate,  license or registration in good
faith in any  reasonable  manner which does not involve any material risk of the
sale,  forfeiture  or loss of the  Aircraft,  the  Airframe,  any  Engine or the
interest of any Participant  therein, any material risk of criminal liability or
of material civil penalty against Lessor, Mortgagee or any Participant or impair
the lien of the Trust Indentures.

           7.1.5 OPERATION

     Lessee agrees not to operate,  use or locate the Aircraft,  the Airframe or
any Engine,  or allow the  Aircraft,  the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of  Section  11,  except in the case of a  requisition  by the U.S.
Government  where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government,  or insurance from the U.S. Government,  covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully  covered in accordance  with Annex D by war-risk  insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case  referred to in this  Section  7.1.5 the  Aircraft is only  temporarily
operated,  used or located in such area as a result of an  emergency,  equipment



malfunction,  navigational error, hijacking,  weather condition or other similar
unforeseen  circumstances,  so  long as  Lessee  diligently  and in  good  faith
proceeds to remove the Aircraft from such area.

     7.2 POSSESSION

     Lessee will not,  without the prior written consent of Lessor,  sublease or
otherwise  in any manner  deliver,  transfer  or  relinquish  possession  of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed,  on any airframe  other than the Airframe;  PROVIDED,  HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:

           7.2.1 INTERCHANGE AND POOLING

     Subject or permit any  Permitted  Sublessee to subject any Engine to normal
interchange  agreements  or pooling  agreements  or  arrangements,  in each case
customary in the commercial  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,  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  shall have occurred and is  continuing,  enter into a sublease
with any Permitted Air Carrier, but only if:

     (a) Lessee  shall  provide  written  notice to Lessor and  Mortgagee  (such
notice in the event of a sublease  to a U.S.  Air  Carrier to be given  promptly
after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 10 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 and (iii) shall be expressly subject and subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder,  including,  without limitation,  Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default;

     (d) In connection with a sublease to a Permitted  Foreign Air Carrier,  (1)
the United States maintains diplomatic relations with the country of domicile of
such  Permitted  Foreign  Air  Carrier  (or,  in the case of Taiwan,  diplomatic
relations  at least as good as those in  effect  on the  Delivery  Date) and (2)
Lessee shall have furnished Lessor and Mortgagee a favorable opinion of counsel,
reasonably  satisfactory to Lessor, in the country of domicile of such Permitted
Foreign Air Carrier,  that (i) the terms of such  sublease are the legal,  valid
and binding  obligations of the parties  thereto  enforceable  under the laws of
such  jurisdiction,  (ii) it is not necessary for Owner  Participant,  Lessor or
Mortgagee  to register or qualify to do  business in such  jurisdiction,  if not
already so  registered or  qualified,  as a result,  in whole or in part, of the
proposed sublease,  (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)



the Laws of such  jurisdiction  of domicile  require  fair  compensation  by the
government of such  jurisdiction,  payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts  required with respect to hull insurance  under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such  sublease) and (v) the  agreement of such  Permitted Air Carrier
that its rights under the sublease are subject and  subordinate to all the terms
of this Lease is enforceable against such Permitted Air Carrier under applicable
law;

     (e)  Lessee  shall  furnish  to  Lessor,  Mortgagee  and Owner  Participant
evidence  reasonably  satisfactory  to Lessor  that the  insurance  required  by
Section 11 remains in effect;

     (f) All  necessary  documents  shall have been duly  filed,  registered  or
recorded in such public  offices as may be required  fully to preserve the title
of Lessor, and the first priority security interest (subject to Permitted Liens)
of Mortgagee, in the Aircraft, Airframe and Engines;

     (g) Lessee shall reimburse Lessor,  Mortgagee and Owner Participant for all
of  their  reasonable  out-of-pocket  fees  and  expenses,   including,  without
limitation,  reasonable fees and  disbursements of counsel,  incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease;

     (h) For all purposes of this Section 7.2.7,  the term  "sublease"  shall be
deemed to  include  interchange  agreements  with  respect  to the  Aircraft  or
Airframe; and

     (i) No such sublease shall be made to a Permitted Foreign Air Carrier prior
to the close of the Tax Attribute  Period,  unless Lessee  prepays on a lump-sum
basis any liability  due under the Tax  Indemnity  Agreement as a result of such
sublease based upon the  assumption  that such sublease were to continue for the
remainder of the term of such sublease.

     7.3   CERTAIN LIMITATIONS ON SUBLEASING OR OTHER
           RELINQUISHMENT OF POSSESSION

     Notwithstanding anything to the contrary in Section 7.2:

     (a) The rights of any person that  receives  possession  of the Aircraft in
accordance with Section 7.2 shall be subject and subordinate to all the terms of



this Lease, and to Lessor's rights,  powers and remedies  hereunder,  including,
without  limitation  (i) Lessor's  right to repossess  the Aircraft  pursuant to
Section 15, (ii) Lessor's right to terminate and avoid such sublease,  delivery,
transfer or relinquishment of possession upon the occurrence of a Lease Event of
Default  and (iii) the right to require  such  person to  forthwith  deliver the
Aircraft,  the Airframe and Engines subject to such transfer upon the occurrence
of a Lease Event of Default;

     (b) Lessee shall remain  primarily  liable hereunder for the performance of
all the  terms of this  Lease to the same  extent  as if such  transfer  had not
occurred,  and no transfer of  possession of the  Aircraft,  the  Airframe,  any
Engine  or any Part  shall in any way  discharge  or  diminish  any of  Lessee's
obligations to Lessor hereunder or under any Operative Agreement;

     (c)  Lessee  shall  ensure  that  no   sublease,   delivery,   transfer  or
relinquishment  permitted  under  Section  7.2 shall  affect the  United  States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2.

     (d) Any  event  that  constitutes  or  would,  with  the  passage  of time,
constitute an Event of Loss under  paragraph  (c), (d), or (e) of the definition
of such  term (as set  forth in Annex A) shall  not be  deemed  to  violate  the
provisions of Section 7.2; and

     (e)  Any  Wet  Lease  shall  not   constitute   a  delivery,   transfer  or
relinquishment  of  possession  for  purposes  of  Section  7.2 and shall not be
prohibited by the terms hereof.

SECTION  8.  MAINTENANCE;   REPLACEMENT  AND  POOLING  OF  PARTS;
             ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
             LESSEE COVENANTS

     8.1   MAINTENANCE;   REPLACEMENT   AND   POOLING  OF  PARTS;
           ALTERATIONS, MODIFICATIONS AND ADDITIONS

     At all times during the Term,  Lessee  shall  comply  with,  or cause to be
complied with,  each of the  provisions of Annex C, which  provisions are hereby
incorporated by this reference as if set forth in full herein.

     8.2   INFORMATION, CERTIFICATES, NOTICES AND REPORTS

           8.2.1 FINANCIAL INFORMATION

     Lessee will furnish to Lessor:




     (a)  Within  90  days  after  the end of each  of the  first  three  fiscal
          quarters in each fiscal year of Lessee,  a consolidated  balance sheet
          of Lessee as of the end of such  quarter  and  related  statements  of
          income  and cash  flows for the  period  commencing  at the end of the
          previous fiscal year and ending with the end of such quarter,  setting
          forth in each case in comparative form the  corresponding  figures for
          the  corresponding  period in the preceding  fiscal year,  prepared in
          accordance  with GAAP;  PROVIDED  THAT so long as Lessee is subject to
          the reporting  requirements of the Securities  Exchange Act of 1934, a
          copy  of  Lessee's  report  on  Form  10-Q  for  such  fiscal  quarter
          (excluding exhibits) will satisfy this paragraph (a).

     (b)  Within  120  days  after  the end of each  fiscal  year of  Lessee,  a
          consolidated balance sheet of Lessee as of the end of such fiscal year
          and  related  statements  of income  and cash flows of Lessee for such
          fiscal  year,  in  comparative  form with the  preceding  fiscal year,
          prepared in accordance  with GAAP,  together with a report of Lessee's
          independent  certified public  accountants with respect to their audit
          of such  financial  statements;  PROVIDED  THAT so long as  Lessee  is
          subject to the reporting  requirements of the Securities  Exchange Act
          of 1934,  a copy of Lessee's  report on Form 10-K for such fiscal year
          (excluding exhibits) will satisfy this paragraph (b).

           8.2.2 ANNUAL CERTIFICATE

     Within 120 days after the close of each fiscal year of Lessee, Lessee shall
deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the effect
that such officer is familiar  with or has reviewed or caused to be reviewed the
relevant terms of this Lease and the other Lessee Operative  Agreements and that
such  officer does not have  knowledge  of the  existence as at the date of such
certificate of any Lease Event of Default.

          8.2.3 INFORMATION FOR FILINGS

     Lessee  shall  promptly  furnish  to  Owner   Participant  or  Lessor  such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's  possession,  or reasonably
available to or  obtainable  by Lessee or such  Permitted  Sublessee,  as may be
required to enable Lessor timely to file any reports  required to be filed by it
as lessor  under the Lease or to enable  Owner  Participant  to timely  file any
reports  required to be filed by it, as the beneficiary of the Trust Estate,  in



either case, with any Government  Entity because of, or in connection  with, the
interest of Owner  Participant  or Lessor in the Aircraft,  Airframe or Engines,
this Lease or any other part of the Trust Estate;  provided,  however, that with
respect to any such  information  which  Lessee  reasonably  deems  commercially
sensitive or  confidential,  Owner  Participant  or Lessor,  as the case may be,
shall afford Lessee a reasonable  opportunity  to seek from any such  Government
Entity a waiver of the  obligation  of Owner  Participant  or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor,  and if any such waiver
or consent is evidenced to the reasonable  satisfaction of Owner  Participant or
Lessor,  as the case may be, then Lessee  shall not be required to furnish  such
information  to Owner  Participant or Lessor.

SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE 9.1 RIGHT OF TERMINATION

     (a)  Lessee  shall  have the right at its  option to  terminate  this Lease
during the Base Lease Term, effective only on a Termination Date occurring on or
after the fifth anniversary of the Delivery Date, if:

          (i) Lessee makes a good faith  determination  that the Aircraft either
     has become economically obsolete or is surplus to Lessee's requirements and
     the Chief Financial  Officer or Treasurer of Lessee so certifies in writing
     to Lessor; and

          (ii)  written  notice of Lessee's  exercise of its option to terminate
     this Agreement  shall be given to Lessor not less than 90 days prior to the
     proposed Termination Date specified in such notice.

     (b) Lessor shall notify Lessee and Mortgagee of Lessor's  intention to sell
or retain the  Aircraft,  as  provided  in this  Section 9, no less than 30 days
after Lessee gives Lessor written  notice  pursuant to Section  9.1(a)(ii).  Any
failure by Lessor to give such notice of its  election  shall be deemed to be an
election to sell the Aircraft, as provided in this Section 9.

     (c) Any  termination  pursuant to this Section 9 shall become  effective on
the  date of the  sale,  if any,  pursuant  to  Section  9.2 or upon the date of
termination  and payment by Lessee and Lessor in accordance  with Section 9.3 if
Lessor elects to retain the Aircraft.




     9.2   ELECTION BY LESSOR TO SELL

           9.2.1 BIDS; CLOSING OF SALE

     Unless  Lessor has given Lessee  notice of Lessor's  election to retain the
Aircraft,  Lessee, as agent for Lessor,  shall, until the date ten Business Days
prior to the proposed  Termination Date, use commercially  reasonable efforts to
obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires to
do so,  also seek to obtain such bids.  In the event  Lessee  receives  any bid,
Lessee shall promptly,  and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of such
bid, the proposed  date of such sale and the name and address of the person (who
shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or
any such  Affiliate  has an  arrangement  for the future use of the  Aircraft by
Lessee or any such Affiliate)  submitting such bid. In the event Lessor receives
any bid on or  prior  to the  date  ten  Business  Days  prior  to the  proposed
Termination Date, Lessor shall, at least ten Business Days prior to the proposed
date of sale, certify to Lessee in writing the amount and terms of such bid, the
proposed  date of such sale and the name and  address of the  person  submitting
such bid.

           9.2.2 CLOSING OF SALE

     (a) On the proposed  Termination Date (i) Lessee shall deliver the Airframe
and Engines or engines  constituting part of the Aircraft to the bidder, if any,
which shall have  submitted  the highest cash bid (net of  applicable  brokerage
commissions)  on or before the date ten Business Days prior to such  Termination
Date, in the same manner as if delivery were made to Lessor  pursuant to Section
5 and Annex B and in full  compliance  with the terms  thereof,  and shall  duly
transfer  to  Lessor  title to any such  engines  not  owned by  Lessor,  all in
accordance  with the  terms of  Section  5 and  Annex B, and (ii)  Lessor  shall
simultaneously  therewith  transfer  the Airframe and Engines or engines to such
bidder,  in the manner  described in Section 4.5, against cash paid to Lessor in
the amount of such highest bid (net of applicable brokerage  commissions and all
reasonable  out-of-pocket  fees and expenses  incurred by Lessor,  Mortgagee and
Owner  Participant in connection  with such sale and the related  termination of
this Lease  (collectively,  the  "Expenses  of Sale"))  and in the manner and in
funds of the type specified in Section 3.3.

     (b) All  proceeds of any sale  described  in Section  9.2.2(a)  (net of the
Expenses  of  Sale)  shall  be paid  to and  retained  by  Lessor  and,  on such
Termination Date, and as a condition  precedent to such sale and the delivery of



the Aircraft and Engines or engines to such bidder,  Lessee shall pay to Lessor,
in the manner and in funds of the type specified in Section 3.3:

          (i) all unpaid  Basic  Rent due at any time prior to such  Termination
     Date and all Basic Rent due on such  Termination Date to the extent payable
     in arrears with respect to the Payment Period then ended; plus

          (ii) an amount equal to the excess,  if any, of the Termination  Value
     for the Aircraft,  computed as of such Termination  Date, over the proceeds
     of such sale (net of the Expenses of Sale); plus

          (iii) as provided in Section 3.2.2,  interest on the amounts specified
     in the foregoing  clause (i) at the Payment Due Rate from and including the
     date on which any such amount was due to the date of payment of such amount
     in full.

     As a further  condition  precedent to such sale and delivery,  Lessee shall
pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the Participants
under  this Lease  (including,  without  limitation,  (A)  Supplemental  Rent in
respect of Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the
Trust Indenture in connection with a prepayment of the Equipment Notes upon such
sale, (B) all interest  charges provided for hereunder or under any other Lessee
Operative  Agreement with respect to the late payment of any amounts so payable,
and (C) the Expenses of Sale).

     (c) Upon and  subject to any such sale and  receipt of  proceeds by Lessor,
and full and final  payment of all amounts  described in Section  9.2.2(b),  and
compliance by Lessee with all the other provisions of this Section 9.2,

          (i) Lessor will transfer to Lessee,  in  accordance  with Section 4.5,
     any  Engines  constituting  part of the  Aircraft  but which  were not then
     installed on the Airframe and sold therewith; and

          (ii) the  obligation  of  Lessee to pay  Basic  Rent,  on or after the
     Payment Date with reference to which Termination  Value is computed,  shall
     cease,  and the Term for the Aircraft shall end effective as of the date of
     such sale.

     (d) A sale of the Aircraft  pursuant to this Section 9.2.2 shall take place
only on a  Termination  Date.  Subject  to  Section  9.3,  if no sale shall have
occurred  on or as of  the  proposed  Termination  Date,  this  Agreement  shall



continue  in full  force  and  effect,  and all of  Lessee's  obligations  shall
continue,  including,  without  limitation,  its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and,  subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.

           9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION

     (a) Lessee may  withdraw  any notice  given  pursuant to Section 9.1 at any
time on or before the date ten Business  Days prior to the proposed  Termination
Date,  whereupon this Agreement  shall continue in full force and effect and all
of Lessee's  obligations  shall continue,  including,  without  limitation,  its
obligation  to pay Rent,  in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice  pursuant to Section 9.1;
PROVIDED  that  Lessee  shall not be  entitled  to give  more than five  notices
pursuant to Section 9.1.

     (b) Lessee  shall pay all  reasonable  out-of-pocket  fees and  expenses of
Lessor,  Mortgagee  and  Owner  Participant  in  connection  with any  notice of
termination  withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.

     9.3   RETENTION OF AIRCRAFT BY LESSOR

     (a) If Lessor shall elect to retain the Aircraft in accordance with Section
9.1, on the proposed Termination Date:

          (i) Lessor shall pay, or cause to be paid,  in the manner and in funds
     of the type specified in Section 3.3, to the Mortgagee an amount sufficient
     to prepay all  outstanding  Equipment  Notes pursuant to Section 2.10(b) of
     the Trust Indenture;

          (ii)  subject  to  receipt  by  Mortgagee  of the funds  described  in
     paragraph  (i) above,  Lessee  shall  deliver the  Airframe  and Engines or
     engines  constituting  part of the Aircraft to Lessor pursuant to Section 5
     and Annex B and in full compliance  with the terms thereof,  and shall duly
     transfer to Lessor  title to any such  engines not owned by Lessor,  all in
     accordance with the terms of Section 5 and Annex B;

          (iii)  Lessee  shall pay to Lessor,  in the manner and in funds of the
     type specified in Section 3.3:



               (1)  all  unpaid  Basic  Rent  due  at any  time  prior  to  such
                    Termination  Date and all Basic Rent due on such Termination
                    Date to the extent  payable in arrears  with  respect to the
                    Payment Period then ended; plus

               (2)  as  provided  in  Section  3.2.2,  interest  on the  amounts
                    specified  in the  foregoing  clause (1) at the  Payment Due
                    Rate from and  including  the date on which any such  amount
                    was due to the date of payment of such amount in full; and

          (iv) Lessee  shall also pay all  Supplemental  Rent due and payable by
     Lessee to  Lessor,  Mortgagee  or the other  Participants  under this Lease
     (other than any Supplemental Rent in respect of Make-Whole  Amount, if any,
     payable  pursuant to Section  2.10(b) of the Trust  Indenture in connection
     with a prepayment of the Equipment Notes upon such sale), including without
     limitation all interest  charges  provided for hereunder or under any other
     Lessee Operative Agreement with respect to the late payment of any amounts,
     so payable, and the reasonable  out-of-pocket fees and expenses incurred by
     Lessor, Mortgagee and Owner Participant in connection with such termination
     and sale.

     (b) Upon full and final payment to Lessor,  Mortgagee and the  Participants
of the amounts  described in Section  9.3(a),  and compliance by Lessee with all
the other applicable provisions of this Section 9.3,

          (i) Lessor will transfer to Lessee,  in  accordance  with Section 4.5,
     any  Engines  constituting  part of the  Aircraft  but which  were not then
     installed on the Airframe and sold therewith; and

          (ii) The  obligation  of Lessee to pay Basic Rent  otherwise due on or
     after the Termination Date shall cease, and the Term for the Aircraft shall
     end effective as of such Termination Date.

SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.

     10.1  EVENT OF LOSS WITH RESPECT TO AIRCRAFT

           10.1.1 NOTICE AND ELECTION

     (a) Upon the  occurrence  of an Event of Loss with respect to the Airframe,
and any Engine or Engines  installed  thereon at the time of such Event of Loss,



Lessee shall  promptly  (and in any event within 15 days after such  occurrence)
give Lessor and Mortgagee  written notice of such Event of Loss.  Within 45 days
after such occurrence,  Lessee shall give Lessor and Mortgagee written notice of
Lessee's  election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3.

     (b) Any  failure  by Lessee to give such  notice of its  election  shall be
deemed to be an election of the option set forth in Section 10.1.2. In addition,
Lessee shall not be entitled to elect the option set forth in Section 10.1.3 if,
at the time Lessor  receives such notice from Lessee,  there shall have occurred
and be continuing a Special Default.

     (c) For  purposes of Section  10.1.2,  an Event of Loss with respect to the
Airframe  shall be deemed to  constitute  an Event of Loss with  respect  to the
Aircraft.  For purposes of Section 10.1.3,  any Engine not actually suffering an
Event of Loss shall not be required to be replaced.

           10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE

     (a) If Lessee elects, in accordance with Section 10.1.1, to make payment in
respect of any such Event of Loss,  then Lessee  shall pay, in the manner and in
funds of the type specified in Section 3.3, the following amounts:

          (i) on or before the  Business Day next  following  the earlier of (x)
     the 120th day following  the date of the  occurrence of such Event of Loss,
     and (y) the fourth Business Day following the receipt of insurance proceeds
     with respect to such occurrence (but in any event not earlier than the date
     of  Lessee's  election  under  Section  10.1.1 to make  payment  under this
     Section 10.1.2),  Lessee shall pay to Lessor:

          (1)  all unpaid Interim Rent,  Basic Rent or Renewal Rent, as the case
               may be, due at any time prior to the  Stipulated  Loss Value Date
               that is on or immediately preceding the Loss Payment Date; plus

          (2)  the  Stipulated  Loss Value of the  Aircraft  computed  as of the
               Stipulated  Loss Value Date used in the foregoing  clause (1) for
               the computation of unpaid Rent; plus




          (3)  if the  Stipulated  Loss Value Date used in the foregoing  clause
               (1) is a Payment  Date on which Basic Rent  payable in arrears is
               due, the amount of such Basic Rent; plus

          (4)  as provided in Section 3.2.2, interest on the amount specified in
               the  foregoing  clause  (1) at the  Payment  Due  Rate  from  and
               including  the date on which any such  amount was due to the date
               of payment of such amount in full; plus

          (5)  interest on the amounts  specified in the  foregoing  clauses (2)
               and (3) at the SLV Rate from and  including the  Stipulated  Loss
               Value Date used in the foregoing  clause (1) for the  computation
               of unpaid Rent to the date such amount is due, and  thereafter at
               the  Payment  Due Rate to the date of payment of such  amounts in
               full; and


          (ii) on or  before  the  date  required  for  payment  of the  amounts
     specified  in  paragraph  (i)  above,  Lessee  shall  also  pay to  Lessor,
     Mortgagee and the other  Participants  all other amounts due and payable by
     Lessee to Lessor,  Mortgagee and the other  Participants  under this Lease,
     the Participation Agreement or any other Lessee Operative Agreement.

     (b)  Upon  payment  in  full  of all  amounts  described  in the  foregoing
paragraph  (a),(i) the  obligation of Lessee to pay Interim Rent,  Basic Rent or
Renewal Rent hereunder with respect to the Aircraft  shall  terminate,  (ii) the
Term for the Aircraft  shall end and (iii) Lessor will  transfer the Aircraft to
Lessee,  as-is and where-is,  and subject to any insurer's  salvage rights,  but
otherwise in the manner described in Section 4.5.

           10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES

     (a) If Lessee elects,  in accordance  with Section  10.1.1,  to replace the
Airframe,  and any Engines  actually  suffering  the Event of Loss,  then Lessee
shall,  as  promptly  as  possible  and in any event  within  120 days after the
occurrence of such Event of Loss,  convey or cause to be conveyed to Lessor,  in
compliance with Section 10.3 and as replacement  for the Airframe,  and any such
Engine,  title to a Replacement  Airframe (which shall comply with paragraph (b)
below),  and for each such Engine a  Replacement  Engine,  in each case free and
clear of all Liens other than  Permitted  Liens.  If Lessee makes such election,
but for any reason  fails or is unable to effect  such  replacement  within such
time period and in compliance with the  requirements  set forth in Section 10.3,



then Lessee  shall be deemed to have  initially  made the  election set forth in
Section 10.1.2 with the effect that Lessee shall  immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts  required  under,
and in accordance with, Section 10.1.2.

     (b) Any such  Replacement  Airframe  shall be an airframe  that is the same
model as the Airframe to be replaced thereby, or an improved model, and that has
a value,  utility and remaining  useful life (without  regard to hours or cycles
remaining  until the next  regular  maintenance  check),  at least  equal to the
Airframe to be replaced thereby (assuming that such Airframe had been maintained
in  accordance  with the  Lease).  Any such  Replacement  Engine  shall meet the
requirements of, and be conveyed by Lessee to Lessor in accordance with, Section
10.2 (other than the notice requirement set forth in Section 10.2.1).

     10.2  EVENT OF LOSS WITH RESPECT TO AN ENGINE

           10.2.1 NOTICE

     Upon the  occurrence  of an Event of Loss with  respect to an Engine  under
circumstances  in which an Event of Loss with  respect to the  Airframe  has not
occurred,  Lessee  shall  promptly  (and in any event  within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.

           10.2.2 REPLACEMENT OF ENGINE

     Lessee shall, promptly and in any event within 60 days after the occurrence
of such Event of Loss,  convey or cause to be conveyed to Lessor,  in compliance
with  Section 10.3 and as  replacement  for the Engine with respect to which any
Event of Loss  occurred,  title to a  Replacement  Engine  free and clear of all
Liens other than Permitted  Liens.  Such  Replacement  Engine shall be an engine
manufactured by Engine  Manufacturer  that is the same model as the Engine to be
replaced  thereby,  or an improved model,  and that is suitable for installation
and use on the Airframe, and that has a value, utility and remaining useful life
(without regard to hours and cycles  remaining until overhaul) at least equal to
the Engine to be replaced thereby (assuming that such Engine had been maintained
in accordance with the Lease).

           10.2.3 ENGINE EXCHANGE

     Upon not less than five (5) Business  Days' prior written notice to Lessor,
Lessee  may  replace  any Engine  leased  hereunder  with  another  engine  (the



"Exchanged  Engine") meeting the requirements of Section 10.2.2.  Such Exchanged
Engine shall be deemed to be a "Replacement  Engine" and Lessor and Lessee shall
comply with the  provisions of Section 10.3 with regard to the Exchanged  Engine
and the Engine so replaced.

     10.3  CONDITIONS TO ANY REPLACEMENT

           10.3.1 DOCUMENTS

     Prior to or at the time of conveyance of title to any Replacement  Airframe
or  Replacement  Engine to  Lessor,  Lessee  shall  take  each of the  following
actions:

     (a) furnish  Lessor with a full  warranty  bill of sale duly  conveying  to
Lessor such Replacement  Airframe or Replacement  Engine,  in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;

     (b) cause (i) a Lease Supplement  subjecting such  Replacement  Airframe or
Replacement  Engine to this Lease,  duly executed by Lessee,  to be delivered to
Lessor for execution and, upon such execution,  to be filed for recordation with
the FAA pursuant to the Act, (ii) a Trust Indenture Supplement,  subjecting such
Replacement  Airframe  or  Replacement  Engine  to the  Trust  Indenture,  to be
delivered  to  Lessor  for  execution  and,  upon  execution,  to be  filed  for
recordation with the FAA pursuant to the Act and (iii) such Financing Statements
and other filings, as Lessor or Mortgagee may reasonably request,  duly executed
by Lessee and, to the extent  applicable,  Lessor and Mortgagee  (and Lessor and
Mortgagee  shall execute and deliver the same), to be filed in such locations as
any such party may reasonably request;

     (c) furnish such  evidence of compliance  with the insurance  provisions of
Section 11 with respect to such  Replacement  Airframe or Replacement  Engine as
Lessor may reasonably request;

     (d)  furnish an opinion  or  opinions  of  Lessee's  counsel  (which may be
Lessee's legal  department)  reasonably  satisfactory to Lessor and addressed to
Lessor and  Mortgagee  to the effect  that (i) such full  warranty  bill of sale
referred to in Section  10.3.1(a)  constitutes  an effective  instrument for the
conveyance of title to the Replacement  Airframe or Replacement  Engine and (ii)
in the case of a  Replacement  Airframe,  Lessor and  Mortgagee,  as assignee of
Lessor,  will be entitled to the  benefits of Section  1110 with  respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that  immediately  prior to such replacement
the  benefits of Section  1110 were not,  solely by reason of a change in law or



court interpretation  thereof,  available to Lessor or Mortgagee, as assignee of
Lessor;

     (e)  furnish  an  opinion  of  Lessee's  aviation  law  counsel  reasonably
satisfactory  to Lessor  and  addressed  to Lessor and  Mortgagee  as to the due
registration of any such Replacement Airframe and the due filing for recordation
of each Lease  Supplement and Trust  Indenture  Supplement  with respect to such
Replacement Airframe or Replacement Engine under the Act; and

     (f)  with  respect  to the  replacement  of the  Airframe,  and any  Engine
installed  thereon at the time of the subject  Event of Loss,  if  requested  by
Lessor  and at  Lessor's  expense,  furnish a  certified  report of a  qualified
independent aircraft appraiser,  reasonably  satisfactory to Lessor,  certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value,  utility  and  remaining  useful life  requirements  set forth in Section
10.1.3(b).

     Lessor  and  Lessee  understand  and  agree  that  if at  the  time  of any
replacement of the Airframe or any Engine,  as  contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the  requirements  set forth above in this Section 10.3.1 relating to compliance
with the  requirements  of the Act or the FAA,  shall be  deemed to refer to the
comparable  applicable  Law of,  and  the  Aviation  Authority  of,  such  other
jurisdiction.

          10.3.2 OTHER OBLIGATIONS

     (a) Lessor and Lessee agree that,  upon any Replacement  Airframe  becoming
the  Airframe  hereunder,  and upon any  Replacement  Engine  becoming an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease for
U.S.  federal  income tax  purposes  of, among other  things,  such  Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall,  in all events,  be entitled to the benefits of
Section 1110 with respect to any Replacement  Airframe or Replacement Engine and
Lessee  and  Lessor  shall  cooperate  and take  such  action  as the  other may
reasonably  request  so as to  ensure  that  Lessor  shall be  entitled  to such
benefits.

     (b) No Event of Loss with  respect  to an  Engine,  or with  respect  to an
Airframe,  shall result in, or otherwise allow or permit (other than as provided
in Section 10.1.2(b)), any reduction, deferral, discharge or other change in the
timing or amount of any Rent payable by Lessee  hereunder,  and (subject to such



Section  10.1.2(b))  Lessee shall pay all such Rent and other  amounts as though
such Event of Loss had not occurred.

     10.4  CONVEYANCE TO LESSEE

     Upon  compliance by Lessee with the  applicable  terms of Sections  10.1.3,
10.2 and 10.3.1,  Lessor will transfer to Lessee the Airframe or Engine,  as the
case may be, with respect to which such Event of Loss  occurred,  in  accordance
with Section 4.5.

     10.5  APPLICATION OF PAYMENTS

     Any amounts, other than insurance proceeds in respect of damage or loss not
constituting  an Event of Loss  (the  application  of which is  provided  for in
Section 11), received at any time by Lessor,  Lessee or any Permitted  Sublessee
from any  Government  Entity or any other Person in respect of any Event of Loss
will be applied as follows:

           10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES

     If such amounts are received with respect to the  Airframe,  and any Engine
installed  thereon at the time of such Event of Loss,  upon compliance by Lessee
with the  applicable  terms of Section  10.1.3 with respect to the Event of Loss
for which such  amounts are  received,  such  amounts  shall be paid over to, or
retained by, Lessee.

           10.5.2 LOSS OF ENGINE

     If such  amounts  are  received  with  respect to an Engine  (other than an
Engine  installed on the Airframe at the time such Airframe  suffers an Event of
Loss),  upon  compliance by Lessee with the  applicable  terms of Section 10.2.2
with  respect to the Event of Loss for which such  amounts  are  received,  such
amounts shall be paid over to, or retained by, Lessee.

           10.5.3 PAYMENT OF LOSS

     If such  amounts are  received,  in whole or in part,  with  respect to the
Airframe,  and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:

     (a) FIRST, if the sum described in Section 10.1.2 has not then been paid in
full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so long as
Mortgagee  has not given  notice to Lessee that the Lien of the Trust  Indenture




has been duly  discharged,  except  with  respect to Excluded  Payments)  to the
extent necessary to pay in full such sum;

     (b) SECOND, the remainder, if any, shall be paid to Lessee.

     10.6  REQUISITION OF AIRCRAFT FOR USE

     If any  Government  Entity shall  requisition  for use the Airframe and the
Engines or engines  installed  thereon,  and if the same does not  constitute an
Event of Loss,  Lessee  shall  promptly  notify  Lessor  and  Mortgagee  of such
requisition and all of Lessee's  obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred;  PROVIDED,  HOWEVER,
that if the Airframe and Engines or engines  installed  thereon are not returned
to Lessor by  Lessee  at the end of the Term or within 30 days  thereafter,  and
Lessor,  upon  notice  given not less than 30 days nor more than 120 days before
the end of the Term,  shall have elected to treat such event as  constituting an
Event of Loss with respect to the Aircraft,  Lessee shall then be deemed to have
made the election set forth in Section  10.1.2 with the effect that Lessee shall
be  obligated to pay the  Stipulated  Loss Value and all other  amounts  payable
pursuant to Section  10.1.2 with  respect to the Aircraft as if an Event of Loss
had  occurred  as of the end of the Term.  If Lessor  shall not have  elected to
treat such event as an Event of Loss,  Lessee  shall be  obligated to return the
Airframe and Engines or engines to Lessor pursuant to, and in all other respects
to comply with the  provisions  of, Section 5 promptly upon their return by such
Government  Entity,  and Lessee  shall pay to Lessor  upon such return an amount
equal to the average daily Basic Rent payable by Lessee during the Term for each
day after the end of the Term to but excluding  the day of such return,  up to a
maximum of 30 days.

     10.7  REQUISITION OF AN ENGINE FOR USE

     If any Government  Entity shall  requisition for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with the applicable terms
of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had occurred
with respect to such Engine,  and any payments received by Lessor or Lessee from
such  Government  Entity  with  respect  to such  requisition  shall  be paid or
retained in accordance with Section 10.5.2.

     10.8  APPLICATION OF PAYMENTS

     All payments received by Lessor or Lessee, or any Permitted Sublessee, from
any  Government  Entity  for the use of the  Airframe  and  Engines  or  engines
installed  thereon during the Term shall be paid over to, or retained by, Lessee



and all payments received by Lessor or Lessee from any Government Entity for the
use of the  Airframe  and Engines or engines  installed  thereon  after the Term
shall  be  paid  over  to,  or  retained  by,  Lessor;  provided  that,  if such
requisition  constitutes  an Event of Loss,  or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments shall
be paid over to  Lessor  (or to  Mortgagee  so long as  Mortgagee  has not given
notice to Lessee that the Lien of the Trust Indenture has been duly discharged),
and held as provided  in Section  10.5.

     10.9  APPLICATION OF PAYMENTS DURING EXISTENCE OF A
           LEASE EVENT OF DEFAULT

     Any amount  described in this Section 10 that is payable or creditable  to,
or  retainable  by,  Lessee  shall not be paid or credited  to, or retained  by,
Lessee if at the time such payment,  credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be held
by or paid over to Lessor (or to Mortgagee  so long as  Mortgagee  has not given
notice to Lessee that the Trust Indenture has been duly  discharged) as security
for the  obligations  of Lessee under this Lease and the other Lessee  Operative
Agreements and shall be invested pursuant to Section 4.4 hereof unless and until
Lessor shall have  demanded  liquidated  damages  pursuant to Section  15.1.3 or
15.1.4 and such amount is applied,  at the option of Lessor, or upon the written
request of Lessee to Lessor, from time to time during the continuance of a Lease
Event of Default,  to Lessee's  obligations under this Lease as and when due, it
being understood that any such application  shall be made to such obligations of
Lessee as Lessor may  determine  in its sole  discretion.  At such time as there
shall not be continuing any Special Default, such amount shall be paid to Lessee
to the extent not  previously  applied in  accordance  with this  Section  10.9.

SECTION 11. INSURANCE

     11.1  LESSEE'S OBLIGATION TO INSURE

     Lessee  shall  comply  with,  or cause  to be  complied  with,  each of the
provisions  of  Annex  D,  which  provisions  are  hereby  incorporated  by this
reference as if set forth in full herein.

     11.2  INSURANCE FOR OWN ACCOUNT

     Nothing in Section 11 shall limit or prohibit  (a) Lessee from  maintaining
the policies of insurance  required  under Annex D with higher limits than those
specified  in Annex  D, or (b)  Lessor,  Mortgagee  or  Owner  Participant  from
obtaining  insurance  for its own account (and any proceeds  payable  under such



separate insurance shall be payable as provided in the policy relating thereto);
PROVIDED,  HOWEVER,  that no insurance may be obtained or maintained  that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained  by Lessee  pursuant to this Section 11 and Annex D.

     11.3  INDEMNIFICATION BY GOVERNMENT IN LIEU OF
           INSURANCE

     Lessor agrees to accept, in lieu of insurance against any risk with respect
to the  Aircraft  described  in  Annex D,  indemnification  from,  or  insurance
provided by, the U.S.  Government,  or upon the written consent of Lessor, other
Government Entity, against such risk in an amount that, when added to the amount
of insurance  (including  permitted  self-insurance),  if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such  requisition or transfer,  shall
be at least  equal to the  amount  of  insurance  against  such  risk  otherwise
required by this Section 11.

     11.4  APPLICATION OF INSURANCE PROCEEDS

     As between Lessor and Lessee,  all insurance  proceeds received as a result
of the occurrence of an Event of Loss with respect to the Aircraft or any Engine
under policies  required to be maintained by Lessee  pursuant to this Section 11
will be applied in  accordance  with  Section  10.5.  All  proceeds of insurance
required to be maintained by Lessee, in accordance with Section 11 and Section B
of Annex D, in respect of any property damage or loss not  constituting an Event
of Loss with respect to the Aircraft,  Airframe or any Engine will be applied in
payment (or to reimburse  Lessee) for repairs or for replacement  property,  and
any balance  remaining  after such repairs or  replacement  with respect to such
damage or loss shall be paid over to, or retained by, Lessee.

     11.5  APPLICATION OF PAYMENTS DURING EXISTENCE OF
           DEFAULT

     Any amount  described in this Section 11 that is payable or creditable  to,
or  retainable  by,  Lessee  shall not be paid or credited  to, or retained  by,
Lessee if at the time such payment,  credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be held
by or paid over to Lessor (or to Mortgagee  so long as  Mortgagee  has not given
notice to Lessee that the Lien of the Trust Indenture has been duly  discharged)
as security for the obligations of Lessee under this Lease and shall be invested
pursuant  to Section  4.4 hereof  unless and until  Lessor  shall have  demanded



liquidated  damages  pursuant  to Section  15.1.3 or 15.1.4  and such  amount is
applied,  at the  option of  Lessor,  or upon the  written  request of Lessee to
Lessor, from time to time during the continuance of a Lease Event of Default, to
Lessee's  obligations under this Lease and the other Lessee Operative Agreements
as and when due, it being understood that any such application  shall be made to
such  obligations of Lessee as Lessor may determine in its sole  discretion.  At
such time as there  shall not be  continuing  any Special  Default,  such amount
shall be paid to Lessee to the extent not previously  applied in accordance with
this Section 11.5.

SECTION 12. INSPECTION

     (a) At all reasonable times Lessor, Mortgagee or the Owner Participant, and
their respective authorized  representatives (the "Inspecting Parties") may (not
more than once every 12 months  unless a Lease Event of Default has occurred and
is continuing  then such inspection  right shall not be so limited)  inspect the
Aircraft,  Airframe and Engines  (including,  without  limitation,  the Aircraft
Documents)  and any such  Inspecting  Party  may make  copies  of such  Aircraft
Documents  not  reasonably  deemed  confidential  by  Lessee  or such  Permitted
Sublessee.

     (b) Any inspection of the Aircraft  hereunder shall be limited to a visual,
walk-around  inspection and shall not include the opening of any panels, bays or
other  components of the Aircraft,  and no such inspection  shall interfere with
Lessee's or any Permitted Sublessee's maintenance and operation of the Aircraft,
Airframe and Engines.

     (c) With respect to such rights of inspection,  Lessor,  Owner  Participant
and  Mortgagee  shall  not have any duty or  liability  to make,  or any duty or
liability by reason of not making, any such visit, inspection or survey.

     (d) Each  Inspecting  Party shall bear its own expenses in connection  with
any such  inspection  (including the cost of any copies made in accordance  with
Section 12(a)).

SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

     13.1  IN GENERAL

     This Lease and the other Lessee Operative  Agreements shall be binding upon
and inure to the  benefit of Lessor and Lessee and their  respective  successors
and permitted assigns.  Except as otherwise  expressly permitted by the terms of
the Lease or any other Lessee Operative Agreement,  Lessee will not, without the




prior written  consent of Lessor and  Mortgagee,  assign any of its rights under
this Lease. Except as otherwise provided herein (including,  without limitation,
under the provisions of Section 15 hereof),  Lessor and Mortgagee may not assign
or convey  any of its  right,  title and  interest  in and to this  Lease or the
Aircraft  without the prior  written  consent of Lessee,  such consent not to be
unreasonably withheld.

     13.2  MERGER OF LESSEE

           13.2.1 IN GENERAL

     Lessee  shall not  consolidate  with or merge into any other  person  under
circumstances  in which  Lessee is not the  surviving  corporation,  or  convey,
transfer or lease in one or more  transactions all or  substantially  all of its
assets to any other person, unless:

     (a) such person is organized,  existing and in good standing under the Laws
of the United  States,  any State of the United States or the District  Columbia
and,  upon  consummation  of such  transaction,  such person will be a U.S.  Air
Carrier;

     (b) such  person  executes  and  delivers  to Lessor and  Mortgagee  a duly
authorized,   legal,  valid,  binding  and  enforceable  agreement,   reasonably
satisfactory in form and substance to Lessor, containing an effective assumption
by such  person  of the due and  punctual  performance  and  observance  of each
covenant,  agreement  and  condition in the Lessee  Operative  Agreements  to be
performed or observed by Lessee;

     (c) such person makes such filings and recordings  with the FAA pursuant to
the Act as shall be necessary to evidence such consolidation or merger; and

     (d)  immediately  after giving  effect to such  consolidation  or merger no
Lease Event of Default shall have occurred and be continuing.

           13.2.2 EFFECT OF MERGER

     Upon any such  consolidation  or  merger  of  Lessee  with or into,  or the
conveyance,  transfer  or lease by  Lessee  of all or  substantially  all of its
assets to, any Person in  accordance  with this Section  13.2,  such Person will
succeed to, and be  substituted  for, and may exercise every right and power of,
Lessee  under the Lessee  Operative  Agreements  with the same effect as if such
person had been named as "Lessee" therein.  No such  consolidation or merger, or




conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the  obligations,  liabilities,  covenants or undertakings of
Lessee under the Lease.

     13.3  ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS

     In order to secure  the  indebtedness  evidenced  by the  Equipment  Notes,
Lessor has  agreed in the Trust  Indenture,  among  other  things,  to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor
of Mortgagee,  subject to the  reservations  and  conditions  therein set forth.
Lessee  hereby  accepts and consents to the  assignment  of all Lessor's  right,
title  and  interest  in and to this  Lease  pursuant  to the terms of the Trust
Indenture.  In accordance with Section 3.3(c),  Lessee agrees to pay directly to
Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge
of the Lien of the Trust Indenture,  to Lessor), all amounts of Rent (other than
Excluded  Payments) due or to become due hereunder and assigned to Mortgagee and
Lessee  agrees  that  Mortgagee's  right  to such  payments  hereunder  shall be
absolute  and  unconditional  and shall  not be  affected  by any  circumstance,
including, without limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding  the foregoing  assignment  of this Lease,  the  obligations  of
Lessee to Lessor to perform the terms and  conditions of this Lease shall remain
in full force and effect.

     13.4  SUCCESSOR OWNER TRUSTEE

     Lessee agrees that in the case of the  appointment  of any successor  Owner
Trustee  pursuant  to the  terms of the  Participation  Agreement  and the Trust
Agreement,  such  successor  Owner Trustee  shall,  upon written  notice by such
successor Owner Trustee to Lessee,  succeed to all the rights,  powers and title
of Lessor  hereunder  and  shall be  deemed  to be  Lessor  and the owner of the
Aircraft  and the other  assets  of the Trust  Estate  for all  purposes  hereof
without  the  necessity  of any consent or approval by Lessee and without in any
way  altering  the terms of this Lease or  Lessee's  obligations  hereunder.  An
appointment  and  designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate  further  successor or additional  Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement,  and such right
may be exercised  repeatedly  as long as this Lease shall be in effect.

SECTION 14. LEASE EVENTS OF DEFAULT

     The  occurrence  of  any  one  or  more  of  the  following  circumstances,
conditions,  acts or events,  for any reason  whatsoever  and  whether  any such




circumstance,  condition, act or event shall be voluntary or involuntary or come
about or be effected by  operation of Law or pursuant to or in  compliance  with
any judgment,  decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been  remedied:

     14.1  PAYMENTS

     Lessee shall fail to pay any amount of Interim  Rent,  Basic Rent,  Renewal
Rent,  Stipulated Loss Value or Termination  Value within ten (10) Business Days
after  the  same  shall  have  become  due;  or  Lessee  shall  fail  to pay any
Supplemental  Rent (other than Stipulated Loss Value or Termination  Value) when
due and such failure shall  continue for a period in excess of ten (10) Business
Days from and after the date of any written  notice to Lessee from Lessor of the
failure to make such payment when due; provided that any such failure to pay any
Excluded  Payment  shall not  constitute a Lease Event of Default  until written
notice  is given by the Owner  Participant  to Lessee  and  Mortgagee  that such
failure  constitutes  a Lease  Event of  Default  and such  failure  shall  have
continued  for a period in excess of ten (10)  Business  Days after such notice.

     14.2  INSURANCE

     Lessee  shall  fail to carry  and  maintain,  or cause  to be  carried  and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.

     14.3  OTHER COVENANTS

     Lessee  shall  fail to observe or  perform  (or caused to be  observed  and
performed) in any material  respect any other covenant,  agreement or obligation
set forth  herein or in any other  Lessee  Operative  Agreement  (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such  failure  shall  continue  unremedied  for a period of 30 days from and
after the date of written  notice  thereof to Lessee from  Lessor or  Mortgagee,
unless such failure is capable of being corrected and Lessee shall be diligently
proceeding to correct such failure,  in which case there shall be no Lease Event
of Default unless and until such failure shall continue  unremedied for a period
of 270 days after receipt of such notice.



     14.4  REPRESENTATIONS AND WARRANTIES

     Any  representation or warranty made by Lessee herein, in the Participation
Agreement  or  in  any  other  Lessee   Operative   Agreement  (other  than  the
representations  and  warranties of Lessee in the Tax Indemnity  Agreement)  (a)
shall prove to have been untrue or inaccurate in any material  respect as of the
date made, (b) such untrue or inaccurate  representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such  incorrectness on the interest of the Participants or
Lessor)  for a period in  excess  of 30 days from and after the date of  written
notice  thereof  from  Lessor  or  Mortgagee  to  Lessee.

     14.5  BANKRUPTCY AND INSOLVENCY

     (a) Lessee shall consent to the  appointment of or the taking of possession
by a receiver,  trustee or liquidator of itself or of  substantially  all of its
property,  or Lessee  shall  admit in  writing  its  inability  to pay its debts
generally  as they come due, or does not pay its debts  generally as they become
due or shall make a general  assignment for the benefit of creditors,  or Lessee
shall file a voluntary  petition  in  bankruptcy  or a voluntary  petition or an
answer seeking  reorganization,  liquidation or other relief in a case under any
bankruptcy Laws or other  insolvency Laws (as in effect at such time), or Lessee
shall seek relief by voluntary petition, answer or consent, under the provisions
of any other bankruptcy or other similar Law providing for the reorganization or
winding-up  of  corporations  (as in effect at such time) or  Lessee's  board of
directors shall adopt a resolution authorizing any of the foregoing; or

     (b) an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing,  without the consent of Lessee, a receiver,  trustee or
liquidator of Lessee or of substantially  all of its property,  or substantially
all of the property of Lessee shall be sequestered, and any such order, judgment
or decree of appointment  or  sequestration  shall remain in force  undismissed,
unstayed and unvacated for a period of 90 days after the date of entry  thereof;
or

     (c) a petition  against Lessee in a case under any bankruptcy Laws or other
insolvency  Laws (as in  effect  at such  time) is filed  and not  withdrawn  or
dismissed  within 90 days  thereafter,  or if, under the  provisions  of any Law
providing for  reorganization  or winding-up of corporations  which may apply to
Lessee, any court of competent  jurisdiction  assumes  jurisdiction,  custody or
control of Lessee or of substantially all of its property and such jurisdiction,



custody or control remains in force  unrelinquished,  unstayed and  unterminated
for a period of 90 days.

SECTION 15. REMEDIES AND WAIVERS

     15.1  REMEDIES

     If any Lease Event of Default shall occur and be continuing, Lessor may, at
its  option and at any time and from time to time,  exercise  any one or more of
the following remedies as Lessor in its sole discretion shall elect:

           15.1.1 RETURN AND REPOSSESSION

     Lessor may cause Lessee,  upon giving written  notice to Lessee,  to return
promptly,  and Lessee shall return promptly,  the Airframe and Engines as Lessor
may so demand,  to Lessor or its order in the manner and condition  required by,
and  otherwise in  accordance  with,  all the  provisions of Section 5 as if the
Airframe or Engine were being  returned at the end of the Base Lease Term or any
Renewal Lease Term or Lessor,  at its option,  may enter upon the premises where
the Airframe or any Engine, or any Part thereof,  are located and take immediate
possession  of and remove  the same by summary  proceedings  or  otherwise,  all
without liability accruing to Lessor for or by reason of such entry or taking of
possession,  whether for the  restoration  of damage to property  caused by such
taking or otherwise.

           15.1.2 SALE AND USE

     Lessor may sell the Airframe  and/or any Engine at public or private  sale,
at such times and places, and to such Persons  (including  Lessor,  Mortgagee or
any Participant),  as Lessor may determine;  or Lessor may otherwise dispose of,
hold, use, operate, lease to others or keep idle the Airframe and/or any Engine,
as Lessor,  in its sole  discretion,  may  determine,  all free and clear of any
rights of Lessee and without any duty to account to Lessee with  respect to such
action  or  inaction  or for  any  proceeds  with  respect  thereto,  except  as
hereinafter  set forth in this  Section  15, and except to the extent  that such
proceeds  would  constitute,  under  applicable  Law, a  mitigation  of Lessor's
damages  suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.



           15.1.3 CERTAIN LIQUIDATED DAMAGES

     Whether or not Lessor shall have exercised, or shall thereafter at any time
exercise,  any of its rights under Section  15.1.1 or 15.1.2 with respect to the
Airframe and/or any Engine,  or any Part thereof,  Lessor,  by written notice to
Lessee  specifying a payment date (which shall be the Stipulated Loss Value Date
next occurring not less than 10 days after the date of such notice),  may demand
Lessee to pay to Lessor,  and Lessee shall pay to Lessor, on the payment date so
specified  and in the manner and in funds of the type  specified in Section 3.3,
as liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Interim  Rent,  Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods  commencing on or after the date specified for payment
in such notice), the following amounts:

     (a) all unpaid  Interim  Rent,  Basic Rent or Renewal Rent, as the case may
be, due at any time prior to the  Stipulated  Loss Value Date  specified in such
notice; plus

     (b) whichever of the following amounts Lessor, in its sole discretion shall
specify in such notice:

          (i) an amount  equal to the  excess,  if any,  of the  present  value,
     computed as of the  Stipulated  Loss Value Date  specified  in such notice,
     discounted  to such  date at a rate  per  annum  equal  to the  Debt  Rate,
     compounded  semiannually,  of all unpaid Interim Rent and Basic Rent during
     the then  remaining  portion of the Base Lease Term or, if a Renewal  Lease
     Term has commenced, of all unpaid Renewal Rent during the remaining portion
     of such  Renewal  Lease  Term,  over the Fair  Market  Rental  Value of the
     Aircraft for the remainder of the Term, after  discounting such Fair Market
     Rental  Value to its then  present  value (at a rate per annum equal to the
     Debt Rate,  compounded  semiannually)  as of the Stipulated Loss Value Date
     specified in such notice, or

          (ii) an amount  equal to the excess,  if any, of the  Stipulated  Loss
     Value for the  Aircraft,  computed  as of the  Stipulated  Loss  Value Date
     specified in such notice, over the Fair Market Sales Value of the Aircraft,
     as of the Stipulated Loss Value Date specified in such notice; plus

     (c) interest on the amounts  specified in the  foregoing  clause (a) at the
Payment Due Rate from and including the date on which any such amount was due to
the date of payment of such amount; plus



     (d) interest on the amount  specified  in the  foregoing  clause  (b)(i) or
(b)(ii),  according  to  Lessor's  election,  at the  Payment  Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the date of
payment of such amount.

           15.1.4 LIQUIDATED DAMAGES UPON SALE

     If Lessor,  pursuant to Section  15.1.2 or applicable  Law, shall have sold
the Airframe and/or any Engine,  Lessor,  in lieu of exercising its rights under
Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case
may be, may, if Lessor  shall so elect,  upon giving  written  notice to Lessee,
demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such
sale and in the manner and in funds of the type  specified  in Section  3.3,  as
liquidated  damages  for loss of a bargain  and not as a penalty (in lieu of the
Interim  Rent,  Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods  commencing  on or after the date of such  sale),  the
following amounts:

     (a)  all unpaid  Interim Rent,  Basic Rent or Renewal Rent, as the case may
          be,  due at any time  prior to the  Stipulated  Loss  Value Date on or
          immediately preceding the date of such sale; plus

     (b)  an amount  equal to the  excess,  if any, of (i) the  Stipulated  Loss
          Value of the Aircraft,  computed as of the Stipulated  Loss Value Date
          used in the foregoing  clause (a) for the  computation of unpaid Rent,
          over (ii) the  proceeds of such sale,  minus all  reasonable  costs of
          Lessor and Mortgagee in connection with the sale; plus

     (c)  if the date of such  sale is not a  Stipulated  Loss  Value  Date,  an
          amount equal to interest on the  outstanding  principal  amount of the
          Equipment Notes at the rate per annum borne thereby from and including
          the  Stipulated  Loss Value Date used in the foregoing  clause (a) for
          the computation of unpaid Rent to the date of such sale; plus

     (d)  interest on the amounts  specified in the foregoing  clause (a) at the
          Payment Due Rate from and  including the date on which any such amount
          was due to the date of payment of such amount; plus

     (e)  interest on the sum of the amounts  specified in the foregoing  clause
          (b) at the Payment Due Rate from and  including  the date of such sale
          to the date of payment of such amounts.




           15.1.5 RESCISSION

     Lessor may (i) at its  option,  rescind or  terminate  this Lease as to the
Aircraft,  Airframe or any Engine,  or any Part  thereof,  or (ii)  exercise any
other  right or  remedy  that may be  available  to it under  applicable  Law or
proceed by appropriate court action to enforce the terms hereof.

           15.1.6 OTHER REMEDIES

     In addition to the foregoing  remedies (but without  duplication of amounts
otherwise  paid under this Section  15),  Lessee shall be liable for any and all
unpaid Rent due hereunder before,  during or after (except as otherwise provided
herein) the exercise of any of the  foregoing  remedies  and for all  reasonable
attorneys'  fees and other  costs and  expenses of Lessor,  Mortgagee  the Owner
Participant and the Note Holders,  including,  without  limitation,  interest on
overdue  Rent  at the  rate  as  herein  provided,  incurred  by  reason  of the
occurrence  of any Lease Event of Default or the  exercise of Lessor's  remedies
with respect thereto,  including all reasonable  costs and expenses  incurred in
connection with the return of the Airframe or any Engine, in accordance with the
terms of Section 5 or in placing the  Airframe or any Engine,  in the  condition
and airworthiness required by Section 5.

     15.2  LIMITATIONS UNDER CRAF

     Notwithstanding  the provisions of Section 15.1, during any period that the
Aircraft,  Airframe  or any  Engine is subject  to CRAF in  accordance  with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not,  as a result of any Lease  Event of Default,  exercise  its  remedies
hereunder in such manner as to limit  Lessee's  control under this Lease (or any
Permitted  Sublessee's  control under any  Permitted  Sublease) of the Aircraft,
Airframe or such  Engine,  unless at least 30 days' (or such other period as may
then be applicable  under CRAF) written notice of default  hereunder  shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted  Sublessee) with a copy to the Contracting Officer  Representative
or  Representatives  for the Military  Airlift  Command of the United States Air
Force to whom notices must be given under the  contract  governing  Lessee's (or
any Permitted  Sublessee's)  participation in CRAF with respect to the Aircraft,
Airframe or any Engine.





     15.3  RIGHT TO PERFORM FOR LESSEE

     If Lessee (i) fails to make any  payment of Rent  required to be made by it
hereunder  or (ii)  fails  to  perform  or  comply  with  any of its  agreements
contained  herein and such failure  continues  for a period of thirty days after
written  notice  thereof is given by Lessor or  Mortgagee  to Lessee,  Lessor or
Mortgagee  may (but shall not be  obligated  to) make such payment or perform or
comply with such agreement, and the amount of such payment and the amount of the
expenses of Lessor or Mortgagee  incurred in connection with such payment or the
performance of or compliance with such  agreement,  as the case may be, together
with  interest  thereon at the  Payment Due Rate,  shall be deemed  Supplemental
Rent,  payable  by Lessee  upon  demand by Lessor  or  Mortgagee,  whichever  is
entitled thereto. No such payment,  performance or compliance shall be deemed to
cure any Lease Default or Lease Event of Default or otherwise  relieve Lessee of
its obligations with respect thereto.


     15.4  DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR
           MARKET SALES VALUE

     For the purpose of this Section 15, the "Fair Market  Rental  Value" or the
"Fair  Market  Sales Value" of the  Aircraft,  Airframe or any Engine,  shall be
determined  on an "as is, where is" basis and shall take into account  customary
brokerage and other  out-of-pocket  fees and expenses which  typically  would be
incurred in connection with a re-lease or sale of the Aircraft,  Airframe or any
Engine. Any such determination  shall be made by an Appraiser selected by Lessor
and the costs and expenses associated therewith shall be borne by Lessee, unless
Lessor does not obtain possession of the Aircraft, Airframe and Engines pursuant
to this Section 15, in which case an Appraiser  shall not be appointed  and Fair
Market  Rental Value and Fair Market Sales Value for purposes of this Section 15
shall be zero.

     15.5  REMEDIES CUMULATIVE

     Nothing  contained in this Lease shall be construed to limit in any way any
right,  power,  remedy  or  privilege  of  Lessor  hereunder  or under any other
Operative  Agreement or now or hereafter existing at law or in equity.  Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease  shall be in  addition  to and not in  limitation  of every  other
right, power,  remedy and privilege given under the Operative  Agreements or now
or hereafter existing at law or in equity.  Each and every right,  power, remedy
and privilege of Lessor under this Lease and any other  Operative  Agreement may
be exercised from time to time or simultaneously  and as often and in such order



as may be deemed  expedient  by Lessor.  All such rights,  powers,  remedies and
privileges shall be cumulative and not mutually  exclusive,  and the exercise of
one shall not be deemed a waiver of the  right to  exercise  any  other.  Lessee
hereby waives to the extent  permitted by applicable  Law any right which it may
have to  require  Lessor to  choose  or elect  remedies.

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

     (a)  Lessee's  obligation  to pay  Rent  hereunder  shall be  absolute  and
unconditional,  and  shall  not  be  affected  by  any  event  or  circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor,  Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever;  (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any  damage to or loss or  destruction  of,  the  Aircraft,  Airframe  or any
Engine,  or any  interruption  or cessation in the use or possession  thereof by
Lessee   for  any  reason   whatsoever;   (iii)  any   insolvency,   bankruptcy,
reorganization or similar  proceedings by or against Lessee or any other Person;
or (iv) any other  circumstance,  happening or event whatsoever,  whether or not
similar to any of the foregoing.

     (b) If for any reason whatsoever this Lease shall be terminated in whole or
in part by operation of law or otherwise except as specifically provided herein,
Lessee  nonetheless  agrees to pay an amount  equal to each Rent  payment at the
time such payment would have become due and payable in accordance with the terms
hereof had this Agreement not been terminated in whole or in part. Lessee hereby
waives,  to the extent  permitted by applicable  law, any and all rights that it
may now have or that at any time  hereafter may be conferred upon it, by statute
or otherwise, to terminate,  cancel, quit or surrender this Agreement, except in
accordance with the express terms hereof.

     (c) Nothing  set forth in this  Section 16 shall be  construed  to prohibit
Lessee  from  separately  pursuing  any claim that it may have from time to time
against  Lessor or any other Person with  respect to any matter  (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than the matters  specified in paragraphs (a) and (b) above).




SECTION 17. RENEWAL AND PURCHASE OPTIONS

     17.1  NOTICES GENERALLY

     (a) At least  120 days  prior to the  Scheduled  Expiration  Date or,  if a
Renewal  Lease  Term is then in  effect,  prior to the  Scheduled  Renewal  Term
Expiration Date of such Renewal Lease Term,  Lessee may provide notice to Lessor
that Lessee may exercise either the option to extend the leasing of the Aircraft
for a Renewal  Lease Term pursuant to Section 17.2 or the option to purchase the
Aircraft on the Scheduled  Expiration Date or Scheduled  Renewal Term Expiration
Date of such Renewal Lease Term, as the case may be, pursuant to Section 17.3 (a
"Preliminary Notice").

     (b) If any such  Preliminary  Notice is given by  Lessee,  then  Lessee may
provide a further  notice  specifying  which  option it intends  to elect,  with
respect to the relevant  period,  pursuant to Section  17.2.1 or 17.3.1,  as the
case may be.

     17.2  RENEWAL OPTIONS

           17.2.1 RENEWAL NOTICE

     (a) If Lessee has given a Preliminary Notice, as specified in Section 17.1,
and  subject  to the terms and  conditions  of this  Section  17.2,  Lessee  may
exercise  its option to extend the leasing of the Aircraft  hereunder  until the
next Scheduled  Renewal Term Expiration Date, on the same terms,  provisions and
conditions  (except as  contemplated by this Section 17) set forth herein and in
the other Lessee  Operative  Agreements  with respect to the Base Lease Term, by
delivery of a notice (a "Renewal  Notice") to Lessor not less than 90 days prior
to (i) if the Base Lease Term is then in effect, the Scheduled  Expiration Date,
or (ii) if a Renewal Lease Term is then in effect,  the  Scheduled  Renewal Term
Expiration Date for such Renewal Lease Term.

     (b) Notwithstanding anything to the contrary in this Agreement or any other
Operative Agreement:

          (i) No Preliminary Notice or Renewal Notice shall be binding on Lessor
     or oblige  Lessor to extend the  leasing of the  Aircraft  hereunder  for a
     Renewal Lease Term if any Lease Event of Default shall have occurred and be
     continuing  on and as of the  date  that  such  Renewal  Lease  Term  would
     otherwise commence.

          (ii) Any Renewal Notice shall be revocable by Lessee until 10 Business
     Days after the Renewal  Rent is  determined  in  accordance  with  Sections



     17.2.2 and  unless  revoked  by  written  notice by Lessee to Lessor  shall
     thereafter  become   irrevocable  and  shall  constitute  an  unconditional
     obligation  of Lessee to extend the leasing of the Aircraft  hereunder  for
     the Renewal Lease Term to which such Renewal Notice relates.

          (iii)  Lessee  shall not be entitled to give any Renewal  Notice if it
     has (x) not  delivered  a  Preliminary  Notice or (y)  delivered a Purchase
     Notice to Lessor.

           17.2.2 RENEWAL RENT

     (a) During  the  Renewal  Lease  Term,  Lessee  shall pay to Lessor on each
Payment  Date,  in the manner and in the funds of the type  specified in Section
3.3, Renewal Rent in arrears.

     (b) The  Renewal  Rent  payable by Lessee on each  Payment  Date during any
Fixed  Renewal  Lease Term shall be the lower of (i) an amount equal to one-half
of the average of the  semiannual  Basic Rent  amounts  payable  during the Base
Lease Term and(ii) the Fair Market Rental Value of the Aircraft for such Renewal
Lease Term.  The Renewal  Rent payable by Lessee on each Payment Date during any
Subsequent  Renewal  Lease Term  shall be the Fair  Market  Rental  Value of the
Aircraft for such Renewal Lease Term. Any such Fair Market Rental Value shall be
determined  not more than 120 days and not less than 100 days  prior to the date
of  commencement  of such Renewal  Lease Term by mutual  agreement of Lessor and
Lessee or, if they shall be unable to agree,  by an appraisal in accordance with
Section 17.4.

           17.2.3 STIPULATED LOSS AND TERMINATION VALUES

     (a) For any Renewal Lease Term, Stipulated Loss Value Dates and Termination
Value Dates shall be extended  throughout  such  Renewal  Lease Term on the same
days and for the same months as during the Base Lease Term.

     (b) Stipulated  Loss Value and  Termination  Value amounts that are payable
during any such Renewal Lease Term shall be determined at the same time that the
Renewal Rent for such Renewal  Lease Term is determined  under  Section  17.2.2.
Stipulated  Loss Values and  Termination  Values for any such Renewal Lease Term
shall,  commencing  on the first day of such Renewal Lease Term, be equal to the
Fair Market  Sales Value of the  Aircraft,  computed as of the first day of such
Renewal  Lease Term,  and shall  decline  ratably on a monthly basis to the Fair
Market  Sales  Value of the  Aircraft as of the last day of such  Renewal  Lease
Term.



     (c)  Any  Fair  Market  Sales  Value  of  the  Aircraft,  for  purposes  of
calculating  Stipulated  Loss Value and  Termination  Value  amounts  applicable
during any such Renewal Lease Term,  shall be determined by mutual  agreement of
Lessor  and  Lessee or, if they  shall be unable to agree,  by an  appraisal  in
accordance with Section 17.4.

     17.3  PURCHASE OPTION

           17.3.1 PURCHASE NOTICE

     (a) Subject to Section  17.1 and the terms and  conditions  of this Section
17.3,  Lessee may elect to purchase the  Aircraft,  on any Purchase  Date,  at a
purchase  price equal to the lesser of 50% of Lessor's  Cost and the Fair Market
Sales Value of the Aircraft computed as of the Purchase Date.

     (b) Lessee may exercise such option to purchase the  Aircraft,  by delivery
of a notice (a  "Purchase  Notice") to Lessor not less than 90 days prior to the
Purchase Date specified in such Purchase Notice.

     (c) Notwithstanding anything to the contrary in this Agreement or any other
Operative Agreement:

          (i) Any  Purchase  Notice  (whether  delivered  or deemed to have been
     delivered)   shall  be   revocable   until  10  Business   Days  after  the
     determination  of the Fair Market  Sales Value in  accordance  with Section
     17.3.2 and  unless  revoked  by  written  notice by Lessee to Lessor  shall
     thereafter  become   irrevocable  and  shall  constitute  an  unconditional
     obligation of Lessee to purchase the Aircraft under this Section 17.3.

          (ii)  Lessee  shall not be  entitled  to give any  Purchase  Notice in
     respect of any  Purchase  Date if it has  delivered a Renewal  Notice for a
     Renewal Lease Term that would commence immediately  following such Purchase
     Date.

           17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE

     The Fair Market Sales Value of the Aircraft  shall be  determined  not more
than 120 days and not less than 100 days prior to the  applicable  Purchase Date
by mutual  agreement  of Lessor and Lessee or, if they shall be unable to agree,
by an appraisal in accordance with Section 17.4.




           17.3.3 TITLE

     Upon full and final payment by Lessee of (a) the applicable  purchase price
of the Aircraft,  (b) all unpaid Rent due and payable  through and including the
Purchase  Date and (c) all other  amounts due and  payable by Lessee  under this
Agreement,  Lessor will  transfer to Lessee title to the Aircraft in  accordance
with Section 4.5.

     17.4  APPRAISALS

     Whenever  Fair  Market  Rental  Value  or Fair  Market  Sales  Value of the
Aircraft is required to be  determined  by an  appraisal  under this Section 17,
Lessee and Lessor  shall  appoint a mutually  satisfactory  Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate  Appraiser and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor fails to so appoint an
Appraiser,  the determination of the single Appraiser  appointed shall be final.
If two Appraisers  are appointed and within 7 days after the  appointment of the
latter of such two  Appraisers,  they cannot  agree upon such  amount,  such two
Appraisers shall, within 8 days after such latter  appointment,  appoint a third
Appraiser  and such amount shall be  determined  by such three  Appraisers,  who
shall make their separate  appraisals within 7 days following the appointment of
the third  Appraiser,  and any  determination  so made shall be  conclusive  and
binding upon Lessor and Lessee.  If no such third Appraiser is appointed  within
such 8-day period, either Lessor or Lessee may apply to the American Arbitration
Association  to make such  appointment,  and both parties shall be bound by such
appointment.  The foregoing  appraisal procedure shall in any event be completed
no less  than 125 days  before  the end of the Base  Lease  Term or the  current
Renewal  Lease Term, as the case may be. If three  Appraisers  are appointed and
the  difference  between  the  determination  which is  farther  from the middle
determination  and the middle  determination is more than 125% of the difference
between the middle determination and the third determination,  then such farther
determination  shall be excluded,  the  remaining  two  determinations  shall be
averaged  and such  average  shall be final and binding  upon Lessor and Lessee.
Otherwise,  the average of all three  determinations  shall be final and binding
upon Lessor and Lessee.  The fees and expenses of all such  Appraisers  and such
appraisal  procedure shall be borne equally by Lessee and Lessor,  PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft  following the
conclusion of such  appraisal,  Lessee shall pay all expenses of such appraisal.



SECTION 18. MISCELLANEOUS

     18.1  AMENDMENTS

     No  provision  of this  Agreement  may be  amended,  supplemented,  waived,
modified,  discharged,  terminated or otherwise  varied  orally,  but only by an
instrument  in  writing  that  specifically  identifies  the  provision  of this
Agreement  that it  purports to amend,  supplement,  waive,  modify,  discharge,
terminate  or  otherwise  vary and is  signed by Lessor  and  Lessee.  Each such
amendment, supplement, waiver, modification,  discharge, termination or variance
shall be effective  only in the specific  instance and for the specific  purpose
for  which it is  given.  No  provision  of this  Agreement  shall be  varied or
contradicted  by oral  communication,  course of dealing or performance or other
manner not set forth in an  agreement,  document  or  instrument  in writing and
signed by Lessor and Lessee.

     18.2  SEVERABILITY

     If any provision hereof shall be held invalid,  illegal or unenforceable in
any respect in any  jurisdiction,  then, to the extent  permitted by Law (a) all
other  provisions  hereof  shall  remain  in  full  force  and  effect  in  such
jurisdiction and (b) such invalidity,  illegality or unenforceability  shall not
affect the validity,  legality or  enforceability of such provision in any other
jurisdiction.  If,  however,  any Law pursuant to which such provisions are held
invalid,  illegal or unenforceable  may be waived,  such Law is hereby waived by
the parties hereto to the full extent permitted,  to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.

     18.3  THIRD-PARTY BENEFICIARY

     This Agreement is not intended to, and shall not,  provide any person not a
party hereto (other than Mortgagee, the Participants,  the Indenture Indemnitees
and the  Persons  referred  to in  Section  4.6) with any  rights of any  nature
whatsoever  against  either of the  parties  hereto,  and no person  not a party
hereto (other than Mortgagee,  the Participants,  the Indenture  Indemnitees and
the Persons referred to in Section 4.6) shall have any right, power or privilege
in respect of, or have any benefit or interest  arising out of, this  Agreement.

     18.4  REPRODUCTION OF DOCUMENTS

     This  Agreement,  all  annexes,  schedules  and  exhibits  hereto  and  all
agreements,  instruments  and  documents  relating  hereto,  including,  without



limitation  (a)  consents,  waivers  and  modifications  that may  hereafter  be
executed  and (b)  financial  statements,  certificates  and  other  information
previously or hereafter furnished to any party hereto, may be reproduced by such
party  by  any  photographic,   photostatic,  microfilm,  micro-card,  miniature
photographic or other similar  process,  and such party may destroy any original
documents so reproduced.  Any such reproduction  shall be admissible in evidence
as the original itself in any judicial or administrative  proceeding (whether or
not the original is in existence and whether or not such  reproduction  was made
by such party in the regular course of business) and any enlargement,  facsimile
or further reproduction of such reproduction likewise is admissible in evidence.

     18.5  COUNTERPARTS

     This Agreement and any amendments,  waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate  signature pages
bound  together into one or more  counterparts),  each of which when so executed
shall  be  deemed  to be an  original,  and  all of  which  counterparts,  taken
together, shall constitute one and the same instrument.

     18.6  NOTICES

     Unless  otherwise  expressly  permitted by the terms  hereof,  all notices,
requests,  demands,  authorizations,  directions,  consents,  waivers  and other
communications  required or  permitted  to be made,  given,  furnished  or filed
hereunder shall be in writing (it being  understood that the  specification of a
writing in certain  instances and not in others does not imply an intention that
a writing is not required as to the latter),  shall refer  specifically  to this
Agreement   and  shall  be   personally   delivered,   sent  by   facsimile   or
telecommunication   transmission   (which  in  either  case   provides   written
confirmation  to the  sender  of its  delivery),  sent  by  registered  mail  or
certified mail, return receipt requested,  postage prepaid, or sent by overnight
courier service,  in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the  Participation  Agreement,  or to such
other address or number as either party hereto may  hereafter  specify by notice
to the other party hereto.  Each such notice,  request,  demand,  authorization,
direction,  consent,  waiver  or other  communication  shall be  effective  when
received  or,  if  made,   given,   furnished  or  filed  (a)  by  facsimile  or
telecommunication   transmission,  when  confirmed,  or  (b)  by  registered  or
certified mail, three Business Days after being deposited,  properly  addressed,
with the U.S. Postal Service.



     18.7  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

     (A) THIS  AGREEMENT  SHALL IN ALL  RESPECTS  BE GOVERNED BY THE LAWS OF THE
STATE  OF  NEW  YORK,  INCLUDING  ALL  MATTERS  OF  CONSTRUCTION,  VALIDITY  AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

     (B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE  JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED  STATES FOR THE SOUTHERN  DISTRICT
OF NEW YORK,  IN  CONNECTION  WITH ANY LEGAL  ACTION,  SUIT OR  PROCEEDING  WITH
RESPECT TO ANY MATTER  RELATING TO OR ARISING OUT OF OR IN CONNECTION  WITH THIS
AGREEMENT.

     (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL  PROCESS,  SUMMONS,  NOTICES  AND  DOCUMENTS  OF ANY OF THE
AFOREMENTIONED  COURTS IN ANY SUCH  SUIT,  ACTION OR  PROCEEDING  MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,  AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE  UPON IT, OR ANY OF ITS  AGENTS,  IN EACH CASE IN  ACCORDANCE  WITH THIS
SECTION 18.7(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH  SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH  SERVICE ON SUCH PARTY OR ANY JUDGMENT  RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

     (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE  LAW, AND AGREES NOT TO ASSERT,  BY WAY OF MOTION,  AS A DEFENSE,  OR
OTHERWISE,  IN ANY LEGAL ACTION OR  PROCEEDING  BROUGHT  HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM,  THAT  VENUE  FOR THE  ACTION  OR  PROCEEDING  IS  IMPROPER  OR THAT THIS
AGREEMENT  OR ANY OTHER  OPERATIVE  AGREEMENT  MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.

     (E) EACH PARTY HERETO HEREBY WAIVES ITS  RESPECTIVE  RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY  JURISDICTION  BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT. 



     18.8  NO WAIVER

     No  failure  on the part of Lessor to  exercise,  and no delay by Lessor in
exercising,  any of its  rights,  powers,  remedies  or  privileges  under  this
Agreement or provided at Law, in equity or otherwise shall impair,  prejudice or
constitute  a  waiver  of any such  right,  power,  remedy  or  privilege  or be
construed  as a waiver  of any  breach  hereof  or  default  hereunder  or as an
acquiescence  therein,  nor shall any  single or  partial  exercise  of any such
right, power, remedy or privilege preclude any other or further exercise thereof
by Lessor or the  exercise of any other  right,  power,  remedy or  privilege by
Lessor.  No notice to or demand on Lessee in any case  shall,  unless  otherwise
required under this Agreement,  entitle Lessee to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
Lessor to any other or further  action in any  circumstances  without  notice or
demand.

     18.9  ENTIRE AGREEMENT

     This Agreement,  together with the other Operative Agreements, on and as of
the date hereof  constitutes  the entire  agreement  of the parties  hereto with
respect  to  the  subject  matter  hereof,  and  all  prior  or  contemporaneous
understandings  or  agreements,  whether  written or oral,  between  the parties
hereto  with  respect to such  subject  matter are  hereby  superseded  in their
entireties.

[This space intentionally left blank.]







     IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.

                                          FIRST SECURITY BANK,

                                          NATIONAL ASSOCIATION
                                            as Lessor, not in its individual
                                            capacity, except as expressly
                                            provided herein, but solely as
                                            Owner Trustee under the Trust
                                            Agreement



                                          By____________________________________
                                            Name:
                                            Title:


                                          CONTINENTAL AIRLINES, INC.,
                                              as Lessee



                                          By____________________________________
                                            Name:
                                            Title:


     Receipt of this original  counterpart of the foregoing  Lease  Agreement is
hereby acknowledged on this ____ day of _________, _______.

                                          WILMINGTON TRUST COMPANY,
                                            as Mortgagee



                                          By____________________________________
                                            Name:
                                            Title:





     IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.

                                         FIRST SECURITY BANK,

                                         NATIONAL ASSOCIATION
                                            as Lessor, not in its
                                            individual capacity, except as
                                            expressly provided herein, but
                                            solely as Owner Trustee under the
                                            Trust Agreement



                                          By____________________________________
                                            Name:
                                            Title:


                                          CONTINENTAL AIRLINES, INC.,
                                            as Lessee



                                          By____________________________________
                                            Name:
                                            Title:





                                                   -----------------------------
                                                   |   SCHEDULE 6 - PLACARDS   |
                                                   |   LEASE AGREEMENT ____    |
                                                   -----------------------------




                                     ANNEX A

              [SEE LEASED AIRCRAFT PARTICIPATION AGREEMENT ANNEX A]








                                   ANNEXES B-D

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]







                                               --------------------------------
                                               | EXHIBIT A - LEASE SUPPLEMENT |
                                               |     LEASE AGREEMENT ____     |
                                               --------------------------------


                             LEASE SUPPLEMENT NO.__


     LEASE SUPPLEMENT No. __, dated ________, 199_, between FIRST SECURITY BANK,
NATIONAL  ASSOCIATION,  a national  banking  association,  not in its individual
capacity,  but solely as Owner Trustee under the Trust Agreement _____, dated as
of _____________,  with the Owner Participant named therein (such Owner Trustee,
in its  capacity  as such Owner  Trustee  being  herein  called  "Lessor"),  and
CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee ("Lessee").

     Lessor and Lessee have heretofore entered into that certain Lease Agreement
______,  dated as of  ______________,  relating to one Boeing  Model  __________
aircraft  (herein  called  the  "Lease"  and the  defined  terms  therein  being
hereinafter  used with the same meanings).  The Lease provides for the execution
and  delivery of this Lease  Supplement  for the purpose of leasing the Airframe
and  Engines  under  the  Lease as and when  delivered  by  Lessor  to Lessee in
accordance with the terms thereof.

     The Lease  relates to the  Airframe  and  Engines  described  below,  and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease  Supplement  is a part,  is being filed for  recordation  on the date
hereof with the Federal Aviation Administration as one document.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  other  good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

     1.  Lessee has been duly  authorized  by Lessor to accept,  and does hereby
irrevocably  accept on behalf of Lessor  delivery of the Aircraft  from Airframe
Manufacturer  under,  and for all purposes of, the  Aircraft  Bill of Sale,  the
Participation Agreement and the Purchase Agreement Assignment.

     2. Lessor  hereby  delivers and leases to Lessee under the Lease and Lessee
hereby  accepts and leases from Lessor under the Lease the  following  described
Boeing  __________  aircraft  (the  "Aircraft"),  which  Aircraft as of the date
hereof consists of the following components:

          (i) Airframe: U.S. Registration No. ___________; manufacturer's serial
     no. ___________; and




          (ii)  Engines:  two  (2)  _________________________  engines  bearing,
     respectively,  manufacturer's serial nos. ___________ and ____________(each
     of which engines has 750 or more rated takeoff horsepower or the equivalent
     of such horsepower).

     3. The Delivery  Date of the Aircraft is the date of this Lease  Supplement
set forth in the opening paragraph hereof.

     4. Lessee  hereby  confirms to Lessor that Lessee has duly and  irrevocably
accepted the Aircraft under and for all purposes hereof, of the Lease and of the
other Lessee Operative Agreements.

     5. All of the terms and  provisions  of this  Lease  Supplement  are hereby
incorporated  by reference in the Lease to the same extent as if fully set forth
therein.

     6. This Lease  Supplement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

     7. To the extent,  if any, that this Lease Supplement  constitutes  chattel
paper (as such term is defined in the  Uniform  Commercial  Code as in effect in
any applicable jurisdiction),  no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart  other than the
original  executed  counterpart,  which shall be identified  as the  counterpart
containing the receipt therefor  executed by the Mortgagee on the signature page
thereof.

                     [This space intentionally left blank.]







     IN  WITNESS  WHEREOF,  Lessor  and  Lessee  have  each  caused  this  Lease
Supplement to be duly executed as of the day and year first above written.

                                         FIRST SECURITY BANK,
                                         NATIONAL ASSOCIATION
                                           as Lessor, not in its
                                           individual capacity, except
                                           as expressly provided herein,
                                           but solely as Owner Trustee
                                           under the Trust Agreement


                                         By____________________________________
                                           Name:
                                           Title:

                                         CONTINENTAL AIRLINES, INC.,
                                           as Lessee



                                         By____________________________________
                                           Name:
                                           Title:





     IN  WITNESS  WHEREOF,  Lessor  and  Lessee  have  each  caused  this  Lease
Supplement to be duly executed as of the day and year first above written.

                                         FIRST SECURITY BANK,
                                         NATIONAL ASSOCIATION
                                            as Lessor, not in its individual
                                            capacity, except as expressly
                                            provided herein, but solely as 
                                            Owner Trustee under the Trust
                                            Agreement



                                         By____________________________________
                                           Name:
                                           Title:



                                         CONTINENTAL AIRLINES, INC.,
                                             as Lessee



                                         By____________________________________
                                           Name:
                                           Title:



     Receipt of this original  counterpart of the foregoing Lease  Supplement is
hereby acknowledged on this ____ day of _________, ----------.

                                        WILMINGTON TRUST COMPANY,
                                          as Mortgagee



                                         By____________________________________
                                           Name:
                                           Title:




                                               --------------------------------
                                               | EXHIBIT B - LEASE SUPPLEMENT |
                                               |     LEASE AGREEMENT ____     |
                                               --------------------------------


                          RETURN ACCEPTANCE SUPPLEMENT


     RETURN ACCEPTANCE  SUPPLEMENT dated ________,  between FIRST SECURITY BANK,
NATIONAL  ASSOCIATION,  a national  banking  association,  not in its individual
capacity,  but solely as Owner Trustee under the Trust Agreement  _____________,
dated as of  ________________________,  with the Owner Participant named therein
(such Owner  Trustee,  in its capacity as such Owner Trustee being herein called
"Lessor"),  and CONTINENTAL AIRLINES,  INC., a Delaware  corporation,  as Lessee
("Lessee").

     Lessor and Lessee have heretofore entered into that certain Lease Agreement
_________________,  dated as of  _______________,  relating to one Boeing  Model
___________________  aircraft  (herein  called the "Lease" and the defined terms
therein being hereinafter used with the same meanings). The Lease relates to the
Airframe and Engines described below.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  other  good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

     1. This Return  Acceptance  Supplement  is executed by Lessor and Lessee to
confirm  that on the date hereof the  following  described  Airframe and Engines
were returned by Lessor to Lessee:

          (i) Airframe: U.S. Registration No.  ________________;  manufacturer's
     serial no. __________________; and

          (ii)  Engines:   two  (2)   _____________________   engines   bearing,
     respectively,  manufacturer's serial nos.  ____________________________ and
     _________________________.

     2. This  Return  Acceptance  Supplement  is  intended  to be  delivered  in
_____________________.

     3. Lessor and Lessee agree that the return of the Aircraft is in compliance
with Section 5 and Annex B of the Lease, except as set forth below:

     4.  Lessor and Lessee  agree that the Lease is  terminated,  except for the
provisions thereof that expressly survive termination.




     IN  WITNESS  WHEREOF,  Lessor  and  Lessee  have each  caused  this  Return
Acceptance  Supplement  to be duly  executed  as of the day and year first above
written.

                                         FIRST SECURITY BANK,
                                         NATIONAL ASSOCIATION
                                            as Lessor, not in its individual
                                            capacity, except as expressly
                                            provided herein, but solely as 
                                            Owner Trustee under the Trust
                                            Agreement



                                         By____________________________________
                                           Name:
                                           Title:



                                         CONTINENTAL AIRLINES, INC.,
                                             as Lessee



                                         By____________________________________
                                           Name:
                                           Title:




                                               ---------------------------------
                                               | SCHEDULE 4 - TERMINATION VALUE|
                                               |      LEASE AGREEMENT ____     |
                                               ---------------------------------


                                  SCHEDULES 1-4

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]





                               PERMITTED COUNTRIES





Argentina                          Malta

Australia                          Mexico

Austria                            Morocco

Bahamas                            Netherlands

Belgium                            New Zealand

Brazil                             Norway

Canada                             Paraguay

Chile                              Peoples Republic of China

Denmark                            Philippines

Egypt                              Portugal

Ecuador                            Republic of China (Taiwan)

Finland                            Singapore

France                             South Africa

Germany                            South Korea

Greece                             Spain

Hungary                            Sweden

Iceland                            Switzerland

India                              Thailand

Indonesia                          Tobago

Ireland                            Trinidad

Italy                              United Kingdom

Japan                              Uruguay

Luxembourg                         Venezuela

Malaysia




                                               ---------------------------------
                                               |      ANNEX D - INSURANCE      |
                                               |      LEASE AGREEMENT ____     |
                                               ---------------------------------



                                    PLACARDS


                                   Leased from

                   First Security Bank, National Association,
                  not in its individual capacity but solely as
                         Owner Trustee, Owner and Lessor

                                       and
                                  Mortgaged to

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



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




                        TRUST INDENTURE AND MORTGAGE ___

                         Dated as of ____________, 199_

                                     Between

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                         not in its individual capacity,
                       except as expressly stated herein,
                          but solely as Owner Trustee,

                                  Owner Trustee

                                       and

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       except as expressly stated herein,
                            but solely as Mortgagee,

                                    Mortgagee


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



                            EQUIPMENT NOTES COVERING
                          ONE BOEING ________ AIRCRAFT
                      BEARING U.S. REGISTRATION MARK N_____
                      LEASED BY CONTINENTAL AIRLINES, INC.

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


                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----


                                GRANTING CLAUSE


                            ARTICLE I - DEFINITIONS


                        ARTICLE II - THE EQUIPMENT NOTES

SECTION 2.01   Form of Equipment Notes..................................       7
SECTION 2.02   Issuance and Terms of Equipment Notes....................      12
SECTION 2.03   Payments from Trust Indenture Estate Only................      14
SECTION 2.04   Method of Payment........................................      16
SECTION 2.05   Application of Payments..................................      18
SECTION 2.06   Termination of Interest in Trust Indenture Estate........      18
SECTION 2.07   Registration Transfer and Exchange of Equipment
               Notes....................................................      18
SECTION 2.08   Mutilated, Destroyed, Lost or Stolen Equipment
               Notes....................................................      20
SECTION 2.09   Payment of Expenses on Transfer; Cancellation............      20
SECTION 2.10   Mandatory Redemptions of Equipment Notes.................      20
SECTION 2.11   Voluntary Redemptions of Equipment Notes.................      21
SECTION 2.12   Redemptions; Notice of Redemption........................      21
SECTION 2.13   Option to Purchase Equipment Notes.......................      22
SECTION 2.14   Subordination ...........................................      23

       ARTICLE III - RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
                           THE TRUST INDENTURE ESTATE

SECTION 3.01   Basic Rent Distribution..................................      24
SECTION 3.02   Event of Loss; Replacement; Voluntary Termination;
               Optional Redemption......................................      25
SECTION 3.03   Payments After Event of Default..........................      26
SECTION 3.04   Certain Payments.........................................      28
SECTION 3.05   Other Payments...........................................      28
SECTION 3.06   Payments to Owner Trustee................................      29





                                TABLE OF CONTENTS
                                   (Continued)
                                                                           PAGE
                                                                           ----

          ARTICLE IV - COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT;
                             REMEDIES OF MORTGAGEE

SECTION 4.01   Covenants of Owner Trustee................................     29
SECTION 4.02   Event of Default..........................................     30
SECTION 4.03   Certain Rights............................................     32
SECTION 4.04   Remedies                                                       34
SECTION 4.05   Return of Aircraft, Etc...................................     37
SECTION 4.06   Remedies Cumulative.......................................     38
SECTION 4.07   Discontinuance of Proceedings.............................     38
SECTION 4.08   Waiver of Past Defaults...................................     38
SECTION 4.09   Appointment of Receiver...................................     39
SECTION 4.10   Mortgagee Authorized to Execute Bills of Sale, Etc........     39
SECTION 4.11   Rights of Note Holders to Receive Payment.................     39

                      ARTICLE V - DUTIES OF THE MORTGAGEE

SECTION 5.01   Notice of Event of Default................................     39
SECTION 5.02   Action Upon Instructions; Certain Rights and
               Limitations...............................................     40
SECTION 5.03   Indemnification ..........................................     43
SECTION 5.04   No Duties Except as Specified in Trust Indenture
               or Instructions...........................................     44
SECTION 5.05   No Action Except Under Lease, Trust Indenture
               or Instructions...........................................     44
SECTION 5.06   Replacement Airframes and Replacement Engines.............     44
SECTION 5.07   Indenture Supplements for Replacements....................     45
SECTION 5.08   Effect of Replacement.....................................     45
SECTION 5.09   Investment of Amounts Held by Mortgagee...................     45

                ARTICLE VI - THE OWNER TRUSTEE AND THE MORTGAGEE

SECTION 6.01   Acceptance of Trusts and Duties...........................     46
SECTION 6.02   Absence of Duties.........................................     46
SECTION 6.03   No Representations or Warranties as to Aircraft
               or Documents..............................................     47
SECTION 6.04   No Segregation of Monies; No Interest.....................     47
SECTION 6.05   Reliance; Agreements; Advice of Counsel...................     48
SECTION 6.06   Capacity in Which Acting..................................     48
SECTION 6.07   Compensation .............................................     48
SECTION 6.08   Instructions from Note Holders............................     49



                                TABLE OF CONTENTS
                                   (Continued)
                                                                           PAGE
                                                                           ----


          ARTICLE VII - INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

SECTION 7.01   Scope Of Indemnification..................................     49

                 ARTICLE VIII - SUCCESSOR AND SEPARATE TRUSTEES

SECTION 8.01   Notice of Successor Owner Trustee.........................     50
SECTION 8.02   Resignation of Mortgagee; Appointment of Successor........     50
SECTION 8.03   Appointment of Additional and Separate Trustees...........     51

        ARTICLE IX - SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
                              AND OTHER DOCUMENTS

SECTION 9.01   Instructions Of Majority; Limitations.....................     53
SECTION 9.02   Trustees Protected........................................     55
SECTION 9.03   Documents Mailed to Note Holders..........................     55
SECTION 9.04   No Request Necessary for Lease Supplement or
               Trust Indenture Supplement................................     55

                           ARTICLE X - MISCELLANEOUS

SECTION 10.01  Termination of Trust Indenture............................     55
SECTION 10.02  No Legal Title to Trust Indenture Estate in Note
               Holders...................................................     56
SECTION 10.03  Sale of Aircraft by Mortgagee Is Binding..................     56
SECTION 10.04  Trust Indenture for Benefit of Owner Trustee,
               Mortgagee, Owner Participant, Note Holders and
               the other Indenture Indemnitees...........................     56
SECTION 10.05  Notices ..................................................     56
SECTION 10.06  Severability .............................................     57
SECTION 10.07  No Oral Modification or Continuing Waivers................     57
SECTION 10.08  Successors and Assigns....................................     57
SECTION 10.09  Headings .................................................     57
SECTION 10.10  Normal Commercial Relations...............................     58
SECTION 10.11  Governing Law; Counterpart Form...........................     58
SECTION 10.12  Voting By Note Holders....................................     58
SECTION 10.13  Bankruptcy ...............................................     58

EXHIBIT A      Form of Trust Indenture and Mortgage Supplement
SCHEDULE I     Equipment Notes Amortization and Interest Rates




                        TRUST INDENTURE AND MORTGAGE ___

          TRUST  INDENTURE  AND  MORTGAGE  ___,  dated as of  ___________,  199_
("Trust  Indenture"),  between FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  a
national  banking  association,  not  in  its  individual  capacity,  except  as
expressly  stated herein,  but solely as Owner Trustee under the Trust Agreement
referred to below (together with its successors under the Trust  Agreement,  the
"Owner Trustee"),  and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").


                               W I T N E S S E T H

          WHEREAS,  all capitalized  terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;

          WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby,  among other things, (i)
the Owner Trustee has established a certain trust for the use and benefit of the
Owner  Participant  subject,  however,  to the Trust  Indenture  Estate  created
pursuant hereto for the use and benefit of, and with the priority of payment to,
the holders of Equipment Notes issued hereunder,  and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Agreement;

          WHEREAS,  the parties  hereto  desire by this Trust  Indenture,  among
other  things,  (i) to  provide  for the  issuance  by the Owner  Trustee of the
Equipment Notes and (ii) to provide for the  assignment,  mortgage and pledge by
the  Owner  Trustee  to the  Mortgagee,  as part of the Trust  Indenture  Estate
hereunder,  among other things,  of all of the Owner Trustee's right,  title and
interest in and to the Aircraft and, except as hereinafter  expressly  provided,
all of the Owner Trustee's right,  title and interest in, to and under the Lease
and the  Participation  Agreement  and all payments and other  amounts  received
hereunder or  thereunder  in  accordance  with the terms  hereof or thereof,  as
security  for,  among  other  things,  the  Owner  Trustee's  and  the  Lessee's
obligations to the Noteholders and the Indenture Indemnitees;

          WHEREAS,  all things have been done to make the Equipment Notes,  when
executed by the Owner Trustee and  authenticated  and delivered by the Mortgagee
hereunder,  the valid, binding and enforceable obligations of the Owner Trustee;
and

          WHEREAS,  all things necessary to make this Trust Indenture the valid,
binding and legal  obligation  of the Owner  Trustee  for the uses and  purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;

                                 GRANTING CLAUSE

          NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt  payment of the Original  Amount of,  interest on,  Make-Whole



Amount,  if any, and all other amounts due with respect to, all Equipment  Notes
from time to time outstanding  hereunder according to their tenor and effect and
to  secure  the  performance  and  observance  by the Owner  Trustee  of all the
agreements,  covenants and provisions  contained herein and in the Participation
Agreement and the Equipment Notes, for the benefit of the Note Holders, the Loan
Participants and each of the Indenture Indemnitees and the prompt payment of all
amounts from time to time owing hereunder, under the Participation Agreement and
the Lease to the Loan Participants, the Note Holders or any Indenture Indemnitee
by the Owner  Trustee or the Lessee and for the uses and purposes and subject to
the terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained,  and of the acceptance of the Equipment Notes by the
holders thereof,  and for other good and valuable  consideration the receipt and
adequacy  whereof  are  hereby  acknowledged,  the Owner  Trustee  has  granted,
bargained,  sold,  assigned,  transferred,   conveyed,  mortgaged,  pledged  and
confirmed,  and does hereby grant,  bargain,  sell,  assign,  transfer,  convey,
mortgage,  pledge and confirm,  unto the Mortgagee,  its successors in trust and
assigns, for the security and benefit of the Loan Participants, the Note Holders
and each of the Indenture Indemnitees, a first priority security interest in and
mortgage  lien on all right,  title and interest of the Owner Trustee in, to and
under the following  described property,  rights and privileges,  whether now or
hereafter acquired, other than Excluded Payments (which, collectively, excluding
Excluded Payments but including all property hereafter  specifically  subject to
the Lien of this Trust  Indenture by the terms hereof or any supplement  hereto,
are included within, and are referred to as, the "Trust Indenture  Estate"),  to
wit:

          (1) The  Airframe  which is one Boeing  ______  aircraft  with the FAA
Registration  number of N_____ and the  manufacturer's  serial number of _______
and Engines, each of which Engines is a ____________________________ engine with
the  manufacturer's  serial numbers of _____ and _____,  is of 750 or more rated
takeoff  horsepower or the  equivalent  of such  horsepower  (such  Airframe and
Engines more  particularly  described in the Indenture  Supplement  executed and
delivered  as  provided  herein)  as the  same  is now  and  will  hereafter  be
constituted,  whether  now owned by the Owner  Trustee  or  hereafter  acquired,
leased  or  intended  to be  leased  under  the  Lease,  and in the case of such
Engines, whether or not any such Engine shall be installed in or attached to the
Airframe or any other airframe,  together with (a) all Parts of whatever nature,
which are from time to time  included  within the  definitions  of "Airframe" or
"Engines", whether now owned or hereafter acquired, including all substitutions,
renewals  and  replacements  of  and  additions,  improvements,  accessions  and
accumulations  to the Airframe and Engines (other than additions,  improvements,
accessions and accumulations which constitute  appliances,  parts,  instruments,
appurtenances,  accessories,  furnishings or other  equipment  excluded from the
definition of Parts) and (b) all Aircraft Documents;

          (2) All  right,  title,  interest,  claims  and  demands  of the Owner
Trustee,  as  Lessor,  in, to and under the  Lease,  together  with all  rights,
powers,  privileges,  options and other  benefits of the Owner Trustee as lessor
under the Lease,  including the immediate  and  continuing  right to receive and
collect  all  Rent,  income,  revenues,  issues,  profits,  insurance  proceeds,
condemnation  awards and other  payments,  tenders and security now or hereafter
payable to or receivable by the Lessor under the Lease  pursuant  thereto,  and,
subject to Section 5.02 hereof, the right to make all waivers and agreements, to
give and receive copies of all notices and other instruments or  communications,



to accept  surrender or redelivery of the Aircraft or any part thereof,  as well
as all the  rights,  powers  and  remedies  on the part of the Owner  Trustee as
Lessor under the Lease, to take such action upon the occurrence of a Lease Event
of Default thereunder,  including the commencement,  conduct and consummation of
legal,  administrative or other proceedings,  as shall be permitted by the Lease
or by Law, and to do any and all other things whatsoever which the Owner Trustee
or any lessor is or may be  entitled  to do under or in respect of the Lease and
any right to  restitution  from the Lessee or any other Person in respect of any
determination of invalidity of the Lease;

          [(3) Each Permitted  Sublease  assignment and each assigned  Permitted
Sublease (to the extent assigned under such Permitted Sublease assignment),  and
including,  without  limitation,  all rents or other  payments  of any kind made
under  such  assigned  Permitted  Sublease  (to the extent  assigned  under such
Permitted Sublease assignment);]

          [(3)/(4)] All right, title, interest,  claims and demands of the Owner
Trustee in, to and under:

          (a) the Purchase Agreement and the GTA;

          (b) the Purchase Agreement Assignment,  with the Consent and Agreement
     and the Engine Consent and Agreement attached thereto;

          (c) the Bills of Sale; and

          (d) any and all other contracts,  agreements and instruments  relating
     to the Airframe and Engines or any rights or interests therein to which the
     Owner Trustee is now or may hereafter be a party;


          together with all rights,  powers,  privileges,  licenses,  easements,
options and other benefits of the Owner Trustee under each  contract,  agreement
and  instrument  referred to in this clause  [(3)/(4)],  including  the right to
receive  and  collect  all  payments  to the  Owner  Trustee  thereunder  now or
hereafter  payable to or receivable by the Owner Trustee  pursuant  thereto and,
subject to Section 5.02 hereof, the right to make all waivers and agreements, to
give and receive notices and other instruments or communications, or to take any
other  action under or in respect of any thereof or to take such action upon the
occurrence  of a default  thereunder,  including the  commencement,  conduct and
consummation  of  legal,  administrative  or  other  proceedings,  as  shall  be
permitted  thereby or by Law, and to do any and all other things which the Owner
Trustee is or may be entitled to do thereunder and any right to restitution from
the  Lessee,  the Owner  Participant  or any  other  Person  in  respect  of any
determination of invalidity of any thereof;


____________

 Insert bracketed  language if the Lease  provides for the  assignment  of a
     permitted sublease.





          [(4)/(5)] All rents, issues, profits, revenues and other income of the
property  subjected  or  required  to be  subjected  to the  Lien of this  Trust
Indenture, including all payments or proceeds payable to the Owner Trustee after
termination of the Lease with respect to the Aircraft as the result of the sale,
lease or other disposition thereof, and all estate, right, title and interest of
every nature whatsoever of the Owner Trustee in and to the same;

          [(5)/(6)]  Without  limiting  the  generality  of the  foregoing,  all
insurance  and  requisition  proceeds  with  respect to the Aircraft or any part
thereof, including the insurance required under Section 11 of the Lease;

          [(6)/(7)] Without limiting the generality of the foregoing, all rights
of the Owner  Trustee to amounts paid or payable by Lessee to the Owner  Trustee
under the Participation Agreement and all rights of the Owner Trustee to enforce
payments of any such amounts thereunder;

          [(7)/(8)] Without limiting the generality of the foregoing, all monies
and securities  from time to time deposited or required to be deposited with the
Mortgagee pursuant to any terms of this Trust Indenture or the Lease or required
hereby or by the Lease to be held by the Mortgagee hereunder as security for the
obligations of the Lessee under the Lease or of the Owner Trustee hereunder; and

          [(8)/(9)] All proceeds of the foregoing;  excluding,  however,  in all
events  from each of  foregoing  clauses  (1) through  [(8)/(9)]  inclusive  all
Excluded  Payments and the right to specifically  enforce the same or to sue for
damages for the breach thereof as provided in Section 5.02 hereof.  Concurrently
with the delivery of this Trust Indenture, the Owner Trustee will deliver to the
Mortgagee  the  original  executed  counterpart  of  the  Lease  and  the  Lease
Supplement  No. 1 (to each of which a chattel paper  receipt is  attached),  and
executed copies of the Participation  Agreement,  the Purchase Agreement and the
GTA (to the extent assigned by the Purchase Agreement Assignment),  the Purchase
Agreement Assignment,  with the Consent and Agreement and the Engine Consent and
Agreement attached thereto.

          TO HAVE AND TO HOLD all and singular the  aforesaid  property unto the
Mortgagee,  and  its  successors  and  assigns,  in  trust  for  the  equal  and
proportionate  benefit and security of the Loan  Participants,  the Note Holders
and the  Indenture  Indemnitees,  except as provided in Section 2.14 and Article
III hereof without any preference,  distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue,  sale,  negotiation,
date of maturity  thereof or otherwise  for any reason  whatsoever,  and for the
uses  and  purposes  and  in all  cases  and as to  all  property  specified  in
paragraphs  (1)  through  [(8)]  inclusive  above,  subject  to  the  terms  and
provisions set forth in this Trust Indenture.

          It is expressly  agreed that anything herein contained to the contrary
notwithstanding,  the Owner  Trustee  shall remain  liable  under the  Indenture
Agreements,  to perform all of the obligations assumed by it thereunder,  except
to the extent  prohibited  or  excluded  from doing so pursuant to the terms and
provisions thereof, and the Mortgagee,  the Loan Participants,  the Note Holders
and the Indenture  Indemnitees  shall have no obligation or liability  under the
Indenture  Agreements,  by reason of or arising out of the assignment hereunder,
nor  shall  the  Mortgagee,  the  Loan  Participants,  the Note  Holders  or the



Indenture  Indemnitees  be  required  or  obligated  in any manner to perform or
fulfill any  obligations of the Owner Trustee under or pursuant to the Indenture
Agreements,  or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment  received by it,
or  present or file any  claim,  or take any  action to  collect or enforce  the
payment of any amounts  which may have been assigned to it or to which it may be
entitled at any time or times.

          The Owner  Trustee does hereby  constitute  the Mortgagee the true and
lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable
consideration  and coupled with an interest and with full power of substitution,
and with full power (in the name of the Owner  Trustee or otherwise) to ask for,
require,  demand, receive,  compound and give acquittance for any and all monies
and claims for monies (in each case including insurance and requisition proceeds
but in all cases  excluding  Excluded  Payments)  due and to become due under or
arising out of the Indenture  Agreements,  and all other  property  which now or
hereafter  constitutes part of the Trust Indenture Estate, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
to take any action or to institute any proceedings  which the Mortgagee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the  foregoing,  but  subject to the rights of the Owner  Trustee  and the Owner
Participant under Sections 2.13, 4.03 and 4.04(a) hereof, during the continuance
of any Event of Default under this Trust Indenture, the Mortgagee shall have the
right under such power of attorney  to accept any offer in  connection  with the
exercise of  remedies  as set forth  herein of any  purchaser  to  purchase  the
Airframe  and Engines and upon such  purchase to execute and deliver in the name
of and on behalf  of the Owner  Trustee  an  appropriate  bill of sale and other
instruments of transfer relating to the Airframe and Engines,  when purchased by
such  purchaser,  and to perform all other  necessary or  appropriate  acts with
respect to any such  purchase,  and in its  discretion to file any claim or take
any other  action or  proceedings,  either in its own name or in the name of the
Owner  Trustee  or  otherwise,   which  the  Mortgagee  may  deem  necessary  or
appropriate  to protect  and  preserve  the  right,  title and  interest  of the
Mortgagee  in and to such Rents and other sums and the  security  intended to be
afforded hereby; PROVIDED,  HOWEVER, that no action of the Mortgagee pursuant to
this  paragraph  shall  increase the  obligations  or  liabilities  of the Owner
Trustee to any Person beyond those obligations and liabilities  specifically set
forth in this Trust Indenture and in the other Operative  Agreements.  Under the
Lease,  Lessee is directed,  so long as this Trust Indenture shall not have been
fully  discharged,  to make all payments of Rent (other than Excluded  Payments)
and all other  amounts  which are required to be paid to or  deposited  with the
Owner Trustee pursuant to the Lease (other than Excluded  Payments) directly to,
or as directed by, the  Mortgagee at such address or addresses as the  Mortgagee
shall specify,  for application as provided in this Trust  Indenture.  The Owner
Trustee  agrees that  promptly  upon receipt  thereof,  it will  transfer to the
Mortgagee any and all monies from time to time received by it constituting  part
of the Trust Indenture  Estate,  for  distribution by the Mortgagee  pursuant to
this  Trust   Indenture,   except  that  the  Owner  Trustee  shall  accept  for
distribution  pursuant to the Trust  Agreement any amounts  distributed to it by
the Mortgagee under this Trust Indenture.




          The Owner Trustee agrees that at any time and from time to time,  upon
the written  request of the Mortgagee,  the Owner Trustee will promptly and duly
execute and deliver or cause to be duly  executed and delivered any and all such
further instruments and documents as the Mortgagee may reasonably deem necessary
or desirable to perfect,  preserve or protect the mortgage,  security  interests
and  assignments  created or intended to be created  hereby or to obtain for the
Mortgagee  the full benefits of the  assignment  hereunder and of the rights and
powers herein granted.

          The Owner Trustee does hereby  warrant and  represent  that it has not
assigned or pledged,  and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right,  title or interest hereby  assigned,  to anyone other than the Mortgagee,
and that it will not,  except as otherwise  provided in this Trust Indenture and
except with respect to Excluded Payments to which it is entitled, (i) accept any
payment  from  Lessee  [or any  Permitted  Sublessee]  under  any  Indenture
Agreement, (ii) enter into any agreement amending or supplementing any Indenture
Agreement,  (iii) execute any waiver or modification  of, or consent under,  the
terms of, or exercise any rights,  powers or  privileges  under,  any  Indenture
Agreement,  (iv) settle or  compromise  any claim  arising  under any  Indenture
Agreement or (v) submit or consent to the submission of any dispute,  difference
or other  matter  arising  under or in respect  of any  Indenture  Agreement  to
arbitration thereunder.

          The Owner  Trustee  does  hereby  agree that it will not  without  the
written consent of the Mortgagee:

          (a)  receive or collect or agree to the receipt or  collection  of any
payment (other than Excluded Payments) of Rent, including Basic Rent, Stipulated
Loss  Value,  Termination  Value or any other  payment  to be made  pursuant  to
Section 9 or 10 of the Lease prior to the date for the payment thereof  provided
for by the Lease or assign, transfer or hypothecate (other than to the Mortgagee
hereunder) any payment of Rent,  including  Basic Rent,  Stipulated  Loss Value,
Termination Value or any other payment to be made pursuant to Section 9 or 10 of
the Lease, then due or to accrue in the future under the Lease in respect of the
Airframe and Engines; or

          (b) except as  contemplated  by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage,  transfer,  assign
or  hypothecate  (other than to the  Mortgagee  hereunder)  its  interest in the
Airframe  and Engines or any part  thereof or in any amount to be received by it
from the use or  disposition  of the Airframe  and  Engines,  other than amounts
distributed to it pursuant to Article III hereof.

______________

 Insert  bracketed  language if the Lease  provides for the  assignment of a
     permitted sublease.




          It is hereby  further  agreed that any and all  property  described or
referred to in the granting  clauses  hereof which is hereafter  acquired by the
Owner Trustee shall IPSO FACTO, and without any other conveyance,  assignment or
act on the part of the Owner Trustee or the Mortgagee,  become and be subject to
the Lien herein granted as fully and completely as though specifically described
herein,  but nothing  contained in this  paragraph  shall be deemed to modify or
change  the  obligations  of  the  Owner  Trustee  contained  in  the  foregoing
paragraphs.

          The Owner  Trustee  does hereby  ratify and confirm the Lease and does
hereby  agree that it will not violate  any  covenant  or  agreement  made by it
therein, herein or in any other Owner Trustee Agreement.

          Notwithstanding   the  Granting   Clause  or  any  of  the   preceding
paragraphs,  there  is  hereby  excluded  from  the  foregoing  sale,  transfer,
assignment,  grant, pledge and security interest all Excluded Payments. Further,
nothing in the Granting Clause or the preceding  paragraphs  shall impair any of
the rights of the Owner  Trustee or the Owner  Participant  under  Section 2.13,
4.03, 4.04, 4.08, 5.02 or 5.03 hereof.

          IT IS HEREBY  COVENANTED  AND AGREED by and between the parties hereto
as follows:

                                    ARTICLE I

                                   DEFINITIONS

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

                                   ARTICLE II

                               THE EQUIPMENT NOTES

          SECTION 2.01.  FORM OF EQUIPMENT  NOTES

          The  Equipment  Notes  shall be  substantially  in the form set  forth
below:

          THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"),  OR PURSUANT TO THE SECURITIES  LAWS OF ANY
STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED
UNDER  THE  ACT  AND  SUCH  APPLICABLE  STATE  LAWS OR AN  EXEMPTION  FROM  SUCH
REGISTRATIONS IS AVAILABLE.

          FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  AS OWNER TRUSTEE UNDER
TRUST AGREEMENT ___ DATED AS OF  _______________,  199_.  SERIES [_____] LIMITED



RECOURSE  EQUIPMENT  NOTE DUE [____] ISSUED IN CONNECTION  WITH THE BOEING MODEL
_______ AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N_____.


No. ____                                                Date: [__________, ____]
                              $____________________
         INTEREST RATE                                     MATURITY DATE
         [___________]                                     [___________]

          FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  not in its  individual
capacity but solely as Owner Trustee  (herein in such capacity called the "Owner
Trustee")  under that certain Trust  Agreement  ___,  dated as of  ____________,
199_,  between the Owner  Participant  named  therein and First  Security  Bank,
National  Association  (herein as such Trust  Agreement may be  supplemented  or
amended from time to time called the "Trust Agreement"),  hereby promises to pay
to __________________,  or the registered assignee thereof, the principal sum of
$____________ (the "Original  Amount"),  together with interest on the amount of
the Original Amount  remaining unpaid from time to time (calculated on the basis
of a year of 360 days  comprised of twelve  30-day  months) from the date hereof
until  paid in full at a rate per annum  equal to the Debt  Rate.  The  Original
Amount of this Equipment Note shall be payable in  installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the Original
Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest  shall be due and  payable in  semiannual  installments  commencing  on
_____________,  199_,  and  thereafter on April 1 and October 1 of each year, to
and including _______________.  Notwithstanding the foregoing, the final payment
made on this  Equipment  Note shall be in an amount  sufficient  to discharge in
full the unpaid  Original Amount and all accrued and unpaid interest on, and any
other amounts due under,  this Equipment Note.  Notwithstanding  anything to the
contrary  contained  herein, if any date on which a payment under this Equipment
Note becomes due and payable is not a Business  Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

          For  purposes  hereof,  the term  "Trust  Indenture"  means  the Trust
Indenture and Mortgage ___, dated as of _____________,  199_,  between the Owner
Trustee and  Wilmington  Trust  Company  (the  "Mortgagee"),  as the same may be
amended or supplemented  from time to time. All other  capitalized terms used in
this Equipment  Note and not defined  herein shall have the respective  meanings
assigned in the Trust Indenture.

          This  Equipment Note shall bear  interest,  payable on demand,  at the
Payment Due Rate  (calculated  on the basis of a year of 360 days  comprised  of
twelve 30-day months) on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any,  and (to the extent  permitted by  applicable  Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is  overdue.  Amounts  shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).




          All payments of Original Amount, interest,  Make-Whole Amount, if any,
and other amounts,  if any, to be made by the Owner Trustee  hereunder and under
the Trust  Indenture or the  Participation  Agreement shall be payable only from
the income and  proceeds  from the Trust  Estate to the extent  included  in the
Trust Indenture  Estate and only to the extent that the Owner Trustee shall have
sufficient  income or proceeds  from the Trust Estate to the extent  included in
the Trust  Indenture  Estate to enable the  Mortgagee  to make such  payments in
accordance  with  the  terms  of  Section  2.03  and  Article  III of the  Trust
Indenture,  and each holder hereof,  by its  acceptance of this Equipment  Note,
agrees  that it will  look  solely to the  income  and  proceeds  from the Trust
Indenture  Estate to the extent  available for distribution to the holder hereof
as above provided and that none of the Owner Participant,  the Owner Trustee and
the  Mortgagee  is  personally  liable or liable in any manner  extending to any
assets  other  than the Trust  Indenture  Estate to the  holder  hereof  for any
amounts  payable  or any  liability  under  this  Equipment  Note or,  except as
provided  in the Trust  Indenture  or in the  Participation  Agreement,  for any
liability under the Trust Indenture or the  Participation  Agreement;  PROVIDED,
HOWEVER, that nothing herein contained shall limit, restrict or impair the right
of the  Mortgagee,  subject  always  to the terms  and  provisions  of the Trust
Indenture,  to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust  Indenture,  to bring suit and obtain a judgment  against the Owner
Trustee  on this  Equipment  Note for  purposes  of  realizing  upon  the  Trust
Indenture  Estate and to exercise  all rights and  remedies  provided  under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.

          There shall be maintained  an Equipment  Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.

          The Original Amount and interest and other amounts due hereunder shall
be payable in Dollars in  immediately  available  funds at the  Corporate  Trust
Office of the Mortgagee,  or as otherwise provided in the Trust Indenture.  Each
such  payment  shall be made on the date such  payment  is due and  without  any
presentment or surrender of this Equipment Note,  except that in the case of any
final payment with respect to this  Equipment  Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.

          The holder hereof,  by its acceptance of this Equipment  Note,  agrees
that,  except as provided in the Trust  Indenture,  each payment of the Original
Amount,  Make-Whole  Amount, if any, and interest received by it hereunder shall
be applied, FIRST, to the payment of accrued interest on this Equipment Note (as
well as any  interest on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any, or, to the extent  permitted  by Law, any overdue  interest and
other amounts hereunder) to the date of such payment,  SECOND, to the payment of
the Original  Amount of this Equipment Note then due,  THIRD,  to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and FOURTH, the balance, if any, remaining thereafter, to the payment
of installments  of the Original Amount of this Equipment Note remaining  unpaid
in the inverse order of their maturity.




          This Equipment  Note is one of the Equipment  Notes referred to in the
Trust  Indenture  which  have  been or are to be  issued  by the  Owner  Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Mortgagee as security,  in part, for the Equipment  Notes. The provisions
of this Equipment Note are subject to the Trust  Indenture.  Reference is hereby
made  to  the  Trust  Indenture  for a  complete  statement  of the  rights  and
obligations  of the holder of,  and the nature and extent of the  security  for,
this  Equipment  Note and the rights and  obligations of the holders of, and the
nature and extent of the security for, any other  Equipment  Notes  executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions  of the Trust created by the Trust  Indenture,  to all of which terms
and  conditions  in  the  Trust  Indenture  each  holder  hereof  agrees  by its
acceptance of this Equipment Note.

          As provided in the Trust Indenture and subject to certain  limitations
therein set forth,  this  Equipment  Note is  exchangeable  for a like aggregate
Original Amount of Equipment  Notes of different  authorized  denominations,  as
requested by the holder surrendering the same.

          Prior  to  due  presentment  for  registration  of  transfer  of  this
Equipment  Note,  the Owner Trustee and the Mortgagee  shall treat the person in
whose  name  this  Equipment  Note is  registered  as the owner  hereof  for all
purposes,  whether or not this Equipment Note be overdue,  and neither the Owner
Trustee nor the Mortgagee shall be affected by notice to the contrary.

          This  Equipment  Note is subject to redemption as provided in Sections
2.10,  2.11 and 2.12 of the Trust  Indenture but not  otherwise.  This Equipment
Note is also subject to exchange and to purchase by the Owner Participant or the
Owner  Trustee  as  provided  in  Section  2.13 of the Trust  Indenture  but not
otherwise.  In addition,  this  Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.

          [The  indebtedness  evidenced by this Equipment Note is, to the extent
and in the manner  provided in the Trust  Indenture,  subordinate and subject in
right of payment to the prior  payment in full of the  Secured  Obligations  (as
defined in the Trust  Indenture)  in respect of [Series A  Equipment  Notes]
[Series A and Series B Equipment  Notes],  and this Equipment Note is issued
subject to such provisions. The Note Holder of this Equipment Note, by accepting
the same,  (a) agrees to and shall be bound by such  provisions,  (b) authorizes
and directs the  Mortgagee on his behalf to take such action as may be necessary
or  appropriate  to  effectuate  the  subordination  as  provided  in the  Trust
Indenture  and  (c)  appoints  the  Mortgagee  his   attorney-in-fact  for  such
purpose.]


__________________

 To be inserted in the case of a Series B Equipment Note.

 To be inserted in the case of a Series C Equipment Note.

 To be inserted  for each  Equipment  Note other than any Series A Equipment
     Note.







          Unless the certificate of  authentication  hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit  under the Trust  Indenture or be valid or obligatory
for any purpose.

          THIS  EQUIPMENT  NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.


                                      * * *

          IN WITNESS  WHEREOF,  the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.

                                           FIRST SECURITY BANK, NATIONAL
                                             ASSOCIATION,
                                             not in its individual capacity
                                             but solely as Owner Trustee

                                           By
                                             Name:
                                             Title:





                    MORTGAGEE'S CERTIFICATE OF AUTHENTICATION



          This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.

                                         WILMINGTON TRUST COMPANY, as
                                           Mortgagee



                                         By
                                           Name:
                                           Title:


                                   SCHEDULE I

                           EQUIPMENT NOTE AMORTIZATION


                                                     Percentage of
      Payment Date                            Original Amount to be Paid
- --------------------------                    --------------------------




                       [SEE SCHEDULE I TO TRUST INDENTURE
                        WHICH IS INSERTED UPON ISSUANCE]

                                      * * *

          SECTION  2.02.  ISSUANCE  AND TERMS OF EQUIPMENT  NOTES

          The Equipment Notes shall be dated the date of issuance thereof, shall
be issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto.  On the date of the consummation of the Transaction,  each
Equipment Note shall be issued to the Subordination  Agent on behalf of the Pass
Through  Trustees under the Pass Through Trust  Agreements.  The Equipment Notes
shall be issued in registered  form only. The Equipment Notes shall be issued in
denominations  of  $1,000  and  integral  multiples  thereof,  except  that  one
Equipment  Note of  each  Series  may be in an  amount  that is not an  integral
multiple of $1,000.

          Each Equipment  Note shall bear interest at the Debt Rate  (calculated
on the basis of a year of 360 days  comprised  of twelve  30-day  months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on _____________,  199_, and on each ________ and ____________  thereafter until



maturity.  The Original  Amount of each  Equipment  Note shall be payable on the
dates  and in the  installments  equal to the  corresponding  percentage  of the
Original  Amount as set forth in  Schedule I hereto  which  shall be attached as
Schedule I to the Equipment  Notes.  Notwithstanding  the  foregoing,  the final
payment  made under each  Equipment  Note  shall be in an amount  sufficient  to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under,  such Equipment  Note.  Each Equipment Note
shall bear interest at the Payment Due Rate  (calculated  on the basis of a year
of 360 days  comprised  of twelve  30-day  months)  on any part of the  Original
Amount,  Make-Whole  Amount,  if any, and, to the extent permitted by applicable
Law, interest and any other amounts payable thereunder not paid when due for any
period  during which the same shall be overdue,  in each case for the period the
same is  overdue.  Amounts  shall be  overdue if not paid when due  (whether  at
stated maturity, by acceleration or otherwise).  Notwithstanding anything to the
contrary  contained  herein,  if any date on which a payment under any Equipment
Note becomes due and payable is not a Business  Day then such payment  shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

          The Owner Trustee agrees to pay to the Mortgagee for  distribution  in
accordance with Section 3.04 hereof:  (i) to the extent not payable  (whether or
not in  fact  paid)  under  Section  6(a) of the  Note  Purchase  Agreement  (as
originally in effect or amended with the consent of the Owner  Participant),  an
amount equal to the fees payable to the Liquidity Provider under Section 2.03 of
each  Liquidity  Facility  and  the  related  Fee  Letter  (as  defined  in  the
Intercreditor  Agreement)  multiplied by a fraction the numerator of which shall
be the then  outstanding  aggregate  principal  amount of the Series A Equipment
Notes, Series B Equipment Notes and Series C Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount of all "Series
A Equipment  Notes",  "Series B Equipment  Notes" and "Series C Equipment Notes"
(each as defined in the Note Purchase  Agreement);  (ii) (x) the amount equal to
interest on any Downgrade  Advance  (other than any Applied  Downgrade  Advance)
payable under Section 3.07 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
foregoing clause (i); and (iv) if any payment default shall have occurred and be
continuing  with  respect to interest on any Series A Equipment  Note,  Series B
Equipment Note or Series C Equipment  Note,  (x) the excess,  if any, of (1) the
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 the  Owner  Trustee  on the  overdue  scheduled  interest  on the
Equipment  Notes in respect  of which such  Unpaid  Advance,  Applied  Downgrade
Advance or Applied  Non-Extension  Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate  overdue  amounts of interest
on the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment
Notes  (other  than  interest  becoming  due and  payable  solely as a result of



acceleration of any such Equipment  Notes) and the denominator of which shall be
the then  aggregate  overdue  amounts of  interest  on all  "Series A  Equipment
Notes",  "Series B  Equipment  Notes" and "Series C  Equipment  Notes"  (each as
defined in the Note Purchase  Agreement)  (other than interest  becoming due and
payable solely as a result of acceleration of any such "Equipment  Notes").  For
purposes of this  paragraph,  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  or  the
Intercreditor Agreement referred to therein.

          The  Equipment  Notes shall be executed on behalf of the Owner Trustee
by its President or one of its Vice  Presidents,  Assistant  Vice  Presidents or
Assistant  Secretaries or other authorized officer.  Equipment Notes bearing the
signatures of individuals  who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee,  notwithstanding  that such individuals or
any of them have ceased to hold such  offices  prior to the  authentication  and
delivery of such Equipment  Notes or did not hold such offices at the respective
dates of such Equipment  Notes.  The Owner Trustee may from time to time execute
and deliver  Equipment  Notes with respect to the Aircraft to the  Mortgagee for
authentication  upon original issue and such Equipment  Notes shall thereupon be
authenticated  and  delivered by the Mortgagee  upon the written  request of the
Owner Trustee  signed by a Vice  President or Assistant  Vice President or other
authorized  officer  of the Owner  Trustee;  PROVIDED,  HOWEVER,  that each such
request shall specify the aggregate Original Amount of all Equipment Notes to be
authenticated  hereunder  on original  issue with  respect to the  Aircraft.  No
Equipment  Note shall be secured by or entitled to any benefit  under this Trust
Indenture or be valid or obligatory  for any  purposes,  unless there appears on
such  Equipment Note a certificate  of  authentication  in the form provided for
herein  executed  by  the  Mortgagee  by  the  manual  signature  of  one of its
authorized  officers and such certificate upon any Equipment Notes be conclusive
evidence,  and the only  evidence,  that  such  Equipment  Note  has  been  duly
authenticated and delivered hereunder.

          The aggregate  Original Amount of the Equipment Notes issued hereunder
shall not exceed __% of Lessor's Cost.

          SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY

          (a)  Without  impairing  any of the other  rights,  powers,  remedies,
privileges,  liens or security  interests of the Note  Holders  under this Trust
Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that
as between it and the Owner Trustee,  except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Agreement, (i) the
obligation  to make  all  payments  of the  Original  Amount  of,  interest  on,
Make-Whole  Amount,  if any,  and all  other  amounts  due with  respect  to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Agreements, shall be payable only from the income and
proceeds  from the Trust  Estate to the extent  included in the Trust  Indenture
Estate  and only to the extent  that the Owner  Trustee  shall  have  sufficient
income or  proceeds  from the Trust  Estate to the extent  included in the Trust
Indenture  Estate to enable the  Mortgagee to make such  payments in  accordance
with  the  terms  of   Article   III   hereof,   and  all  of  the   statements,



representations,  covenants and agreements  made by the Owner Trustee (when made
in such capacity)  contained in this Trust Indenture and any agreement  referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and  intended  only  for the  purpose  of  binding  the  Trust  Estate  and
establishing  the  existence of rights and remedies  which can be exercised  and
enforced against the Trust Estate;  therefore,  anything contained in this Trust
Indenture or such other agreements to the contrary  notwithstanding  (except for
any express provisions or representations  that the Owner Trustee is responsible
for, or is making, in its individual capacity, for which there would be personal
liability of the Owner  Trustee),  no recourse shall be had with respect to this
Trust  Indenture  or such  other  agreements  against  the Owner  Trustee in its
individual  capacity  or  against  any  institution  or person  which  becomes a
successor trustee or co-trustee or any officer,  director,  trustee,  servant or
direct or indirect  parent or controlling  Person or Persons of any of them, and
(ii)  none  of  the  Owner  Trustee,  in  its  individual  capacity,  the  Owner
Participant,   the  Mortgagee  and  any  officer,  director,  trustee,  servant,
employee, agent or direct or indirect parent or controlling Person or Persons of
any of them shall have any personal liability for any amounts payable hereunder,
under the  Participation  Agreement or any of the other Operative  Agreements or
under the Equipment Notes except as expressly  provided herein,  in the Lease or
in the Participation  Agreement;  PROVIDED,  HOWEVER,  that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance  with the terms of this Trust  Indenture or such other  agreements of
rights and remedies against the Trust Indenture Estate.

          (b) If (i) all or any part of the Trust  Estate  becomes the  property
of, or the Owner Trustee or Owner Participant  becomes,  a debtor subject to the
reorganization  provisions  of  the  Bankruptcy  Code,  (ii)  pursuant  to  such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by  reason  of the  Owner  Trustee  (in its  individual  capacity)  or the Owner
Participant  being held to have  recourse  liability  to any Note  Holder or the
Mortgagee,  directly or  indirectly  (other than the  recourse  liability of the
Owner Trustee (in its individual  capacity) or the Owner  Participant  under the
Participation  Agreement,  the  Lease or this  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
(iii) any Note Holder or the Mortgagee  actually  receives any Excess Amount (as
hereinafter  defined)  which  reflects any payment by the Owner  Trustee (in its
individual  capacity) or the Owner  Participant on account of clause (ii) above,
then  such Note  Holder or the  Mortgagee,  as the case may be,  shall  promptly
refund  to  the  Owner  Trustee  (in  its  individual  capacity)  or  the  Owner
Participant (whichever shall have made such payment) such Excess Amount.

          For purposes of this Section 2.03(b), "Excess Amount" means the amount
by which such payment exceeds the amount that would have been received by a Note
Holder or the Trustee if the Owner Trustee (in its  individual  capacity) or the
Owner Participant had not become subject to the recourse  liability  referred to
in clause (ii) above.  Nothing contained in this Section 2.03(b) shall prevent a
Note Holder or the Mortgagee  from  enforcing any personal  recourse  obligation
(and  retaining the proceeds  thereof) of the Owner  Trustee (in its  individual
capacity) or the Owner Participant under the Participation  Agreement, the Lease




or this Trust  Indenture (and any exhibits or annexes hereto or thereto) or from
retaining  any  amount  paid by Owner  Participant  under  Section  2.13 or 4.03
hereof.

          SECTION 2.04. METHOD OF PAYMENT

          (a) The Original Amount of, interest on,  Make-Whole  Amount,  if any,
and other amounts due under each  Equipment Note or hereunder will be payable in
Dollars by wire  transfer of  immediately  available  funds not later than 12:30
p.m.,  New York City time,  on the due date of payment to the  Mortgagee  at the
Corporate  Trust  Office for  distribution  among the Note Holders in the manner
provided  herein.  The Owner Trustee shall not have any  responsibility  for the
distribution of such payment to any Note Holder.  Notwithstanding  the foregoing
or any provision in any Equipment  Note to the contrary,  the Mortgagee will use
reasonable  efforts to pay or cause to be paid, if so directed in writing by any
Note Holder  (with a copy to the Owner  Trustee),  all amounts paid by the Owner
Trustee  hereunder and under such holder's  Equipment Note or Equipment Notes to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article  III  of  this  Trust  Indenture)  by  transferring,  or  causing  to be
transferred,  by wire transfer of immediately available funds in Dollars,  prior
to 2:00 p.m.,  New York City  time,  on the due date of  payment,  to an account
maintained by such holder with a bank located in the  continental  United States
the amount to be distributed  to such holder,  for credit to the account of such
holder  maintained at such bank.  If the  Mortgagee  shall fail to make any such
payment as provided in the immediately  foregoing  sentence after its receipt of
funds at the place and prior to the time specified above, the Mortgagee,  in its
individual  capacity and not as trustee,  agrees to compensate  such holders for
loss of use of  funds  at the  Debt  Rate  until  such  payment  is made and the
Mortgagee  shall be  entitled  to any  interest  earned on such funds until such
payment  is  made.  Any  payment  made  hereunder  shall  be  made  without  any
presentment or surrender of any Equipment Note,  except that, in the case of the
final payment in respect of any Equipment  Note,  such  Equipment  Note shall be
surrendered  to the  Mortgagee  for  cancellation  promptly  after such payment.
Notwithstanding any other provision of this Trust Indenture to the contrary, the
Mortgagee  shall not be required to make, or cause to be made, wire transfers as
aforesaid  prior to the first  Business Day on which it is  practicable  for the
Mortgagee  to do so in  view  of  the  time  of  day  when  the  funds  to be so
transferred  were received by it if such funds were  received  after 12:30 p.m.,
New York City time, at the place of payment.  Prior to the due  presentment  for
registration  of  transfer  of any  Equipment  Note,  the Owner  Trustee and the
Mortgagee  shall deem and treat the Person in whose name any  Equipment  Note is
registered  on the Equipment  Note Register as the absolute  owner and holder of
such Equipment Note for the purpose of receiving  payment of all amounts payable
with respect to such Equipment Note and for all other purposes,  and none of the
Owner Trustee or the Mortgagee  shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or nominee thereof shall
be a registered Note Holder,  all payments to it shall be made to the account of
such Note Holder  specified  in Schedule I thereto and  otherwise  in the manner
provided  in or  pursuant to the  Participation  Agreement  unless it shall have
specified  some other  account  or manner of payment by notice to the  Mortgagee
consistent with this Section 2.04.

          (b) The Mortgagee,  as agent for the Owner Trustee,  shall exclude and
withhold  at the  appropriate  rate from each  payment  of  Original  Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under



each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States  withholding  taxes
applicable  thereto as  required  by Law.  The  Mortgagee  agrees to act as such
withholding agent and, in connection  therewith,  whenever any present or future
United States taxes or similar  charges are required to be withheld with respect
to any  amounts  payable  hereunder  or in respect of the  Equipment  Notes,  to
withhold  such amounts and timely pay the same to the  appropriate  authority in
the name of and on behalf of the Note  Holders,  that it will file any necessary
United  States  withholding  tax  returns or  statements  when due,  and that as
promptly as  possible  after the  payment  thereof it will  deliver to each Note
Holder (with a copy to the Owner  Trustee and the Lessee)  appropriate  receipts
showing the payment thereof,  together with such additional documentary evidence
as any such Note Holder may reasonably request from time to time.

          If a Note  Holder  which is a  Non-U.S.  Person has  furnished  to the
Mortgagee a properly  completed,  accurate and currently effective U.S. Internal
Revenue  Service  Form  1001 or W-8 (or such  successor  form or forms as may be
required by the United States Treasury  Department)  during the calendar year in
which the payment  hereunder or under the Equipment  Note(s) held by such holder
is made  (but  prior to the  making  of such  payment),  or in either of the two
preceding  calendar years,  and has not notified the Mortgagee of the withdrawal
or  inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no  reason  to  believe  that any  information  set  forth  in such  form is
inaccurate),  the Mortgagee shall withhold only the amount,  if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United  States  federal  income tax. If a Note
Holder (x) which is a Non-U.S.  Person has furnished to the Mortgagee a properly
completed,  accurate and currently  effective U.S. Internal Revenue Service Form
4224 in  duplicate  (or  such  successor  certificate,  form or  forms as may be
required by the United  States  Treasury  Department  as  necessary  in order to
properly  avoid  withholding  of United  States  federal  income tax),  for each
calendar year in which a payment is made (but prior to the making of any payment
for  such  year),  and has not  notified  the  Mortgagee  of the  withdrawal  or
inaccuracy  of such  certificate  or form prior to the date of such payment (and
the  Mortgagee has no reason to believe that any  information  set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly  completed,  accurate and currently  effective U.S.  Internal Revenue
Service  Form W-9,  if  applicable,  prior to a payment  hereunder  or under the
Equipment  Notes held by such holder,  no amount shall be withheld from payments
in respect of United States  federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing  forms or  certificates  is withdrawn or
inaccurate,  or if such holder has not filed a form  claiming an exemption  from
United States  withholding tax or if the Code or the  regulations  thereunder or
the administrative  interpretation  thereof is at any time after the date hereof
amended to require such  withholding  of United States federal income taxes from
payments under the Equipment Notes held by such holder,  the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder  withholding taxes at
the  appropriate  rate  under  Law and  will,  on a timely  basis as more  fully
provided above, deposit such amounts with an authorized depository and make such
returns,  statements,  receipts  and other  documentary  evidence in  connection
therewith as required by Law.




          Neither  the Owner  Trustee nor the Owner  Participant  shall have any
liability  for the  failure of the  Mortgagee  to  withhold  taxes in the manner
provided for herein or for any false,  inaccurate or untrue evidence provided by
any Note Holder hereunder.

          SECTION 2.05. APPLICATION OF PAYMENTS

          In the case of each Equipment Note,  each payment of Original  Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:

          First:  to the payment of accrued  interest on such Equipment Note (as
     well as any interest on any overdue Original Amount, any overdue Make-Whole
     Amount,  if any, and to the extent  permitted by Law, any overdue  interest
     and any other overdue amounts thereunder) to the date of such payment;

          Second:  to the payment of the Original  Amount of such Equipment Note
     (or a portion thereof) then due thereunder;

          Third:  to the payment of  Make-Whole  Amount,  if any,  and any other
     amount due hereunder or under such Equipment Note; and

          Fourth: the balance, if any, remaining  thereafter,  to the payment of
     the Original Amount of such Equipment Note remaining  unpaid (provided that
     such Equipment  Note shall not be subject to redemption  except as provided
     in Sections  2.10,  2.11 and 2.12  hereof).  The amounts  paid  pursuant to
     clause  "Fourth"  above  shall be applied to the  installments  of Original
     Amount  of such  Equipment  Note  in the  inverse  order  of  their  normal
     maturity.

          SECTION 2.06.  TERMINATION  OF INTEREST IN TRUST  INDENTURE  ESTATE

          No Note Holder nor any other Indenture Indemnitee shall, as such, have
any further  interest  in, or other right with  respect to, the Trust  Indenture
Estate  when and if the  Original  Amount of,  Make-Whole  Amount,  if any,  and
interest on and other  amounts due under all  Equipment  Notes held by such Note
Holder  and all  other  sums then due and  payable  to such  Note  Holder,  such
Indenture Indemnitee or the Mortgagee hereunder (including,  without limitation,
under the third  paragraph of Section 2.02 hereof) and under the other Operative
Agreements  by the Owner  Trustee  and the Lessee  (collectively,  the  "Secured
Obligations") shall have been paid in full.

          SECTION 2.07. REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT NOTES

          The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee  shall provide for the  registration  of Equipment Notes and
the  registration  of transfers of Equipment  Notes.  No such transfer  shall be
given effect unless and until  registration  hereunder shall have occurred.  The
Equipment  Note  Register  shall be kept at the  Corporate  Trust  Office of the



Mortgagee.  The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of  registering  Equipment  Notes and  transfers of  Equipment  Notes as
herein  provided.  A holder of any  Equipment  Note  intending to exchange  such
Equipment  Note shall  surrender  such  Equipment  Note to the  Mortgagee at the
Corporate  Trust  Office,  together with a written  request from the  registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer,  the name and address of the new holder or holders.
Upon  surrender for  registration  of transfer of any Equipment  Note, the Owner
Trustee shall execute,  and the Mortgagee shall authenticate and deliver, in the
name of the  designated  transferee  or  transferees,  one or more new Equipment
Notes of a like aggregate  Original Amount and of the same series. At the option
of the Note Holder,  Equipment  Notes may be exchanged for other Equipment Notes
of any  authorized  denominations  of a like  aggregate  Original  Amount,  upon
surrender  of the  Equipment  Notes  to be  exchanged  to the  Mortgagee  at the
Corporate  Trust Office.  Whenever any Equipment  Notes are so  surrendered  for
exchange,  the Owner Trustee shall execute, and the Mortgagee shall authenticate
and deliver,  the  Equipment  Notes which the Note Holder making the exchange is
entitled  to receive.  All  Equipment  Notes  issued  upon any  registration  of
transfer or exchange of  Equipment  Notes  (whether  under this  Section 2.07 or
under Section 2.08 hereof or otherwise under this Trust  Indenture) shall be the
valid   obligations  of  the  Owner  Trustee   evidencing  the  same  respective
obligations,  and entitled to the same  security  and benefits  under this Trust
Indenture, as the Equipment Notes surrendered upon such registration of transfer
or exchange.  Every Equipment Note presented or surrendered for  registration of
transfer  shall  (if so  required  by the  Mortgagee)  be duly  endorsed,  or be
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Mortgagee  duly  executed  by the Note  Holder or such  holder's  attorney  duly
authorized in writing, and the Mortgagee shall require evidence  satisfactory to
it as to the  compliance of any such transfer with the  Securities  Act, and the
securities Laws of any applicable  state. The Mortgagee shall make a notation on
each new  Equipment  Note of the  amount  of all  payments  of  Original  Amount
previously  made on the old  Equipment  Note or Equipment  Notes with respect to
which such new Equipment  Note is issued and the date to which  interest on such
old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to
have been paid on such new Equipment  Note to the date on which  interest  shall
have been paid on such old  Equipment  Note,  and all  payments of the  Original
Amount marked on such new Equipment Note, as provided above,  shall be deemed to
have been made thereon.  The Owner Trustee shall not be required to exchange any
surrendered  Equipment  Notes  as  provided  above  during  the  ten-day  period
preceding the due date of any payment on such Equipment  Note. The Owner Trustee
shall in all cases deem the Person in whose name any  Equipment  Note shall have
been issued and  registered as the absolute  owner and holder of such  Equipment
Note for the purpose of  receiving  payment of all amounts  payable by the Owner
Trustee with respect to such  Equipment Note and for all purposes until a notice
stating otherwise is received from the Mortgagee and such change is reflected on
the  Equipment  Note  Register.  The Mortgagee  will  promptly  notify the Owner
Trustee and the Lessee of each  registration of a transfer of an Equipment Note.
Any such  transferee  of an Equipment  Note,  by its  acceptance of an Equipment
Note, agrees to the provisions of the Participation Agreement applicable to Note
Holders,  and  shall  be  deemed  to  have  covenanted  to  the  parties  to the
Participation  Agreement  as to the  matters  covenanted  by the  original  Loan
Participant in the  Participation  Agreement.  Subject to compliance by the Note
Holder and its transferee (if any) of the requirements set forth in this Section



2.07,  Mortgagee and Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes upon transfer or exchange within 10 Business Days of the date an
Equipment Note is surrendered for transfer or exchange.

          SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES

          If any  Equipment  Note shall  become  mutilated,  destroyed,  lost or
stolen,  the Owner Trustee shall, upon the written request of the holder of such
Equipment  Note,  execute and the Mortgagee  shall  authenticate  and deliver in
replacement  thereof a new Equipment  Note,  payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft.  If
the Equipment  Note being  replaced has become  mutilated,  such  Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner Trustee.  If the Equipment Note being replaced has been  destroyed,
lost or stolen,  the holder of such  Equipment  Note shall  furnish to the Owner
Trustee and the Mortgagee  such security or indemnity as may be required by them
to save the Owner Trustee and the Mortgagee  harmless and evidence  satisfactory
to the Owner Trustee and the Mortgagee of the destruction, loss or theft of such
Equipment  Note and of the  ownership  thereof.  If a  "qualified  institutional
buyer" of the type  referred to in  paragraph  (a)(1)(i)(A),  (B), (D) or (E) of
Rule  144A  under  the  Securities  Act (a  "QIB")  is the  holder  of any  such
destroyed,  lost or stolen  Equipment Note,  then the written  indemnity of such
QIB, signed by an authorized  officer thereof,  in favor of, delivered to and in
form  reasonably  satisfactory  to Lessee,  Owner Trustee and Mortgagee shall be
accepted as  satisfactory  indemnity  and security  and no further  indemnity or
security  shall be required as a condition to the execution and delivery of such
new Equipment Note. Subject to compliance by the Note Holder of the requirements
set  forth in this  Section  2.08,  Mortgagee  and Owner  Trustee  shall use all
reasonable  efforts to issue new Equipment  Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.

          SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION

          (a)  No service  charge  shall  be  made  to a  Note  Holder  for  any
registration of transfer or exchange of Equipment Notes,  but the Mortgagee,  as
Equipment Note  Registrar,  may require payment of a sum sufficient to cover any
tax or other  governmental  charge  that may be imposed in  connection  with any
registration of transfer or exchange of Equipment Notes.

          (b) The Mortgagee  shall cancel all Equipment  Notes  surrendered  for
replacement,  redemption,  transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.

          SECTION 2.10. MANDATORY REDEMPTIONS OF EQUIPMENT NOTES

          (a) On the date on which Lessee is required pursuant to Section 10.1.2
of the Lease to make payment for an Event of Loss with respect to the  Aircraft,
all of the  Equipment  Notes shall be redeemed  in whole at a  redemption  price
equal to 100% of the unpaid Original  Amount thereof,  together with all accrued
interest  thereon to the date of redemption  and all other  Secured  Obligations
owed or then due and payable to the Note Holders but without Make-Whole Amount.




          (b) If the Lease is terminated  with respect to the Aircraft by Lessee
pursuant to Section 9 thereof,  on the date the Lease is so terminated,  all the
Equipment  Notes shall be redeemed in whole at a redemption  price equal to 100%
of the unpaid Original Amount thereof, together with accrued interest thereon to
the date of redemption and all other amounts then due and payable  hereunder and
under the Participation Agreement and all other Operative Agreements to the Note
Holders plus, Make-Whole Amount, if any.

          SECTION 2.11. VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES

          All (but not less than all) of the Equipment  Notes may be redeemed by
the Owner Trustee in connection with a transaction  described in, and subject to
the terms and conditions of, Section 11 of the  Participation  Agreement upon at
least 30 days'  revocable  prior  written  notice to the  Mortgagee and the Note
Holders,  and the  Equipment  Notes  shall,  as  provided  in  Section 11 of the
Participation  Agreement,  be redeemed in whole at a  redemption  price equal to
100% of the unpaid  Original  Amount  thereof,  together  with accrued  interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note  Holders  plus  (except as provided in Section 11 of
the Participation Agreement), Make-Whole Amount, if any.

          SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION

          (a) Neither any  redemption of any Equipment  Note nor any purchase by
the Owner Trustee of any Equipment  Note may be made except to the extent and in
the manner  expressly  permitted  by this Trust  Indenture.  No  purchase of any
Equipment Note may be made by the Mortgagee.

          (b) Notice of  redemption  or purchase  with respect to the  Equipment
Notes shall be given by the  Mortgagee by  first-class  mail,  postage  prepaid,
mailed not less than 25 nor more than 60 days prior to the applicable redemption
date, to each Note Holder of such  Equipment  Notes to be redeemed or purchased,
at such Note Holder's address appearing in the Equipment Note Register; PROVIDED
that,  in the case of a  redemption  to be made  pursuant to Section  2.10(b) or
Section 2.11,  such notice shall be revocable and shall be deemed revoked in the
event that the Lease does not in fact  terminate  on the  specified  termination
date or if notice of such redemption  shall have been given in connection with a
refinancing of Equipment Notes and the Mortgagee receives written notice of such
revocation  from the Lessee or the Owner Trustee not later than three days prior
to the  redemption  date.  All  notices  of  redemption  shall  state:  (1)  the
redemption date, (2) the applicable basis for determining the redemption  price,
(3) that on the  redemption  date,  the  redemption  price  will  become due and
payable upon each such Equipment Note, and that, if any such Equipment Notes are
then outstanding,  interest on such Equipment Notes shall cease to accrue on and
after such  redemption  date,  and (4) the place or places where such  Equipment
Notes are to be surrendered for payment of the redemption price.

          (c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner  Trustee)  shall,  to the  extent an amount  equal to the
redemption  price for the  Equipment  Notes to be redeemed or  purchased  on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Mortgagee by 12:00 noon on the redemption date in



immediately  available  funds the redemption  price of the Equipment Notes to be
redeemed or purchased.

          (d) Notice of  redemption  or purchase  having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)),  the
Equipment  Notes to be redeemed or  purchased  shall,  on the  redemption  date,
become due and payable at the Corporate  Trust Office of the Mortgagee or at any
office or agency maintained for such purposes pursuant to Section 2.07, and from
and after such  redemption  date (unless there shall be a default in the payment
of the redemption  price) any such Equipment Notes then outstanding  shall cease
to bear  interest.  Upon  surrender of any such Equipment Note for redemption or
purchase in accordance  with said notice,  such Equipment Note shall be redeemed
at the redemption price. If any Equipment Note called for redemption or purchase
shall not be so paid upon surrender thereof for redemption, the principal amount
thereof  shall,  until  paid,  continue  to bear  interest  from the  applicable
redemption  date at the interest  rate in effect for such  Equipment  Note as of
such redemption date.

          SECTION 2.13. OPTION TO PURCHASE EQUIPMENT NOTES

          The Owner Trustee and the Owner  Participant  may, upon the events and
subject to the terms and  conditions and for the price set forth in this Section
2.13,  purchase  all but not less than all of the  Equipment  Notes  outstanding
hereunder,  and each Note  Holder  agrees  that it will,  upon such  events  and
subject to such terms and  conditions  and upon  receipt  of such  price,  sell,
assign,  transfer and convey to such purchaser or its nominee (without  recourse
or warranty of any kind except against Liens on such Equipment Notes arising by,
through or under such holder), all of the right, title and interest of such Note
Holder in and to the  Equipment  Notes  held by it,  and such  purchaser  or its
nominee shall assume all of such holder's  obligations  under the  Participation
Agreement and hereunder.

          Such option to purchase  the  Equipment  Notes may be exercised by the
Owner Trustee or the Owner  Participant  at any time following the occurrence of
any of the following  events,  and in any such event the purchase  price thereof
shall equal for each  Equipment  Note,  the  aggregate  unpaid  Original  Amount
thereof,  plus accrued and unpaid  interest  thereon to, but not including,  the
date of purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof).  Such option to purchase the Equipment  Notes may be exercised (x)
upon a  Mortgagee  Event or (y) in the event there  shall have  occurred  and be
continuing  a Lease  Event of Default or (z) upon  either  the  Equipment  Notes
becoming due and payable  pursuant to Section  4.04(b)  hereof or the  Mortgagee
taking  action or notifying  the Owner Trustee that it intends to take action to
foreclose the Lien of this Trust Indenture or otherwise commence the exercise of
any significant remedy under this Trust Indenture or the Lease, PROVIDED that if
such option is exercised  pursuant to clause (y) at a time when there shall have
occurred and be continuing for less than 120 days a Lease Event of Default,  the
purchase price thereof shall equal the price provided in the preceding  sentence
plus the Make-Whole Amount, if any.




          Such option to purchase  the  Equipment  Notes may be exercised by the
Owner Trustee or the Owner Participant giving irrevocable  written notice of its
election of such option to the Mortgagee,  which notice shall specify a date for
such purchase within 15 days of the date of such notice. The Mortgagee shall not
exercise any of the  remedies  hereunder  and,  without the consent of the Owner
Trustee or the Owner  Participant,  under the Lease,  during the period from the
date of the  giving of such  notice  until the date on which  such  purchase  is
required to occur pursuant to the terms of the preceding sentence.

          If the Owner Trustee or the Owner Participant on or before the date of
such  purchase  shall so  request,  the Note  Holders  will  comply with all the
provisions  of Section  2.07 to enable new  Equipment  Notes to be issued to the
Owner Trustee or the Owner  Participant or its nominee in such  denominations as
the Owner Trustee or the Owner Participant shall request. All taxes, charges and
expenses  required  pursuant to Section 2.09 in connection  with the issuance of
such new Equipment Note shall be borne by the Owner Participant.


          SECTION 2.14.  SUBORDINATION

          (a) The Owner Trustee and, by acceptance of its Equipment Notes of any
Series,  each Note  Holder of such  Series,  hereby  agree  that no  payment  or
distribution  shall be made on or in respect of the Secured  Obligations owed to
such Note Holder of such Series,  including any payment or distribution of cash,
property  or  securities  after the  commencement  of a  proceeding  of the type
referred to in Section 4.02(g) hereof,  except as expressly  provided in Article
III hereof.

          (b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Note  Holder of such  Series  agrees that in the event that such
Note  Holder,  in its capacity as a Note  Holder,  shall  receive any payment or
distribution  on any Secured  Obligations  in respect of such Series which it is
not entitled to receive  under this Section 2.14 or Article III hereof,  it will
hold any  amount so  received  in trust for the  Senior  Holder  (as  defined in
Section  2.14(c)  hereof)  and will  forthwith  turn  over such  payment  to the
Mortgagee in the form received to be applied as provided in Article III hereof.

          (c) As used in this Section 2.14, the term "Senior Holder" shall mean,
(i) the Note  Holders of Series A until the  Secured  Obligations  in respect of
Series A  Equipment  Notes  have  been  paid in full,  (ii)  after  the  Secured
Obligations  in respect of Series A Equipment  Notes have been paid in full, the
Note  Holders of Series B until the Secured  Obligations  in respect of Series B
Equipment  Notes have been paid in full and (iii) after the Secured  Obligations
in respect of Series B Equipment  Notes have been paid in full, the Note Holders
of Series C until the Secured Obligations in respect of Series C Equipment Notes
have been paid in full.



                                   ARTICLE III

         RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
                                INDENTURE ESTATE

          SECTION 3.01. BASIC RENT DISTRIBUTION  Except as otherwise provided in
Sections 3.02 and 3.03 hereof,  each  installment  of Basic Rent, any payment of
interest on overdue  installments of Basic Rent and any payment  received by the
Mortgagee  pursuant to Section 4.03 hereof shall be promptly  distributed in the
following order of priority:


First,    (i)  so much of such  installment  or payment as shall be  required to
               pay in full the  aggregate  amount of the  payment or payments of
               Original  Amount and  interest  (as well as any  interest  on any
               overdue  Original Amount and, to the extent  permitted by Law, on
               any overdue interest) then due under all Series A Equipment Notes
               shall be  distributed  to the Note  Holders  of Series A ratably,
               without  priority of one over the other,  in the proportion  that
               the amount of such payment or payments then due under each Series
               A Equipment  Note bears to the  aggregate  amount of the payments
               then due under all Series A Equipment Notes;

         (ii)  after  giving  effect to  paragraph  (i)  above,  so much of such
               installment  or payment  remaining as shall be required to pay in
               full the aggregate  amount of the payment or payments of Original
               Amount  and  interest  (as well as any  interest  on any  overdue
               Original Amount and, to the extent permitted by Law, on interest)
               then due under all Series B Equipment  Notes shall be distributed
               to the Note Holders of Series B ratably,  without priority of one
               over the other, in the proportion that the amount of such payment
               or payments then due under each Series B Equipment  Note bears to
               the aggregate  amount of the payments then due under all Series B
               Equipment Notes; and

        (iii)  after  giving  effect to  paragraph  (ii) above,  so much of such
               installment  or payment  remaining as shall be required to pay in
               full the aggregate  amount of the payment or payments of Original
               Amount  and  interest  (as well as any  interest  on any  overdue
               Original  Amount  and,  to the extent  permitted  by Law,  on any
               overdue  interest)  then due under all Series C  Equipment  Notes
               shall be  distributed  to the Note  Holders  of Series C ratably,
               without  priority of one over the other,  in the proportion  that
               the amount of such payment or payments then due under each Series
               C Equipment  Note bears to the  aggregate  amount of the payments
               then due under all Series C Equipment Notes; and

Second,        the balance,  if any, of such  installment  remaining  thereafter
               shall be  distributed to the Owner  Trustee;  PROVIDED,  HOWEVER,
               that  if  an  Event  of  Default   shall  have  occurred  and  be
               continuing,  then  such  balance  shall  not  be  distributed  as
               provided  in  this  clause  "Second"  but  shall  be  held by the
               Mortgagee as part of the Trust  Indenture  Estate and invested in
               accordance  with  Section  5.09  hereof  until  whichever  of the



               following shall first occur: (i) all Events of Default shall have
               been  cured or  waived,  in which  event  such  balance  shall be
               distributed  as provided in this clause  "Second",  (ii)  Section
               3.03 hereof  shall be  applicable,  in which  event such  balance
               shall be  distributed  in accordance  with the provisions of such
               Section  3.03,  or (iii) the 120th day after the  receipt of such
               payment  in which  case  such  payment  shall be  distributed  as
               provided in this clause "Second".

          SECTION  3.02.  EVENT OF  LOSS;  REPLACEMENT;  VOLUNTARY  TERMINATION;
                          OPTIONAL REDEMPTION

          Except as  otherwise  provided in Section  3.03  hereof,  any payments
received by the  Mortgagee  (i) with respect to the Airframe or the Airframe and
one or more  Engines  as the  result  of an Event of Loss,  (ii)  pursuant  to a
voluntary  termination  of the Lease  pursuant  to Section 9  thereof,  or (iii)
pursuant to an optional redemption of the Equipment Notes pursuant to Section 11
of the  Participation  Agreement shall be applied to redemption of the Equipment
Notes  and to all  other  Secured  Obligations  by  applying  such  funds in the
following order of priority:


First,    (a)  to  reimburse   the  Mortgagee  and  the  Note  Holders  for  any
               reasonable  costs or expenses  incurred in  connection  with such
               redemption  for which  they are  entitled  to  reimbursement,  or
               indemnity by Lessee,  under the Operative Agreements and then (b)
               to pay any  other  amounts  then due to the  Mortgagee,  the Note
               Holders  and the other  Indenture  Indemnitees  under  this Trust
               Indenture, the Participation Agreement or the Equipment Notes;

Second,   (i)  to pay the amounts  specified in paragraph (i) of clause  "Third"
               of Section 3.03 hereof plus Make-Whole  Amount,  if any, then due
               and payable in respect of the Series A Equipment Notes;

          (ii) after giving  effect to paragraph  (i) above,  to pay the amounts
               specified  in  paragraph  (ii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series B Equipment Notes; and

          (iii)after giving effect to paragraph  (ii) above,  to pay the amounts
               specified  in paragraph  (iii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series C Equipment Notes; and

THIRD, as provided in clause "Fourth" of Section 3.03 hereof;

PROVIDED, HOWEVER, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in  accordance  with  Section  5.06  hereof,  any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the  Mortgagee  shall be held by the Mortgagee as permitted
by Section 6.04 hereof  (provided that such moneys shall be invested as provided
in Section 5.09 hereof) as  additional  security for the  obligations  of Lessee
under the Lessee Operative  Agreements and, unless otherwise applied pursuant to



the Lease, such proceeds (and such investment earnings) shall be released to the
Lessee at the Lessee's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided in the Lease.

          SECTION  3.03.  PAYMENTS  AFTER EVENT OF DEFAULT

          Except as  otherwise  provided in Section  3.04  hereof,  all payments
received and amounts held or realized by the  Mortgagee  (including  any amounts
realized by the Mortgagee from the exercise of any remedies  pursuant to Section
15 of the Lease or  Article  IV  hereof)  after an Event of  Default  shall have
occurred  and be  continuing  and after the  declaration  specified  in  Section
4.04(b) hereof, as well as all payments or amounts then held by the Mortgagee as
part of the  Trust  Indenture  Estate,  shall  be  promptly  distributed  by the
Mortgagee in the following order of priority:


FIRST,    so much of such  payments  or  amounts  as  shall be  required  to (i)
          reimburse  the  Mortgagee  or WTC for any tax  (except  to the  extent
          resulting  from a failure of the Mortgagee to withhold  taxes pursuant
          to Section 2.04(b) hereof), expense or other loss (including,  without
          limitation,  all  amounts to be expended at the expense of, or charged
          upon the  rents,  revenues,  issues,  products  and  profits  of,  the
          property  included in the Trust  Indenture  Estate (all such  property
          being  herein  called the  "Mortgaged  Property")  pursuant to Section
          4.05(b)  hereof)  incurred by the  Mortgagee or WTC (to the extent not
          previously reimbursed), the expenses of any sale, or other proceeding,
          reasonable  attorneys' fees and expenses,  court costs,  and any other
          expenditures   incurred  or  expenditures  or  advances  made  by  the
          Mortgagee,  WTC or the Note  Holders in the  protection,  exercise  or
          enforcement of any right,  power or remedy or any damages sustained by
          the Mortgagee, WTC or any Note Holder,  liquidated or otherwise,  upon
          such Event of Default  shall be  applied by the  Mortgagee  as between
          itself, WTC and the Note Holders in reimbursement of such expenses and
          any other  expenses for which the  Mortgagee,  WTC or the Note Holders
          are entitled to reimbursement  under any Operative  Agreement and (ii)
          all amounts payable to the other Indenture  Indemnitees  hereunder and
          under the  Participation  Agreement and the Lease; and in the case the
          aggregate  amount  to be so  distributed  is  insufficient  to  pay as
          aforesaid in clauses (i) and (ii), then ratably,  without  priority of
          one over the other, in proportion to the amounts owed each hereunder;

SECOND,   so much of such payments or amounts  remaining as shall be required to
          reimburse  the then  existing or prior Note Holders for payments  made
          pursuant  to  Section  5.03  hereof  (to  the  extent  not  previously
          reimbursed)  shall be  distributed to such then existing or prior Note
          Holders ratably, without priority of one over the other, in accordance
          with the  amount of the  payment  or  payments  made by each such then
          existing or prior Note Holder pursuant to said Section 5.03 hereof;

THIRD,    (i)  so much  of such  payments  or  amounts  remaining  as  shall  be
               required to pay in full the aggregate  unpaid  Original Amount of
               all Series A Equipment Notes, and the accrued but unpaid interest


               and other amounts due thereon (other than Make-Whole Amount which
               shall not be due and payable) and all other  Secured  Obligations
               in respect of the Series A Equipment Notes (other than Make-Whole
               Amount) to the date of distribution,  shall be distributed to the
               Note Holders of Series A, and in case the aggregate  amount so to
               be distributed shall be insufficient to pay in full as aforesaid,
               then  ratably,  without  priority  of one over the other,  in the
               proportion  that the  aggregate  unpaid  Original  Amount  of all
               Series A Equipment Notes held by each holder plus the accrued but
               unpaid  interest and other  amounts due  hereunder or  thereunder
               (other  than   Make-Whole   Amount,   if  any)  to  the  date  of
               distribution,  bears to the aggregate  unpaid  Original Amount of
               all Series A Equipment  Notes held by all such  holders  plus the
               accrued but unpaid  interest and other amounts due thereon (other
               than Make-Whole Amount) to the date of distribution;

         (ii)  after  giving  effect to  paragraph  (i)  above,  so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series B Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series B, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution; and

        (iii)  after  giving  effect to  paragraph  (ii) above,  so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series C Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series C, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution; and




FOURTH,   the balance, if any, of such payments or amounts remaining  thereafter
          shall be distributed to the Owner Trustee.

          No Make-Whole  Amount shall be due and payable on the Equipment  Notes
as a consequence of the  acceleration  of the Equipment  Notes as a result of an
Event of Default.

          SECTION 3.04. CERTAIN PAYMENTS

          (a) Any payments  received by the  Mortgagee for which no provision as
to the  application  thereof is made in this Trust  Indenture and for which such
provision is made in the Lease or the  Participation  Agreement shall be applied
forthwith to the purpose for which such payment was made in accordance  with the
terms of the Lease or the Participation Agreement, as the case may be.

          (b) Notwithstanding anything to the contrary contained in this Article
III, the Mortgagee will distribute  promptly upon receipt any indemnity  payment
received by it from the Owner  Trustee or Lessee in respect of the  Mortgagee in
its individual capacity,  any Note Holder or any other Indenture Indemnitee,  in
each case  whether  pursuant to Section 9 of the  Participation  Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Mortgagee  under the third paragraph of Section 2.02 shall be distributed
to the Subordination Agent to be distributed in accordance with the terms of the
Intercreditor Agreement.

          (c) Notwithstanding anything to the contrary contained in this Article
III, any payments  received by the Mortgagee which constitute  Excluded Payments
shall be  distributed  promptly  upon receipt by the  Mortgagee  directly to the
Person or Persons entitled thereto.

          (d)  Notwithstanding  any  provision  of this Trust  Indenture  to the
contrary,  any amounts held by Mortgagee  pursuant to the terms of the Lease [or
any  Permitted  Sublease  assignment] shall  be   held by the  Mortgagee  as
security for the  obligations  of Lessee under the Lessee  Operative  Agreements
and, if and when required by the Lease,  paid and/or applied in accordance  with
the applicable provisions of the Lease.

          SECTION 3.05. OTHER PAYMENTS

          Any payments  received by the  Mortgagee  for which no provision as to
the  application  thereof is made in the  Lease,  the  Participation  Agreement,
elsewhere in this Trust Indenture or in any other  Operative  Agreement shall be
distributed by the Mortgagee to the extent  received or realized at any time (i)
prior to the payment in full of all Secured Obligations due the Note Holders, in
the order of priority  specified in Section  3.01 hereof  subject to the proviso




________________

 Insert  bracketed  language if the Lease  provides for the  assignment of a
     permitted sublease.





thereto,  and (ii) after  payment  in full of all  Secured  Obligations,  in the
following order of priority:

FIRST,    to the extent  payments  or  amounts  described  in clause  "First" of
          Section  3.03 hereof are  otherwise  obligations  of Lessee  under the
          Operative Agreements or for which the Lessee is obligated to indemnify
          against  thereunder,  in the  manner  provided  in clause  "First"  of
          Section 3.03 hereof, and

SECOND,   in the manner  provided  in clause  "Fourth" of Section  3.03  hereof.

          Further,  and except as otherwise  provided in Sections 3.02, 3.03 and
3.04 hereof,  all payments  received and amounts realized by the Mortgagee under
the  Lease  or  otherwise  with  respect  to the  Aircraft  (including,  without
limitation,  all amounts realized upon the sale or release of the Aircraft after
the  termination of the Lease with respect  thereto),  to the extent received or
realized at any time after  payment in full of all Secured  Obligations  due the
Note  Holders,  shall be  distributed  by the Mortgagee in the order of priority
specified in clause (ii) of the immediately  preceding  sentence of this Section
3.05.

          SECTION 3.06. PAYMENTS TO OWNER TRUSTEE

          Any  amounts  distributed  hereunder  by the  Mortgagee  to the  Owner
Trustee shall be paid to the Owner Trustee (within the time limits  contemplated
by  Section  2.04(a))  by wire  transfer  of funds of the type  received  by the
Mortgagee  at such  office and to such  account or  accounts  of such  entity or
entities  as  shall be  designated  by  notice  from the  Owner  Trustee  to the
Mortgagee  from time to time.  The Owner Trustee  hereby  notifies the Mortgagee
that unless and until the  Mortgagee  receives  notice to the contrary  from the
Owner Trustee,  all amounts to be  distributed to the Owner Trustee  pursuant to
clause  "Second" of Section 3.01 or clause "Fourth" of Section 3.03 hereof shall
be  distributed  by wire transfer of funds of the type received by the Mortgagee
to the Owner  Participant's  account  (within  the time limits  contemplated  by
Section 2.04(a)) specified in Schedule 1 to the Participation Agreement.

                                   ARTICLE IV

           COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF
                                   MORTGAGEE

          SECTION 4.01. COVENANTS OF OWNER TRUSTEE

          The Owner  Trustee  hereby  covenants  and agrees (the  covenants  and
agreements  only in clause  (b) below  being  made by the Owner  Trustee  in its
individual capacity) as follows:

          (a) the Owner Trustee will duly and punctually pay the Original Amount
of,  Make-Whole  Amount, if any, and interest on and other amounts due under the
Equipment  Notes and  hereunder in  accordance  with the terms of the  Equipment



Notes and this Trust  Indenture  and all amounts,  if any,  payable by it to the
Note Holders under the Participation Agreement or Section 9 of the Lease;

          (b) the Owner Trustee in its individual  capacity covenants and agrees
that it shall not,  directly  or  indirectly,  cause or permit to exist a Lessor
Lien attributable to it in its individual  capacity with respect to the Aircraft
or any other  portion of the Trust  Estate;  that it will  promptly,  at its own
expense, take such action as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it will make restitution
to the Trust  Indenture  Estate for any actual  diminution  of the assets of the
Trust  Estate  resulting  from  such  Lessor  Liens  attributable  to it in  its
individual capacity;

          (c) in the event the Owner Trustee  shall have Actual  Knowledge of an
Event of Default,  a Default or an Event of Loss,  the Owner  Trustee  will give
prompt written notice of such Event of Default,  Default or Event of Loss to the
Mortgagee, each Note Holder, Lessee and the Owner Participant;

          (d) the  Owner  Trustee  will  furnish  to the  Note  Holders  and the
Mortgagee,  promptly upon receipt thereof,  duplicates or copies of all reports,
notices, requests, demands,  certificates and other instruments furnished to the
Owner  Trustee under the Lease,  including,  without  limitation,  a copy of any
Termination  Notice and a copy of each  report or notice  received  pursuant  to
Section 9 or 8.2 or Annex D,  Paragraph  E of the Lease to the  extent  that the
same shall not have been  furnished  or is not  required to be  furnished by the
Lessee to the Note Holders or the Mortgagee pursuant to the Lease;

          (e) except  with the  consent of the  Mortgagee  (acting  pursuant  to
instructions  given in  accordance  with  Section 9.01 hereof) or as provided in
Sections 2 and 11 of the  Participation  Agreement,  the Owner  Trustee will not
contract for,  create,  incur,  assume or suffer to exist any Debt, and will not
guarantee  (directly  or  indirectly  or by an  instrument  having the effect of
assuring  another's payment or performance on any obligation or capability of so
doing,  or otherwise),  endorse or otherwise be or become  contingently  liable,
directly or indirectly, in connection with the Debt of any other person; and

          (f) the  Owner  Trustee  will not  enter  into any  business  or other
activity other than the business of owning the Aircraft,  the leasing thereof to
Lessee and the carrying out of the transactions  contemplated  hereby and by the
Lease,  the  Participation  Agreement  and the  Trust  Agreement  and the  other
Operative Agreements.

          SECTION 4.02. EVENT OF DEFAULT

          "Event of Default"  means any of the  following  events  (whatever the
reason for such Event of Default and whether  such event shall be  voluntary  or
involuntary  or come about or be effected by  operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

          (a) any Lease Event of Default  (provided that any such Lease Event of
Default  caused solely by a failure of Lessee to pay to the Owner Trustee or the
Owner  Participant  when due any amount that is included  in the  definition  of




Excluded  Payments  shall not  constitute  an Event of Default  unless notice is
given by the Owner Trustee to the Mortgagee  that such failure shall  constitute
an Event of Default); or

          (b) the  failure of the Owner  Trustee to pay when due any  payment of
Original Amount of, interest on, Make-Whole  Amount, if any, or other amount due
and payable under any Equipment  Note or hereunder  (other than as a result of a
Lease Event of Default or a Lease Default) and such failure shall have continued
unremedied  for ten Business Days in the case of any payment of Original  Amount
or interest or Make-Whole  Amount, if any, thereon and, in the case of any other
amount,  for ten Business Days after the Owner Trustee or the Owner  Participant
receives written demand from the Mortgagee or any Note Holder; or

          (c) any Lien required to be discharged  by the Owner  Trustee,  in its
individual  capacity  pursuant to Section 4.01(b) hereof or in its individual or
trust capacity pursuant to Section 7.3.1 of the Participation  Agreement,  or by
the Owner Participant  pursuant to Section 7.2.1 of the Participation  Agreement
shall remain undischarged for a period of 30 days after the Owner Trustee or the
Owner  Participant,  as the case may be, shall have received written notice from
the Mortgagee or any Note Holder of such Lien; or

          (d) any  representation  or warranty made by the Owner  Participant or
the Owner Trustee in the  Participation  Agreement or this Trust Indenture or in
any certificate  furnished by the Owner  Participant or the Owner Trustee to the
Mortgagee or any Note Holder in connection with the transactions contemplated by
the Operative  Agreements  shall prove to have been false or incorrect when made
in any  material  respect  and  continues  to be  material  and  adverse  to the
interests of the Mortgagee or the Note Holders; and if such misrepresentation is
capable of being  corrected and if such  correction is being sought  diligently,
such misrepresentation shall not have been corrected within 60 days (or, without
affecting  Section 4.02(f)  hereof,  in the case of the  representation  made in
Section 6.3.6 or 6.2.6 of the  Participation  Agreement as to citizenship of the
Owner  Trustee  in  its  individual   capacity  or  of  the  Owner  Participant,
respectively,  as soon as is reasonably  practicable  but in any event within 60
days)  following  notice  thereof  from the  Mortgagee or any Note Holder to the
Owner Trustee or the Owner Participant, as the case may be; or

          (e) other than as provided  in (c) above or (f) below,  any failure by
the Owner Trustee or Owner  Participant to observe or perform any other covenant
or obligation of the Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Mortgagee or the Note Holders  contained in the Participation
Agreement,  Section 4.2.1 of the Trust  Agreement,  the Equipment  Notes or this
Trust  Indenture  which is not remedied  within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant; or

          (f) if at any time when the Aircraft is  registered  under the Laws of
the United States,  the Owner  Participant shall not be a "citizen of the United
States" within the meaning of Section  40102(a)(15) of Part A of Subtitle VII of
Title 49, United States Code, and as the result thereof the  registration of the
Aircraft  under the  Federal  Aviation  Act,  and  regulations  then  applicable
thereunder, shall cease to be effective; provided that no Event of Default shall



be deemed to have occurred  under this  paragraph (f) unless such  circumstances
continue unremedied for more than 30 days after the Owner Participant has Actual
Knowledge  of the state of facts that  resulted in such  ineffectiveness  and of
such loss of citizenship; or

          (g) at any time either (i) the  commencement of an involuntary case or
other  proceeding in respect of the Owner  Participant,  the Owner Trustee,  the
Trust or the Trust Estate under the federal  bankruptcy Laws, as now constituted
or  hereafter  amended,  or any other  applicable  federal or state  bankruptcy,
insolvency or other similar Law in the United States or seeking the  appointment
of a  receiver,  liquidator,  assignee,  custodian,  trustee,  sequestrator  (or
similar official) of the Owner Participant,  the Owner Trustee, the Trust or the
Trust Estate or for all or  substantially  all of its  property,  or seeking the
winding-up or liquidation of its affairs and the  continuation  of any such case
or other  proceeding  undismissed  and unstayed  for a period of 60  consecutive
days; or (ii) the commencement by the Owner Participant,  the Owner Trustee, the
Trust or the Trust Estate of a voluntary  case or  proceeding  under the federal
bankruptcy  Laws,  as  now  constituted  or  hereafter  amended,  or  any  other
applicable  federal or state bankruptcy,  insolvency or other similar Law in the
United States, or the consent by the Owner Participant,  the Owner Trustee,  the
Trust or the  Trust  Estate to the  appointment  of or  taking  possession  by a
receiver,  liquidator,  assignee,  trustee,  custodian,  sequestrator  (or other
similar official) of the Owner Participant,  the Owner Trustee, the Trust or the
Trust Estate or for all or substantially  all of its property,  or the making by
the Owner Participant,  the Owner Trustee,  the Trust or the Trust Estate of any
assignment  for the benefit of creditors or the Owner  Participant  or the Owner
Trustee  shall  take any action to  authorize  any of the  foregoing;  PROVIDED,
HOWEVER,  that an event referred to in this Section  4.02(g) with respect to the
Owner  Participant shall not constitute an Event of Default if within 30 days of
the  commencement  of the  case  or  proceeding  a final  non-appealable  order,
judgment or decree shall be entered in such case or  proceeding  by a court or a
trustee,  custodian,  receiver or liquidator, to the effect that, no part of the
Trust Estate (except for the Owner  Participant's  beneficial  interest therein)
and no  right,  title or  interest  under the Trust  Indenture  Estate  shall be
included  in,  or  be  subject  to,  any  declaration  or  adjudication  of,  or
proceedings  with respect to, the  bankruptcy,  insolvency or liquidation of the
Owner Participant referred to in this Section 4.02(g).

          SECTION 4.03. CERTAIN RIGHTS

          The Mortgagee  shall give the Note Holders,  the Owner Trustee and the
Owner  Participant  prompt  written  notice of any Event of Default of which the
Mortgagee  has  Actual  Knowledge  and shall  give the Note  Holders,  the Owner
Trustee and the Owner Participant not less than ten Business Days' prior written
notice of the date (the "Enforcement Date") on or after which the Mortgagee may,
subject to the limitation set forth in Section 4.04(a),  commence and consummate
the exercise of any remedy or remedies  described in Section 4.04,  4.05 or 4.06
hereof;  provided,  however,  that in the event the Mortgagee shall have validly
terminated the Lease, the Mortgagee shall not sell or lease, or otherwise afford
the use of, the Aircraft or any portion  thereof to the Lessee or any  Affiliate
thereof.  Without limiting the generality of the foregoing,  the Mortgagee shall
give the  Owner  Trustee,  the  Owner  Participant  and the  Lessee at least ten
Business Days' prior written notice (which may be given concurrently with notice
of the  Enforcement  Date) of any  declaration  of the  Lease  to be in  default
pursuant to Sections 14 and 15 of the Lease or any  termination  of the Lease or



of the  exercise of any remedy or remedies  pursuant to Section 15 of the Lease.
If an Event of Default shall have occurred and be continuing,  the Owner Trustee
shall have the rights set forth below, any of which may be exercised directly by
the Owner Participant.

          If as a result of the  occurrence of an Event of Default in respect of
the nonpayment by Lessee of Basic Rent due under the Lease,  the Mortgagee shall
have  insufficient  funds to make any payment of Original Amount and interest on
any Equipment Note on the day it becomes due and payable, the Owner Trustee may,
but shall not be obligated to pay the Mortgagee prior to the  Enforcement  Date,
in the manner  provided in Section 2.04 hereof,  for  application  in accordance
with Section 3.01 hereof,  an amount equal to the portion of the Original Amount
and  interest  (including  interest,  if any,  on any  overdue  payments of such
portion of Original  Amount and interest)  then due and payable on the Equipment
Notes,  and,  unless the Owner Trustee has cured Events of Default in respect of
payments of Basic Rent on each of the [three]  [six]  immediately  preceding
Basic Rent  payment  dates,  or the Owner  Trustee has cured  [six]  [eight]
previous Events of Default in respect of payments of Basic Rent, such payment by
the Owner Trustee shall,  solely for purposes of this Trust  Indenture be deemed
to cure any Event of Default which would otherwise have arisen on account of the
nonpayment  by  Lessee  of such  installment  of Basic  Rent  (but not any other
Default or Event of Default which shall have occurred and be continuing).

          If any Event of Default  (other than in respect of the  nonpayment  of
Basic  Rent by the  Lessee)  which  can be cured  by the  payment  of money  has
occurred,  the Owner Trustee may, but shall not be obligated to, cure such Event
of Default by making such payment prior to the Enforcement  Date as is necessary
to accomplish the observance or performance of the defaulted covenant, condition
or agreement to the party entitled to the same.

          Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall  not,  as a result  of  exercising  the  right  to cure any such  Event of
Default,  obtain any Lien on any of the  Mortgaged  Property or any Rent payable
under the Lease for or on account of costs or expenses  incurred  in  connection
with the  exercise  of such  right,  nor shall  any  claim of the Owner  Trustee
against  Lessee or any other party for the  repayment  of such costs or expenses
impair the prior  right and  security  interest of the  Mortgagee  in and to the
Mortgaged Property.  Upon any payment by the Owner Trustee pursuant to the first
or second preceding  paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by
the Lessee on account of its being overdue and any Supplemental  Rent in respect
of  the  reimbursement  of  amounts  paid  by  Owner  Trustee  pursuant  to  the
immediately  preceding  paragraph  (but in either case shall have no rights as a


_________________

 Insert appropriate term for Owner Participant

 Insert appropriate term for Owner Participant







secured party  hereunder),  and thereafter,  the Owner Trustee shall be entitled
(so long as the  application  thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental  Rent, as the case
may be, and interest  thereon upon receipt  thereof by the Mortgagee;  PROVIDED,
HOWEVER,  that (i) if the Original  Amount and interest on the  Equipment  Notes
shall have  become due and  payable  pursuant to Section  4.04(b)  hereof,  such
subrogation shall,  until the Secured  Obligations shall have been paid in full,
be  subordinate  to the  rights  of the  Mortgagee,  the  Note  Holders  and the
Indenture  Indemnitees  in  respect  of such  payment  of  overdue  Basic  Rent,
Supplemental  Rent  and such  interest  and (ii) the  Owner  Trustee  shall  not
otherwise  attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee  payment of such
amount,  or by  commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (PROVIDED, that
at no time while an Event of Default shall have occurred and be continuing shall
any such demand be made or shall any such action be commenced (or continued) and
any amounts nevertheless  received by the Owner Trustee in respect thereof shall
be held in trust for the benefit of, and  promptly  paid to, the  Mortgagee  for
distribution as provided in Section 3.03 hereof).

          Neither  the Owner  Trustee nor the Owner  Participant  shall have the
right to cure any Lease Event of Default or Lease Default except as specified in
this Section 4.03.

          SECTION 4.04. REMEDIES

          (a) If an Event of Default shall have  occurred and be continuing  and
so long as the same shall continue  unremedied,  then and in every such case the
Mortgagee  may,  subject  to the  second and third  paragraphs  of this  Section
4.04(a),  exercise any or all of the rights and powers and pursue any and all of
the remedies  pursuant to this Article IV and shall have and may exercise all of
the rights and  remedies of a secured  party under the Uniform  Commercial  Code
and, in the event such Event of Default is also a Lease  Event of  Default,  any
and all of the remedies pursuant to Section 15 of the Lease [and pursuant to any
Permitted Sublease assignment] and may take possession of all or any part of
the  properties  covered or intended to be covered by the Lien created hereby or
pursuant  hereto and may exclude the Owner  Participant,  the Owner  Trustee and
Lessee and all persons  claiming  under any of them wholly or partly  therefrom;
provided,  that  the  Mortgagee  shall  give the  Owner  Trustee  and the  Owner
Participant  twenty  days' prior  written  notice of its  intention  to sell the
Aircraft,  and provided,  further,  that in the event the  Mortgagee  shall have
validly  terminated  the  Lease,  the  Mortgagee  shall  not sell or  lease,  or
otherwise  afford the use of, the Aircraft or any portion  thereof to the Lessee
or any  Affiliate  thereof.  Unless an Event of Default  not  resulting  from or
relating to a Lease Event of Default has occurred and is  continuing,  the Owner
Participant may bid at the sale and become the purchaser.  Without  limiting any
of the foregoing, it is understood and agreed that the Mortgagee may exercise



___________________

 Insert  bracketed  language if the Lease  provides for the  assignment of a
     permitted sublease.






any right of sale of the Aircraft available to it, even though it shall not have
taken  possession of the Aircraft and shall not have  possession  thereof at the
time of such sale.

          Anything in this Trust Indenture to the contrary notwithstanding,  the
Mortgagee shall not be entitled to exercise any remedy  hereunder as a result of
an Event of  Default  which  arises  solely by  reason of one or more  events or
circumstances  which constitute a Lease Event of Default unless the Mortgagee as
security  assignee of the Owner Trustee shall have exercised or  concurrently be
exercising one or more of the dispossessory  remedies provided for in Section 15
of the  Lease  with  respect  to the  Aircraft;  PROVIDED,  HOWEVER,  that  such
requirement  to exercise one or more of such remedies  under the Lease shall not
apply in  circumstances  where the Mortgagee is, and has been,  for a continuous
period in excess of 60 days or such other  period as may be specified in Section
1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "New
Section 1110 Period"),  involuntarily  stayed or prohibited by applicable law or
court order from  exercising  such remedies under the Lease (a "Continuous  Stay
Period");  PROVIDED  FURTHER,  HOWEVER,  that the requirement to exercise one or
more of such remedies under the Lease shall  nonetheless be applicable  during a
Continuous  Stay Period  subsequent  to the  expiration  of the New Section 1110
Period to the  extent  that the  continuation  of such  Continuous  Stay  Period
subsequent to the  expiration of the New Section 1110 Period (A) results from an
agreement by the trustee or the  debtor-in-possession  in such proceeding during
the New Section 1110 Period with the  approval of the relevant  court to perform
the Lease in accordance  with Section  1110(a)(1)(A)  of the Bankruptcy Code and
continues to perform as required by Section  1110(a)(1)(A-B)  of the  Bankruptcy
Code or (B) is an  extension  of the New Section 1110 Period with the consent of
the Mortgagee  pursuant to Section 1110(b) of the Bankruptcy Code or (C) results
from the  Lessee's  assumption  during  the New  Section  1110  Period  with the
approval  of the  relevant  court of the Lease  pursuant  to Section  365 of the
Bankruptcy Code and Lessee's  continuous  performance of the Lease as so assumed
or (D) is the  consequence of the  Mortgagee's own failure to give any requisite
notice to any person. In the event that the applicability of Section 1110 of the
Bankruptcy  Code to the  Aircraft  is being  contested  by  Lessee  in  judicial
proceedings, both of the Mortgagee and the Owner Trustee shall have the right to
participate in such  proceedings;  provided that any such  participation  by the
Owner  Trustee shall not affect in any way any rights or remedy of the Mortgagee
hereunder.

          It is expressly  understood  and agreed that,  subject only to the two
preceding  paragraphs,  the  inability,  described  in such  paragraphs,  of the
Mortgagee  to exercise any right or remedy under the Lease shall in no event and
under no  circumstances  prevent the Mortgagee from exercising any or all of its
rights,  powers and  remedies  under this Trust  Indenture,  including,  without
limitation, this Article IV.

          (b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Mortgagee  may (and shall,  upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), subject to Section
4.03 hereof,  at any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment Notes to be due and
payable,  whereupon  the  unpaid  Original  Amount of all  Equipment  Notes then
outstanding,   together  with  accrued  but  unpaid  interest  thereon  (without
Make-Whole  Amount) and other amounts due thereunder,  shall immediately  become



due and payable without presentment, demand, protest or notice, all of which are
hereby waived; PROVIDED that if an Event of Default referred to in clause (g) of
Section  4.02  hereof  shall have  occurred  or a Lease  Event of Default  under
Section 14.5 of the Lease shall have  occurred,  then and in every such case the
unpaid  Original  Amount  then  outstanding,  together  with  accrued but unpaid
interest and all other amounts due  thereunder and hereunder  shall  immediately
and  without  further act become due and payable  without  presentment,  demand,
protest or notice, all of which are hereby waived;  PROVIDED FURTHER that in the
event of a  reorganization  proceeding  involving  the Lessee  instituted  under
Chapter 11 of the Bankruptcy  Code, if no Lease Event of Default  (including any
Lease  Event of  Default  set forth in  Section  14.3 of the Lease) and no other
Event of  Default  (other  than the  failure to pay the  Original  Amount of the
Equipment Notes which by such  declaration  shall have become payable) exists at
any time after the  consummation of such proceeding,  such declaration  shall be
automatically  rescinded  without  any  further  action  on the part of any Note
Holder.

          This Section 4.04(b), however, is subject to the condition that, if at
any time after the Original  Amount of the Equipment  Notes shall have become so
due and payable,  and before any judgment or decree for the payment of the money
so due, or any thereof,  shall be entered, all overdue payments of interest upon
the  Equipment  Notes and all other amounts  payable  under the Equipment  Notes
(except the Original  Amount of the  Equipment  Notes which by such  declaration
shall have become  payable)  shall have been duly paid,  and every other Default
and Event of Default  with  respect to any  covenant or  provision of this Trust
Indenture  shall have been  cured,  then and in every  such case a  Majority  in
Interest  of Note  Holders  may (but  shall not be  obligated  to),  by  written
instrument  filed  with  the  Mortgagee,   rescind  and  annul  the  Mortgagee's
declaration (or such automatic  acceleration) and its consequences;  but no such
rescission  or  annulment  shall extend to or affect any  subsequent  Default or
Event of Default or impair any right consequent thereon.

          Any   acceleration   pursuant  to  this  Section   4.04(b)   shall  be
automatically  rescinded  and any  related  declaration  of an Event of  Default
annulled in the event that the Owner  Trustee  shall have cured,  in  accordance
with  Section  4.03  hereof,   the  Event  of  Default  that  resulted  in  such
acceleration or declaration.

          (c) The Note  Holders  shall be  entitled,  at any  sale  pursuant  to
Section 15 of the Lease or this  Section  4.04,  to credit  against any purchase
price bid at such sale by such holder all or any part of the unpaid  obligations
owing to such Note Holder and secured by the Lien of this Trust  Indenture (only
to the extent that such purchase  price would have been paid to such Note Holder
pursuant to Article III hereof if such purchase  price were paid in cash and the
foregoing provisions of this subsection (c) were not given effect).

          (d) In the event of any sale of the  Trust  Indenture  Estate,  or any
part  thereof,  pursuant to any  judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Original Amount of all Equipment  Notes then  outstanding,  together with
accrued  interest  thereon (without  Make-Whole  Amount),  and other amounts due
thereunder,  shall  immediately  become  due and  payable  without  presentment,
demand, protest or notice, all of which are hereby waived.




          (e)  Notwithstanding  anything  contained  herein, so long as the Pass
Through  Trustee under any Pass Through  Trust  Agreement (or its designee) is a
Note Holder,  the Mortgagee will not be authorized or empowered to acquire title
to any  Mortgaged  Property  or take any action  with  respect to any  Mortgaged
Property so acquired by it if such  acquisition  or action would cause any Trust
to fail to qualify as a "grantor trust" for federal income tax purposes.

          SECTION 4.05. RETURN OF AIRCRAFT, ETC.

          (a) If an Event of Default shall have  occurred and be continuing  and
the Equipment  Notes have been  accelerated,  subject to Section 4.03 hereof and
unless the Owner Trustee or the Owner Participant shall have elected to purchase
the Equipment  Notes,  at the request of the Mortgagee,  the Owner Trustee shall
promptly  execute and deliver to the  Mortgagee  such  instruments  of title and
other  documents as the Mortgagee may deem  necessary or advisable to enable the
Mortgagee or an agent or  representative  designated by the  Mortgagee,  at such
time or times  and  place or  places as the  Mortgagee  may  specify,  to obtain
possession  of all or any part of the Mortgaged  Property  included in the Trust
Indenture Estate to which the Mortgagee shall at the time be entitled hereunder.
If the Owner  Trustee  shall for any reason  fail to execute  and  deliver  such
instruments and documents after such request by the Mortgagee, the Mortgagee may
(i)  obtain a  judgment  conferring  on the  Mortgagee  the  right to  immediate
possession  and  requiring  the  Owner  Trustee  to  execute  and  deliver  such
instruments  and documents to the Mortgagee,  to the entry of which judgment the
Owner Trustee hereby  specifically  consents to the fullest extent  permitted by
Law, and (ii) pursue all or part of such Mortgaged  Property  wherever it may be
found  and,  in the event  that a Lease  Event of Default  has  occurred  and is
continuing,  may enter any of the  premises of Lessee  wherever  such  Mortgaged
Property may be or be supposed to be and search for such Mortgaged  Property and
take possession of and remove such Mortgaged Property. All expenses of obtaining
such  judgment or of pursuing,  searching  for and taking such  property  shall,
until paid, be secured by the Lien of this Trust Indenture.

          (b) Upon every such taking of possession, the Mortgagee may, from time
to time, at the expense of the Mortgaged  Property,  make all such  expenditures
for  maintenance,   use,  operation,   storage,  insurance,   leasing,  control,
management,  disposition,  modifications  or alterations to and of the Mortgaged
Property, as it may deem proper. In each such case, the Mortgagee shall have the
right to maintain, use, operate, store, insure, lease, control,  manage, dispose
of, modify or alter the  Mortgaged  Property and to carry on the business and to
exercise all rights and powers of the Owner  Participant  and the Owner  Trustee
relating to the Mortgaged Property,  as the Mortgagee shall deem best, including
the  right  to  enter  into  any and all such  agreements  with  respect  to the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  modification  or alteration of the Mortgaged  Property or any part
thereof as the Mortgagee may determine,  and the Mortgagee  shall be entitled to
collect  and receive  directly  all tolls,  rents  (including  Rent),  revenues,
issues,  income,  products and profits of the Mortgaged  Property and every part
thereof, except Excluded Payments,  without prejudice,  however, to the right of
the Mortgagee under any provision of this Trust Indenture to collect and receive
all cash held by, or required to be  deposited  with,  the  Mortgagee  hereunder



other than Excluded  Payments.  Such tolls,  rents (including  Rent),  revenues,
issues, income, products and profits shall be applied to pay the expenses of the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  improvement,  modification or alteration of the Mortgaged Property
and of  conducting  the business  thereof,  and to make all  payments  which the
Mortgagee may be required or may elect to make, if any, for taxes,  assessments,
insurance  or other  proper  charges  upon the  Mortgaged  Property  or any part
thereof  (including  the  employment  of engineers and  accountants  to examine,
inspect and make reports upon the  properties and books and records of the Owner
Trustee),  and all  other  payments  which  the  Mortgagee  may be  required  or
authorized to make under any provision of this Trust Indenture,  as well as just
and  reasonable  compensation  for the  services  of the  Mortgagee,  and of all
persons properly engaged and employed by the Mortgagee with respect hereto.

          SECTION  4.06.  REMEDIES  CUMULATIVE  Each and every right,  power and
remedy given to the Mortgagee  specifically or otherwise in this Trust Indenture
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 be exercised  from time to time and as
often and in such order as may be deemed  expedient  by the  Mortgagee,  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 the Mortgagee in the
exercise of any right,  remedy or power or in the  pursuance of any remedy shall
impair any such  right,  power or remedy or be  construed  to be a waiver of any
default  on the part of the Owner  Trustee  or  Lessee or to be an  acquiescence
therein.

          SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS

          In case the Mortgagee  shall have instituted any proceeding to enforce
any right,  power or remedy under this Trust Indenture by foreclosure,  entry or
otherwise,  and such proceedings  shall have been  discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner  Trustee,  the Mortgagee and Lessee shall,  subject to
any determination in such proceedings, be restored to their former positions and
rights  hereunder  with  respect  to the  Mortgaged  Property,  and all  rights,
remedies and powers of the Owner Trustee, the Mortgagee or Lessee shall continue
as if no such proceedings had been instituted.

          SECTION 4.08. WAIVER OF PAST DEFAULTS

          Upon written  instruction from a Majority in Interest of Note Holders,
the Mortgagee shall waive any past Default  hereunder and its  consequences  and
upon any such waiver such Default  shall cease to exist and any Event of Default
arising  therefrom  shall be deemed to have been cured for every purpose of this
Trust  Indenture,  but no such waiver  shall extend to any  subsequent  or other
Default or impair any right consequent thereon; provided, that in the absence of
written  instructions  from all the Note Holders,  the Mortgagee shall not waive
any Default (i) in the payment of the Original  Amount,  Make-Whole  Amount,  if
any,  and  interest  and  other  amounts  due  under  any  Equipment  Note  then



outstanding,  or (ii) in respect of a covenant or provision hereof which,  under
Article IX hereof,  cannot be  modified  or amended  without the consent of each
Note Holder.

          SECTION 4.09. APPOINTMENT OF RECEIVER

          The  Mortgagee  shall,  as a  matter  of  right,  be  entitled  to the
appointment  of a receiver (who may be the Mortgagee or any successor or nominee
thereof)  for  all  or  any  part  of  the  Mortgaged  Property,   whether  such
receivership  be incidental to a proposed sale of the Mortgaged  Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such  appointment.
Any receiver  appointed for all or any part of the Mortgaged  Property  shall be
entitled to exercise all the rights and powers of the Mortgagee  with respect to
the Mortgaged Property.

          SECTION 4.10. MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.

          Subject to the provisions of this Trust  Indenture,  the Owner Trustee
irrevocably  appoints the Mortgagee the true and lawful  attorney-in-fact of the
Owner Trustee  (which  appointment  is coupled with an interest) in its name and
stead and on its behalf,  for the purpose of effectuating any sale,  assignment,
transfer or delivery for the  enforcement  of the Lien of this Trust  Indenture,
whether  pursuant  to  foreclosure  or  power  of sale,  assignments  and  other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby  ratifying and confirming all that such attorney or any
substitute  shall  do by  virtue  hereof  in  accordance  with  applicable  law.
Nevertheless,  if so requested  by the  Mortgagee  or any  purchaser,  the Owner
Trustee  shall  ratify  and  confirm  any such  sale,  assignment,  transfer  or
delivery,  by executing and  delivering  to the Mortgagee or such  purchaser all
bills of sale, assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such request.

          SECTION 4.11. RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT

          Notwithstanding any other provision of this Trust Indenture, the right
of any Note Holder to receive payment of principal of, and premium,  if any, and
interest on an Equipment Note on or after the respective due dates  expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.

                                    ARTICLE V

                             DUTIES OF THE MORTGAGEE

          SECTION 5.01. NOTICE OF EVENT OF DEFAULT

          If the Mortgagee shall have Actual Knowledge of an Event of Default or
of a Default arising from a failure to pay Rent, the Mortgagee shall give prompt
written notice thereof to the Owner Trustee, the Owner Participant,  Lessee, and



each Note Holder.  Subject to the terms of Sections 2.13, 4.03, 4.04, 4.08, 5.02
and 5.03 hereof,  the Mortgagee  shall take such action,  or refrain from taking
such action,  with respect to such Event of Default or Default  (including  with
respect to the exercise of any rights or remedies  hereunder)  as the  Mortgagee
shall be  instructed  in writing  by a Majority  in  Interest  of Note  Holders.
Subject to the  provisions  of Section  5.03,  if the  Mortgagee  shall not have
received  instructions  as above provided within 20 days after mailing notice of
such  Event of  Default  to the Note  Holders,  the  Mortgagee  may,  subject to
instructions  thereafter  received pursuant to the preceding  provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain  from taking any action,  with  respect to such
Event  of  Default  or  Default  as it  shall  determine  advisable  in the best
interests of the Note  Holders;  PROVIDED,  HOWEVER,  that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge  on  the  part  of the  Mortgagee,  the  Owner  Trustee  or the  Owner
Participant,  the Mortgagee, the Owner Trustee or the Owner Participant,  as the
case may be,  shall not be deemed to have  knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee,  the failure of Lessee to pay any
installment  of Basic Rent within one  Business  Day after the same shall become
due,  if any  portion of such  installment  was then  required to be paid to the
Mortgagee,  which  failure  shall  constitute  knowledge  of a  Default)  unless
notified in writing by Lessee,  the Owner Trustee,  the Owner Participant or one
or more Note Holders.

          SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
                        LIMITATIONS

          (a)  Subject to the terms of  Sections  2.13,  4.03,  4.04(a) and (b),
4.08, 5.01 and 5.03 hereof,  upon the written  instructions at any time and from
time to time of a Majority in Interest of Note  Holders,  the  Mortgagee  shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be  specified  in such  instructions:  (i) give such notice or  direction or
exercise  such right,  remedy or power  hereunder  as shall be specified in such
instructions;  (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation  Agreement,  the Purchase Agreement,
the  Purchase  Agreement  Assignment,  or any other part of the Trust  Indenture
Estate  as shall  be  specified  in such  instructions;  and  (iii)  approve  as
satisfactory to the Mortgagee all matters  required by the terms of the Lease to
be  satisfactory  to the Owner  Trustee,  it being  understood  that without the
written  instructions  of a Majority in Interest of Note Holders,  the Mortgagee
shall not approve any such matter as  satisfactory  to the Mortgagee;  provided,
that  anything  contained  in this  Trust  Indenture,  the  Lease  or the  other
Operative  Agreements to the contrary  notwithstanding,  but subject to the next
paragraph hereof:

          (1) the Owner  Trustee  or the Owner  Participant,  may,  without  the
     consent of the Mortgagee,  demand, collect, sue for or otherwise obtain all
     amounts  included  in  Excluded  Payments  from  Lessee  and seek  legal or
     equitable  remedies to require  Lessee to maintain the  insurance  coverage
     referred to in Section 11 of the Lease [(or the  comparable  provisions  of



     any assigned Permitted  Sublease)]  provided, that the rights referred
     to in this  clause (1) shall not be deemed to include  the  exercise of any
     remedies  provided  for in Section 15 of the Lease  other than the right to
     proceed by appropriate court action, either at Law or in equity, to enforce
     payment  by  Lessee  of such  amounts  included  in  Excluded  Payments  or
     performance by Lessee of such insurance  covenant or to recover damages for
     the breach  thereof or for  specific  performance  of any other term of the
     Lease  [(or  the   comparable   provisions   of  any   assigned   Permitted
     Sublease)];

          (2) (A) the  Mortgagee  shall not,  without  the  consent of the Owner
     Trustee,  enter into,  execute or deliver  amendments or  modifications  in
     respect of any of the  provisions  of the Lease[,  any  assigned  Permitted
     Sublease  or any  Permitted  Sublease  assignment],  and (B)  unless a
     Mortgagee Event shall have occurred and be continuing,  the Mortgagee shall
     not,  without the consent of the Owner Trustee,  which consent shall not be
     withheld  if no  right  or  interest  of the  Owner  Trustee  or the  Owner
     Participant  shall be  diminished  or  impaired  thereby,  (i) enter  into,
     execute or deliver  waivers or consents in respect of any of the provisions
     of the Lease,  or (ii) approve any  accountants,  engineers,  appraisers or
     counsel as  satisfactory  to render  services for or issue  opinions to the
     Owner Trustee pursuant to the Operative  Agreements,  provided that whether
     or not any  Mortgagee  Event  has  occurred  and is  continuing,  the Owner
     Trustee's consent shall be required with respect to any waivers or consents
     in respect of any of the provisions of Section 5, 7 or 11 of the Lease,  or
     of any other  Section of the Lease to the extent such action  shall  affect
     (y) the  amount  or  timing  of, or the  right to  enforce  payment  of any
     Excluded  Payment or (z) the amount or timing of any amounts payable by the
     Lessee under the Lease as originally executed (or as subsequently  modified
     with the consent of the Owner  Trustee)  which,  absent the  occurrence and
     continuance of an Event of Default hereunder, would be distributable to the
     Owner Trustee under Article III hereof;

          (3)  whether  or not a  Default  or Event of  Default  under the Trust
     Indenture has occurred and is  continuing,  the Owner Trustee and the Owner
     Participant  shall  have the right,  together  with the  Mortgagee,  (i) to
     receive  from Lessee [or any  Permitted  Sublessee]  certificates  and
     other documents and information which Lessee is required to give or furnish
     to the Owner Trustee or the Lessor pursuant to any Operative  Agreement and
     (ii) to inspect in  accordance  with the Lease the Airframe and Engines and
     all Aircraft Documents;



_____________

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.




          (4)  whether  or not a  Default  or Event of  Default  under the Trust
     Indenture has occurred and is continuing,  the Owner Trustee shall have the
     right to adjust upwards Rent, Stipulated Loss Values and Termination Values
     as provided in Section 3.2.1 of the Lease;

          (5) so long as no Mortgagee Event has occurred and is continuing,  the
     Owner Trustee shall have the right,  to the exclusion of the Mortgagee,  to
     adjust  Basic  Rent,  Stipulated  Loss  Values  and  Termination  Values as
     provided in Section 3.2 of the Lease or to adjust  downward any installment
     or amount of Basic Rent,  Stipulated  Loss Value or Termination  Value,  as
     such  installments  and  amounts  are set  forth in  Schedules  2, 3 and 4,
     respectively,  to  the  Lease,  to  the  extent  of  the  portion  of  such
     installment or amount that would,  under Section 3.01, 3.02 or 3.03 hereof,
     as the case may be,  be  distributable  to the Owner  Trustee  or the Owner
     Participant;

          (6)  whether  or not a  Default  or Event of  Default  under the Trust
     Indenture has occurred and is  continuing,  the Owner Trustee may,  without
     the consent of the Mortgagee, (i) solicit and make bids with respect to the
     Aircraft  under Section 9 of the Lease in respect of a  termination  of the
     Lease by Lessee  pursuant to Section 9 thereof,  (ii) determine Fair Market
     Sales Value and Fair Market  Rental Value under Section 17 of the Lease for
     all purposes  except  following a Mortgagee Event pursuant to Section 15 of
     the Lease,  and (iii) make an election  pursuant to and in accordance  with
     the provisions of Sections 9.1(b), 9.2 and 9.3 of the Lease; and

          (7)  so  long  as no  Mortgagee  Event  shall  have  occurred  and  be
     continuing,  all  other  rights  of the  "Lessor"  under  the Lease [or any
     assigned Permitted  Sublease]  shall be exercised by the Owner Trustee
     to the exclusion of the Mortgagee including,  without limitation, the right
     to (i)  exercise  all rights with  respect to Lessee's  use and  operation,
     modification  or maintenance of the Aircraft and any Engine which the Lease
     specifically  confers on the  Lessor,  and (ii)  consent to and approve any
     assignment pursuant to Section 13 of the Lease; PROVIDED that the foregoing
     shall not (x) limit (A) any  rights  separately  granted  to the  Mortgagee
     under the Operative Agreements or (B) the right of the Mortgagee to receive
     any funds to be  delivered  to the  "Lessor"  under the Lease  (except with
     respect to  Excluded  Payments)  and under the  Purchase  Agreement  or (y)
     confer upon the Owner Trustee the right to adversely affect the validity or
     enforceability of the lien of this Indenture.

          Notwithstanding  anything to the contrary  contained herein (including
this Section 5.02),  the Mortgagee shall have the right, to the exclusion of the
Owner  Trustee  and the Owner  Participant,  to (A)  declare  the Lease to be in
default  under  Section 15 thereof and (B)  subject  only to the  provisions  of
Sections 4.03, 4.04(a) and (b) and 2.14 hereof,  exercise the remedies set forth



___________________

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.






in such Section 15 (other than in connection with Excluded Payments and provided
that  each  of  the  Owner  Trustee,   Owner  Participant  and  Mortgagee  shall
independently  retain the rights set forth in clause  (ii) of Section  15.1.5 of
the Lease) at any time that a Lease Event of Default  shall have occurred and be
continuing. Further and for the avoidance of doubt, and anything to the contrary
contained  herein  (including  this  Section  5.02),  in no event  may the Owner
Trustee  amend or otherwise  modify the  provisions  of Section  3.2.1(e) of the
Lease or of the final  sentence of the  definition of  Stipulated  Loss Value or
Termination  Value,  in any such case,  without the prior written consent of the
Mortgagee.

          The Mortgagee will execute and the Owner Trustee will file or cause to
be filed such  continuation  statements  with  respect to  financing  statements
relating to the  security  interest  created  hereunder  in the Trust  Indenture
Estate  as may be  specified  from  time to time in  written  instructions  of a
Majority in Interest of Note Holders (which instructions shall be accompanied by
the form of such  continuation  statement so to be filed).  The  Mortgagee  will
furnish to each Note Holder (and,  during the continuation of a Mortgagee Event,
to the Owner  Trustee and Owner  Participant),  promptly  upon receipt  thereof,
duplicates or copies of all reports, notices,  requests,  demands,  certificates
and other  instruments  furnished to the Mortgagee under the Lease or hereunder,
including,  without limitation,  a copy of any Termination Notice (as defined in
the Lease) and a copy of each  report or notice  received  pursuant to Section 9
and  Paragraph  E of Annex D of the Lease,  respectively  to the extent that the
same shall not have been furnished to such holder pursuant hereto or the Lease.

          (b)  If  any  Lease  Event  of  Default  shall  have  occurred  and be
continuing  and the Owner Trustee shall not have cured fully such Lease Event of
Default  under and in  accordance  with  Section  4.03  hereof,  on request of a
Majority in Interest of Note Holders,  the Mortgagee  shall declare the Lease to
be in  default  pursuant  to  Section 15 thereof  and  exercise  those  remedies
specified  by such Note  Holders.  The  Mortgagee  agrees to provide to the Note
Holders,  the Owner  Trustee and the Owner  Participant  concurrently  with such
declaration by the Mortgagee, notice of such declaration by the Mortgagee.

          SECTION 5.03. INDEMNIFICATION

          The Mortgagee shall not be required to take any action or refrain from
taking any action under  Section 5.01 (other than the first  sentence  thereof),
5.02 or Article IV hereof unless the Mortgagee  shall have been  indemnified  to
its reasonable  satisfaction  against any liability,  cost or expense (including
counsel  fees)  which may be  incurred  in  connection  therewith  pursuant to a
written  agreement with one or more Note Holders.  The Mortgagee  agrees that it
shall look solely to the Note  Holders  for the  satisfaction  of any  indemnity
(except  expenses for  foreclosure  of the type referred to in clause "First" of
Section 3.03 hereof) owed to it pursuant to this  Section  5.03.  The  Mortgagee
shall not be under any obligation to take any action under this Trust  Indenture
or any other Operative Agreement and nothing herein or therein shall require the
Mortgagee  to expend or risk its own  funds or  otherwise  incur the risk of any
financial  liability  in the  performance  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  written  indemnity  of any  Note  Holder  who is a QIB,  signed  by an



authorized  officer  thereof,  in favor of,  delivered to and in form reasonably
satisfactory  to the  Mortgagee  shall be accepted as  reasonable  assurance  of
adequate  indemnity).  The  Mortgagee  shall not be  required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof,  nor shall any other  provision  of this  Trust  Indenture  or any other
Operative  Agreement  be deemed to  impose a duty on the  Mortgagee  to take any
action,  if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.

          SECTION  5.04.  NO DUTIES  EXCEPT AS SPECIFIED  IN TRUST  INDENTURE OR
                          INSTRUCTIONS

          The Mortgagee  shall not have any duty or obligation to use,  operate,
store,  lease,  control,  manage,  sell,  dispose of or otherwise  deal with the
Aircraft or any other part of the Trust Indenture  Estate,  or to otherwise take
or refrain  from taking any action  under,  or in  connection  with,  this Trust
Indenture  or any  part of the  Trust  Indenture  Estate,  except  as  expressly
provided  by the terms of this  Trust  Indenture  or as  expressly  provided  in
written instructions from Note Holders as provided in this Trust Indenture;  and
no implied duties or obligations shall be read into this Trust Indenture against
the Mortgagee.  The Mortgagee 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 7.01 hereof),  promptly take such action
as may be necessary duly to discharge all liens and  encumbrances on any part of
the Trust Indenture Estate which result from claims against it in its individual
capacity not related to the ownership of the Aircraft or the  administration  of
the Trust  Indenture  Estate or any other  transaction  pursuant  to this  Trust
Indenture or any document included in the Trust Indenture Estate.

          SECTION  5.05.  NO ACTION  EXCEPT  UNDER  LEASE,  TRUST  INDENTURE  OR
                          INSTRUCTIONS

          The Owner  Trustee  and the  Mortgagee  agree  that they will not use,
operate, store, lease, control,  manage, sell, dispose of or otherwise deal with
the  Aircraft  or any other  part of the Trust  Indenture  Estate  except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the  authority  conferred  upon,  the  Owner  Trustee  and the  Mortgagee
pursuant  to this Trust  Indenture  and in  accordance  with the  express  terms
hereof.

          SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES

          At any time an Airframe or Engine is to be replaced  under or pursuant
to Section 10 of the Lease by a Replacement  Airframe or Replacement  Engine, if
no Lease Event of Default is  continuing,  the Owner  Trustee  shall  direct the
Mortgagee to execute and deliver to the Owner Trustee an appropriate  instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this Trust
Indenture  and the  Mortgagee  shall  execute and  deliver  such  instrument  as
aforesaid,  but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease.



          SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS

          If a Replacement  Airframe or Replacement  Engine is being substituted
as contemplated by Section 10 of the Lease,  the Owner Trustee and the Mortgagee
agree for the benefit of the Note Holders and Lessee,  subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the  requirements  of Section  5.06  hereof  with
respect to such  Replacement  Airframe  or  Replacement  Engine,  to execute and
deliver a Lease Supplement and a Trust Indenture Supplement,  as applicable,  as
contemplated by Section 10 of the Lease.

          SECTION 5.08.  EFFECT OF REPLACEMENT

          In the event of the  substitution  of an Airframe or of a  Replacement
Engine  pursuant  to  Section  10 of the  Lease,  all  provisions  of this Trust
Indenture  relating to the Airframe or Engine or Engines being replaced shall be
applicable to such  Replacement  Airframe or Replacement  Engine or Engines with
the same force and effect as if such Replacement  Airframe or Replacement Engine
or Engines were the same  airframe or engine or engines,  as the case may be, as
the Airframe or Engine or Engines being  replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced.

          SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY MORTGAGEE

          Any amounts held by the  Mortgagee as assignee of the Owner  Trustee's
rights to hold monies for security pursuant to Section 4.4 of the Lease shall be
held in accordance with the terms of such Section and the Mortgagee agrees,  for
the  benefit of Lessee,  to perform the duties of the Owner  Trustee  under such
Section.  Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any  other  Operative  Agreement  providing  for  amounts  to be  held by the
Mortgagee which are not distributed  pursuant to the other provisions of Article
III  hereof  shall  be  invested  by the  Mortgagee  from  time  to time in Cash
Equivalents  as  directed  by the Owner  Trustee  so long as the  Mortgagee  may
acquire  the same  using  its best  efforts.  All Cash  Equivalents  held by the
Mortgagee pursuant to Section 4.4 of the Lease or this Section 5.09 shall either
be (a) registered in the name of, payable to the order of, or specially endorsed
to,  the  Mortgagee,  or (b)  held  in an  Eligible  Account.  Unless  otherwise
expressly  provided in this Trust Indenture,  any income realized as a result of
any such  investment,  net of the  Mortgagee's  reasonable  fees and expenses in
making such  investment,  shall be held and applied by the Mortgagee in the same
manner as the  principal  amount of such  investment  is to be  applied  and any
losses, net of earnings and such reasonable fees and expenses,  shall be charged
against the principal amount invested. The Mortgagee shall not be liable for any
loss resulting  from any  investment  required to be made by it under this Trust
Indenture  other than by reason of its willful  misconduct or gross  negligence,
and any such  investment  may be sold  (without  regard to its  maturity) by the
Mortgagee  without  instructions  whenever  such  sale  is  necessary  to make a
distribution required by this Trust Indenture.




                                   ARTICLE VI

                       THE OWNER TRUSTEE AND THE MORTGAGEE

          SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES

          The Mortgagee  accepts the duties hereby  created and applicable to it
and agrees to perform  the same but only upon the terms of this Trust  Indenture
and agrees to receive and  disburse  all monies  constituting  part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee,  in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable  or  accountable  under any  circumstances,  except (i) for their own
willful  misconduct or gross  negligence  (other than for the handling of funds,
for  which  the  standard  of  accountability  shall be  willful  misconduct  or
negligence),  (ii) in the  case of the  Mortgagee,  as  provided  in the  fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for  liabilities  that may result,  in the case of the Owner  Trustee,
from the  inaccuracy  of any  representation  or warranty  of the Owner  Trustee
expressly made in its individual  capacity in the Participation  Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note  Holder in  connection  with the  transactions  contemplated  by the
Operative  Agreements)  or,  in the  case of the  Mortgagee  (in its  individual
capacity),  from  the  inaccuracy  of  any  representation  or  warranty  of the
Mortgagee  (in  its  individual  capacity)  in the  Participation  Agreement  or
expressly made  hereunder.  Neither the Owner Trustee nor the Mortgagee shall be
liable for any action or inaction of the other or of the Owner Participant.

          SECTION 6.02. ABSENCE OF DUTIES

          In the  case of the  Mortgagee,  except  in  accordance  with  written
instructions  furnished  pursuant to Section 5.01 or 5.02 hereof,  and except as
provided in, and without  limiting the  generality of,  Sections 5.03,  5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b)  hereof,  the Owner Trustee and the Mortgagee  shall have no duty (i) to
see to any  registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other  document,  or to see to the maintenance
of any such registration,  recording or filing,  (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance,  whether or not Lessee
shall  be in  default  with  respect  thereto,  (iii) to see to the  payment  or
discharge of any lien or  encumbrance  of any kind against any part of the Trust
Estate or the Trust Indenture  Estate,  (iv) to confirm,  verify or inquire into
the failure to receive any financial  statements from Lessee,  or (v) to inspect
the  Aircraft  at any time or  ascertain  or  inquire as to the  performance  or
observance of any of Lessee's covenants under the Lease [or any of the Permitted
Sublessee's  covenants under any assigned Permitted  Sublease] with respect
to the Aircraft. The Owner Participant shall not have any duty or responsibility



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 Insert bracketed  language if the Lease  provides for the  assignment of a
      permitted sublease.







hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above;  provided,  that nothing contained in this sentence shall
limit any obligations of the Owner Participant under the Participation Agreement
or relieve the Owner Participant from any restriction under Section 4.03 hereof.

          SECTION  6.03.  NO  REPRESENTATIONS  OR  WARRANTIES  AS TO AIRCRAFT OR
                          DOCUMENTS

          NEITHER THE  MORTGAGEE  IN ITS  INDIVIDUAL  OR TRUST  CAPACITY NOR THE
OWNER  TRUSTEE IN ITS  INDIVIDUAL  CAPACITY OR AS OWNER  TRUSTEE UNDER THE TRUST
AGREEMENT,  MAKES OR SHALL BE  DEEMED  TO HAVE  MADE AND EACH  HEREBY  EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  AS TO THE TITLE,
AIRWORTHINESS,   VALUE,  COMPLIANCE  WITH  SPECIFICATIONS,   CONDITION,  DESIGN,
QUALITY,  DURABILITY,  OPERATION,  MERCHANTABILITY  OR  FITNESS  FOR  USE  FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER  DEFECTS,  WHETHER  OR  NOT  DISCOVERABLE,   AS  TO  THE  ABSENCE  OF  ANY
INFRINGEMENT  OF ANY  PATENT,  TRADEMARK  OR  COPYRIGHT,  AS TO THE  ABSENCE  OF
OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT OR ANY OTHER  REPRESENTATION  OR
WARRANTY  WHATSOEVER,  except  the  Owner  Trustee  in its  individual  capacity
warrants  that (i) the Owner  Trustee has received on the Delivery Date whatever
title was  conveyed  to it,  and (ii) the  Aircraft  is free and clear of Lessor
Liens attributable to the Owner Trustee in its individual capacity.  Neither the
Owner Trustee,  in its  individual  capacity or as Owner Trustee under the Trust
Agreement,  nor the Mortgagee,  in its individual or trust capacities,  makes or
shall be deemed to have made any  representation or warranty as to the validity,
legality or  enforceability  of this Trust Indenture,  the Trust Agreement,  the
Participation  Agreement, the Equipment Notes, the Lease, the Purchase Agreement
or the Purchase  Agreement  Assignment  with the Consent and  Agreement  and the
Engine Consent and Agreement  attached thereto,  or as to the correctness of any
statement  contained  in  any  thereof,   except  for  the  representations  and
warranties  of the  Owner  Trustee  made  in its  individual  capacity  and  the
representations and warranties of the Mortgagee in its individual  capacity,  in
each  case  expressly  made  in this  Trust  Indenture  or in the  Participation
Agreement.  The Loan  Participants,  the Note Holders and the Owner  Participant
make no representation or warranty hereunder whatsoever.

          SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST

          Any  monies  paid to or  retained  by the  Mortgagee  pursuant  to any
provision  hereof and not then required to be  distributed  to the Note Holders,
Lessee or the Owner  Trustee  as  provided  in Article  III  hereof  need not be
segregated in any manner except to the extent  required by Law or Section 4.4 of
the Lease and Section  5.09  hereof,  and may be  deposited  under such  general
conditions as may be  prescribed  by Law, and the Mortgagee  shall not be liable
for any interest thereon (except that the Mortgagee shall invest all monies held
as directed by Lessee so long as no Lease Event of Default or Lease  Default has
occurred and is continuing (or in the absence of such direction, by the Majority
In Interest of Note Holders) in Cash Equivalents;  PROVIDED,  HOWEVER,  that any



payments received, or applied hereunder, by the Mortgagee shall be accounted for
by the  Mortgagee so that any portion  thereof paid or applied  pursuant  hereto
shall be identifiable as to the source thereof.

          SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL

          Neither the Owner Trustee nor the Mortgagee  shall incur any 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.  The  Owner  Trustee  and  the  Mortgagee  may  accept  a copy of a
resolution  of the Board of Directors (or  Executive  Committee  thereof) of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary  thereof as duly adopted and in full force and effect,  as  conclusive
evidence that such resolution has been duly adopted and that the same is in full
force and effect.  As to the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date,  the Owner Trustee may for all purposes  hereof rely
on a  certificate  signed by any Vice  President or other  authorized  corporate
trust officer of the Mortgagee.  As to any fact or matter relating to Lessee the
manner of which is not specifically  described herein, the Owner Trustee and the
Mortgagee may for all purposes  hereof rely on a  certificate,  signed by a duly
authorized  officer of Lessee,  as to such fact or matter,  and such certificate
shall  constitute full protection to the Owner Trustee and the Mortgagee for any
action  taken or omitted to be taken by them in good faith in reliance  thereon.
The Mortgagee shall assume,  and shall be fully protected in assuming,  that the
Owner  Trustee is  authorized  by the Trust  Agreement  to enter into this Trust
Indenture  and to take all action to be taken by it pursuant  to the  provisions
hereof,  and shall not inquire into the  authorization of the Owner Trustee with
respect  thereto.  In the  administration  of the  trusts  hereunder,  the Owner
Trustee and the  Mortgagee  each may execute any of the trusts or powers  hereof
and  perform  its powers  and duties  hereunder  directly  or through  agents or
attorneys  and may, at the expense of the Trust  Indenture  Estate,  advise with
counsel,  accountants  and other skilled  persons to be selected and retained by
it, and the Owner  Trustee and the  Mortgagee  shall not be liable for  anything
done,  suffered or omitted in good faith by them in accordance  with the written
advice or written  opinion of any such  counsel,  accountants  or other  skilled
persons.

          SECTION 6.06. CAPACITY IN WHICH ACTING

          The Owner  Trustee acts  hereunder  solely as trustee as herein and in
the Trust  Agreement  provided,  and not in its individual  capacity,  except as
otherwise  expressly  provided  herein,  in  the  Trust  Agreement  and  in  the
Participation Agreement.

          SECTION 6.07. COMPENSATION

          The Mortgagee shall be entitled to reasonable compensation,  including
expenses  and  disbursements  (including  the  reasonable  fees and  expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder,  have a priority claim on the Trust Indenture Estate
for the payment of such compensation, to the extent that such compensation shall
not be paid by Lessee,  and shall have the right,  on and subsequent to an Event
of Default  hereunder,  to use or apply any monies held by it  hereunder  in the



Trust Indenture Estate toward such payments.  The Mortgagee agrees that it shall
have no right against the Loan Participants, the Note Holders, the Owner Trustee
or the Owner Participant for any fee as compensation for its services as trustee
under this Trust Indenture.

          SECTION 6.08. INSTRUCTIONS FROM NOTE HOLDERS

          In the administration of the trusts created  hereunder,  the Mortgagee
shall have the right to seek  instructions  from a Majority  in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions.  The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 6.08.

                                   ARTICLE VII

                  INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

          SECTION 7.01. SCOPE OF INDEMNIFICATION

          The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee,  hereby  agrees,  whether or not any of the  transactions  contemplated
hereby  shall be  consummated,  except as to matters  covered  by any  indemnity
furnished  as  contemplated  by Section  5.03  hereof  and  except as  otherwise
provided in Section 2.03 or 2.04(b)  hereof,  to assume  liability for, and does
hereby  indemnify,  protect,  save  and  keep  harmless  the  Mortgagee  (in its
individual  and trust  capacities),  and its  successors,  assigns,  agents  and
servants,  from  and  against  any and  all  liabilities,  obligations,  losses,
damages,  penalties,  taxes  (excluding any taxes payable by the Mortgagee on or
measured by any  compensation  received by the Mortgagee for its services  under
this Trust Indenture),  claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on,  incurred by or asserted  against the  Mortgagee  (whether or not
also  indemnified  against by any other person under any other  document) in any
way relating to or arising out of this Trust  Indenture  or any other  Operative
Agreement to which it is a party or the  enforcement  of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture,  purchase,
acceptance,  non-acceptance,  rejection, ownership, delivery, lease, possession,
use, operation,  condition, sale, return or other disposition of the Aircraft or
any Engine (including,  without limitation,  latent or other defects, whether or
not   discoverable,   and  any  claim  for  patent,   trademark   or   copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Mortgagee  hereunder
except only in the case of willful misconduct or gross negligence (or negligence
in the case of handling funds) of the Mortgagee in the performance of its duties
hereunder or resulting from the inaccuracy of any  representation or warranty of
the Mortgagee (in its individual  capacity)  referred to in Section 6.03 hereof,
or as provided in Section  6.01 hereof or in the last  sentence of Section  5.04
hereof,  or as  otherwise  excluded  by the terms of  Section  9.1 or 9.3 of the
Participation  Agreement  from  Lessee's  indemnities  under such  Sections.  In
addition, if necessary,  the Mortgagee shall be entitled to indemnification from
the Trust Indenture Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement  indemnified against pursuant



to this  Section  7.01 to the extent  not  reimbursed  by Lessee or others,  but
without releasing any of them from their respective agreements of reimbursement;
and to  secure  the same the  Mortgagee  shall  have a prior  Lien on the  Trust
Indenture  Estate.  Without  limiting the foregoing,  the Mortgagee agrees that,
prior to  seeking  indemnification  from the  Trust  Indenture  Estate,  it will
demand,  and  diligently  pursue in good faith (but with no duty to exhaust  all
legal remedies therefor), indemnification available to the Mortgagee from Lessee
under the Lease or the Participation Agreement.

                                  ARTICLE VIII

                         SUCCESSOR AND SEPARATE TRUSTEES

          SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE

          In the case of any  appointment  of a successor  to the Owner  Trustee
pursuant  to  the  Trust  Agreement  including  upon  any  merger,   conversion,
consolidation  or sale of  substantially  all of the corporate trust business of
the Owner Trustee pursuant to the Trust  Agreement,  the successor Owner Trustee
shall give prompt written  notice thereof to the Mortgagee,  Lessee and the Note
Holders.

          SECTION 8.02. RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR

          (a) The  Mortgagee  or any  successor  thereto  may resign at any time
without  cause by giving at least 30 days' prior written  notice to Lessee,  the
Owner Trustee,  the Owner Participant and each Note Holder,  such resignation to
be effective upon the acceptance of the trusteeship by a successor Mortgagee. In
addition,  a Majority in Interest of Note Holders may at any time (but only with
the consent of the Lessee,  which  consent shall not be  unreasonably  withheld,
except that such  consent  shall not be necessary if a Lease Event of Default is
continuing)  remove the  Mortgagee  without  cause by an  instrument  in writing
delivered to the Owner Trustee, Lessee, the Owner Participant and the Mortgagee,
and the Mortgagee  shall  promptly  notify each Note Holder  thereof in writing,
such  removal  to be  effective  upon the  acceptance  of the  trusteeship  by a
successor Mortgagee. In the case of the resignation or removal of the Mortgagee,
a Majority in Interest of Note  Holders may appoint a successor  Mortgagee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default  shall have  occurred  and be  continuing,  shall be subject to Lessee's
reasonable  approval.  If a successor  Mortgagee  shall not have been  appointed
within 30 days after such notice of resignation or removal,  the Mortgagee,  the
Owner Trustee,  the Owner  Participant or any Note Holder may apply to any court
of  competent  jurisdiction  to appoint a successor  Mortgagee to act until such
time, if any, as a successor  shall have been appointed as above  provided.  The
successor  Mortgagee so appointed  by such court shall  immediately  and without
further  act be  superseded  by  any  successor  Mortgagee  appointed  as  above
provided.

          (b) Any  successor  Mortgagee,  however  appointed,  shall execute and
deliver  to the Owner  Trustee,  the  predecessor  Mortgagee  and the  Lessee an
instrument  accepting  such  appointment  and  assuming the  obligations  of the
Mortgagee under the  Participation  Agreement arising from and after the time of
such appointment,  and thereupon such successor Mortgagee,  without further act,



shall become vested with all the estates, properties,  rights, powers and duties
of the predecessor  Mortgagee hereunder in the trust hereunder  applicable to it
with like effect as if originally named the Mortgagee  herein;  but nevertheless
upon the written request of such successor Mortgagee, such predecessor Mortgagee
shall  execute  and  deliver  an  instrument   transferring  to  such  successor
Mortgagee,  upon the trusts herein expressed  applicable to it, all the estates,
properties,   rights  and  powers  of  such  predecessor  Mortgagee,   and  such
predecessor Mortgagee shall duly assign, transfer,  deliver and pay over to such
successor  Mortgagee all monies or other property then held by such  predecessor
Mortgagee hereunder.

          (c) Any successor  Mortgagee,  however  appointed,  shall be a bank or
trust  company  having  its  principal  place  of  business  in the  Borough  of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington,  Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative  Agreements are guaranteed by an affiliated entity having) a
combined  capital  and  surplus  of at least  $100,000,000,  if there be such an
institution  willing,  able and legally  qualified  to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.

          (d)  Any  corporation  into  which  the  Mortgagee  may be  merged  or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Mortgagee shall be a
party,  or any  corporation  to  which  substantially  all the  corporate  trust
business of the Mortgagee  may be  transferred,  shall,  subject to the terms of
paragraph (c) of this Section  8.02, be a successor  Mortgagee and the Mortgagee
under this Trust Indenture without further act.

          SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES

          (a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any  jurisdiction in which all or any part of the
Trust Indenture  Estate shall be situated or to make any claim or bring any suit
with respect to or in connection  with the Trust  Indenture  Estate,  this Trust
Indenture,  any other  Indenture  Agreement,  the Equipment  Notes or any of the
transactions  contemplated by the  Participation  Agreement,  (ii) the Mortgagee
shall be  advised  by  counsel  satisfactory  to it that it is so  necessary  or
prudent in the interests of the Note Holders (and the Mortgagee  shall so advise
the Owner Trustee and Lessee),  or (iii) the Mortgagee shall have been requested
to do so by a Majority in Interest of Note Holders,  then in any such case,  the
Mortgagee  and, upon the written  request of the  Mortgagee,  the Owner Trustee,
shall  execute  and  deliver  an  indenture  supplemental  hereto and such other
instruments  as may from time to time be necessary  or  advisable  either (1) to
constitute one or more bank or trust  companies or one or more persons  approved
by the Mortgagee, either to act jointly with the Mortgagee as additional trustee
or  trustees  of all or any part of the  Trust  Indenture  Estate,  or to act as
separate  trustee or trustees of all or any part of the Trust Indenture  Estate,
in each case with such rights,  powers,  duties and obligations  consistent with
this Trust Indenture as may be provided in such supplemental  indenture or other
instruments  as the Mortgagee or a Majority in Interest of Note Holders may deem
necessary or advisable,  or (2) to clarify,  add to or subtract from the rights,
powers,  duties and  obligations  theretofore  granted  any such  additional  or
separate  trustee,  subject  in each case to the  remaining  provisions  of this
Section 8.03. If the Owner Trustee shall not have taken any action  requested of



it under this Section  8.03(a) that is permitted or required by its terms within
15 days after the receipt of a written  request from the  Mortgagee so to do, or
if an Event of Default shall have occurred and be continuing,  the Mortgagee may
act  under  the  foregoing  provisions  of  this  Section  8.03(a)  without  the
concurrence  of the Owner  Trustee,  and the Owner  Trustee  hereby  irrevocably
appoints  (which  appointment  is coupled with an interest) the  Mortgagee,  its
agent and  attorney-in-fact to act for it under the foregoing provisions of this
Section  8.03(a) in either of such  contingencies.  The  Mortgagee  may, in such
capacity,  execute,  deliver and perform any such supplemental indenture, or any
such  instrument,  as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the  rights,  powers,  duties or  obligations  theretofore  granted  to any such
additional  or separate  trustee.  In case any  additional  or separate  trustee
appointed  under this Section  8.03(a)  shall die,  become  incapable of acting,
resign or be moved, all the assets, property, rights, powers, trusts, duties and
obligations of such additional or separate trustee shall revert to the Mortgagee
until a successor  additional  or separate  trustee is  appointed as provided in
this Section 8.03(a).

          (b) No  additional  or separate  trustee shall be entitled to exercise
any of the rights,  powers,  duties and obligations conferred upon the Mortgagee
in  respect  of the  custody,  investment  and  payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Trust Indenture Estate or otherwise payable under any Operative Agreement to
the  Mortgagee  shall be promptly  paid over by it to the  Mortgagee.  All other
rights,  powers, duties and obligations conferred or imposed upon any additional
or separate  trustee  shall be exercised or performed by the  Mortgagee and such
additional or separate  trustee jointly except to the extent that applicable Law
of any  jurisdiction in which any particular act is to be performed  renders the
Mortgagee  incompetent  or  unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Trust Indenture Estate in any such jurisdiction)  shall be exercised
and performed by such additional or separate trustee.  No additional or separate
trustee shall take any  discretionary  action except on the  instructions of the
Mortgagee or a Majority in Interest of Note Holders.  No trustee hereunder shall
be  personally  liable  by reason of any act or  omission  of any other  trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting,  and the Mortgagee's own actions in acting
with, any additional or separate  trustee.  Each additional or separate  trustee
appointed  pursuant to this Section 8.03 shall be subject to, and shall have the
benefit of Articles IV through  VIII and Article X hereof  insofar as they apply
to the  Mortgagee.  The powers of any additional or separate  trustee  appointed
pursuant  to this  Section  8.03  shall  not in any  case  exceed  those  of the
Mortgagee hereunder.

          (c) If at any time the Trustee shall deem it no longer necessary or in
order to conform to any such Law or take any such  action or shall be advised by
such  counsel  that it is no longer so necessary or desirable in the interest of
the Note Holders,  or in the event that the Mortgagee  shall have been requested
to do so in writing by a Majority  in Interest of Note  Holders,  the  Mortgagee
and, upon the written request of the Mortgagee, the Owner Trustee, shall execute
and  deliver an  indenture  supplemental  hereto and all other  instruments  and
agreements necessary or proper to remove any additional or separate trustee. The



Mortgagee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.


                                   ARTICLE IX

          SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
                                    DOCUMENTS

          SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS

          (a) Except as  provided  in Section  5.02  hereof,  the Owner  Trustee
agrees it shall not enter into any amendment of or supplement to the Lease,  the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Engine Consent and  Agreement,  or execute and deliver any written waiver
or  modification  of, or consent  under,  the terms of the Lease,  the  Purchase
Agreement,  the Purchase Agreement Assignment,  the Consent and Agreement or the
Engine  Consent  and  Agreement,  unless  such  supplement,  amendment,  waiver,
modification  or consent is  consented  to in  writing  by the  Mortgagee  and a
Majority in Interest of Note Holders.  Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of any of the Note Holders
or the Mortgagee, (i) any Excluded Payments payable to the Owner Participant may
be modified,  amended, changed or waived in such manner as shall be agreed to by
the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into  amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under
Section 15 of the Lease) or Section 17 of the Lease so long as such  amendments,
modifications and changes do not and would not affect the time of, or reduce the
amount of, Rent payments  (except to the extent  expressly  permitted by Section
5.02  hereof)  until  after the payment in full of all  Secured  Obligations  or
otherwise adversely affect the Note Holders.

          (b) Without  limiting  the  provisions  of Section  9.01  hereof,  the
Mortgagee  agrees  with  the  Note  Holders  that it shall  not  enter  into any
amendment,  waiver or  modification  of,  supplement  or  consent  to this Trust
Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement, the Engine Consent and Agreement or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement,  amendment,  waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders,  but upon the written request
of a Majority in Interest of Note  Holders,  the Trustee shall from time to time
enter into any such  supplement  or  amendment,  or execute and deliver any such
waiver,  modification or consent, as may be specified in such request and as may
be (in the case of any  such  amendment,  supplement  or  modification),  to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate,  the Airframe  Manufacturer  or the Engine  Manufacturer;
PROVIDED,  HOWEVER,  that,  without  the  consent of each  holder of an affected
Equipment Note then outstanding and of the Liquidity Provider, no such amendment
of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and
Agreement or the Participation  Agreement or waiver or modification of the terms
of, or consent  under,  any thereof,  shall (i) modify any of the  provisions of



this Section 9.01, or of Article II or III or Section  4.02,  4.04(c),  4.04(d),
5.02 or 5.06 hereof,  Section 13.3, 14 (except to add an Event of Default) or 16
of the Lease,  Section 15.1 of the Participation  Agreement,  the definitions of
"Event of  Default,"  "Default,"  "Lease  Event of  Default,"  "Lease  Default,"
"Majority in Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or
the percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount,  or change the time of payment or method of  calculation
of any amount, of Original Amount,  Make-Whole  Amount, if any, or interest with
respect to any Equipment  Note, or alter or modify the provisions of Article III
hereof with respect to the order of priorities in which distribution  thereunder
shall be made as among the Note  Holders,  the Owner  Trustee and Lessee,  (iii)
reduce,  modify or amend any  indemnities  in favor of the  Owner  Trustee,  the
Mortgagee or the Note Holders  (except that the Owner Trustee (in its individual
capacity)  or the  Mortgagee,  as the case may be, may  consent to any waiver or
reduction of an  indemnity  payable to it) or the other  Indenture  Indemnitees,
(iv)  consent  to any change in the Trust  Indenture  or the Lease  which  would
permit  redemption of Equipment  Notes earlier than permitted under Section 2.10
or 2.11 hereof or the purchase or exchange of the Equipment  Notes other than as
permitted by Section 2.13 hereof, (v) except as contemplated by the Lease or the
Participation  Agreement,  reduce  the  amount or extend  the time of payment of
Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each
case as set forth in the Lease,  or  modify,  amend or  supplement  the Lease or
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations  in respect of the payment of Basic Rent,  Stipulated  Loss Value or
Termination  Value for the Aircraft or altering  the absolute and  unconditional
character  of the  obligations  of Lessee to pay Rent as set forth in Sections 3
and 16 of the  Lease  or (vi)  permit  the  creation  of any  Lien on the  Trust
Indenture  Estate or any part thereof other than Permitted  Liens or deprive any
Note  Holder of the  benefit  of the Lien of this Trust  Indenture  on the Trust
Indenture Estate, except as provided in connection with the exercise of remedies
under Article IV hereof.

          (c) At any time  after  the date  hereof,  the Owner  Trustee  and the
Mortgagee may enter into one or more agreements  supplemental hereto without the
consent of any Note Holder for any of the  following  purposes:  (i) (a) to cure
any defect or  inconsistency  herein or in the Equipment  Notes,  or to make any
change not  inconsistent  with the provisions  hereof (PROVIDED that such change
does not  adversely  affect the  interests  of any Note  Holder in its  capacity
solely as Note Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the  succession  of another party as the Owner Trustee in accordance
with the terms of the Trust  Agreement  or to evidence the  succession  of a new
trustee hereunder  pursuant hereto,  the removal of the trustee hereunder or the
appointment  of any  co-trustee  or  co-trustees  or any separate or  additional
trustee or trustees; (iii) to convey,  transfer,  assign, mortgage or pledge any
property to or with the Mortgagee or to make any other  provisions  with respect
to matters or  questions  arising  hereunder  so long as such  action  shall not
adversely  affect the  interests of the Note  Holders in its capacity  solely as
Note Holder;  (iv) to correct or amplify the  description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this  Trust  Indenture,  the  Airframe  or  Engines  or any  Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee
for the benefit of the Note Holders,  or to surrender any rights or power herein
conferred upon the Owner Trustee,  the Owner Participant or the Lessee;  (vi) to



add to the rights of the Note  Holders;  and (vii) to  include on the  Equipment
Notes any legend as may be required by Law.

          SECTION 9.02. TRUSTEES PROTECTED

          If, in the opinion of the  institution  acting as Owner  Trustee under
the Trust  Agreement  or the  institution  acting as  Mortgagee  hereunder,  any
document  required to be  executed  by it pursuant to the terms of Section  9.01
hereof  affects any right,  duty,  immunity or  indemnity  with  respect to such
institution under this Trust Indenture or the Lease, such institution may in its
discretion decline to execute such document.

          SECTION 9.03. DOCUMENTS MAILED TO NOTE HOLDERS

          Promptly  after the execution by the Owner Trustee or the Mortgagee of
any document  entered into pursuant to Section 9.01 hereof,  the Mortgagee shall
mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each
Note Holder at its address last set forth in the Equipment  Note  Register,  but
the failure of the  Mortgagee to mail such copies shall not impair or affect the
validity of such document.

          SECTION  9.04.  NO REQUEST  NECESSARY  FOR LEASE  SUPPLEMENT  OR TRUST
                          INDENTURE SUPPLEMENT

          No written  request or consent of the  Mortgagee,  the Note Holders or
the Owner  Participant  pursuant  to Section  9.01  hereof  shall be required to
enable  the  Owner  Trustee  to enter  into any  Lease  Supplement  specifically
required by the terms of the Lease or to execute  and deliver a Trust  Indenture
Supplement specifically required by the terms hereof.

                                    ARTICLE X

                                  MISCELLANEOUS

          SECTION 10.01. TERMINATION OF TRUST INDENTURE

          Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole  Amount,  if any, and interest on and all other amounts due under all
Equipment  Notes  and  provided  that  there  shall  then  be no  other  Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or any other Operative Agreement,
the Owner  Trustee  shall  direct the  Mortgagee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate instrument releasing the
Aircraft and the Engines from the Lien of this Trust Indenture and releasing the
Lease,  the Purchase  Agreement,  the  Purchase  Agreement  Assignment  with the
Consent and Agreement and the Engine Consent and Agreement attached thereto from
the assignment and pledge thereof  hereunder and the Mortgagee shall execute and
deliver such  instrument as aforesaid and give written notice thereof to Lessee;
PROVIDED, HOWEVER, that this Trust Indenture and the trusts created hereby shall
earlier  terminate  and this Trust  Indenture  shall be of no  further  force or
effect upon any sale or other final disposition by the Mortgagee of all property



constituting  part of the Trust Indenture  Estate and the final  distribution by
the Mortgagee of all monies or other property or proceeds  constituting  part of
the Trust  Indenture  Estate in  accordance  with the  terms  hereof.  Except as
aforesaid otherwise provided, this Trust Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.

          SECTION  10.02.  NO  LEGAL  TITLE TO TRUST  INDENTURE  ESTATE  IN NOTE
                           HOLDERS

          No holder of an  Equipment  Note shall have legal title to any part of
the Trust Indenture  Estate. No transfer,  by operation of law or otherwise,  of
any Equipment Note or other right,  title and interest of any Note Holder in and
to the Trust Indenture Estate or hereunder shall operate to terminate this Trust
Indenture or entitle such holder or any  successor or  transferee of such holder
to an  accounting or to the transfer to it of any legal title to any part of the
Trust Indenture Estate.

          SECTION 10.03. SALE OF AIRCRAFT BY MORTGAGEE IS BINDING

          Any sale or other  conveyance of the Trust  Indenture  Estate,  or any
part thereof (including any part thereof or interest therein),  by the Mortgagee
made pursuant to the terms of this Trust  Indenture  shall bind the Note Holders
and shall be  effective  to transfer or convey all right,  title and interest of
the Trustee, the Owner Trustee, the Owner Participant and such holders in and to
such Trust Indenture Estate or part thereof. No purchaser or other grantee shall
be  required  to  inquire  as to the  authorization,  necessity,  expediency  or
regularity of such sale or conveyance  or as to the  application  of any sale or
other proceeds with respect thereto by the Mortgagee.

          SECTION  10.04.  TRUST   INDENTURE  FOR  BENEFIT  OF  OWNER  TRUSTEE,
                           MORTGAGEE, OWNER PARTICIPANT, NOTE HOLDERS AND THE
                           OTHER INDENTURE INDEMNITEES

          Nothing in this Trust Indenture,  whether express or implied, shall be
construed to give any person other than the Owner Trustee,  the  Mortgagee,  the
Owner  Participant,  the Note Holders and the other Indenture  Indemnitees,  any
legal or  equitable  right,  remedy or claim  under or in  respect of this Trust
Indenture.

          SECTION 10.05. 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 Trust  Indenture  to be made,  given,
furnished  or filed  shall be in  writing,  personally  delivered  or  mailed by
certified mail, postage prepaid,  or by facsimile or confirmed telex, and (i) if
to the Owner Trustee,  addressed to it at 79 South Main Street,  Salt Lake City,
Utah 84111 with a copy to the Owner Participant  addressed as provided in clause
(iii)  below,  (ii) if to  Mortgagee,  addressed  to it at its  office at Rodney
Square North, 1100 North Market Street,  Wilmington,  Delaware 19890, Attention:
Corporate Trust Administration, facsimile number (302) 651-8882, (iii) if to any
Participant,  Lessee,  any  Note  Holder  or  any  other  Indenture  Indemnitee,
addressed  to such party at such  address as such party shall have  furnished by
notice to the Owner  Trustee  and the  Mortgagee,  or,  until an  address  is so



furnished, addressed to the address of such party (if any) set forth on Schedule
1 to the Participation Agreement or in the Equipment Note Register. Whenever any
notice in writing is required to be given by the Owner Trustee,  any Participant
or the  Mortgagee  or any Note  Holder to any of the other of them,  such notice
shall be  deemed  given  and such  requirement  satisfied  when  such  notice is
received, or if such notice is mailed by certified mail, postage prepaid,  three
Business Days after being mailed,  addressed as provided above. 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 Trust Indenture.

          SECTION 10.06. SEVERABILITY

          Any  provision  of  this  Trust   Indenture  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. Any such prohibition or  unenforceability  in any
particular  jurisdiction  shall  not  invalidate  or render  unenforceable  such
provision in any other jurisdiction.

          SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS

          No term or provision of this Trust  Indenture or the  Equipment  Notes
may be  changed,  waived,  discharged  or  terminated  orally,  but  only  by an
instrument  in  writing  signed  by the  Owner  Trustee  and the  Mortgagee,  in
compliance  with Section  9.01 hereof.  Any waiver of the terms hereof or of any
Equipment  Note shall be  effective  only in the  specific  instance and for the
specific purpose given.

          SECTION 10.08. SUCCESSORS AND ASSIGNS

          All covenants and agreements  contained  herein shall be binding upon,
and inure to the  benefit  of,  each of the  parties  hereto  and the  permitted
successors and assigns of each,  all as herein  provided.  Any request,  notice,
direction,  consent,  waiver or other  instrument  or action by any Note  Holder
shall bind the successors and assigns of such holder.  This Trust  Indenture and
the Trust Indenture  Estate shall not be affected by any amendment or supplement
to the Trust  Agreement  or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Trust Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and  supplemented  from time
to  time  to the  extent  permitted  hereby,  thereby  and by the  Participation
Agreement.  Each Note Holder by its acceptance of an Equipment Note agrees to be
bound by this Trust Indenture and all provisions of the Participation  Agreement
applicable to a Loan Participant or a Note Holder.

          SECTION 10.09. 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 10.10. NORMAL COMMERCIAL RELATIONS

          Anything   contained   in  this  Trust   Indenture   to  the  contrary
notwithstanding,  Owner Trustee, Mortgagee, any Participant or any bank or other
Affiliate  of such  Participant  may  conduct  any  banking  or other  financial
transactions,  and have banking or other commercial  relationships,  with Lessee
[or any  Permitted  Sublessee],  fully to the same  extent as if this Trust
Indenture were not in effect,  including without  limitation the making of loans
or other  extensions  of credit to Lessee for any  purpose  whatsoever,  whether
related to any of the transactions contemplated hereby or otherwise.

          SECTION 10.11. GOVERNING LAW; COUNTERPART FORM

          THIS  TRUST  INDENTURE  SHALL IN ALL  RESPECTS  BE  GOVERNED  BY,  AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE OF NEW YORK,
INCLUDING  ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE.  THIS TRUST
INDENTURE IS BEING  DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties  hereto in separate  counterparts  (or upon  separate
signature  pages bound  together into one or more  counterparts),  each of which
when so executed and delivered shall be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

          SECTION  10.12.  VOTING BY NOTE  HOLDERS

          All  votes  of the  Note  Holders  shall  be  governed  by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.

          SECTION 10.13. BANKRUPTCY

          It is the intention of the parties that the Owner  Trustee,  as lessor
under the Lease (and the Mortgagee as assignee of the Owner Trustee  hereunder),
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 the
Lease in the event of a case under  Chapter 11 of the  Bankruptcy  Code in which
Lessee is a debtor,  and in any  instance  where more than one  construction  is
possible of the terms and  conditions  hereof or any other  pertinent  Operative
Agreement,  each such party agrees that a construction which would preserve such
benefits  shall  control over any  construction  which would not  preserve  such
benefits.

          IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Trust
Indenture and Mortgage to be duly executed by their respective  officers thereof
duly authorized as of the day and year first above written.

__________________

 Insert  bracketed  language if the Lease  provides for the assignment of a
      permitted sublease.







                               FIRST SECURITY BANK, NATIONAL
                                 ASSOCIATION,
                                 not in its individual capacity,
                                 except as expressly provided herein, but solely
                                 as Owner Trustee, as Owner Trustee


                               By:______________________________________________
                                    Name: ______________________________________
                                    Title:______________________________________


                               WILMINGTON TRUST COMPANY, as
                                 Mortgagee


                               By:______________________________________________
                                    Name: ______________________________________
                                    Title:______________________________________




                                                                       EXHIBIT A
                                             TO TRUST INDENTURE AND MORTGAGE ___

                   TRUST INDENTURE AND MORTGAGE ___ SUPPLEMENT

          This  TRUST  INDENTURE  AND  MORTGAGE  ___  SUPPLEMENT  NO.  1,  dated
___________,  199_ (herein called this "Trust  Indenture  Supplement")  of FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  not in its individual capacity, but solely
as Owner Trustee  (herein called the "Owner  Trustee")  under that certain Trust
Agreement ___ dated as of ___________, 199_ (the "Trust Agreement"), between the
Owner Trustee and the Owner Participant named therein.

                              W I T N E S S E T H:

          WHEREAS,   the  Trust   Indenture  and  Mortgage  ___,   dated  as  of
____________,  199_ (as amended and supplemented to the date hereof,  the "Trust
Indenture") between the Owner Trustee and Wilmington Trust Company, as Mortgagee
(the  "Mortgagee"),  provides  for the  execution  and  delivery of a supplement
thereto  substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and

          WHEREAS,  each of the Trust Agreement and Trust  Indenture  relates to
the  Airframe  and  Engines  described  below,  and a  counterpart  of the Trust
Indenture  is attached  hereto and made a part  hereof and this Trust  Indenture
Supplement,  together with such  counterpart  of the Trust  Indenture,  is being
filed for recordation on the date hereof with the FAA as one document;

          NOW, THEREFORE,  this Trust Indenture  Supplement  witnesseth that the
Owner Trustee hereby  confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right,  title and interest in and
to the following described property:


                                    AIRFRAME

One airframe identified as follows:

                                            FAA
                                        REGISTRATION             MANUFACTURER'S
MANUFACTURER            MODEL              NUMBER                SERIAL NUMBER
- ------------            -----              ------                -------------

The Boeing Company

together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever  nature,  whether now owned or hereinafter  acquired and which
are from time to time incorporated or installed in or attached to said airframe.






                                AIRCRAFT ENGINES

          Two  aircraft  engines,  each such  engine  having  750 or more  rated
take-off horsepower or the equivalent thereof, identified as follows:


MANUFACTURER             MANUFACTURER'S MODEL               SERIAL NUMBER
- ------------             --------------------               -------------



together  with all of Owner  Trustee's  right,  title and interest in and to all
Parts of whatever nature,  whether now owned or hereafter acquired and which are
from time to time  incorporated  or  installed  in or attached to either of such
engines.

          Together with all of Owner Trustee's right,  title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the  definition  of  "Airframe"  or  "Engine",  whether  now owned or  hereafter
acquired,  including  all  substitutions,   renewals  and  replacements  of  and
additions,  improvements,  accessions  and  accumulations  to the  Airframe  and
Engines (other than additions, improvements,  accessions and accumulations which
constitute   appliances,   parts,   instruments,   appurtenances,   accessories,
furnishings  or other  equipment  excluded from the definition of Parts) and (b)
all Aircraft Documents.

          As further security for the obligations  referred to above and secured
by the Trust  Indenture and hereby,  the Owner  Trustee has granted,  bargained,
sold, assigned,  transferred,  conveyed,  mortgaged,  pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm,  unto the Mortgagee,  its successors and assigns,  for the security and
benefit  of  the  Loan   Participants,   the  Note  Holders  and  the  Indenture
Indemnitees,  in the trust  created  by the Trust  Indenture,  all of the right,
title and interest of the Owner Trustee in, to and under the Lease Supplement of
even date herewith covering the property described above.

          Notwithstanding  any  provision  hereof,  no  Excluded  Payment  shall
constitute security for any of the aforementioned obligations.

          TO HAVE AND TO HOLD all and singular the  aforesaid  property unto the
Mortgagee,  its successors and assigns, in trust for the equal and proportionate
benefit  and  security  of the  Loan  Participants,  the  Note  Holders  and the
Indenture Indemnitees, except as provided in Section 2.14 and Article III of the
Trust  Indenture  without  any  preference,  distinction  or priority of any one
Equipment  Note over any other by reason  of  priority  of time of issue,  sale,
negotiation,  date of maturity  thereof or otherwise for any reason  whatsoever,
and for the uses and purposes and subject to the terms and  provisions set forth
in the Trust Indenture.

          This Trust Indenture  Supplement shall be construed as supplemental to
the Trust  Indenture and shall form a part thereof.  The Trust Indenture is each
hereby  incorporated by reference  herein and is hereby  ratified,  approved and
confirmed.




          AND, FURTHER,  the Owner Trustee hereby acknowledges that the Aircraft
referred  to  in  this  Trust  Indenture  Supplement  and  the  aforesaid  Lease
Supplement  has been  delivered  to the Owner  Trustee  and is  included  in the
property of the Owner  Trustee  covered by all the terms and  conditions  of the
Trust  Agreement,  subject to the pledge and  mortgage  thereof  under the Trust
Indenture.

                                      * * *

          IN WITNESS WHEREOF,  the Owner Trustee has caused this Trust Indenture
Supplement  to  be  duly  executed  by  one  of  its  officers,  thereunto  duly
authorized, on the day and year first above written.

                                 FIRST SECURITY BANK, NATIONAL
                                   ASSOCIATION, not in its individual capacity,
                                   but solely as Owner Trustee, as Owner Trustee


                                 By:____________________________________________
                                    Name: ______________________________________
                                    Title:______________________________________



                                                    TRUST INDENTURE AND MORTGAGE

                                   SCHEDULE I

                          ORIGINAL AMOUNT                   INTEREST RATE
                          ---------------                   -------------


Series A:
Series B:
Series C:










                                                    Trust Indenture and Mortgage


                           Equipment Note Amortization


                                                   PERCENTAGE OF
                                                 ORIGINAL AMOUNT
     PAYMENT DATE                                   TO BE PAID
- ------------------------                  ------------------------------








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






                              TRUST AGREEMENT ____

                           Dated as of ______________


                                     Between


                           [_________________________]


                                       and

                          FIRST SECURITY BANK, NATIONAL
                                   ASSOCIATION


                      _____________________________________


                     One Boeing Model _____________Aircraft
                  Bearing Manufacturer's Serial No. ___________








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



                                    CONTENTS


SECTION 1.    DEFINITIONS....................................................  1

SECTION 2.    DECLARATION OF TRUST...........................................  1

SECTION 3.    AUTHORIZATION; CONDITIONS PRECEDENT............................  1

       3.1    Authorization..................................................  1
       3.2    Conditions Precedent...........................................  2

SECTION 4.    RECEIPT, DISTRIBUTION AND APPLICATION OF
              INCOME FROM THE TRUST ESTATE...................................  3

       4.1    Payments from Trust Estate Only................................  3
       4.2    Distribution of Payments.......................................  4
       4.3    Method of Payments.............................................  5

SECTION 5.    DUTIES OF OWNER TRUSTEE........................................  5

       5.1    Notice of Event of Default.....................................  5
       5.2    Action upon Instructions.......................................  6
       5.3    Limitations on Duties..........................................  7
       5.4    No Duties except as Specified; No Action
              except as Specified............................................  7
       5.5    Satisfaction of Conditions Precedent...........................  8
       5.6    Fixed Investment Trust.........................................  8

SECTION 6.    OWNER TRUSTEE..................................................  8

       6.1    Acceptance of Trusts and Duties................................  8
       6.2    Absence of Certain Duties......................................  9
       6.3    No Representations or Warranties as to Certain Matters......... 10
       6.4    No Segregation of Monies; Interest............................. 11
       6.5    Reliance upon Certificates, Counsel and Agents................. 11
       6.6    Not Acting in Individual Capacity.............................. 12
       6.7    Fees; Compensation............................................. 12
       6.8    Tax Returns.................................................... 13

SECTION 7.    INDEMNIFICATION OF FIRST SECURITY BY OWNER PARTICIPANT......... 13



SECTION 8.    TRANSFER OF OWNER PARTICIPANT'S INTEREST....................... 15

       8.1    Transfer of Interest........................................... 15
       8.2    Actions of Owner Participants.................................. 15

SECTION 9.    SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES.......................... 16

       9.1    Resignation of Owner Trustee; Appointment of Successor......... 16
       9.2    Co-Trustees and Separate Trustees.............................. 18

SECTION 10.   SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND
              OTHER DOCUMENTS................................................ 19

       10.1   Supplements and Amendments and Delivery Thereof................ 19
       10.2   Discretion as to Execution of Documents........................ 20
       10.3   Absence of Requirements as to Form............................. 20
       10.4   Distribution of Documents...................................... 21
       10.5   No Request Needed as to Lease Supplement and Trust
              Indenture Supplement........................................... 21

SECTION 11.   MISCELLANEOUS.................................................. 21

       11.1   Termination of Trust Agreement................................. 21
       11.2   Termination at Option of the Owner Participant................. 22
       11.3   Owner Participant Has No Legal Title in Trust Estate........... 22
       11.4   Assignment, Sale, etc. of Aircraft............................. 22
       11.5   Trust Agreement for Benefit of Certain Parties Only............ 23
       11.6   Citizenship of Owner Participant............................... 23
       11.7   Notices........................................................ 23
       11.8   Severability................................................... 24
       11.9   Waivers, Etc................................................... 24
       11.10  Counterparts................................................... 24
       11.11  Binding Effect, Etc............................................ 24
       11.12  Headings; References........................................... 24
       11.13  Governing Law.................................................. 25



                             TRUST AGREEMENT _______

     This  TRUST  AGREEMENT  ______,  dated  as  of  ________________,   between
[_________],  a Delaware corporation ("Owner  Participant"),  and FIRST SECURITY
BANK,  NATIONAL  ASSOCIATION,  a national banking association (in its individual
capacity,  "First  Security" and otherwise  not in its  individual  capacity but
solely as trustee hereunder, "Owner Trustee").

                                   WITNESSETH:

SECTION 1.   DEFINITIONS

     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 to the Lease.

SECTION 2.   DECLARATION OF TRUST

     First Security  hereby declares that it will hold the Trust Estate as Owner
Trustee upon the trusts  hereinafter  set forth for the use and benefit of Owner
Participant,  subject, however, to the provisions of and the Lien created by the
Trust  Indenture  and to the  provisions  of the  Lease  and  the  Participation
Agreement.

SECTION 3.   AUTHORIZATION; CONDITIONS PRECEDENT

     3.1     AUTHORIZATION

     In respect of the Aircraft, Owner Participant hereby authorizes and directs
Owner Trustee to, and Owner Trustee agrees for the benefit of Owner  Participant
that it will, on and after the Delivery  Date,  subject  (except with respect to
Section 3.1(a)) to due compliance with the terms of Section 3.2:

     (a) execute and deliver the Participation  Agreement,  the Trust Indenture,
the Lease and the other Owner Trustee  Agreements  (in the  respective  forms in
which  they  are  delivered  from  time to time by  Owner  Participant  to Owner
Trustee);

     (b) subject to the terms of this Trust  Agreement,  exercise (i) its rights
and perform its duties under the  Participation  Agreement,  (ii) the rights and
perform  the duties of Lessor  under the Lease and (iii) its rights and  perform
its duties under the Trust Indenture and the other Owner Trustee Agreements;

     (c) execute,  issue and deliver to Mortgagee for authentication and further
delivery to the  Subordination  Agent the  Equipment  Notes in the amount and as
provided in Section 2 of the Participation Agreement;



     (d) purchase the Aircraft pursuant to the Purchase Agreement as assigned to
Owner Trustee pursuant to the Purchase Agreement Assignment;

     (e) accept from Airframe  Manufacturer the delivery of the Aircraft Bill of
Sale,  the FAA Bill of Sale and the invoice  with  respect to such  Aircraft and
from Lessee the delivery of the BFE Bill of Sale and the invoice with respect to
such BFE;

     (f) effect the  registration  of the  Aircraft  with the FAA in the name of
Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of
Sale;  (ii) an Aircraft  Registration  Application  in the name of Owner Trustee
(including,  without  limitation,  an affidavit from Owner Trustee in compliance
with the  provisions of Section  47.7(c)(2) of the FAA  Regulations);  and (iii)
this Trust Agreement;

     (g) execute and deliver  the  Financing  Statements  referred to in Section
5.1.2 (xxii) of the Participation Agreement, together with all other agreements,
documents  and  instruments  referred  to  in  Section  5 of  the  Participation
Agreement to which Owner Trustee is to be a party;

     (h) make  payment of  Lessor's  Cost for the  Aircraft  from the  aggregate
amount  of the  Commitments  for the  Aircraft  of  Owner  Participant  and Loan
Participants, to the extent received by Owner Trustee, in the manner provided in
the Participation Agreement;

     (i) execute and deliver Lease Supplement No. 1 covering the Aircraft;

     (j) execute and deliver a Trust Indenture Supplement covering the Aircraft;
and

     (k) execute  and  deliver  all  such  other   instruments,   documents   or
certificates and take all such other actions in accordance with the direction of
Owner  Participant,  as Owner  Participant  may deem  necessary  or advisable in
connection  with the  transactions  contemplated by this Trust Agreement and the
other Operative Agreements.

     3.2     CONDITIONS PRECEDENT

     The rights and obligations of Owner Trustee to take the actions required by
Section 3.1 shall be subject to the following conditions precedent:



     (a) Owner Trustee shall have received the notice described in Section 5.1.1
of the Participation Agreement, when and as required thereby, or shall have been
deemed to have  waived  such  notice in  accordance  with  Section  5.1.1 of the
Participation Agreement;

     (b) Each  Participant  shall  have made the full  amount of its  Commitment
specified  in Section  2.1 of the  Participation  Agreement  available  to Owner
Trustee, in immediately  available funds, in accordance with Sections 2 and 4 of
the Participation Agreement; and

     (c) Owner  Participant shall have notified Owner Trustee that the terms and
conditions of Section 5 of the Participation  Agreement,  insofar as they relate
to conditions  precedent to performance by Owner  Participant of its obligations
thereunder,  have been either  fulfilled to the  satisfaction  of, or waived by,
Owner  Participant.  Owner  Participant  shall, by instructing  Owner Trustee to
release the full amount of its Commitment then held by Owner Trustee as provided
in  Section  2  of  the  Participation   Agreement,  be  deemed  to  have  found
satisfactory to it, or waived, all such conditions precedent.

SECTION 4.   RECEIPT,  DISTRIBUTION  AND  APPLICATION  OF  INCOME FROM THE TRUST
             ESTATE

     4.1     PAYMENTS FROM TRUST ESTATE ONLY

     Except as provided in Section 7, all  payments to be made by Owner  Trustee
under this Trust Agreement shall be made only from (a) in the case of funds made
available in  accordance  with  Section 4 of the  Participation  Agreement,  the
Commitments  (except as  otherwise  provided in Section 14 of the  Participation
Agreement)  and (b) in the  case of all  other  payments,  the  income  from and
proceeds  of the Trust  Estate to the  extent  that  Owner  Trustee  shall  have
received  sufficient  income  or  proceeds  from the  Trust  Estate to make such
payments.  Owner Participant  agrees that it will look solely (y) in the case of
funds  made  available  in  accordance  with  Section  4  of  the  Participation
Agreement,  to the  Commitments  and any income  therefrom  (except as otherwise
provided in Section 14 of the  Participation  Agreement)  and (z) in the case of
all other  payments,  to the income from and proceeds of the Trust Estate to the
extent available for distribution to Owner Participant as provided in this Trust
Agreement.  Except as provided in Section 7, Owner Participant agrees that First
Security  is neither  personally  liable to Owner  Participant  for any  amounts
payable nor subject to any other liability under this Trust Agreement.



     4.2     DISTRIBUTION OF PAYMENTS

             4.2.1  PAYMENTS TO MORTGAGEE

     Until the Trust Indenture  shall have been  discharged  pursuant to Section
10.01 thereof, all Rent, insurance proceeds and requisition or other payments of
any kind included in the Trust Estate (other than Excluded  Payments) payable to
Owner  Trustee shall be payable  directly to Mortgagee  (and, if any of the same
are  received by Owner  Trustee,  shall upon  receipt be paid over to  Mortgagee
without  deduction,  set-off  or  adjustment  of any kind) for  distribution  in
accordance with the provisions of Article III of the Trust Indenture;  PROVIDED,
that any  payments  received by Owner  Trustee  from (a) Lessee with  respect to
Owner  Trustee's fees and  disbursements  or (b) Owner  Participant  pursuant to
Section 7 shall not be paid over to  Mortgagee  but shall be  retained  by Owner
Trustee and applied toward the purpose for which such payments were made.

             4.2.2  PAYMENTS TO OWNER TRUSTEE, OTHER PARTIES

     After the Trust Indenture  shall have been  discharged  pursuant to Section
10.01 thereof,  any payment of the type referred to in Section 4.2.1 (other than
Excluded  Payments)  received  by  Owner  Trustee,  any  payment  received  from
Mortgagee  (other than Excluded  Payments) and any other amount received as part
of the  Trust  Estate  and for the  application  or  distribution  of  which  no
provision is made in this Trust  Agreement  shall be distributed  forthwith upon
receipt by Owner Trustee in the following  order of priority:  FIRST, so much of
such  payment as shall be required to reimburse  Owner  Trustee for any expenses
not  otherwise  reimbursed  as to  which  Owner  Trustee  is  entitled  to be so
reimbursed pursuant to the provisions hereof shall be retained by Owner Trustee;
SECOND,  so much of the  remainder  for which  provision  as to the  application
thereof is contained in the Lease or any of the other Operative Agreements shall
be applied and  distributed  in  accordance  with the terms of the Lease or such
other  Operative  Agreement;  and THIRD,  the balance,  if any, shall be paid to
Owner Participant.

             4.2.3  CERTAIN DISTRIBUTIONS TO OWNER PARTICIPANT

     All  amounts  from  time  to  time  distributable  by  Mortgagee  to  Owner
Participant  pursuant to the Trust Indenture shall, if paid to Owner Trustee, be
distributed  by  Owner  Trustee  to Owner  Participant  in  accordance  with the
provisions of Article III of the Trust  Indenture;  PROVIDED,  that any payments
received by Owner Trustee from (a) Lessee with respect to Owner  Trustee's  fees
and  disbursements or (b) Owner  Participant  pursuant to Section 7 shall not be



paid  over to Owner  Participant  but shall be  retained  by Owner  Trustee  and
applied toward the purpose for which such payments were made.

             4.2.4  EXCLUDED PAYMENTS

     Any  Excluded  Payments  received by Owner  Trustee  shall be paid by Owner
Trustee to the  Person to whom such  Excluded  Payments  are  payable  under the
provisions of the Participation  Agreement,  the Tax Indemnity  Agreement or the
Lease.

             4.2.5  MULTIPLE OWNER PARTICIPANTS

     If, as a result of a transfer by Owner Participant under Section 8.1, there
is more than one Owner Participant  under this Trust Agreement,  each such Owner
Participant  shall hold in proportion to its respective  beneficial  interest in
the Trust Estate an undivided beneficial interest in the entire Trust Estate and
is  entitled  to  receive  ratably  with any other  Owner  Participant  payments
distributable by Owner Trustee under this Trust Agreement.  No Owner Participant
shall have legal title to the Aircraft or any other portion of the Trust Estate.

     4.3     METHOD OF PAYMENTS

     Owner Trustee shall make distributions or cause distributions to be made to
Owner  Participant  pursuant to this Section 4 by transferring  the amount to be
distributed by wire transfer in immediately  available funds on the day received
(or on the next succeeding  Business Day if the funds to be so distributed shall
not have been received by Owner Trustee by 12:00 noon,  New York City time,  and
which funds Owner Trustee shall not have been  reasonably  able to distribute to
Owner Participant on the day received) to Owner Participant's  account set forth
in  Schedule  1 to the  Participation  Agreement  or to such  other  account  or
accounts of Owner  Participant as Owner  Participant  may designate from time to
time in  writing  to Owner  Trustee;  PROVIDED,  that  Owner  Trustee  shall use
reasonable  efforts to invest overnight,  in investments that would be permitted
under Section 4.4 of the Lease,  all funds received by it at or later than 12:00
noon,  New York City time,  and which  funds Owner  Trustee  shall not have been
reasonably able to distribute to Owner Participant on the day received).

SECTION 5.   DUTIES OF OWNER TRUSTEE

     5.1     NOTICE OF EVENT OF DEFAULT

     (a) If Owner  Trustee  shall have  knowledge of a Lease  Default or a Lease
Event of Default or an Indenture Default or an Indenture Event of Default, Owner



Trustee shall give to Owner Participant,  Mortgagee and Lessee prompt telephonic
or telex notice  thereof  followed by prompt  confirmation  thereof by certified
mail, postage prepaid, PROVIDED, that (i) in the case of an event which with the
passage  of time  would  constitute  an  Indenture  Event of Default of the type
referred to in paragraph (c) or (e) of Section 4.02 of the Trust Indenture, such
notice  shall in no event be furnished  later than ten days after Owner  Trustee
shall  first  have   knowledge  of  such  event  and  (ii)  in  the  case  of  a
misrepresentation  by  Owner  Trustee  which  with  the  passage  of time  would
constitute  an Indenture  Event of Default of the type  referred to in paragraph
(d) of Section  4.02 of the Trust  Indenture,  such notice  shall in no event be
furnished  later than ten days after Owner Trustee shall first have knowledge of
such event.

     (b)  Subject to the terms of Section  5.3,  Owner  Trustee  shall take such
action or shall  refrain  from taking such  action,  not  inconsistent  with the
provisions of the Trust  Indenture,  with respect to such Lease  Default,  Lease
Event of Default, Indenture Default or Indenture Event of Default or other event
as Owner  Trustee  shall be  directed in writing by Owner  Participant.  For all
purposes of this Trust Agreement,  the Lease and the other Operative Agreements,
in the absence of Actual Knowledge of Owner Trustee,  Owner Trustee shall not be
deemed to have knowledge of a Lease Default,  Lease Event of Default,  Indenture
Default or Indenture  Event of Default unless  notified in writing by Mortgagee,
Owner Participant or Lessee.

     5.2     ACTION UPON INSTRUCTIONS

     Subject to the terms of Sections 5.1 and 5.3, upon the written instructions
at any time and from time to time of Owner Participant,  Owner Trustee will take
such of the following actions, not inconsistent with the provisions of the Lease
and the Trust Indenture, as may be specified in such instructions: (a) give such
notice or  direction  or exercise  such right,  remedy or power under this Trust
Agreement or any of the other Owner  Trustee  Agreements or in respect of all or
any part of the Trust Estate,  or take such other action,  as shall be specified
in such instructions (including entering into such agreements and instruments as
shall be  necessary  under  Section  10);  (b) take such  action to  preserve or
protect the Trust Estate  (including the discharge of Liens) as may be specified
in such instructions;  (c) approve as satisfactory to it all matters required by
the terms of the Lease or the other  Operative  Agreements to be satisfactory to
Owner Trustee,  it being  understood that without written  instructions of Owner
Participant,  Owner Trustee shall not approve any such matter as satisfactory to
it; (d) subject to the rights of Lessee under the  Operative  Agreements,  after



the  expiration  or  earlier  termination  of the  Lease,  convey  all of  Owner
Trustee's right,  title and interest in and to the Aircraft for such amount,  on
such terms and to such  purchaser or  purchasers  as shall be designated in such
instructions,  or retain,  lease or  otherwise  dispose of, or from time to time
take such other  action with  respect to, the Aircraft on such terms as shall be
designated in such instructions;  and (e) take or refrain from taking such other
action or actions as may be specified in such instructions.

     5.3     LIMITATIONS ON DUTIES

     Owner  Trustee  shall not be required to take any action under  Section 5.1
(other  than the giving of the  notices  referred  to  therein)  or 5.2 if Owner
Trustee shall  reasonably  believe such action is not adequately  indemnified by
Owner Participant under Section 7, unless Lessee or Owner Participant  agrees to
furnish such additional indemnity as shall reasonably be required, in manner and
form satisfactory to Owner Trustee, and, in addition to the extent not otherwise
paid pursuant to the provisions of the Lease or of the Participation  Agreement,
to pay the reasonable  compensation of Owner Trustee for the services  performed
or to be performed by it pursuant to such direction and any reasonable  fees and
disbursements  of  counsel or agents  employed  by Owner  Trustee in  connection
therewith.  Owner Trustee shall not be required to take any action under Section
5.1 or 5.2 (other than the giving of the  notices  referred to therein) if Owner
Trustee  shall have been  advised by counsel that such action is contrary to the
terms of any of the Owner Trustee Agreements or is otherwise contrary to Law and
Owner Trustee has delivered to Owner Participant written notice of the basis for
its refusal to act.

     5.4     NO DUTIES EXCEPT AS SPECIFIED; NO ACTION EXCEPT AS SPECIFIED

             5.4.1  NO DUTIES EXCEPT AS SPECIFIED

     Owner Trustee  shall not have any duty or  obligation  to manage,  control,
use,  sell,  dispose of or otherwise deal with the Aircraft or any other part of
the Trust Estate or to otherwise  take or refrain from taking any action  under,
or in connection with, any of the Owner Trustee Agreements,  except as expressly
required by the terms of any of the Owner Trustee Agreements,  or (to the extent
not  inconsistent  with the  provisions  of the Trust  Indenture)  as  expressly
provided by the terms hereof or in a written  instruction from Owner Participant
received  pursuant to the terms of Section 5.1 or 5.2, and no implied  duties or
obligations shall be read into this Trust Agreement against Owner Trustee. First
Security agrees that it will, in its individual  capacity and at its own cost or



expense  (but  without  any right of  indemnity  in  respect of any such cost or
expense  hereunder or under the  Participation  Agreement),  promptly  take such
action as may be  necessary  to duly  discharge  and  satisfy in full all Lessor
Liens  attributable  to it in its  individual  capacity  which it is required to
discharge pursuant to Section 7.3.1 of the Participation Agreement and otherwise
comply with the terms of said Section binding upon it.

             5.4.2  NO ACTION EXCEPT AS SPECIFIED

     Owner Trustee  shall have no power,  right or authority to, and agrees that
it will not, manage,  control,  use, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Estate except (a) as expressly  required
by the terms of any of the Owner Trustee  Agreements,  (b) as expressly provided
by the terms hereof or (c) as expressly  provided in written  instructions  from
Owner Participant pursuant to Section 5.1 or 5.2.

     5.5     SATISFACTION OF CONDITIONS PRECEDENT

     Anything in this Trust  Agreement  to the contrary  notwithstanding,  Owner
Trustee shall,  subject to the satisfaction of special counsel for Owner Trustee
of the  occurrence  of all the  applicable  conditions  precedent  specified  in
Section 3.2, comply with the provisions of Section 3.1.

     5.6     FIXED INVESTMENT TRUST

     Notwithstanding  anything in this Trust  Agreement to the  contrary,  Owner
Trustee shall not be authorized and shall have no power to "vary the investment"
of  Owner  Participant  within  the  meaning  of  Treasury  Regulations  Section
301.7701-4(c)(1),  it being  understood  that Owner Trustee shall have the power
and authority to fulfill its obligations under Section 4.3 hereof, Section 4.3.3
of the Participation Agreement and Section 4.4 of the Lease.

SECTION 6.   OWNER TRUSTEE

     6.1     ACCEPTANCE OF TRUSTS AND DUTIES

     First Security  accepts the trusts hereby created and agrees to perform the
same as Owner  Trustee  but only upon the terms  hereof and the Trust  Indenture
applicable  to it. Owner  Trustee also agrees to receive and disburse all monies
received  by it  constituting  part of the Trust  Estate  pursuant  to the terms
hereof.  First  Security  shall  not be  answerable  or  accountable  under  any
circumstances,  except for (a) its own willful  misconduct  or gross  negligence



(including,  without  limitation,  in  connection  with any  activities of Owner
Trustee in  violation  of Section  5.4.2),  (b) its failure  (in its  individual
capacity)  to perform its  obligations  under  Section  5.4.1,  (c) its or Owner
Trustee's failure to use ordinary care to receive or disburse funds or to comply
with the first sentence of Section 6.8, (d) liabilities that may result from the
inaccuracy of any  representation  or breach of warranty of it in its individual
capacity  (or from the failure by it in its  individual  capacity to perform any
covenant)  in this  Trust  Agreement,  the  Trust  Indenture,  the  Lease or the
Participation  Agreement or elsewhere in any of the other Operative  Agreements,
(e)  taxes,  fees or  other  charges  on,  based  on or  measured  by any  fees,
commissions or  compensation  received by First Security in connection  with the
transactions  contemplated  by this  Trust  Agreement  and the  other  Operative
Agreements  to which it (in its  individual  capacity or as Owner  Trustee) is a
party, (f) for its or Owner Trustee's  failure to use ordinary care in receiving
or  disbursing  funds or in  connection  with its  obligation  to  invest  funds
pursuant to Section 4 of the Participation  Agreement,  Section 4.4 of the Lease
or  Section  4.3  hereof,  (g) for any  liability  on the part of Owner  Trustee
arising out of its  negligence or willful or negligent  misconduct in connection
with its obligations under Section 5.1 (other than the first sentence  thereof),
6.8 or 9.2 hereof or Section 4.01 of the Trust  Indenture.  First Security shall
have no obligation to advance its  individual  funds for any purpose,  and Owner
Trustee shall have no obligation to distribute to Owner  Participant,  Lessee or
any third party any amounts to be paid to Owner  Trustee  until such amounts are
collected by Owner Trustee.

     6.2     ABSENCE OF CERTAIN DUTIES

     (a) Except in accordance with written  instructions  furnished  pursuant to
Section  5.1 or 5.2  and  except  as  provided  in,  and  without  limiting  the
generality  of,  Sections 3.1 and 5.4.1 and the last sentence of Section  9.1.2,
and subject to Section 4.01 of the Trust  Indenture,  neither  Owner Trustee nor
First  Security shall have any duty (i) to see to any recording or filing of any
Operative  Agreement  or of  any  supplement  to  any  thereof  or to see to the
maintenance  of any such recording or filing or any other filing of reports with
the FAA or other governmental agencies,  except that of First Security to comply
with the FAA  reporting  requirements  set forth in 14 C.F.R.  ss.  47.45 and 14
C.F.R.  ss. 47.51,  and Owner Trustee shall, to the extent that  information for
that  purpose is timely  supplied  by Lessee  pursuant  to any of the  Operative
Agreements,  complete and timely  submit (and furnish Owner  Participant  with a
copy of) any and all reports relating to the Aircraft that may from time to time
be  required  by the FAA or any  government  or  governmental  authority  having
jurisdiction,  (ii) to see to any  insurance  on the  Aircraft  or to  effect or



maintain  any such  insurance,  whether or not Lessee  shall be in default  with
respect  thereto,  other  than to  forward  to Owner  Participant  copies of all
reports and other written  information  which Owner Trustee receives from Lessee
pursuant to Section 11 of the Lease,  (iii) except as provided in Section  7.3.1
or 7.3.2 of the Participation Agreement,  Section 4.01 of the Trust Indenture or
Section  5.4 or 6.1  hereof,  to see to the  payment  or  discharge  of any tax,
assessment or other  governmental  charge or any lien or encumbrance of any kind
owing  with  respect  to or  assessed  or levied  against  any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 6.3.9 of the
Participation  Agreement  or (iv) to inspect  Lessee's  books and  records  with
respect to the Aircraft at any time permitted pursuant to the Lease.

     (b) Notwithstanding clause (a), Owner Trustee will furnish to Mortgagee and
Owner  Participant,  promptly upon receipt thereof,  duplicates or copies of all
reports,  notices,  requests,  demands,  certificates,  financial statements and
other  instruments  furnished  to Owner  Trustee  under  the  Lease or any other
Operative Agreement except to the extent to which a responsible officer of Owner
Trustee  reasonably   believes  (and  confirms  by  telephone  call  with  Owner
Participant)  that  duplicates or copies  thereof have already been furnished to
Owner Participant by some other person.

     6.3     NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS

     NEITHER  FIRST  SECURITY NOR OWNER TRUSTEE MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY  REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  AS TO THE TITLE,
AIRWORTHINESS,  VALUE, CONDITION, DESIGN, OPERATION,  MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF,  AS TO THE
ABSENCE  OF LATENT OR OTHER  DEFECTS,  WHETHER  OR NOT  DISCOVERABLE,  AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,  TRADEMARK OR COPYRIGHT,  THE ABSENCE
OF ANY STRICT  LIABILITY  OBLIGATION  OR ANY OTHER  REPRESENTATION  OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF WHATSOEVER,
except that First Security  warrants to Owner  Participant  that on the Delivery
Date Owner Trustee shall have received  whatever  title to the Aircraft that was
conveyed to it and that the Aircraft  shall, on the Delivery Date and during the
Term,  be free  of  Lessor  Liens  attributable  to  First  Security  or (b) any
representation  or warranty as to the validity,  legality or  enforceability  of
this Trust Agreement or any other  Operative  Agreement to which First Security,
in its  individual  capacity  or as  Owner  Trustee,  is a party,  or any  other
document or instrument,  or as to the correctness of any statement  contained in
any  thereof  except to the extent that any such  statement  is  expressly  made



herein or therein by such party as a  representation  by First Security,  in its
individual  capacity  or as Owner  Trustee,  as the case may be, and except that
First Security  hereby  represents and warrants that it has all corporate  power
and authority to execute, deliver and perform this Trust Agreement and that this
Trust  Agreement  has been,  and  (assuming  due  authorization,  execution  and
delivery  by Owner  Participant  of this Trust  Agreement)  the other  Operative
Agreements  to which it or Owner Trustee is a party have been (or at the time of
execution and delivery of any such  instrument by it or Owner Trustee under this
Trust  Agreement or pursuant to the terms of the  Participation  Agreement  that
such an  instrument  will be) duly executed and delivered by one of its officers
who is or will be, as the case may be,  duly  authorized  to execute and deliver
such  instruments on behalf of itself or Owner Trustee,  as the case may be, and
that this Trust Agreement constitutes the legal, valid and binding obligation of
First Security or Owner Trustee,  as the case may be, enforceable  against First
Security or Owner Trustee, as the case may be, in accordance with its terms.

     6.4     NO SEGREGATION OF MONIES; INTEREST

     Monies  received by Owner  Trustee under this Trust  Agreement  need not be
segregated  in any manner  except to the extent  required  by Law,  or except as
provided in written  instructions from Owner Participant,  and shall be invested
as provided in Section 4.3 hereof or Section 4.4 of the Lease.

     6.5     RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS

     Owner Trustee shall incur no liability to anyone in acting in good faith in
reliance  upon  and  in  accordance  with  any  signature,  instrument,  notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document  or  paper  reasonably  believed  by it to be  genuine  and  reasonably
believed  by it to be  signed  by the  proper  party or  parties.  Unless  other
evidence in respect thereof is specifically  prescribed in this Trust Agreement,
any request, direction, order or demand of Owner Participant or Lessee mentioned
in this Trust Agreement or in any of the other Owner Trustee Agreements shall be
sufficiently  evidenced  by written  instruments  signed by the  Chairman of the
Board, the President, any Vice President or any other officer and in the name of
Owner Participant or Lessee, as the case may be. Owner Trustee may accept a copy
of a resolution  of the Board of  Directors  or  Executive  Committee of Lessee,
certified by the  Secretary or an Assistant  Secretary of Lessee as duly adopted
and in full force and effect,  as conclusive  evidence that such  resolution has
been duly adopted by said Board of Directors or Executive Committee and that the
same is in full  force  and  effect.  As to any fact or  matter  the  manner  of



ascertainment  of which is not  specifically  described in this Trust Agreement,
Owner  Trustee may,  absent Actual  Knowledge to the contrary,  for all purposes
rely on a certificate  signed by the Chairman of the Board,  the President,  any
Vice President or any other officer of Lessee, and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant  Secretary of Lessee, as to such fact
or matter,  and such  certificate  shall  constitute  full  protection  to Owner
Trustee  for any  action  taken or  omitted  to be taken by it in good  faith in
reliance thereon and in accordance  therewith.  In the  administration of trusts
under this Trust  Agreement,  Owner  Trustee  may  execute  any of the trusts or
powers and perform its powers and duties under this Trust Agreement  directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel,  accountants and other skilled persons to be selected and employed
by it. Owner Trustee shall not be liable for anything done,  suffered or omitted
in good  faith  by it in  accordance  with the  advice  or  opinion  of any such
counsel, accountants or other skilled persons.

     6.6     NOT ACTING IN INDIVIDUAL CAPACITY

     In acting under this Trust  Agreement,  First Security acts solely as Owner
Trustee  and  not in its  individual  capacity  except  as  otherwise  expressly
provided in this Trust Agreement or in the other  Operative  Agreements to which
it is a party; and, except as may be otherwise  expressly provided in this Trust
Agreement,  the Lease, the Participation Agreement and the Trust Indenture,  all
persons, other than the Owner Participant as provided in this Trust Agreement or
the Trust  Indenture,  having any claim  against  Owner Trustee by reason of the
transactions contemplated hereby shall look only to the Trust Estate for payment
or  satisfaction  thereof  except  to the  extent  provided  in  Section  6.1 or
otherwise as Owner Trustee shall expressly agree otherwise in writing.

     6.7     FEES; COMPENSATION

     Lessee or Owner  Participant  shall pay the  Transaction  Expenses of Owner
Trustee pursuant to Section 9.2 of the Participation Agreement. The Trust Estate
shall not have any liability for any such fees and expenses;  PROVIDED, that the
foregoing  shall not limit the obligations of Owner  Participant  under Sections
5.3 and 7; PROVIDED,  that Owner Trustee shall have a Lien upon the Trust Estate
for any such fee not paid by Lessee or Owner Participant, as the case may be, as
contemplated by Section 9.2 of the  Participation  Agreement and such Lien shall
entitle  Owner  Trustee to priority as to payment  thereof  over  payment to any
other  Person  under this  Trust  Agreement;  PROVIDED,  that such Lien shall be
subject and  subordinate in all events to the Lien of the Trust  Indenture;  and



PROVIDED, FURTHER, that Owner Trustee shall have no right to exercise, and shall
not exercise, any rights or remedies Owner Trustee may have with respect to such
Lien unless and until the Secured  Obligations  have been paid and  performed in
full.

     6.8     TAX RETURNS

     Owner Trustee shall be responsible for the keeping of all appropriate books
and records  relating to the receipt and  disbursement  of all monies under this
Trust Agreement or any agreement contemplated hereby. Owner Participant shall be
responsible for causing to be prepared and filed all income tax returns required
to be filed by Owner Participant. Owner Trustee shall be responsible for causing
to be  prepared,  at the  request  of Owner  Participant  and at the  expense of
Lessee,  all income tax returns  required to be filed with  respect to the trust
created  hereby and shall  execute and file such returns;  PROVIDED,  that Owner
Trustee shall send promptly a completed copy of such return to Owner Participant
not more  than  sixty nor less than  fifteen  days  prior to the due date of the
return,  PROVIDED,  that Owner Trustee shall have timely  received all necessary
information  to complete and deliver to Owner  Participant  such  return.  Owner
Participant,  upon request, will furnish Owner Trustee with all such information
as may be reasonably  required  from Owner  Participant  in connection  with the
preparation  of such income tax returns.  Owner Trustee shall keep copies of all
returns delivered to or filed by it.

SECTION 7.   INDEMNIFICATION OF FIRST SECURITY BY OWNER PARTICIPANT

     Owner  Participant  hereby agrees,  whether or not any of the  transactions
contemplated  hereby shall be consummated,  to assume  liability for, and hereby
indemnifies,  protects,  saves  and  keeps  harmless,  First  Security  and  its
successors,  assigns,  agents  and  servants,  from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, taxes (excluding any Taxes
which are not required to be  indemnified  by Lessee  pursuant to Section 9.1 or
9.3 of the  Participation  Agreement  and  excluding  any taxes payable by First
Security on or measured by any  compensation  received by First Security for its
services under this Trust Agreement), claims, actions, suits, costs, expenses or
disbursements  (including,   without  limitation,   reasonable  legal  fees  and
expenses,  but  excluding  internal  costs and  expenses  such as  salaries  and
overhead,  and including,  without  limitation,  any liability of an owner,  any
strict  liability  and any  liability  without  fault)  of any kind  and  nature
whatsoever  which may be imposed  on,  incurred  by or  asserted  against  First
Security  (whether or not also indemnified  against by Lessee under the Lease or
under the  Participation  Agreement  or also  indemnified  against  by any other



Person;  PROVIDED,  that Owner  Participant shall be subrogated to the rights of
Owner Trustee against Lessee or any other  indemnitor) in any way relating to or
arising out of this Trust Agreement or any of the other Operative  Agreements or
the enforcement of any of the terms of any thereof, or in any way relating to or
arising out of the manufacture, purchase, acceptance, nonacceptance,  rejection,
ownership, delivery, lease, possession, use, operation,  condition, sale, return
or other disposition of the Aircraft (including,  without limitation, latent and
other defects, whether or not discoverable,  and any claim for patent, trademark
or  copyright  infringement),  or in any way  relating  to or arising out of the
administration  of the Trust Estate or the action or inaction of Owner  Trustee,
under  this  Trust  Agreement,  except  (a) in the case of gross  negligence  or
willful misconduct on the part of First Security,  in its individual capacity or
as Owner Trustee,  in the performance or nonperformance of its duties under this
Trust Agreement or under any of the other Owner Trustee  Agreements or (b) those
Claims resulting from the inaccuracy of any  representation or warranty of First
Security (or from the failure of First Security to perform any of its covenants)
in Section  6.3,  in Section  6.03 of the Trust  Indenture,  in Section 4 of the
Lease, in Section 6.3 of the Participation  Agreement or elsewhere in any of the
Operative Agreements or (c) as may result from a breach by First Security of its
covenant in the last sentence of Section 5.4.1 or (d) in the case of the failure
to use ordinary care on the part of First Security,  in its individual  capacity
or as Owner Trustee,  in the receipt or  disbursement  of funds or in connection
with its obligation to invest funds  pursuant to Section 4 of the  Participation
Agreement,  Section 4.4 of the Lease or Section 4.3 hereof or in compliance with
the  provisions of the first sentence of Section 6.8 or (e) any liability on the
part of Owner  Trustee  arising out of its  negligence  or willful or  negligent
misconduct  in  connection  with its  obligations  under Section 5.1, 6.8 or 9.2
hereof or Section 4.01 of the Trust Indenture, or (f) those claims arising under
any circumstances or upon any terms where Lessee would not have been required to
indemnify  First  Security  pursuant to Section 9.1 or 9.3 of the  Participation
Agreement  disregarding  for purposes of this  paragraph  Sections  9.1.2(b) and
9.3.2(j); PROVIDED, that before asserting its right to indemnification,  if any,
pursuant to this Section 7, First Security shall first demand its  corresponding
right to  indemnification  pursuant to Section 9 of the Participation  Agreement
(but need not exhaust any or all remedies available thereunder). The indemnities
contained  in this  Section 7 extend to First  Security  only in its  individual
capacity and shall not be construed as indemnities of the Trust Indenture Estate
or the Trust Estate (except to the extent,  if any, that First Security has been
reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered



by the indemnities  contained in this Section 7). The  indemnities  contained in
this  Section 7 shall  survive  the  termination  of this  Trust  Agreement.  In
addition, if necessary, First Security shall be entitled to indemnification from
the Trust Estate, subject to the Lien of the Trust Indenture, for any liability,
obligation,  loss, damage,  penalty,  tax, claim, action, suit, cost, expense or
disbursement  indemnified  against  pursuant to this Section 7 to the extent not
reimbursed by Lessee,  Owner Participant or others, but without releasing any of
them from their respective agreements of reimbursement;  and, to secure the same
First Security shall have a lien on the Trust Estate, subject to the lien of the
Trust  Indenture and subject  further to the  provisions  of Section 6.7,  which
shall be prior to any interest  therein of Owner  Participant.  The payor of any
indemnity  under this Section 7 shall be  subrogated  to any right of the person
indemnified in respect of the matter as to which such indemnity was paid.

SECTION 8.   TRANSFER OF OWNER PARTICIPANT'S INTEREST

     8.1     TRANSFER OF INTEREST

     All provisions of Section 10 of the Participation Agreement shall (with the
same force and effect as if set forth in full in this Section 8.1) be applicable
to any assignment,  conveyance or other transfer by Owner  Participant of any of
its right,  title or interest in and to the Participation  Agreement,  the Trust
Estate or this Trust Agreement. If there is more than one Owner Participant,  no
assignment,  conveyance or other transfer by an Owner  Participant of any of its
right,  title or interest  in and to this Trust  Agreement  or the Trust  Estate
shall be valid  unless  each other Owner  Participant's  prior  written  consent
(which  consent  may be  withheld  in the sole  discretion  of such other  Owner
Participant) is given to such assignment, conveyance or other transfer.

     8.2     ACTIONS OF OWNER PARTICIPANTS

     If at any time prior to the  termination of this Trust  Agreement  there is
more than one Owner  Participant,  then,  subject to Section  11.5,  during such
time,  if any  action  is  required  to be taken by all Owner  Participants  and
whenever any direction,  authorization,  approval, consent, instruction or other
action is permitted to be given or taken by Owner Participant, it shall be given
or taken only upon unanimous agreement of all Owner Participants; PROVIDED, that
the termination of this Trust Agreement pursuant to Section 11.2 may be effected
upon the election of any Owner Participant.



SECTION 9.   SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES

     9.1     RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR

             9.1.1  RESIGNATION OR REMOVAL

     Owner Trustee or any  successor  Owner Trustee (a) shall resign if required
to do so  pursuant  to  Section  13.3  of the  Participation  Agreement  or upon
obtaining  Actual  Knowledge  of any  facts  that  would  cast  doubt  upon  its
continuing  status as a Citizen of the  United  States and (b) may resign at any
time  without  cause by giving at least 60 days' prior  written  notice to Owner
Participant,  Mortgagee and Lessee,  such  resignation  to be effective upon the
assumption of the trusts  hereunder by the successor Owner Trustee under Section
9.1.2. In addition, Owner Participant may at any time remove Owner Trustee, with
or without cause by a notice in writing  delivered to Owner  Trustee,  Mortgagee
and Lessee,  such  removal to be  effective  upon the  assumption  of the trusts
hereunder by the successor Owner Trustee under Section 9.1.2, PROVIDED, that, in
the case of a removal without cause,  unless a Lease Event of Default shall have
occurred  and be  continuing,  such  removal  shall be subject to the consent of
Lessee (which consent shall not be  unreasonably  withheld).  In the case of the
resignation  or  removal  of Owner  Trustee,  Owner  Participant  may  appoint a
successor  Owner Trustee by an  instrument  signed by Owner  Participant,  with,
unless a Lease  Event of Default  shall have  occurred  and be  continuing,  the
consent of Lessee  (which  consent  shall not be  unreasonably  withheld).  If a
successor Owner Trustee shall not have been appointed  within 30 days after such
notice of resignation or removal,  Owner Trustee, any Owner Participant,  Lessee
or  Mortgagee  may apply to any court of  competent  jurisdiction  to  appoint a
successor  Owner  Trustee to act until such time,  if any, as a successor  shall
have been appointed as above provided.  Any successor Owner Trustee so appointed
by such court shall  immediately  and without  further act be  superseded by any
successor  Owner Trustee  appointed as above  provided  within one year from the
date of the appointment by such court.

             9.1.2  EXECUTION AND DELIVERY OF DOCUMENTS, ETC.

     Any successor Owner Trustee,  however appointed,  shall execute and deliver
to the predecessor Owner Trustee,  with a copy to Owner Participant,  Lessee and
Mortgagee, an instrument accepting such appointment and assuming the obligations
of Owner  Trustee,  in its individual  capacity and as Owner Trustee,  under the
Owner Trustee  Agreements,  and thereupon such successor Owner Trustee,  without
further act,  shall  become  vested with all the  estates,  properties,  rights,



powers,  duties and trusts of the predecessor  Owner Trustee in the trusts under
this Trust  Agreement  with like effect as if originally  named Owner Trustee in
this  Trust  Agreement;  but  nevertheless,  upon the  written  request  of such
successor  Owner  Trustee,  such  predecessor  Owner  Trustee  shall execute and
deliver an instrument  transferring  to such successor  Owner Trustee,  upon the
trusts herein expressed, all the estates, properties,  rights, powers and trusts
of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign,  transfer,  deliver  and pay over to such  successor  Owner  Trustee all
monies or other  property then held by such  predecessor  Owner Trustee upon the
trusts herein  expressed.  Upon the  appointment of any successor  Owner Trustee
under this  Section  9.1,  the  predecessor  Owner  Trustee  will  execute  such
documents as are provided to it by such  successor  Owner  Trustee and will take
such further  actions as are requested of it by such successor  Owner Trustee as
are required to cause  registration of the Aircraft included in the Trust Estate
to be transferred upon the records of the FAA, or other  governmental  authority
having jurisdiction, into the name of the successor Owner Trustee.

             9.1.3  QUALIFICATIONS

     Any successor Owner Trustee,  however appointed,  shall be a Citizen of the
United States and shall also be a bank or trust company organized under the Laws
of the United States or any state thereof having a combined  capital and surplus
of at least  $100,000,000,  if there be such an  institution  willing,  able and
legally  qualified  to  perform  the  duties of Owner  Trustee  under this Trust
Agreement upon  reasonable or customary  terms.  No such successor Owner Trustee
shall be located in a jurisdiction  which creates material adverse  consequences
for  Lessee  (unless  such  material  adverse  consequences  would be created by
substantially  all jurisdictions  where major banking or trust  institutions are
located).

             9.1.4  MERGER, ETC.

     Any  corporation  into which First  Security  may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or  consolidation  to which First Security  shall be a party,  or any
corporation  to which  substantially  all the corporate  trust business of First
Security may be  transferred,  shall,  subject to the terms of Section 9.1.3, be
Owner Trustee under this Trust  Agreement  without further act,  PROVIDED,  that
such corporation shall not also be the Mortgagee.



     9.2     CO-TRUSTEES AND SEPARATE TRUSTEES

     (a) If at any time it shall be  necessary or prudent in order to conform to
any Law of any  jurisdiction  in which  all or any part of the  Trust  Estate is
located, or Owner Trustee being advised by counsel shall determine that it is so
necessary or prudent in the interest of Owner  Participant or Owner Trustee,  or
Owner  Trustee  shall have been  directed to do so by Owner  Participant,  Owner
Trustee  and  Owner   Participant   shall   execute  and  deliver  an  agreement
supplemental hereto and all other instruments and agreements necessary or proper
to  constitute  another bank or trust company or one or more persons (any or all
of which shall be a Citizen of the United States)  approved by Owner Trustee and
Owner Participant,  either to act as co-trustee,  jointly with Owner Trustee, or
to act as separate  trustee under this Trust  Agreement (any such  co-trustee or
separate trustee being herein sometimes referred to as an "additional trustee").
In the event Owner  Participant  shall not have joined in the  execution of such
agreements'  supplemental  hereto within ten days after the receipt of a written
request  from  Owner  Trustee  so to do, or in case a Lease  Event of Default or
Indenture Event of Default shall occur and be continuing,  Owner Trustee may act
under the foregoing  provisions of this Section 9.2 without the  concurrence  of
Owner Participant; and Owner Participant hereby appoints Owner Trustee its agent
and  attorney-in-fact  to act for it  under  the  foregoing  provisions  of this
Section 9.2 in either of such contingencies.

     (b) Every  additional  trustee  under this Trust  Agreement  shall,  to the
extent  permitted  by Law,  be  appointed  and act,  and Owner  Trustee  and its
successors shall act, subject to the following provisions and conditions:

           (i) All powers, duties,  obligations and rights  conferred upon Owner
     Trustee in respect of the custody,  control and  management of monies,  the
     Aircraft or documents authorized to be delivered under this Trust Agreement
     or under the  Participation  Agreement  shall be exercised  solely by Owner
     Trustee;

          (ii) All other rights,  powers,  duties and  obligations  conferred or
     imposed upon Owner Trustee shall be conferred or imposed upon and exercised
     or performed by Owner Trustee and such additional  trustee jointly,  except
     to the  extent  that  under  any  Law  of any  jurisdiction  in  which  any
     particular act or acts are to be performed  (including the holding of title
     to the Trust Estate) Owner Trustee shall be  incompetent  or unqualified to
     perform such act or acts,  in which event such rights,  powers,  duties and
     obligations shall be exercised and performed by such additional trustee;



         (iii) No power  given  to,  or which  it is  provided  hereby  may be
     exercised by, any such  additional  trustee  shall be exercised  under this
     Trust  Agreement by such additional  trustee,  except jointly with, or with
     the consent in writing of, Owner Trustee;

          (iv) No trustee under this Trust Agreement shall be personally  liable
     by reason of any action or omission of any other  trustee  under this Trust
     Agreement;

           (v) Owner Participant,  at any time,  by an instrument in writing may
     remove any such  additional  trustee.  In the event that Owner  Participant
     shall not have joined in the  execution of any such  instrument  within ten
     days after the receipt of a written  request  from Owner  Trustee so to do,
     Owner  Trustee shall have the power to remove any such  additional  trustee
     without the concurrence of Owner Participant;  and Owner Participant hereby
     appoints Owner Trustee its agent and attorney-in-fact to act for it in such
     connection in such contingency; and

          (vi) No  appointment  of, or action by, any  additional  trustee  will
     relieve Owner Trustee of any of its obligations  under, or otherwise affect
     any of the terms of,  the  Trust  Indenture  or  affect  the  interests  of
     Mortgagee or the Certificate Holders in the Trust Indenture Estate.

     (c) In case any separate  trustee under this Section 9.2 shall die,  become
incapable of acting, resign or be removed, the title to the Trust Estate and all
rights and duties of such separate  trustee  shall,  so far as permitted by Law,
vest  in and be  exercised  by  Owner  Trustee,  without  the  appointment  of a
successor to such separate trustee.

SECTION 10.  SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER
             DOCUMENTS

     10.1    SUPPLEMENTS AND AMENDMENTS AND DELIVERY THEREOF

             10.1.1  SUPPLEMENTS AND AMENDMENTS

     Subject  to  Section  7.2.2  of the  Participation  Agreement,  this  Trust
Agreement may not be amended,  supplemented  or otherwise  modified except by an
instrument in writing signed by Owner Trustee and Owner Participant.  Subject to
Section  10.2,  Section  9.01 of the Trust  Indenture  and Section  7.6.7 of the
Participation Agreement, Owner Trustee will execute any amendment, supplement or
other  modification  of this  Trust  Agreement  or of any  other  Owner  Trustee
Agreement  which it is  requested  in writing  to execute by Owner  Participant,



except that Owner  Trustee shall not execute any such  amendment,  supplement or
other  modification  which,  by the  express  provisions  of  any  of the  above
documents,  requires the consent of any other party  unless such  consent  shall
have been obtained;  and PROVIDED,  that,  without the prior written  consent of
Owner Participant,  (a) no such supplement,  amendment or modification shall (i)
modify any of the  provisions  of Section 4 or this Section  10.1,  (ii) reduce,
modify or amend any  indemnities  in favor of Owner  Participant as set forth in
Section 9 of the  Participation  Agreement  or in the Tax  Indemnity  Agreement,
(iii)  reduce  the  amount  or  extend  the  time  of  payment  of  Basic  Rent,
Supplemental  Rent,  Stipulated Loss Value or Termination  Value as set forth in
the Lease (except in accordance  with Section 3 of the Lease) or (iv) modify any
of the rights of Owner  Participant  under the Trust  Indenture  and (b) no such
supplement,  amendment or modification shall require Owner Participant to invest
or  advance  funds or shall  entail any  additional  personal  liability  or the
surrender of any indemnification, claim or individual right on the part of Owner
Participant with respect to any agreement or obligation.

             10.1.2  DELIVERY OF AMENDMENTS AND SUPPLEMENTS TO CERTAIN PARTIES

     A signed copy of each amendment or supplement referred to in Section 10.1.1
to which Lessee is not a party shall be delivered  promptly by Owner  Trustee to
Lessee, and a signed copy of each amendment or supplement referred to in Section
10.1.1 shall be delivered promptly by Owner Trustee to Mortgagee.

     10.2    DISCRETION AS TO EXECUTION OF DOCUMENTS

     Prior to executing  any document  required to be executed by it pursuant to
the terms of Section 10.1, Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the  execution of such  document is authorized
under this Trust Agreement. If in the opinion of Owner Trustee any such document
adversely  affects  any right,  duty,  immunity or  indemnity  in favor of Owner
Trustee under this Trust  Agreement or under any other Owner Trustee  Agreement,
Owner  Trustee may in its  discretion  decline to execute such  document  unless
Owner Trustee is furnished with  indemnification  from Lessee or any other party
upon terms and in amounts  reasonably  satisfactory  to Owner Trustee to protect
the Trust Estate and the Owner Trustee  against any and all  liabilities,  costs
and expenses arising out of the execution of such documents.

     10.3    ABSENCE OF REQUIREMENTS AS TO FORM

     It shall not be necessary  for any written  request  furnished  pursuant to
Section  10.1 to specify the  particular  form of the  proposed  documents to be



executed  pursuant to such  Section  10.1,  but it shall be  sufficient  if such
request shall indicate the substance thereof.

     10.4    DISTRIBUTION OF DOCUMENTS

     Promptly after the execution by Owner Trustee of any document  entered into
pursuant to Section 10.1,  Owner Trustee shall mail, by certified mail,  postage
prepaid, a conformed copy thereof to Owner Participant, but the failure of Owner
Trustee to mail such  conformed  copy shall not impair or affect the validity of
such document.

     10.5    NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST INDENTURE
             SUPPLEMENT

     No written  request  pursuant  to Section  10.1 shall be required to enable
Owner Trustee to enter into,  pursuant to Section 3.1 and the Lease or the Trust
Indenture,  as the case may be, the Lease  Supplement  with Lessee and the Trust
Indenture Supplement.

SECTION 11.  MISCELLANEOUS

     11.1    TERMINATION OF TRUST AGREEMENT

     This Trust  Agreement and the trusts  created hereby shall be of no further
force or effect  upon the earlier of (a) both the final  discharge  of the Trust
Indenture  pursuant  to  Section  10.01  thereof  and the  sale or  other  final
disposition  by Owner  Trustee of all  property  constituting  part of the Trust
Estate  and the  final  distribution  by Owner  Trustee  of all  monies or other
property or proceeds  constituting  part of the Trust Estate in accordance  with
Section 4, PROVIDED, that at such time Lessee shall have fully complied with all
of the terms of the Lease and the  Participation  Agreement or (b) 21 years less
one day after the death of the last  survivor of all of the  descendants  of the
grandparents  of  David  C.  Rockefeller  living  on the  date  of the  earliest
execution  of this  Trust  Agreement  by any  party  hereto,  but if this  Trust
Agreement  and the trusts  created  hereby shall be or become  authorized  under
applicable  Law to be valid for a period  commencing on the 21st  anniversary of
the death of such last  survivor  (or,  without  limiting the  generality of the
foregoing,  if legislation shall become effective  providing for the validity of
this  Trust  Agreement  and the  trusts  created  hereby  for a period  in gross
exceeding  the  period for which this  Trust  Agreement  and the trusts  created
hereby are hereinabove stated to extend and be valid), then this Trust Agreement
and the trusts  created  hereby  shall not  terminate  under this clause (b) but
shall  extend to and  continue in effect,  but only if such  nontermination  and



extension shall then be valid under applicable Law, until the day preceding such
date as the same shall, under applicable Law, cease to be valid;  otherwise this
Trust  Agreement and the trusts  created hereby shall continue in full force and
effect in  accordance  with the terms  hereof.  Except as expressly set forth in
Section  11.2,  this Trust  Agreement and the trusts  created  hereby may not be
revoked by Owner Participant.

     11.2    TERMINATION AT OPTION OF THE OWNER PARTICIPANT

     Notwithstanding  Section  11.1 hereof,  this  Agreement  and trust  created
hereby shall  terminate and the Trust Estate shall be  distributed  to the Owner
Participant,  and this Agreement  shall be of no further force and effect,  upon
the election of the Owner  Participant by notice to the Owner  Trustee,  if such
notice shall be  accompanied  by the written  agreement  (in form and  substance
satisfactory  to the  Owner  Trustee)  of the  Owner  Participant  assuming  all
obligations  of the  Owner  Trustee  under  or  contemplated  by  the  Operative
Agreements  or  incurred  by it as trustee  hereunder  and  releasing  the Owner
Trustee therefrom;  provided,  however, that such notice may be given only after
the time the Lien of the Trust  Indenture is  discharged  under Section 10.01 of
the Trust Indenture and after the Lease shall no longer be in effect.

     11.3    OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE

     No Owner  Participant  shall  have  legal  title  to any part of the  Trust
Estate. No transfer,  by operation of Law or otherwise,  of any right, title and
interest  of Owner  Participant  in and to the Trust  Estate  under  this  Trust
Agreement  shall operate to terminate  this Trust  Agreement or the trusts under
this  Trust  Agreement  or  entitle  any  successors  or  transferees  of  Owner
Participant  to an  accounting  or to the transfer of legal title to any part of
the Trust Estate.

     11.4    ASSIGNMENT, SALE, ETC. OF AIRCRAFT

     Any assignment, sale, transfer or other conveyance of the Aircraft by Owner
Trustee  made  pursuant to the terms of this Trust  Agreement or of the Lease or
the Participation  Agreement 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.



     11.5    TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY

     Except  for  the  terms  of  Section  10  of  the  Participation  Agreement
incorporated in Section 8 and except as otherwise provided in Sections 5.1, 6.7,
9, 10.1 and 11.1,  nothing in this Trust Agreement,  whether express or implied,
shall be  construed  to give any  person  other  than  Owner  Trustee  and Owner
Participant any legal or equitable right, remedy or claim under or in respect of
this Trust Agreement;  and this Trust Agreement shall be held to be for the sole
and exclusive benefit of Owner Trustee and Owner Participant.

     11.6    CITIZENSHIP OF OWNER PARTICIPANT

     If at any time  there  shall be more than one Owner  Participant,  then any
Owner  Participant  who shall cease to be a Citizen of the United  States  shall
have no voting or similar  rights under this Trust  Agreement  and shall have no
right to direct, influence or limit the exercise of, or to prevent the direction
or influence  of, or place any  limitation  on the exercise of, Owner  Trustee's
authority or to remove Owner Trustee.

     11.7    NOTICES

     Unless otherwise  expressly permitted by the terms of this Trust Agreement,
all notices, requests, demands,  authorizations,  directions,  consents, waivers
and other communications  required or permitted to be made, given,  furnished or
filed under this Trust Agreement shall be in writing,  shall refer  specifically
to this Trust  Agreement  and shall be personally  delivered,  sent by telecopy,
telex or other means of electronic facsimile or telecommunication  transmission,
sent by registered mail or certified  mail,  return receipt  requested,  postage
prepaid,  or sent by overnight  courier service,  in each case to the respective
telex,  telecopy or other number or address set forth for such party in Schedule
1 to the  Participation  Agreement,  or to such other  telex,  telecopy or other
number or address 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 telecopy or other means
of electronic facsimile or telecommunication  transmission,  when confirmed,  or
(b) by registered or certified mail,  three Business Days after being deposited,
properly addressed, in the U.S. mail.



     11.8    SEVERABILITY

     If any provision of this Trust Agreement 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 Trust
Agreement  shall be deemed to be a valid and binding  agreement in all respects,
enforceable in accordance with its terms.

     11.9    WAIVERS, ETC.

     No  term  or  provision  hereof  may  be  changed,  waived,  discharged  or
terminated  orally,  but  only  by an  instrument  in  writing  entered  into in
compliance  with the terms of Section  10;  and any  waiver of the terms  hereof
shall be effective  only in the specific  instance and for the specific  purpose
given.

     11.10   COUNTERPARTS

     This Trust Agreement and any amendments,  waivers,  consents or supplements
hereto  may be  executed  in any number of  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.

     11.11   BINDING EFFECT, ETC.

     All covenants and  agreements  contained in this Trust  Agreement  shall be
binding upon,  and inure to the benefit of, Owner Trustee and its successors and
assigns,  and Owner  Participant and its successors and, to the extent permitted
by Section 8, assigns. Any request, notice, direction,  consent, waiver or other
instrument or action by Owner Participant shall bind its successors and assigns.

     11.12   HEADINGS; REFERENCES

     The headings and the table of contents used in this Trust Agreement are for
convenience  of reference only and shall not define or limit any of the terms or
provisions  hereof and shall not in any way affect  the  construction  of, or be
taken into consideration in interpreting, this Trust Agreement.



     11.13   GOVERNING LAW

     THIS TRUST  AGREEMENT  SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF UTAH , INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.


                     [This space intentionally left blank.]



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


                                      __________________________________________


                                      By________________________________________
                                        Name:
                                        Title:


                                      FIRST SECURITY BANK,  NATIONAL ASSOCIATION



                                      By________________________________________
                                        Name:
                                        Title:



________________________________________________________________________________


                        TRUST INDENTURE AND MORTGAGE ___

                         Dated as of ____________, 199_

                                     Between

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                         not in its individual capacity,
                       except as expressly stated herein,
                          but solely as Owner Trustee,

                                  Owner Trustee

                                       and

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       except as expressly stated herein,
                            but solely as Mortgagee,

                                    Mortgagee

________________________________________________________________________________


                            EQUIPMENT NOTES COVERING
                          ONE BOEING ________ AIRCRAFT
                      BEARING U.S. REGISTRATION MARK N_____
                      LEASED BY CONTINENTAL AIRLINES, INC.

________________________________________________________________________________



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

GRANTING CLAUSE ..........................................................     1

                                   ARTICLE I

                                  DEFINITIONS

                                   ARTICLE II

                              THE EQUIPMENT NOTES

SECTION 2.01   Form of Equipment Notes....................................     7
SECTION 2.02   Issuance and Terms of Equipment Notes......................    13
SECTION 2.03   Payments from Trust Indenture Estate Only..................    16
SECTION 2.04   Method of Payment..........................................    17
SECTION 2.05   Application of Payments....................................    20
SECTION 2.06   Termination of Interest in Trust Indenture Estate..........    20
SECTION 2.07   Registration Transfer and Exchange of Equipment Notes......    20
SECTION 2.08   Mutilated, Destroyed, Lost or Stolen Equipment Notes.......    22
SECTION 2.09   Payment of Expenses on Transfer; Cancellation..............    22
SECTION 2.10   Mandatory Redemptions of Equipment Notes...................    22
SECTION 2.11   Voluntary Redemptions of Equipment Notes...................    23
SECTION 2.12   Redemptions; Notice of Redemption..........................    23
SECTION 2.13   Option to Purchase Equipment Notes.........................    24
SECTION 2.14   Subordination..............................................    25

                                  ARTICLE III

                      RECEIPT, DISTRIBUTION AND APPLICATION
                   OF INCOME FROM THE TRUST INDENTURE ESTATE

SECTION 3.01   Basic Rent Distribution....................................    26
SECTION 3.02   Event of Loss; Replacement; Voluntary Termination;
               Optional Redemption........................................    27
SECTION 3.03   Payments After Event of Default............................    28
SECTION 3.04   Certain Payments...........................................    30
SECTION 3.05   Other Payments.............................................    31
SECTION 3.06   Payments to Owner Trustee..................................    31



                                TABLE OF CONTENTS
                                   (Continued)
                                                                            PAGE
                                                                            ----

                                   ARTICLE IV

                     COVENANTS OF OWNER TRUSTEE; EVENTS OF
                         DEFAULT; REMEDIES OF MORTGAGEE

SECTION 4.01   Covenants of Owner Trustee.................................    32
SECTION 4.02   Event of Default...........................................    33
SECTION 4.03   Certain Rights.............................................    35
SECTION 4.04   Remedies...................................................    36
SECTION 4.05   Return of Aircraft, Etc....................................    39
SECTION 4.06   Remedies Cumulative........................................    40
SECTION 4.07   Discontinuance of Proceedings..............................    40
SECTION 4.08   Waiver of Past Defaults....................................    40
SECTION 4.09   Appointment of Receiver....................................    41
SECTION 4.10   Mortgagee Authorized to Execute Bills of Sale, Etc.........    41
SECTION 4.11   Rights of Note Holders to Receive Payment..................    41

                                   ARTICLE V

                            DUTIES OF THE MORTGAGEE

SECTION 5.01   Notice of Event of Default.................................    42
SECTION 5.02   Action Upon Instructions; Certain Rights and
               Limitations................................................    42
SECTION 5.03   Indemnification............................................    45
SECTION 5.04   No Duties Except as Specified in Trust Indenture
               or Instructions............................................    46
SECTION 5.05   No Action Except Under Lease, Trust Indenture or
               Instructions...............................................    46
SECTION 5.06   Replacement Airframes and Replacement Engines..............    46
SECTION 5.07   Indenture Supplements for Replacements.....................    47
SECTION 5.08   Effect of Replacement......................................    47
SECTION 5.09   Investment of Amounts Held by Mortgagee....................    47

                                   ARTICLE VI

                      THE OWNER TRUSTEE AND THE MORTGAGEE

SECTION 6.01   Acceptance of Trusts and Duties............................    48
SECTION 6.02   Absence of Duties..........................................    48
SECTION 6.03   No Representations or Warranties as to Aircraft or
               Documents..................................................    49
SECTION 6.04   No Segregation of Monies; No Interest......................    49
SECTION 6.05   Reliance; Agreements; Advice of Counsel....................    50



                                TABLE OF CONTENTS
                                   (Continued)
                                                                            PAGE
                                                                            ----

SECTION 6.06   Capacity in Which Acting...................................    50
SECTION 6.07   Compensation...............................................    50
SECTION 6.08   Instructions from Note Holders.............................    51

                                  ARTICLE VII

                 INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

SECTION 7.01   Scope of Indemnification...................................    51

                                  ARTICLE VIII

                        SUCCESSOR AND SEPARATE TRUSTEES

SECTION 8.01   Notice of Successor Owner Trustee..........................    52
SECTION 8.02   Resignation of Mortgagee; Appointment of Successor.........    52
SECTION 8.03   Appointment of Additional and Separate Trustees............    53

                                   ARTICLE IX

     SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS

SECTION 9.01   Instructions of Majority; Limitations......................    55
SECTION 9.02   Trustees Protected.........................................    57
SECTION 9.03   Documents Mailed to Note Holders...........................    57
SECTION 9.04   No Request Necessary for Lease Supplement or Trust
               Indenture Supplement.......................................    57

                                   ARTICLE X

                                 MISCELLANEOUS

SECTION 10.01  Termination of Trust Indenture.............................    57
SECTION 10.02  No Legal Title to Trust Indenture Estate
               in Note Holders............................................    58
SECTION 10.03  Sale of Aircraft by Mortgagee Is Binding...................    58
SECTION 10.04  Trust Indenture for Benefit of Owner Trustee,
               Mortgagee, Owner Participant, Note Holders and
               Other Holders of Secured Obligations.......................    58
SECTION 10.05  Notices....................................................    58
SECTION 10.06  Severability...............................................    59
SECTION 10.07  No Oral Modification or Continuing Waivers.................    59
SECTION 10.08  Successors and Assigns.....................................    59



                                TABLE OF CONTENTS
                                   (Continued)
                                                                            PAGE
                                                                            ----

SECTION 10.09  Headings...................................................    59
SECTION 10.10  Normal Commercial Relations................................    60
SECTION 10.11  Governing Law; Counterpart Form............................    60
SECTION 10.12  Voting By Note Holders.....................................    60
SECTION 10.13  Bankruptcy.................................................    60



EXHIBIT A      Form of Trust Indenture and Mortgage Supplement

SCHEDULE I     Equipment Notes Amortization and Interest Rates



                        TRUST INDENTURE AND MORTGAGE ___

          TRUST  INDENTURE  AND  MORTGAGE  ___,  dated as of  ___________,  199_
("Trust  Indenture"),  between FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  a
national  banking  association,  not  in  its  individual  capacity,  except  as
expressly  stated herein,  but solely as Owner Trustee under the Trust Agreement
referred to below (together with its successors under the Trust  Agreement,  the
"Owner Trustee"),  and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").

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

          WHEREAS,  all capitalized  terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;

          WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby,  among other things, (i)
the Owner Trustee has established a certain trust for the use and benefit of the
Owner  Participant  subject,  however,  to the Trust  Indenture  Estate  created
pursuant hereto for the use and benefit of, and with the priority of payment to,
the holders of Equipment Notes issued hereunder,  and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Agreement;

          WHEREAS,  the parties  hereto  desire by this Trust  Indenture,  among
other  things,  (i) to  provide  for the  issuance  by the Owner  Trustee of the
Equipment Notes and (ii) to provide for the  assignment,  mortgage and pledge by
the  Owner  Trustee  to the  Mortgagee,  as part of the Trust  Indenture  Estate
hereunder,  among other things,  of all of the Owner Trustee's right,  title and
interest in and to the Aircraft and, except as hereinafter  expressly  provided,
all of the Owner Trustee's right,  title and interest in, to and under the Lease
and the  Participation  Agreement  and all payments and other  amounts  received
hereunder or  thereunder  in  accordance  with the terms  hereof or thereof,  as
security  for,  among  other  things,  the Owner  Trustee's  obligations  to the
Noteholders;

          WHEREAS,  all things have been done to make the Equipment Notes,  when
executed by the Owner Trustee and  authenticated  and delivered by the Mortgagee
hereunder,  the valid, binding and enforceable obligations of the Owner Trustee;
and

          WHEREAS,  all things necessary to make this Trust Indenture the valid,
binding and legal  obligation  of the Owner  Trustee  for the uses and  purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;

                                 GRANTING CLAUSE

          NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt  payment of the Original  Amount of,  interest on,  Make-Whole



Amount,  if any, and all other amounts due with respect to, all Equipment  Notes
from time to time outstanding  hereunder according to their tenor and effect and
to  secure  the  performance  and  observance  by the Owner  Trustee  of all the
agreements,  covenants and provisions  contained herein and in the Participation
Agreement and the Equipment Notes, for the benefit of the Note Holders, the Loan
Participants and other holders of Secured  Obligations and the prompt payment of
all amounts from time to time owing hereunder and under Participation  Agreement
to the Loan  Participants,  the Note  Holders  and/or  other  holders of Secured
Obligations  by the Owner  Trustee and for the uses and  purposes and subject to
the terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained,  and of the acceptance of the Equipment Notes by the
holders thereof,  and for other good and valuable  consideration the receipt and
adequacy  whereof  are  hereby  acknowledged,  the Owner  Trustee  has  granted,
bargained,  sold,  assigned,  transferred,   conveyed,  mortgaged,  pledged  and
confirmed,  and does hereby grant,  bargain,  sell,  assign,  transfer,  convey,
mortgage,  pledge and confirm,  unto the Mortgagee,  its successors in trust and
assigns, for the security and benefit of the Loan Participants, the Note Holders
and other holders of Secured Obligations,  a first priority security interest in
and mortgage  lien on all right,  title and interest of the Owner Trustee in, to
and under the following described property,  rights and privileges,  whether now
or  hereafter  acquired,  other than  Excluded  Payments  (which,  collectively,
excluding  Excluded Payments but including all property  hereafter  specifically
subject  to the  Lien  of  this  Trust  Indenture  by the  terms  hereof  or any
supplement  hereto,  are  included  within,  and are  referred to as, the "Trust
Indenture Estate"), to wit:

               (1) The Airframe which is one Boeing ______ aircraft with the FAA
          Registration number of N_____ and the manufacturer's  serial number of
          _______  and   _________   Engines,   each  of  which   Engines  is  a
          ____________________________  engine  with the  manufacturer's  serial
          numbers of _____ and _____, is of 750 or more rated takeoff horsepower
          or the equivalent of such  horsepower  (such Airframe and Engines more
          particularly  described  in  the  Indenture  Supplement  executed  and
          delivered as provided herein) as the same is now and will hereafter be
          constituted,  whether  now owned by the  Owner  Trustee  or  hereafter
          acquired,  leased or intended to be leased under the Lease, and in the
          case  of such  Engines,  whether  or not  any  such  Engine  shall  be
          installed  in or  attached  to the  Airframe  or any  other  airframe,
          together with (a) all Parts of whatever nature, which are from time to
          time  included  within the  definitions  of  "Airframe"  or "Engines",
          whether now owned or hereafter acquired,  including all substitutions,
          renewals and replacements of and additions,  improvements,  accessions
          and  accumulations  to the Airframe and Engines (other than additions,
          improvements,    accessions   and   accumulations   which   constitute
          appliances,    parts,   instruments,    appurtenances,    accessories,
          furnishings or other equipment  excluded from the definition of Parts)
          and (b) all Aircraft Documents;

               (2) All right, title,  interest,  claims and demands of the Owner
          Trustee,  as  Lessor,  in, to and under the Lease,  together  with all
          rights,  powers,  privileges,  options and other benefits of the Owner
          Trustee  as lessor  under  the  Lease,  including  the  immediate  and
          continuing  right to receive and collect all Rent,  income,  revenues,
          issues,  profits,  insurance  proceeds,  condemnation awards and other



          payments,  tenders  and  security  now  or  hereafter  payable  to  or
          receivable  by the  Lessor  under the  Lease  pursuant  thereto,  and,
          subject to Section  5.02  hereof,  the right to make all  waivers  and
          agreements,  to give and  receive  copies  of all  notices  and  other
          instruments or  communications,  to accept  surrender or redelivery of
          the Aircraft or any part  thereof,  as well as all the rights,  powers
          and  remedies  on the part of the Owner  Trustee  as Lessor  under the
          Lease,  to take such  action upon the  occurrence  of a Lease Event of
          Default   thereunder,   including   the   commencement,   conduct  and
          consummation of legal,  administrative or other proceedings,  as shall
          be  permitted  by the  Lease  or by Law,  and to do any and all  other
          things  whatsoever  which the Owner Trustee or any lessor is or may be
          entitled  to do under or in  respect  of the  Lease  and any  right to
          restitution  from the  Lessee or any other  Person in  respect  of any
          determination of invalidity of the Lease;

               [(3)]  Each  Permitted  Sublease  assignment  and  each  assigned
          Permitted  Sublease  (to the  extent  assigned  under  such  Permitted
          Sublease assignment),  and including, without limitation, all rents or
          other payments of any kind made under such assigned Permitted Sublease
          (to   the   extent    assigned   under   such    Permitted    Sublease
          assignment);]

               [(3)/(4)] All right, title,  interest,  claims and demands of the
          Owner Trustee in, to and under:

               (a) the Purchase Agreement and the GTA;

               (b) the  Purchase  Agreement  Assignment,  with the  Consent  and
     Agreement and the Engine Consent and Agreement attached thereto;

               (c) the Bills of Sale; and

               (d) any and  all  other  contracts,  agreements  and  instruments
     relating to the Airframe and Engines or any rights or interests  therein to
     which the Owner Trustee is now or may hereafter be a party;

               together   with  all  rights,   powers,   privileges,   licenses,
          easements,  options and other benefits of the Owner Trustee under each
          contract,   agreement  and  instrument  referred  to  in  this  clause
          [(3)/(4)],  including the right to receive and collect all payments to
          the Owner Trustee thereunder now or hereafter payable to or receivable
          by the Owner  Trustee  pursuant  thereto and,  subject to Section 5.02
          hereof,  the right to make all  waivers  and  agreements,  to give and
          receive notices and other  instruments or  communications,  or to take
          any other  action  under or in respect of any  thereof or to take such
          action upon the  occurrence  of a default  thereunder,  including  the
          commencement,  conduct and  consummation of legal,  administrative  or


___________________

  Insert bracketed language is the Lease  provides  for the assignment of  a
      permitted sublease.



          other proceedings,  as shall be permitted thereby or by Law, and to do
          any and all other things which the Owner Trustee is or may be entitled
          to do thereunder  and any right to  restitution  from the Lessee,  the
          Owner  Participant or any other Person in respect of any determination
          of invalidity of any thereof;

               [(4)/(5)] All rents, issues,  profits,  revenues and other income
          of the  property  subjected or required to be subjected to the Lien of
          this Trust  Indenture,  including all payments or proceeds  payable to
          the Owner Trustee after  termination  of the Lease with respect to the
          Aircraft  as the  result  of the  sale,  lease  or  other  disposition
          thereof,  and all estate,  right,  title and  interest of every nature
          whatsoever of the Owner Trustee in and to the same;

               [(5)/(6)]  Without limiting the generality of the foregoing,  all
          insurance and requisition proceeds with respect to the Aircraft or any
          part thereof, including the insurance required under Section 11 of the
          Lease;

               [(6)/(7)]  Without limiting the generality of the foregoing,  all
          rights of the Owner  Trustee to  amounts  paid or payable by Lessee to
          the Owner Trustee under the Participation  Agreement and all rights of
          the Owner Trustee to enforce payments of any such amounts thereunder;

               [(7)/(8)]  Without limiting the generality of the foregoing,  all
          monies and  securities  from time to time  deposited or required to be
          deposited  with the  Mortgagee  pursuant  to any  terms of this  Trust
          Indenture  or the Lease or required  hereby or by the Lease to be held
          by the  Mortgagee  hereunder  as security for the  obligations  of the
          Lessee under the Lease or of the Owner Trustee hereunder; and

               [(8)/(9)] All proceeds of the foregoing;  excluding,  however, in
          all  events  from each of  foregoing  clauses  (1)  through  [(8)/(9)]
          inclusive all Excluded Payments and the right to specifically  enforce
          the same or to sue for damages  for the breach  thereof as provided in
          Section 5.02 hereof.

          Concurrently  with the  delivery  of this Trust  Indenture,  the Owner
Trustee will deliver to the Mortgagee the original  executed  counterpart of the
Lease and the Lease  Supplement  No. 1 (to each of which a chattel paper receipt
is attached),  and executed copies of the Participation  Agreement, the Purchase
Agreement  and the  GTA  (to  the  extent  assigned  by the  Purchase  Agreement
Assignment),  the Purchase Agreement Assignment,  with the Consent and Agreement
and the Engine Consent and Agreement attached thereto.

          TO HAVE AND TO HOLD all and singular the  aforesaid  property unto the
Mortgagee,  and  its  successors  and  assigns,  in  trust  for  the  equal  and
proportionate  benefit and security of the Loan  Participants,  the Note Holders
and the other holders of Secured Obligations, except as provided in Section 2.14
and Article III hereof  without any  preference,  distinction or priority of any
one Equipment Note over any other by reason of priority of time of issue,  sale,
negotiation,  date of maturity  thereof or otherwise for any reason  whatsoever,



and for the uses and purposes and in all cases and as to all property  specified
in  paragraphs  (1)  through  [(8)]  inclusive  above,  subject to the terms and
provisions set forth in this Trust Indenture.

          It is expressly  agreed that anything herein contained to the contrary
notwithstanding,  the Owner  Trustee  shall remain  liable  under the  Indenture
Agreements,  to perform all of the obligations assumed by it thereunder,  except
to the extent  prohibited  or  excluded  from doing so pursuant to the terms and
provisions thereof, and the Mortgagee,  the Loan Participants,  the Note Holders
and the other  holders  of  Secured  Obligations  shall  have no  obligation  or
liability  under the  Indenture  Agreements,  by reason of or arising out of the
assignment hereunder, nor shall the Mortgagee,  the Loan Participants,  the Note
Holders or the other holders of Secured  Obligations be required or obligated in
any manner to perform or fulfill any  obligations  of the Owner Trustee under or
pursuant to the Indenture  Agreements,  or, except as herein expressly provided,
to make any payment,  or to make any inquiry as to the nature or  sufficiency of
any payment  received by it, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.

          The Owner  Trustee does hereby  constitute  the Mortgagee the true and
lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable
consideration  and coupled with an interest and with full power of substitution,
and with full power (in the name of the Owner  Trustee or otherwise) to ask for,
require,  demand, receive,  compound and give acquittance for any and all monies
and claims for monies (in each case including insurance and requisition proceeds
but in all cases  excluding  Excluded  Payments)  due and to become due under or
arising out of the Indenture  Agreements,  and all other  property  which now or
hereafter  constitutes part of the Trust Indenture Estate, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
to take any action or to institute any proceedings  which the Mortgagee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the  foregoing,  but  subject to the rights of the Owner  Trustee  and the Owner
Participant under Sections 2.13, 4.03 and 4.04(a) hereof, during the continuance
of any Event of Default under this Trust Indenture, the Mortgagee shall have the
right under such power of attorney  to accept any offer in  connection  with the
exercise of  remedies  as set forth  herein of any  purchaser  to  purchase  the
Airframe  and Engines and upon such  purchase to execute and deliver in the name
of and on behalf  of the Owner  Trustee  an  appropriate  bill of sale and other
instruments of transfer relating to the Airframe and Engines,  when purchased by
such  purchaser,  and to perform all other  necessary or  appropriate  acts with
respect to any such  purchase,  and in its  discretion to file any claim or take
any other  action or  proceedings,  either in its own name or in the name of the
Owner  Trustee  or  otherwise,   which  the  Mortgagee  may  deem  necessary  or
appropriate  to protect  and  preserve  the  right,  title and  interest  of the
Mortgagee  in and to such Rents and other sums and the  security  intended to be
afforded hereby; PROVIDED,  HOWEVER, that no action of the Mortgagee pursuant to
this  paragraph  shall  increase the  obligations  or  liabilities  of the Owner
Trustee to any Person beyond those obligations and liabilities  specifically set
forth in this Trust Indenture and in the other Operative  Agreements.  Under the
Lease,  Lessee is directed,  so long as this Trust Indenture shall not have been
fully  discharged,  to make all payments of Rent (other than Excluded  Payments)
and all other  amounts  which are required to be paid to or  deposited  with the



Owner Trustee pursuant to the Lease (other than Excluded  Payments) directly to,
or as directed by, the  Mortgagee at such address or addresses as the  Mortgagee
shall specify,  for application as provided in this Trust  Indenture.  The Owner
Trustee  agrees that  promptly  upon receipt  thereof,  it will  transfer to the
Mortgagee any and all monies from time to time received by it constituting  part
of the Trust Indenture  Estate,  for  distribution by the Mortgagee  pursuant to
this  Trust   Indenture,   except  that  the  Owner  Trustee  shall  accept  for
distribution  pursuant to the Trust  Agreement any amounts  distributed to it by
the Mortgagee under this Trust Indenture.

          The Owner Trustee agrees that at any time and from time to time,  upon
the written  request of the Mortgagee,  the Owner Trustee will promptly and duly
execute and deliver or cause to be duly  executed and delivered any and all such
further instruments and documents as the Mortgagee may reasonably deem necessary
or desirable to perfect,  preserve or protect the mortgage,  security  interests
and  assignments  created or intended to be created  hereby or to obtain for the
Mortgagee  the full benefits of the  assignment  hereunder and of the rights and
powers herein granted.

          The Owner Trustee does hereby  warrant and  represent  that it has not
assigned or pledged,  and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right,  title or interest hereby  assigned,  to anyone other than the Mortgagee,
and that it will not,  except as otherwise  provided in this Trust Indenture and
except with respect to Excluded Payments to which it is entitled, (i) accept any
payment  from  Lessee  [or any  Permitted  Sublessee]  under  any  Indenture
Agreement, (ii) enter into any agreement amending or supplementing any Indenture
Agreement,  (iii) execute any waiver or modification  of, or consent under,  the
terms of, or exercise any rights,  powers or  privileges  under,  any  Indenture
Agreement,  (iv) settle or  compromise  any claim  arising  under any  Indenture
Agreement or (v) submit or consent to the submission of any dispute,  difference
or other  matter  arising  under or in respect  of any  Indenture  Agreement  to
arbitration thereunder.

          The Owner  Trustee  does  hereby  agree that it will not  without  the
written consent of the Mortgagee:

          (a)  receive or collect or agree to the receipt or  collection  of any
payment (other than Excluded Payments) of Rent, including Basic Rent, Stipulated
Loss  Value,  Termination  Value or any other  payment  to be made  pursuant  to
Section 9 or 10 of the Lease prior to the date for the payment thereof  provided
for by the Lease or assign, transfer or hypothecate (other than to the Mortgagee
hereunder) any payment of Rent,  including  Basic Rent,  Stipulated  Loss Value,
Termination Value or any other payment to be made pursuant to Section 9 or 10 of
the Lease, then due or to accrue in the future under the Lease in respect of the
Airframe and Engines; or


___________________

  Insert bracketed language is the Lease  provides  for the assignment of  a
      permitted sublease.



          (b) except as  contemplated  by the Trust Agreement in connection with
the appointment of a successor owner trustee, sell, mortgage,  transfer,  assign
or  hypothecate  (other than to the  Mortgagee  hereunder)  its  interest in the
Airframe  and Engines or any part  thereof or in any amount to be received by it
from the use or  disposition  of the Airframe  and  Engines,  other than amounts
distributed to it pursuant to Article III hereof.

          It is hereby  further  agreed that any and all  property  described or
referred to in the granting  clauses  hereof which is hereafter  acquired by the
Owner Trustee shall IPSO FACTO, and without any other conveyance,  assignment or
act on the part of the Owner Trustee or the Mortgagee,  become and be subject to
the Lien herein granted as fully and completely as though specifically described
herein,  but nothing  contained in this  paragraph  shall be deemed to modify or
change  the  obligations  of  the  Owner  Trustee  contained  in  the  foregoing
paragraphs.

          The Owner  Trustee  does hereby  ratify and confirm the Lease and does
hereby  agree that it will not violate  any  covenant  or  agreement  made by it
therein, herein or in any other Owner Trustee Agreement.

          Notwithstanding   the  Granting   Clause  or  any  of  the   preceding
paragraphs,  there  is  hereby  excluded  from  the  foregoing  sale,  transfer,
assignment,  grant, pledge and security interest all Excluded Payments. Further,
nothing in the Granting Clause or the preceding  paragraphs  shall impair any of
the rights of the Owner  Trustee or the Owner  Participant  under  Section 2.13,
4.03, 4.04, 4.08, 5.02 or 5.03 hereof.

          IT IS HEREBY  COVENANTED  AND AGREED by and between the parties hereto
as follows:

                                    ARTICLE I

                                   DEFINITIONS

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

                                   ARTICLE II

                               THE EQUIPMENT NOTES

     SECTION 2.01.  FORM OF EQUIPMENT NOTES.

          The  Equipment  Notes  shall be  substantially  in the form set  forth
below:

          THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"),  OR PURSUANT TO THE SECURITIES  LAWS OF ANY
STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED



UNDER  THE  ACT  AND  SUCH  APPLICABLE  STATE  LAWS OR AN  EXEMPTION  FROM  SUCH
REGISTRATIONS IS AVAILABLE.

          FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  AS OWNER TRUSTEE UNDER
TRUST AGREEMENT ___ DATED AS OF  _______________,  199_.  SERIES [_____] LIMITED
RECOURSE  EQUIPMENT  NOTE DUE [____] ISSUED IN CONNECTION  WITH THE BOEING MODEL
_______ AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N_____.


No. ____                                               Date: [__________, 199__]

                             $______________________

     INTEREST RATE                                                 MATURITY DATE
     -------------                                                 -------------

     [___________]                                                 [___________]


          FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  not in its  individual
capacity but solely as Owner Trustee  (herein in such capacity called the "Owner
Trustee")  under that certain Trust  Agreement  ___,  dated as of  ____________,
199_,  between the Owner  Participant  named  therein and First  Security  Bank,
National  Association  (herein as such Trust  Agreement may be  supplemented  or
amended from time to time called the "Trust Agreement"),  hereby promises to pay
to __________________,  or the registered assignee thereof, the principal sum of
$____________ (the "Original  Amount"),  together with interest on the amount of
the Original Amount  remaining unpaid from time to time (calculated on the basis
of a year of 360 days  comprised of twelve  30-day  months) from the date hereof
until  paid in full at a rate per annum  equal to the Debt  Rate.  The  Original
Amount of this Equipment Note shall be payable in  installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the Original
Amount of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest  shall be due and  payable in  semiannual  installments  commencing  on
_____________,  199_, and thereafter on [_______] and [_______] of each year, to
and including _______________.  Notwithstanding the foregoing, the final payment
made on this  Equipment  Note shall be in an amount  sufficient  to discharge in
full the unpaid  Original Amount and all accrued and unpaid interest on, and any
other amounts due under,  this Equipment Note.  Notwithstanding  anything to the
contrary  contained  herein, if any date on which a payment under this Equipment
Note becomes due and payable is not a Business  Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

          For  purposes  hereof,  the term  "Trust  Indenture"  means  the Trust
Indenture and Mortgage ___, dated as of _____________,  199_,  between the Owner
Trustee and  Wilmington  Trust  Company  (the  "Mortgagee"),  as the same may be
amended or supplemented  from time to time. All other  capitalized terms used in
this Equipment  Note and not defined  herein shall have the respective  meanings
assigned in the Trust Indenture.



          This  Equipment Note shall bear  interest,  payable on demand,  at the
Payment Due Rate  (calculated  on the basis of a year of 360 days  comprised  of
twelve 30-day months) on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any,  and (to the extent  permitted by  applicable  Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is  overdue.  Amounts  shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).

          All payments of Original Amount, interest,  Make-Whole Amount, if any,
and other amounts,  if any, to be made by the Owner Trustee  hereunder and under
the Trust  Indenture or the  Participation  Agreement shall be payable only from
the income and  proceeds  from the Trust  Estate to the extent  included  in the
Trust Indenture  Estate and only to the extent that the Owner Trustee shall have
sufficient  income or proceeds  from the Trust Estate to the extent  included in
the Trust  Indenture  Estate to enable the  Mortgagee  to make such  payments in
accordance  with  the  terms  of  Section  2.03  and  Article  III of the  Trust
Indenture,  and each holder hereof,  by its  acceptance of this Equipment  Note,
agrees  that it will  look  solely to the  income  and  proceeds  from the Trust
Indenture  Estate to the extent  available for distribution to the holder hereof
as above provided and that none of the Owner Participant,  the Owner Trustee and
the  Mortgagee  is  personally  liable or liable in any manner  extending to any
assets  other  than the Trust  Indenture  Estate to the  holder  hereof  for any
amounts  payable  or any  liability  under  this  Equipment  Note or,  except as
provided  in the Trust  Indenture  or in the  Participation  Agreement,  for any
liability under the Trust Indenture or the  Participation  Agreement;  PROVIDED,
HOWEVER, that nothing herein contained shall limit, restrict or impair the right
of the  Mortgagee,  subject  always  to the terms  and  provisions  of the Trust
Indenture,  to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust  Indenture,  to bring suit and obtain a judgment  against the Owner
Trustee  on this  Equipment  Note for  purposes  of  realizing  upon  the  Trust
Indenture  Estate and to exercise  all rights and  remedies  provided  under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.

          There shall be maintained  an Equipment  Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.

          The Original Amount and interest and other amounts due hereunder shall
be payable in Dollars in  immediately  available  funds at the  Corporate  Trust
Office of the Mortgagee,  or as otherwise provided in the Trust Indenture.  Each
such  payment  shall be made on the date such  payment  is due and  without  any
presentment or surrender of this Equipment Note,  except that in the case of any
final payment with respect to this  Equipment  Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.

          The holder hereof,  by its acceptance of this Equipment  Note,  agrees
that,  except as provided in the Trust  Indenture,  each payment of the Original
Amount,  Make-Whole  Amount, if any, and interest received by it hereunder shall
be applied, FIRST, to the payment of accrued interest on this Equipment Note (as
well as any  interest on any overdue  Original  Amount,  any overdue  Make-Whole



Amount,  if any, or, to the extent  permitted  by Law, any overdue  interest and
other amounts hereunder) to the date of such payment,  SECOND, to the payment of
the Original  Amount of this Equipment Note then due,  THIRD,  to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and FOURTH, the balance, if any, remaining thereafter, to the payment
of installments  of the Original Amount of this Equipment Note remaining  unpaid
in the inverse order of their maturity.

          This Equipment  Note is one of the Equipment  Notes referred to in the
Trust  Indenture  which  have  been or are to be  issued  by the  Owner  Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Mortgagee as security,  in part, for the Equipment  Notes. The provisions
of this Equipment Note are subject to the Trust  Indenture.  Reference is hereby
made  to  the  Trust  Indenture  for a  complete  statement  of the  rights  and
obligations  of the holder of,  and the nature and extent of the  security  for,
this  Equipment  Note and the rights and  obligations of the holders of, and the
nature and extent of the security for, any other  Equipment  Notes  executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions  of the Trust created by the Trust  Indenture,  to all of which terms
and  conditions  in  the  Trust  Indenture  each  holder  hereof  agrees  by its
acceptance of this Equipment Note.

          As provided in the Trust Indenture and subject to certain  limitations
therein set forth,  this  Equipment  Note is  exchangeable  for a like aggregate
Original Amount of Equipment  Notes of different  authorized  denominations,  as
requested by the holder surrendering the same.

          Prior  to  due  presentment  for  registration  of  transfer  of  this
Equipment  Note,  the Owner Trustee and the Mortgagee  shall treat the person in
whose  name  this  Equipment  Note is  registered  as the owner  hereof  for all
purposes,  whether or not this Equipment Note be overdue,  and neither the Owner
Trustee nor the Mortgagee shall be affected by notice to the contrary.

          This  Equipment  Note is subject to redemption as provided in Sections
2.10,  2.11 and 2.12 of the Trust  Indenture but not  otherwise.  This Equipment
Note is also subject to exchange and to purchase by the Owner Participant or the
Owner  Trustee  as  provided  in  Section  2.13 of the Trust  Indenture  but not
otherwise.  In addition,  this  Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.

          [The  indebtedness  evidenced by this Equipment Note is, to the extent
and in the manner  provided in the Trust  Indenture,  subordinate and subject in
right of payment to the prior  payment in full of the  Secured  Obligations  (as
defined in the Trust  Indenture)  in respect of [Series A  Equipment  Notes]
[Series A and Series B Equipment  Notes],  and this Equipment Note is issued


___________________

  To be inserted in the case of a Series B Equipment Note.

  To be inserted in the case of a Series C Equipment Note.



subject to such provisions. The Note Holder of this Equipment Note, by accepting
the same,  (a) agrees to and shall be bound by such  provisions,  (b) authorizes
and directs the  Mortgagee on his behalf to take such action as may be necessary
or  appropriate  to  effectuate  the  subordination  as  provided  in the  Trust
Indenture  and  (c)  appoints  the  Mortgagee  his   attorney-in-fact  for  such
purpose.]

          Unless the certificate of  authentication  hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit  under the Trust  Indenture or be valid or obligatory
for any purpose.

          THIS  EQUIPMENT  NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                      * * *


























___________________

  To be  inserted  for each Equipment Note other than any Series A Equipment
      Note.



          IN WITNESS  WHEREOF,  the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.

                                      FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                                        not  in  its  individual   capacity  but
                                        solely as Owner Trustee



                                      By________________________________________
                                        Name:
                                        Title:



                    MORTGAGEE'S CERTIFICATE OF AUTHENTICATION

          This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.

                                      WILMINGTON TRUST COMPANY, as Mortgagee



                                      By________________________________________
                                        Name:
                                        Title:



                                   SCHEDULE I

                           EQUIPMENT NOTE AMORTIZATION


                                                      Percentage of
                                                     Original Amount
           Payment Date                                 to be Paid
- -------------------------------------    ---------------------------------------




                       [SEE SCHEDULE I TO TRUST INDENTURE

                        WHICH IS INSERTED UPON ISSUANCE]

                                      * * *

     SECTION 2.02.  ISSUANCE AND TERMS OF EQUIPMENT NOTES.

          The Equipment Notes shall be dated the date of issuance thereof, shall
be issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto.  On the date of the consummation of the Transaction,  each
Equipment Note shall be issued to the Subordination  Agent on behalf of the Pass
Through  Trustees under the Pass Through Trust  Agreements.  The Equipment Notes
shall be issued in registered  form only. The Equipment Notes shall be issued in
denominations  of  $1,000  and  integral  multiples  thereof,  except  that  one
Equipment  Note of  each  Series  may be in an  amount  that is not an  integral
multiple of $1,000.



          Each Equipment  Note shall bear interest at the Debt Rate  (calculated
on the basis of a year of 360 days  comprised  of twelve  30-day  months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on  _____________,  199_, and on each [_______] and [_______]  thereafter  until
maturity.  The Original  Amount of each  Equipment  Note shall be payable on the
dates  and in the  installments  equal to the  corresponding  percentage  of the
Original  Amount as set forth in  Schedule I hereto  which  shall be attached as
Schedule I to the Equipment  Notes.  Notwithstanding  the  foregoing,  the final
payment  made under each  Equipment  Note  shall be in an amount  sufficient  to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under,  such Equipment  Note.  Each Equipment Note
shall bear interest at the Payment Due Rate  (calculated  on the basis of a year
of 360 days  comprised  of twelve  30-day  months)  on any part of the  Original
Amount,  Make-Whole  Amount,  if any, and, to the extent permitted by applicable
Law, interest and any other amounts payable thereunder not paid when due for any
period  during which the same shall be overdue,  in each case for the period the
same is  overdue.  Amounts  shall be  overdue if not paid when due  (whether  at
stated maturity, by acceleration or otherwise).  Notwithstanding anything to the
contrary  contained  herein,  if any date on which a payment under any Equipment
Note becomes due and payable is not a Business  Day then such payment  shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

          The Owner Trustee agrees to pay to the Mortgagee for  distribution  in
accordance with Section 3.04 hereof: (i) any and all indemnity amounts which are
payable  by the  Lessee  to (x) WTC and the  Mortgagee,  (y)  each  separate  or
additional  Trustee  appointed  pursuant to the Trust Indenture and (z) the Pass
Through Indemnitees pursuant to Section 9 of the Participation  Agreement;  (ii)
to the extent not payable  (whether or not in fact paid) under  Section  6(a) of
the Note Purchase Agreement (as originally in effect or amended with the consent
of the Owner Participant),  an amount equal to the fees payable to the Liquidity
Provider  under  Section  2.03 of each  Liquidity  Facility  and the related Fee
Letter (as defined in the Intercreditor  Agreement) multiplied by a fraction the
numerator of which shall be the then outstanding  aggregate  principal amount of
the Series A Equipment  Notes,  Series B Equipment  Notes and Series C Equipment
Notes  and the  denominator  of which  shall be the then  outstanding  aggregate
principal amount of all "Series A Equipment  Notes",  "Series B Equipment Notes"
and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement);
(iii) (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 (ii);  (iv) (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  foregoing  clause (ii);  (v) any amounts owed to the Liquidity
Providers by the  Subordination  Agent as borrower under the second  sentence of
Section  7.05  of  each  Liquidity  Facility  (other  than  as a  result  of any
"prohibited  transaction"  within the  meaning of  Section  406 of the  Employee
Retirement Income Security Act of 1974, as amended, or Section 4975(c)(1) of the
Internal Revenue Code of 1986, as amended)  multiplied by the fraction specified
in the  foregoing  clause  (ii);  and (vi) if any  payment  default  shall  have



occurred  and be  continuing  with respect to interest on any Series A Equipment
Note,  Series B Equipment Note or Series C Equipment  Note,  (x) the excess,  if
any,  of (1) the  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 the Owner  Trustee on the  overdue  scheduled
interest on the Equipment Notes in respect of which such Unpaid Advance, Applied
Downgrade Advance or Applied Non-Extension Advance was made, multiplied by (y) a
fraction the numerator of which shall be the then aggregate  overdue  amounts of
interest on the Series A Equipment Notes,  Series B Equipment Notes and Series C
Equipment Notes (other than interest becoming due and payable solely as a result
of acceleration of any such Equipment  Notes) and the denominator of which shall
be the then  aggregate  overdue  amounts of  interest on all "Series A Equipment
Notes",  "Series B  Equipment  Notes" and "Series C  Equipment  Notes"  (each as
defined in the Note Purchase  Agreement)  (other than interest  becoming due and
payable solely as a result of acceleration of any such "Equipment  Notes").  For
purposes of this  paragraph,  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  or  the
Intercreditor Agreement referred to therein.

          The  Equipment  Notes shall be executed on behalf of the Owner Trustee
by its President or one of its Vice  Presidents,  Assistant  Vice  Presidents or
Assistant  Secretaries or other authorized officer.  Equipment Notes bearing the
signatures of individuals  who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee,  notwithstanding  that such individuals or
any of them have ceased to hold such  offices  prior to the  authentication  and
delivery of such Equipment  Notes or did not hold such offices at the respective
dates of such Equipment  Notes.  The Owner Trustee may from time to time execute
and deliver  Equipment  Notes with respect to the Aircraft to the  Mortgagee for
authentication  upon original issue and such Equipment  Notes shall thereupon be
authenticated  and  delivered by the Mortgagee  upon the written  request of the
Owner Trustee  signed by a Vice  President or Assistant  Vice President or other
authorized  officer  of the Owner  Trustee;  PROVIDED,  HOWEVER,  that each such
request shall specify the aggregate Original Amount of all Equipment Notes to be
authenticated  hereunder  on original  issue with  respect to the  Aircraft.  No
Equipment  Note shall be secured by or entitled to any benefit  under this Trust
Indenture or be valid or obligatory  for any  purposes,  unless there appears on
such  Equipment Note a certificate  of  authentication  in the form provided for
herein  executed  by  the  Mortgagee  by  the  manual  signature  of  one of its
authorized  officers and such certificate upon any Equipment Notes be conclusive
evidence,  and the only  evidence,  that  such  Equipment  Note  has  been  duly
authenticated and delivered hereunder.

          The aggregate  Original Amount of the Equipment Notes issued hereunder
shall not exceed __% of Lessor's Cost.



     SECTION 2.03.  PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.

          (a)  Without  impairing  any of the other  rights,  powers,  remedies,
privileges,  liens or security  interests of the Note  Holders  under this Trust
Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that
as between it and the Owner Trustee,  except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Agreement, (i) the
obligation  to make  all  payments  of the  Original  Amount  of,  interest  on,
Make-Whole  Amount,  if any,  and all  other  amounts  due with  respect  to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Agreements, shall be payable only from the income and
proceeds  from the Trust  Estate to the extent  included in the Trust  Indenture
Estate  and only to the extent  that the Owner  Trustee  shall  have  sufficient
income or  proceeds  from the Trust  Estate to the extent  included in the Trust
Indenture  Estate to enable the  Mortgagee to make such  payments in  accordance
with  the  terms  of   Article   III   hereof,   and  all  of  the   statements,
representations,  covenants and agreements  made by the Owner Trustee (when made
in such capacity)  contained in this Trust Indenture and any agreement  referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and  intended  only  for the  purpose  of  binding  the  Trust  Estate  and
establishing  the  existence of rights and remedies  which can be exercised  and
enforced against the Trust Estate;  therefore,  anything contained in this Trust
Indenture or such other agreements to the contrary  notwithstanding  (except for
any express provisions or representations  that the Owner Trustee is responsible
for, or is making, in its individual capacity, for which there would be personal
liability of the Owner  Trustee),  no recourse shall be had with respect to this
Trust  Indenture  or such  other  agreements  against  the Owner  Trustee in its
individual  capacity  or  against  any  institution  or person  which  becomes a
successor trustee or co-trustee or any officer,  director,  trustee,  servant or
direct or indirect  parent or controlling  Person or Persons of any of them, and
(ii)  none  of  the  Owner  Trustee,  in  its  individual  capacity,  the  Owner
Participant,   the  Mortgagee  and  any  officer,  director,  trustee,  servant,
employee, agent or direct or indirect parent or controlling Person or Persons of
any of them shall have any personal liability for any amounts payable hereunder,
under the  Participation  Agreement or any of the other Operative  Agreements or
under the Equipment Notes except as expressly  provided herein,  in the Lease or
in the Participation  Agreement;  PROVIDED,  HOWEVER,  that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance  with the terms of this Trust  Indenture or such other  agreements of
rights and remedies against the Trust Indenture Estate. These provisions are not
intended as any release or  discharge  of the  indebtedness  represented  by the
Equipment Notes and the Trust Indenture, but are intended only as a covenant not
to sue the  Owner  Participant,  the Owner  Trustee  or the  Mortgagee  in their
individual   capacities,   except  as  expressly   provided  herein  or  in  the
Participation Agreement, for a deficiency with respect to such indebtedness, the
indebtedness  represented  by this Trust  Indenture and the  Equipment  Notes to
remain in full force and  effect as fully as though  these  provisions  were not
contained in this Trust Indenture.  The Owner Trustee hereby  acknowledges  that
the Note Holders have expressly  reserved all their rights and remedies  against
the Trust  Indenture  Estate,  including the right, in the event of a default in
the payment of all or part of the Original  Amount of,  interest on,  Make-Whole
Amount,  if any,  or any other  amount due with  respect to any  Equipment  Note
within  the  periods  provided  for in  Section  4.02(b)  hereof,  or  upon  the
occurrence  and  continuation  of any other  Event of  Default  under this Trust



Indenture,  to  foreclose  upon this  Trust  Indenture,  and/or to  receive  the
proceeds  from the Trust  Indenture  Estate and  otherwise  to enforce any other
right under this Trust  Indenture.  Nothing in this  Section  2.03(a)  shall (x)
release the Owner Participant from personal liability,  or constitute a covenant
not to sue the Owner Participant,  for any breach by it of any of its covenants,
representations  or warranties  contained in the Participation  Agreement or for
any  of the  payments  it has  agreed  to  make  pursuant  to the  Participation
Agreement or (y) release the Owner  Trustee or  constitute a covenant not to sue
the Owner  Trustee for any breach by it of any  representations,  warranties  or
covenants of the Owner  Trustee  contained in the  Operative  Agreements  or (z)
release the Owner Trustee in its individual capacity from personal liability, or
constitute a covenant not to sue the Owner  Trustee in its  individual  capacity
for any breach by it of any  representations,  warranties  or  covenants  of the
Owner Trustee made in its individual capacity in the Operative Agreements.

          (b) If (i) all or any part of the Trust  Estate  becomes the  property
of, or the Owner Trustee or Owner Participant  becomes,  a debtor subject to the
reorganization  provisions  of  the  Bankruptcy  Code,  (ii)  pursuant  to  such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by  reason  of the  Owner  Trustee  (in its  individual  capacity)  or the Owner
Participant  being held to have  recourse  liability  to any Note  Holder or the
Mortgagee,  directly or  indirectly  (other than the  recourse  liability of the
Owner Trustee (in its individual  capacity) or the Owner  Participant  under the
Participation  Agreement,  the  Lease or this  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
(iii) any Note Holder or the Mortgagee  actually  receives any Excess Amount (as
hereinafter  defined)  which  reflects any payment by the Owner  Trustee (in its
individual  capacity) or the Owner  Participant on account of clause (ii) above,
then  such Note  Holder or the  Mortgagee,  as the case may be,  shall  promptly
refund  to  the  Owner  Trustee  (in  its  individual  capacity)  or  the  Owner
Participant (whichever shall have made such payment) such Excess Amount.

          For purposes of this Section 2.03(b), "Excess Amount" means the amount
by which such payment exceeds the amount that would have been received by a Note
Holder or the Trustee if the Owner Trustee (in its  individual  capacity) or the
Owner Participant had not become subject to the recourse  liability  referred to
in clause (ii) above.  Nothing contained in this Section 2.03(b) shall prevent a
Note Holder or the Mortgagee  from  enforcing any personal  recourse  obligation
(and  retaining the proceeds  thereof) of the Owner  Trustee (in its  individual
capacity) or the Owner Participant under the Participation  Agreement, the Lease
or this Trust  Indenture (and any exhibits or annexes hereto or thereto) or from
retaining  any  amount  paid by Owner  Participant  under  Section  2.13 or 4.03
hereof.

     SECTION 2.04.  METHOD OF PAYMENT.

          (a) The Original Amount of, interest on,  Make-Whole  Amount,  if any,
and other amounts due under each  Equipment Note or hereunder will be payable in
Dollars by wire  transfer of  immediately  available  funds not later than 12:30
p.m.,  New York City time,  on the due date of payment to the  Mortgagee  at the
Corporate  Trust  Office for  distribution  among the Note Holders in the manner



provided  herein.  The Owner Trustee shall not have any  responsibility  for the
distribution of such payment to any Note Holder.  Notwithstanding  the foregoing
or any provision in any Equipment  Note to the contrary,  the Mortgagee will use
reasonable  efforts to pay or cause to be paid, if so directed in writing by any
Note Holder  (with a copy to the Owner  Trustee),  all amounts paid by the Owner
Trustee  hereunder and under such holder's  Equipment Note or Equipment Notes to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article  III  of  this  Trust  Indenture)  by  transferring,  or  causing  to be
transferred,  by wire transfer of immediately available funds in Dollars,  prior
to 2:00 p.m.,  New York City  time,  on the due date of  payment,  to an account
maintained by such holder with a bank located in the  continental  United States
the amount to be distributed  to such holder,  for credit to the account of such
holder  maintained at such bank.  If the  Mortgagee  shall fail to make any such
payment as provided in the immediately  foregoing  sentence after its receipt of
funds at the place and prior to the time specified above, the Mortgagee,  in its
individual  capacity and not as trustee,  agrees to compensate  such holders for
loss of use of  funds  at the  Debt  Rate  until  such  payment  is made and the
Mortgagee  shall be  entitled  to any  interest  earned on such funds until such
payment  is  made.  Any  payment  made  hereunder  shall  be  made  without  any
presentment or surrender of any Equipment Note,  except that, in the case of the
final payment in respect of any Equipment  Note,  such  Equipment  Note shall be
surrendered  to the  Mortgagee  for  cancellation  promptly  after such payment.
Notwithstanding any other provision of this Trust Indenture to the contrary, the
Mortgagee  shall not be required to make, or cause to be made, wire transfers as
aforesaid  prior to the first  Business Day on which it is  practicable  for the
Mortgagee  to do so in  view  of  the  time  of  day  when  the  funds  to be so
transferred  were received by it if such funds were  received  after 12:30 p.m.,
New York City time, at the place of payment.  Prior to the due  presentment  for
registration  of  transfer  of any  Equipment  Note,  the Owner  Trustee and the
Mortgagee  shall deem and treat the Person in whose name any  Equipment  Note is
registered  on the Equipment  Note Register as the absolute  owner and holder of
such Equipment Note for the purpose of receiving  payment of all amounts payable
with respect to such Equipment Note and for all other purposes,  and none of the
Owner Trustee or the Mortgagee  shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or nominee thereof shall
be a registered Note Holder,  all payments to it shall be made to the account of
such Note Holder  specified  in Schedule I thereto and  otherwise  in the manner
provided  in or  pursuant to the  Participation  Agreement  unless it shall have
specified  some other  account  or manner of payment by notice to the  Mortgagee
consistent with this Section 2.04.

          (b) The Mortgagee,  as agent for the Owner Trustee,  shall exclude and
withhold  at the  appropriate  rate from each  payment  of  Original  Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States  withholding  taxes
applicable  thereto as  required  by Law.  The  Mortgagee  agrees to act as such
withholding agent and, in connection  therewith,  whenever any present or future
United States taxes or similar  charges are required to be withheld with respect
to any  amounts  payable  hereunder  or in respect of the  Equipment  Notes,  to
withhold  such amounts and timely pay the same to the  appropriate  authority in
the name of and on behalf of the Note  Holders,  that it will file any necessary
United  States  withholding  tax  returns or  statements  when due,  and that as
promptly as  possible  after the  payment  thereof it will  deliver to each Note



Holder (with a copy to the Owner  Trustee and the Lessee)  appropriate  receipts
showing the payment thereof,  together with such additional documentary evidence
as any such Note Holder may reasonably request from time to time.

          If a Note  Holder  which is a  Non-U.S.  Person has  furnished  to the
Mortgagee a properly  completed,  accurate and currently effective U.S. Internal
Revenue  Service  Form  1001 or W-8 (or such  successor  form or forms as may be
required by the United States Treasury  Department)  during the calendar year in
which the payment  hereunder or under the Equipment  Note(s) held by such holder
is made  (but  prior to the  making  of such  payment),  or in either of the two
preceding  calendar years,  and has not notified the Mortgagee of the withdrawal
or  inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no  reason  to  believe  that any  information  set  forth  in such  form is
inaccurate),  the Mortgagee shall withhold only the amount,  if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United  States  federal  income tax. If a Note
Holder (x) which is a Non-U.S.  Person has furnished to the Mortgagee a properly
completed,  accurate and currently  effective U.S. Internal Revenue Service Form
4224 in  duplicate  (or  such  successor  certificate,  form or  forms as may be
required by the United  States  Treasury  Department  as  necessary  in order to
properly  avoid  withholding  of United  States  federal  income tax),  for each
calendar year in which a payment is made (but prior to the making of any payment
for  such  year),  and has not  notified  the  Mortgagee  of the  withdrawal  or
inaccuracy  of such  certificate  or form prior to the date of such payment (and
the  Mortgagee has no reason to believe that any  information  set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly  completed,  accurate and currently  effective U.S.  Internal Revenue
Service  Form W-9,  if  applicable,  prior to a payment  hereunder  or under the
Equipment  Notes held by such holder,  no amount shall be withheld from payments
in respect of United States  federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing  forms or  certificates  is withdrawn or
inaccurate,  or if such holder has not filed a form  claiming an exemption  from
United States  withholding tax or if the Code or the  regulations  thereunder or
the administrative  interpretation  thereof is at any time after the date hereof
amended to require such  withholding  of United States federal income taxes from
payments under the Equipment Notes held by such holder,  the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder  withholding taxes at
the  appropriate  rate  under  Law and  will,  on a timely  basis as more  fully
provided above, deposit such amounts with an authorized depository and make such
returns,  statements,  receipts  and other  documentary  evidence in  connection
therewith as required by Law.

          Neither  the Owner  Trustee nor the Owner  Participant  shall have any
liability  for the  failure of the  Mortgagee  to  withhold  taxes in the manner
provided for herein or for any false,  inaccurate or untrue evidence provided by
any Note Holder hereunder,  and Mortgagee shall pay, indemnify,  protect, defend
and hold the Owner  Participant  and the Owner Trustee  harmless on an after-tax
basis against any Taxes imposed as a result of such failure by the Mortgagee.



     SECTION 2.05.  APPLICATION OF PAYMENTS.

          In the case of each Equipment Note,  each payment of Original  Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:

          First:  to the payment of accrued  interest on such Equipment Note (as
     well as any interest on any overdue Original Amount, any overdue Make-Whole
     Amount,  if any, and to the extent  permitted by Law, any overdue  interest
     and any other overdue amounts thereunder) to the date of such payment;

          Second:  to the payment of the Original  Amount of such Equipment Note
     (or a portion thereof) then due thereunder;

          Third:  to the payment of  Make-Whole  Amount,  if any,  and any other
     amount due hereunder or under such Equipment Note; and

          Fourth: the balance, if any, remaining  thereafter,  to the payment of
     the Original Amount of such Equipment Note remaining  unpaid (provided that
     such Equipment  Note shall not be subject to redemption  except as provided
     in Sections 2.10, 2.11 and 2.12 hereof).

The  amounts  paid  pursuant  to clause  "Fourth"  above shall be applied to the
installments  of Original  Amount of such Equipment Note in the inverse order of
their normal maturity.

     SECTION 2.06.  TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.

          No Note Holder shall, as such, have any further  interest in, or other
right with  respect  to, the Trust  Indenture  Estate  when and if the  Original
Amount of,  Make-Whole  Amount,  if any, and  interest on and other  amounts due
under all  Equipment  Notes held by such Note Holder and all other sums then due
and payable hereunder (including,  without limitation, under the third paragraph
of Section 2.02 hereof) and under the other  Operative  Agreements  by the Owner
Trustee (collectively, the "Secured Obligations") shall have been paid in full.

     SECTION 2.07.  REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT NOTES.

          The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee  shall provide for the  registration  of Equipment Notes and
the  registration  of transfers of Equipment  Notes.  No such transfer  shall be
given effect unless and until  registration  hereunder shall have occurred.  The
Equipment  Note  Register  shall be kept at the  Corporate  Trust  Office of the
Mortgagee.  The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of  registering  Equipment  Notes and  transfers of  Equipment  Notes as
herein  provided.  A holder of any  Equipment  Note  intending to exchange  such
Equipment  Note shall  surrender  such  Equipment  Note to the  Mortgagee at the
Corporate  Trust  Office,  together with a written  request from the  registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer,  the name and address of the new holder or holders.
Upon  surrender for  registration  of transfer of any Equipment  Note, the Owner



Trustee shall execute,  and the Mortgagee shall authenticate and deliver, in the
name of the  designated  transferee  or  transferees,  one or more new Equipment
Notes of a like aggregate  Original Amount and of the same series. At the option
of the Note Holder,  Equipment  Notes may be exchanged for other Equipment Notes
of any  authorized  denominations  of a like  aggregate  Original  Amount,  upon
surrender  of the  Equipment  Notes  to be  exchanged  to the  Mortgagee  at the
Corporate  Trust Office.  Whenever any Equipment  Notes are so  surrendered  for
exchange,  the Owner Trustee shall execute, and the Mortgagee shall authenticate
and deliver,  the  Equipment  Notes which the Note Holder making the exchange is
entitled  to receive.  All  Equipment  Notes  issued  upon any  registration  of
transfer or exchange of  Equipment  Notes  (whether  under this  Section 2.07 or
under Section 2.08 hereof or otherwise under this Trust  Indenture) shall be the
valid   obligations  of  the  Owner  Trustee   evidencing  the  same  respective
obligations,  and entitled to the same  security  and benefits  under this Trust
Indenture, as the Equipment Notes surrendered upon such registration of transfer
or exchange.  Every Equipment Note presented or surrendered for  registration of
transfer  shall  (if so  required  by the  Mortgagee)  be duly  endorsed,  or be
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Mortgagee  duly  executed  by the Note  Holder or such  holder's  attorney  duly
authorized in writing, and the Mortgagee shall require evidence  satisfactory to
it as to the  compliance of any such transfer with the  Securities  Act, and the
securities Laws of any applicable  state. The Mortgagee shall make a notation on
each new  Equipment  Note of the  amount  of all  payments  of  Original  Amount
previously  made on the old  Equipment  Note or Equipment  Notes with respect to
which such new Equipment  Note is issued and the date to which  interest on such
old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to
have been paid on such new Equipment  Note to the date on which  interest  shall
have been paid on such old  Equipment  Note,  and all  payments of the  Original
Amount marked on such new Equipment Note, as provided above,  shall be deemed to
have been made thereon.  The Owner Trustee shall not be required to exchange any
surrendered  Equipment  Notes  as  provided  above  during  the  ten-day  period
preceding the due date of any payment on such Equipment  Note. The Owner Trustee
shall in all cases deem the Person in whose name any  Equipment  Note shall have
been issued and  registered as the absolute  owner and holder of such  Equipment
Note for the purpose of  receiving  payment of all amounts  payable by the Owner
Trustee with respect to such  Equipment Note and for all purposes until a notice
stating otherwise is received from the Mortgagee and such change is reflected on
the  Equipment  Note  Register.  The Mortgagee  will  promptly  notify the Owner
Trustee and the Lessee of each  registration of a transfer of an Equipment Note.
Any such  transferee  of an Equipment  Note,  by its  acceptance of an Equipment
Note, agrees to the provisions of the Participation Agreement applicable to Note
Holders,  and  shall  be  deemed  to  have  covenanted  to  the  parties  to the
Participation  Agreement  as to the  matters  covenanted  by the  original  Loan
Participant in the  Participation  Agreement.  Subject to compliance by the Note
Holder and its transferee (if any) of the requirements set forth in this Section
2.07,  Mortgagee and Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes upon transfer or exchange within 10 Business Days of the date an
Equipment Note is surrendered for transfer or exchange.

     SECTION 2.08.  MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES.

          If any  Equipment  Note shall  become  mutilated,  destroyed,  lost or
stolen,  the Owner Trustee shall, upon the written request of the holder of such



Equipment  Note,  execute and the Mortgagee  shall  authenticate  and deliver in
replacement  thereof a new Equipment  Note,  payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft.  If
the Equipment  Note being  replaced has become  mutilated,  such  Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner Trustee.  If the Equipment Note being replaced has been  destroyed,
lost or stolen,  the holder of such  Equipment  Note shall  furnish to the Owner
Trustee and the Mortgagee  such security or indemnity as may be required by them
to save the Owner Trustee and the Mortgagee  harmless and evidence  satisfactory
to the Owner Trustee and the Mortgagee of the destruction, loss or theft of such
Equipment  Note and of the  ownership  thereof.  If a  "qualified  institutional
buyer" of the type  referred to in  paragraph  (a)(1)(i)(A),  (B), (D) or (E) of
Rule  144A  under  the  Securities  Act (a  "QIB")  is the  holder  of any  such
destroyed,  lost or stolen  Equipment Note,  then the written  indemnity of such
QIB, signed by an authorized  officer thereof,  in favor of, delivered to and in
form  reasonably  satisfactory  to Lessee,  Owner Trustee and Mortgagee shall be
accepted as  satisfactory  indemnity  and security  and no further  indemnity or
security  shall be required as a condition to the execution and delivery of such
new Equipment Note. Subject to compliance by the Note Holder of the requirements
set  forth in this  Section  2.08,  Mortgagee  and Owner  Trustee  shall use all
reasonable  efforts to issue new Equipment  Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.

     SECTION 2.09.  PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.

          (a) No  service  charge  shall  be  made  to a  Note  Holder  for  any
registration of transfer or exchange of Equipment Notes,  but the Mortgagee,  as
Equipment Note  Registrar,  may require payment of a sum sufficient to cover any
tax or other  governmental  charge  that may be imposed in  connection  with any
registration of transfer or exchange of Equipment Notes.

          (b) The Mortgagee  shall cancel all Equipment  Notes  surrendered  for
replacement,  redemption,  transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.

     SECTION 2.10.  MANDATORY REDEMPTIONS OF EQUIPMENT NOTES.

          (a) On the date on which Lessee is required pursuant to Section 10.1.2
of the Lease to make payment for an Event of Loss with respect to the  Aircraft,
all of the  Equipment  Notes shall be redeemed  in whole at a  redemption  price
equal to 100% of the unpaid Original  Amount thereof,  together with all accrued
interest  thereon to the date of redemption  and all other  Secured  Obligations
owed or then due and payable to the Note Holders but without Make-Whole Amount.

          (b) If the Lease is terminated  with respect to the Aircraft by Lessee
pursuant to Section 9 thereof,  on the date the Lease is so terminated,  all the
Equipment  Notes shall be redeemed in whole at a redemption  price equal to 100%
of the unpaid Original Amount thereof, together with accrued interest thereon to
the date of redemption and all other amounts then due and payable  hereunder and
under the Participation Agreement and all other Operative Agreements to the Note
Holders plus, Make-Whole Amount, if any.



     SECTION 2.11.  VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES.

          All (but not less than all) of the Equipment  Notes may be redeemed by
the Owner Trustee in connection with a transaction  described in, and subject to
the terms and conditions of, Section 11 of the  Participation  Agreement upon at
least 30 days'  revocable  prior  written  notice to the  Mortgagee and the Note
Holders,  and the  Equipment  Notes  shall,  as  provided  in  Section 11 of the
Participation  Agreement,  be redeemed in whole at a  redemption  price equal to
100% of the unpaid  Original  Amount  thereof,  together  with accrued  interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note  Holders  plus  (except as provided in Section 11 of
the Participation Agreement), Make-Whole Amount, if any.

     SECTION 2.12.  REDEMPTIONS; NOTICE OF REDEMPTION.

          (a) Neither any  redemption of any Equipment  Note nor any purchase by
the Owner Trustee of any Equipment  Note may be made except to the extent and in
the manner  expressly  permitted  by this Trust  Indenture.  No  purchase of any
Equipment Note may be made by the Mortgagee.

          (b) Notice of  redemption  or purchase  with respect to the  Equipment
Notes shall be given by the  Mortgagee by  first-class  mail,  postage  prepaid,
mailed not less than 25 nor more than 60 days prior to the applicable redemption
date, to each Note Holder of such  Equipment  Notes to be redeemed or purchased,
at such Note Holder's address appearing in the Equipment Note Register; PROVIDED
that,  in the case of a  redemption  to be made  pursuant to Section  2.10(b) or
Section 2.11,  such notice shall be revocable and shall be deemed revoked in the
event that the Lease does not in fact  terminate  on the  specified  termination
date or if notice of such redemption  shall have been given in connection with a
refinancing of Equipment Notes and the Mortgagee receives written notice of such
revocation  from the Lessee or the Owner Trustee not later than three days prior
to the  redemption  date.  All  notices  of  redemption  shall  state:  (1)  the
redemption date, (2) the applicable basis for determining the redemption  price,
(3) that on the  redemption  date,  the  redemption  price  will  become due and
payable upon each such Equipment Note, and that, if any such Equipment Notes are
then outstanding,  interest on such Equipment Notes shall cease to accrue on and
after such  redemption  date,  and (4) the place or places where such  Equipment
Notes are to be surrendered for payment of the redemption price.

          (c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner  Trustee)  shall,  to the  extent an amount  equal to the
redemption  price for the  Equipment  Notes to be redeemed or  purchased  on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Mortgagee by 12:00 noon on the redemption date in
immediately  available  funds the redemption  price of the Equipment Notes to be
redeemed or purchased.

          (d) Notice of  redemption  or purchase  having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)),  the
Equipment  Notes to be redeemed or  purchased  shall,  on the  redemption  date,
become due and payable at the Corporate  Trust Office of the Mortgagee or at any
office or agency maintained for such purposes pursuant to Section 2.07, and from
and after such  redemption  date (unless there shall be a default in the payment



of the redemption  price) any such Equipment Notes then outstanding  shall cease
to bear  interest.  Upon  surrender of any such Equipment Note for redemption or
purchase in accordance  with said notice,  such Equipment Note shall be redeemed
at the redemption price. If any Equipment Note called for redemption or purchase
shall not be so paid upon surrender thereof for redemption, the principal amount
thereof  shall,  until  paid,  continue  to bear  interest  from the  applicable
redemption  date at the interest  rate in effect for such  Equipment  Note as of
such redemption date.

     SECTION 2.13.  OPTION TO PURCHASE EQUIPMENT NOTES.

          The Owner Trustee and the Owner  Participant  may, upon the events and
subject to the terms and  conditions and for the price set forth in this Section
2.13,  purchase  all but not less than all of the  Equipment  Notes  outstanding
hereunder,  and each Note  Holder  agrees  that it will,  upon such  events  and
subject to such terms and  conditions  and upon  receipt  of such  price,  sell,
assign,  transfer and convey to such purchaser or its nominee (without  recourse
or warranty of any kind except against Liens on such Equipment Notes arising by,
through or under such holder), all of the right, title and interest of such Note
Holder in and to the  Equipment  Notes  held by it,  and such  purchaser  or its
nominee shall assume all of such holder's  obligations  under the  Participation
Agreement and hereunder.

          Such option to purchase  the  Equipment  Notes may be exercised by the
Owner Trustee or the Owner  Participant  at any time following the occurrence of
any of the following  events,  and in any such event the purchase  price thereof
shall equal for each  Equipment  Note,  the  aggregate  unpaid  Original  Amount
thereof,  plus accrued and unpaid  interest  thereon to, but not including,  the
date of purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof).  Such option to purchase the Equipment  Notes may be exercised (x)
upon a  Mortgagee  Event or (y) in the event there  shall have  occurred  and be
continuing  a Lease Event of Default  PROVIDED  that if such option is exercised
pursuant  to  clause  (y)  at a time  when  there  shall  have  occurred  and be
continuing  for less than 120 days a Lease Event of Default,  the purchase price
thereof  shall  equal the price  provided  in the  preceding  sentence  plus the
Make-Whole Amount, if any.

          Such option to purchase  the  Equipment  Notes may be exercised by the
Owner Trustee or the Owner Participant  giving written notice of its election of
such  option  to the  Mortgagee,  which  notice  shall  specify  a date for such
purchase  within 30 days of the date of such  notice.  The  Mortgagee  shall not
exercise any of the  remedies  hereunder  and,  without the consent of the Owner
Trustee or the Owner  Participant,  under the Lease,  during the period from the
time  that an  exercise  by the Owner  Participant  of such  option to  purchase
becomes  irrevocable  until the date on which such purchase is required to occur
pursuant to the terms of the preceding  sentence.  Such election to purchase the
Equipment  Notes shall become  irrevocable  upon the sixteenth day following the
giving of written notice as provided above.

          If the Owner Trustee or the Owner Participant on or before the date of
such  purchase  shall so  request,  the Note  Holders  will  comply with all the
provisions  of Section  2.07 to enable new  Equipment  Notes to be issued to the
Owner Trustee or the Owner  Participant or its nominee in such  denominations as



the Owner Trustee or the Owner Participant shall request. All taxes, charges and
expenses  required  pursuant to Section 2.09 in connection  with the issuance of
such new Equipment Note shall be borne by the Owner Participant.

     SECTION 2.14.  SUBORDINATION.

          (a) The Owner Trustee and, by acceptance of its Equipment Notes of any
Series,  each Note  Holder of such  Series,  hereby  agree  that no  payment  or
distribution  shall be made on or in respect of the Secured  Obligations owed to
such Note Holder of such Series,  including any payment or distribution of cash,
property  or  securities  after the  commencement  of a  proceeding  of the type
referred to in Section 4.02(g) hereof,  except as expressly  provided in Article
III hereof.

          (b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Note  Holder of such  Series  agrees that in the event that such
Note  Holder,  in its capacity as a Note  Holder,  shall  receive any payment or
distribution  on any Secured  Obligations  in respect of such Series which it is
not entitled to receive  under this Section 2.14 or Article III hereof,  it will
hold any  amount so  received  in trust for the  Senior  Holder  (as  defined in
Section  2.14(c)  hereof)  and will  forthwith  turn  over such  payment  to the
Mortgagee in the form received to be applied as provided in Article III hereof.

          (c) As used in this Section 2.14, the term "Senior Holder" shall mean,
(i) the Note  Holders of Series A until the  Secured  Obligations  in respect of
Series A  Equipment  Notes  have  been  paid in full,  (ii)  after  the  Secured
Obligations  in respect of Series A Equipment  Notes have been paid in full, the
Note  Holders of Series B until the Secured  Obligations  in respect of Series B
Equipment  Notes have been paid in full and (iii) after the Secured  Obligations
in respect of Series B Equipment  Notes have been paid in full, the Note Holders
of Series C until the Secured Obligations in respect of Series C Equipment Notes
have been paid in full.



                                   ARTICLE III

                    RECEIPT, DISTRIBUTION AND APPLICATION OF
                     INCOME FROM THE TRUST INDENTURE ESTATE

     SECTION 3.01.  BASIC RENT DISTRIBUTION.

          Except as otherwise  provided in Sections  3.02 and 3.03 hereof,  each
installment  of Basic Rent, any payment of interest on overdue  installments  of
Basic Rent and any payment  received by the  Mortgagee  pursuant to Section 4.03
hereof shall be promptly distributed in the following order of priority:

FIRST,   (i)  so much of such installment  or  payment  as  shall be required to
              pay in full the  aggregate  amount of the  payment or  payments of
              Original  Amount  and  interest  (as well as any  interest  on any
              overdue  Original  Amount and, to the extent  permitted by Law, on
              any overdue  interest) then due under all Series A Equipment Notes
              shall be  distributed  to the Note  Holders  of Series A  ratably,
              without priority of one over the other, in the proportion that the
              amount of such  payment or  payments  then due under each Series A
              Equipment Note bears to the aggregate  amount of the payments then
              due under all Series A Equipment Notes;

        (ii)  after  giving  effect to  paragraph  (i)  above,  so  much of such
              installment  or payment  remaining  as shall be required to pay in
              full the  aggregate  amount of the payment or payments of Original
              Amount  and  interest  (as  well as any  interest  on any  overdue
              Original Amount and, to the extent  permitted by Law, on interest)
              then due under all Series B Equipment  Notes shall be  distributed
              to the Note Holders of Series B ratably,  without  priority of one
              over the other,  in the proportion that the amount of such payment
              or payments  then due under each Series B Equipment  Note bears to
              the  aggregate  amount of the payments then due under all Series B
              Equipment Notes; and

       (iii)  after  giving  effect to  paragraph  (ii)  above,  so much of such
              installment  or payment  remaining  as shall be required to pay in
              full the  aggregate  amount of the payment or payments of Original
              Amount  and  interest  (as  well as any  interest  on any  overdue
              Original  Amount  and,  to the  extent  permitted  by Law,  on any
              overdue  interest)  then due under all  Series C  Equipment  Notes
              shall be  distributed  to the Note  Holders  of Series C  ratably,
              without priority of one over the other, in the proportion that the
              amount of such  payment or  payments  then due under each Series C
              Equipment Note bears to the aggregate  amount of the payments then
              due under all Series C Equipment Notes; and

SECOND,       the  balance,  if  any,  of  such installment remaining thereafter
              shall be distributed to the Owner Trustee; PROVIDED, HOWEVER, that
              if an Event of Default shall have occurred and be continuing, then
              such balance shall not be  distributed  as provided in this clause



              "Second"  but shall be held by the  Mortgagee as part of the Trust
              Indenture  Estate and  invested in  accordance  with  Section 5.09
              hereof until whichever of the following shall first occur: (i) all
              Events of Default shall have been cured or waived,  in which event
              such  balance  shall be  distributed  as  provided  in this clause
              "Second",  (ii) Section 3.03 hereof shall be applicable,  in which
              event such balance shall be  distributed  in  accordance  with the
              provisions  of such Section 3.03, or (iii) the 120th day after the
              receipt  of such  payment  in which  case  such  payment  shall be
              distributed as provided in this clause "Second".

     SECTION 3.02.  EVENT  OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; OPTIONAL
                    REDEMPTION.

          Except as  otherwise  provided in Section  3.03  hereof,  any payments
received by the  Mortgagee  (i) with respect to the Airframe or the Airframe and
one or more  Engines  as the  result  of an Event of Loss,  (ii)  pursuant  to a
voluntary  termination  of the Lease  pursuant  to Section 9  thereof,  or (iii)
pursuant to an optional redemption of the Equipment Notes pursuant to Section 11
of the  Participation  Agreement shall be applied to redemption of the Equipment
Notes  and to all  other  Secured  Obligations  by  applying  such  funds in the
following order of priority:

FIRST,        (a) to reimburse the  Mortgagee  and  the  Note  Holders  for  any
              reasonable  costs or  expenses  incurred in  connection  with such
              redemption  for  which  they are  entitled  to  reimbursement,  or
              indemnity by Lessee,  under the Operative  Agreements and then (b)
              to pay any other  amounts then due to the  Mortgagee  and the Note
              Holders under this Trust Indenture, the Participation Agreement or
              the Equipment  Notes and any and all amounts  payable  pursuant to
              the third paragraph of Section 2.02;

SECOND,  (i)  to pay  the  amounts  specified in paragraph (i) of clause "Third"
              of Section 3.03 hereof plus  Make-Whole  Amount,  if any, then due
              and payable in respect of the Series A Equipment Notes;

        (ii)  after  giving effect to paragraph  (i) above,  to  pay the amounts
              specified  in  paragraph  (ii) of clause  "Third" of Section  3.03
              hereof plus  Make-Whole  Amount,  if any,  then due and payable in
              respect of the Series B Equipment Notes; and

       (iii)  after  giving  effect to  paragraph (ii) above, to pay the amounts
              specified  in  paragraph  (iii) of clause  "Third" of Section 3.03
              hereof plus  Make-Whole  Amount,  if any,  then due and payable in
              respect of the Series C Equipment Notes; and

THIRD,        as provided in clause "Fourth" of Section 3.03 hereof;

PROVIDED, HOWEVER, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in  accordance  with  Section  5.06  hereof,  any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the  Mortgagee  shall be held by the Mortgagee as permitted
by Section 6.04 hereof  (provided that such moneys shall be invested as provided



in Section 5.09 hereof) as  additional  security for the  obligations  of Lessee
under the Lessee Operative  Agreements and, unless otherwise applied pursuant to
the Lease, such proceeds (and such investment earnings) shall be released to the
Lessee at the Lessee's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided in the Lease.

     SECTION 3.03.  PAYMENTS AFTER EVENT OF DEFAULT.

          Except as  otherwise  provided in Section  3.04  hereof,  all payments
received and amounts held or realized by the  Mortgagee  (including  any amounts
realized by the Mortgagee from the exercise of any remedies  pursuant to Section
15 of the Lease or  Article  IV  hereof)  after an Event of  Default  shall have
occurred  and be  continuing  and after the  declaration  specified  in  Section
4.04(b) hereof, as well as all payments or amounts then held by the Mortgagee as
part of the  Trust  Indenture  Estate,  shall  be  promptly  distributed  by the
Mortgagee in the following order of priority:

FIRST,        so much  of such  payments or amounts as shall be  required to (i)
              reimburse  the  Mortgagee or WTC for any tax (except to the extent
              resulting  from a  failure  of the  Mortgagee  to  withhold  taxes
              pursuant  to  Section  2.04(b)  hereof),  expense  or  other  loss
              (including,  without limitation, all amounts to be expended at the
              expense of, or charged upon the rents, revenues,  issues, products
              and  profits  of, the  property  included  in the Trust  Indenture
              Estate  (all such  property  being  herein  called the  "Mortgaged
              Property")  pursuant to Section  4.05(b)  hereof)  incurred by the
              Mortgagee or WTC (to the extent not  previously  reimbursed),  the
              expenses of any sale, or other proceeding,  reasonable  attorneys'
              fees  and  expenses,  court  costs,  and  any  other  expenditures
              incurred or expenditures or advances made by the Mortgagee, WTC or
              the Note Holders in the protection, exercise or enforcement of any
              right,  power or remedy or any damages sustained by the Mortgagee,
              WTC or any Note Holder,  liquidated or otherwise,  upon such Event
              of Default  shall be applied by the  Mortgagee as between  itself,
              WTC and the Note Holders in reimbursement of such expenses and any
              other  expenses for which the  Mortgagee,  WTC or the Note Holders
              are entitled to  reimbursement  under any Operative  Agreement and
              (ii)  pay any  and all  amounts  payable  to WTC or the  Mortgagee
              hereunder  and any and all amounts  payable  pursuant to the third
              paragraph of Section 2.02; and in the case the aggregate amount to
              be so distributed is  insufficient  to pay as aforesaid in clauses
              (i) and  (ii),  then  ratably,  without  priority  of one over the
              other, in proportion to the amounts owed each hereunder;

SECOND,       so much of such payments or amounts remaining as shall be required
              to reimburse  the then existing or prior Note Holders for payments
              made pursuant to Section 5.03 hereof (to the extent not previously
              reimbursed)  shall be  distributed  to such then existing or prior
              Note Holders  ratably,  without priority of one over the other, in
              accordance with the amount of the payment or payments made by each
              such then  existing or prior Note Holder  pursuant to said Section
              5.03 hereof;



THIRD,   (i)  so much of such payments or amounts remaining as shall be required
              to pay in full the aggregate  unpaid Original Amount of all Series
              A Equipment  Notes,  and the accrued but unpaid interest and other
              amounts due thereon (other than Make-Whole  Amount which shall not
              be due and payable) and all other Secured  Obligations  in respect
              of the Series A Equipment Notes (other than Make-Whole  Amount) to
              the date of distribution, shall be distributed to the Note Holders
              of Series A, and in case the aggregate amount so to be distributed
              shall be insufficient  to pay in full as aforesaid,  then ratably,
              without priority of one over the other, in the proportion that the
              aggregate  unpaid  Original Amount of all Series A Equipment Notes
              held by each holder plus the accrued but unpaid interest and other
              amounts due hereunder or thereunder (other than Make-Whole Amount,
              if any) to the date of distribution, bears to the aggregate unpaid
              Original  Amount of all Series A Equipment  Notes held by all such
              holders plus the accrued but unpaid interest and other amounts due
              thereon   (other   than   Make-Whole   Amount)   to  the  date  of
              distribution;

        (ii)  after  giving  effect to  paragraph  (i)  above,  so  much of such
              payments or amounts  remaining as shall be required to pay in full
              the  aggregate  unpaid  Original  Amount of all Series B Equipment
              Notes,  and the accrued but unpaid  interest and other amounts due
              thereon (other than  Make-Whole  Amount which shall not be due and
              payable)  and all other  Secured  Obligations  in  respect  of the
              Series B Equipment  Notes  (other than  Make-Whole  Amount) to the
              date of distribution,  shall be distributed to the Note Holders of
              Series B, and in case the  aggregate  amount so to be  distributed
              shall be insufficient  to pay in full as aforesaid,  then ratably,
              without priority of one over the other, in the proportion that the
              aggregate  unpaid  Original Amount of all Series B Equipment Notes
              held by each holder plus the accrued but unpaid interest and other
              amounts due  hereunder or  thereunder  (other than the  Make-Whole
              Amount,  if  any)  to  the  date  of  distribution,  bears  to the
              aggregate  unpaid  Original Amount of all Series B Equipment Notes
              held by all such holders plus the accrued but unpaid  interest and
              other amounts due thereon  (other than the  Make-Whole  Amount) to
              the date of distribution; and

       (iii)  after  giving  effect  to  paragraph  (ii) above,  so much of such
              payments or amounts  remaining as shall be required to pay in full
              the  aggregate  unpaid  Original  Amount of all Series C Equipment
              Notes,  and the accrued but unpaid  interest and other amounts due
              thereon (other than  Make-Whole  Amount which shall not be due and
              payable)  and all other  Secured  Obligations  in  respect  of the
              Series C Equipment  Notes  (other than  Make-Whole  Amount) to the
              date of distribution,  shall be distributed to the Note Holders of
              Series C, and in case the  aggregate  amount so to be  distributed
              shall be insufficient  to pay in full as aforesaid,  then ratably,
              without priority of one over the other, in the proportion that the
              aggregate  unpaid  Original Amount of all Series C Equipment Notes
              held by each holder plus the accrued but unpaid interest and other
              amounts due  hereunder or  thereunder  (other than the  Make-Whole
              Amount,  if  any)  to  the  date  of  distribution,  bears  to the
              aggregate  unpaid  Original Amount of all Series C Equipment Notes



              held by all such holders plus the accrued but unpaid  interest and
              other amounts due thereon  (other than the  Make-Whole  Amount) to
              the date of distribution; and

FOURTH,       the  balance,  if  any,  of  such  payments  or  amounts remaining
              thereafter shall be distributed to the Owner Trustee.

          No Make-Whole  Amount shall be due and payable on the Equipment  Notes
as a consequence of the  acceleration  of the Equipment  Notes as a result of an
Event of Default.

     SECTION 3.04.  CERTAIN PAYMENTS.

          (a) Any payments  received by the  Mortgagee for which no provision as
to the  application  thereof is made in this Trust  Indenture and for which such
provision is made in the Lease or the  Participation  Agreement shall be applied
forthwith to the purpose for which such payment was made in accordance  with the
terms of the Lease or the Participation Agreement, as the case may be.

          (b) Notwithstanding anything to the contrary contained in this Article
III, the Mortgagee will distribute  promptly upon receipt any indemnity  payment
received by it from the Owner  Trustee or Lessee in respect of the  Mortgagee in
its individual capacity,  any Note Holder, WTC, the Mortgagee,  each separate or
additional Trustee appointed pursuant to the Trust Indenture or the Pass Through
Indemnitees,  in each case  whether  pursuant to Section 9 of the  Participation
Agreement or as  Supplemental  Rent,  directly to the Person  entitled  thereto.
Subject to the foregoing sentence of this Section 3.04(b),  any payment received
by the Mortgagee  under the third paragraph of Section 2.02 shall be distributed
to the Subordination Agent to be distributed in accordance with the terms of the
Intercreditor Agreement.

          (c) Notwithstanding anything to the contrary contained in this Article
III, any payments  received by the Mortgagee which constitute  Excluded Payments
shall be  distributed  promptly  upon receipt by the  Mortgagee  directly to the
Person or Persons entitled thereto.

          (d)  Notwithstanding  any  provision  of this Trust  Indenture  to the
contrary,  any amounts held by Mortgagee  pursuant to the terms of the Lease [or
any  Permitted  Sublease  assignment]  shall  be  held by the  Mortgagee  as
security for the  obligations  of Lessee under the Lessee  Operative  Agreements
and, if and when required by the Lease,  paid and/or applied in accordance  with
the applicable provisions of the Lease.


___________________

  Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



     SECTION 3.05.  OTHER PAYMENTS.

          Any payments  received by the  Mortgagee  for which no provision as to
the  application  thereof is made in the  Lease,  the  Participation  Agreement,
elsewhere in this Trust Indenture or in any other  Operative  Agreement shall be
distributed by the Mortgagee to the extent  received or realized at any time (i)
prior to the payment in full of all Secured Obligations due the Note Holders, in
the order of priority  specified in Section  3.01 hereof  subject to the proviso
thereto,  and (ii) after  payment  in full of all  Secured  Obligations,  in the
following order of priority:

FIRST,        to the  extent  payments or  amounts  described  in clause "First"
              of Section 3.03 hereof are otherwise  obligations  of Lessee under
              the  Operative  Agreements or for which the Lessee is obligated to
              indemnify  against  thereunder,  in the manner  provided in clause
              "First" of Section 3.03 hereof, and

SECOND,       in the manner provided in clause "Fourth" of Section 3.03 hereof.

          Further,  and except as otherwise  provided in Sections 3.02, 3.03 and
3.04 hereof,  all payments  received and amounts realized by the Mortgagee under
the  Lease  or  otherwise  with  respect  to the  Aircraft  (including,  without
limitation,  all amounts realized upon the sale or release of the Aircraft after
the  termination of the Lease with respect  thereto),  to the extent received or
realized at any time after  payment in full of all Secured  Obligations  due the
Note  Holders,  shall be  distributed  by the Mortgagee in the order of priority
specified in clause (ii) of the immediately  preceding  sentence of this Section
3.05.

     SECTION 3.06.  PAYMENTS TO OWNER TRUSTEE.

          Any  amounts  distributed  hereunder  by the  Mortgagee  to the  Owner
Trustee shall be paid to the Owner Trustee (within the time limits  contemplated
by  Section  2.04(a))  by wire  transfer  of funds of the type  received  by the
Mortgagee  at such  office and to such  account or  accounts  of such  entity or
entities  as  shall be  designated  by  notice  from the  Owner  Trustee  to the
Mortgagee  from time to time.  The Owner Trustee  hereby  notifies the Mortgagee
that unless and until the  Mortgagee  receives  notice to the contrary  from the
Owner Trustee,  all amounts to be  distributed to the Owner Trustee  pursuant to
clause  "Second" of Section 3.01 or clause "Fourth" of Section 3.03 hereof shall
be  distributed  by wire transfer of funds of the type received by the Mortgagee
to the Owner  Participant's  account  (within  the time limits  contemplated  by
Section 2.04(a)) specified in Schedule 1 to the Participation Agreement.



                                   ARTICLE IV

                      COVENANTS OF OWNER TRUSTEE; EVENTS OF
                         DEFAULT; REMEDIES OF MORTGAGEE

     SECTION 4.01.  COVENANTS OF OWNER TRUSTEE.

          The Owner  Trustee  hereby  covenants  and agrees (the  covenants  and
agreements  only in clause  (b) below  being  made by the Owner  Trustee  in its
individual capacity) as follows:

          (a) the Owner Trustee will duly and punctually pay the Original Amount
of,  Make-Whole  Amount, if any, and interest on and other amounts due under the
Equipment  Notes and  hereunder in  accordance  with the terms of the  Equipment
Notes and this Trust  Indenture  and all amounts,  if any,  payable by it to the
Note Holders under the Participation Agreement or Section 9 of the Lease;

          (b) the Owner Trustee in its individual  capacity covenants and agrees
that it shall not,  directly  or  indirectly,  cause or permit to exist a Lessor
Lien attributable to it in its individual  capacity with respect to the Aircraft
or any other  portion of the Trust  Estate;  that it will  promptly,  at its own
expense, take such action as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it will make restitution
to the Trust  Indenture  Estate for any actual  diminution  of the assets of the
Trust  Estate  resulting  from  such  Lessor  Liens  attributable  to it in  its
individual capacity;

          (c) in the event the Owner Trustee  shall have Actual  Knowledge of an
Event of Default,  a Default or an Event of Loss,  the Owner  Trustee  will give
prompt written notice of such Event of Default,  Default or Event of Loss to the
Mortgagee, each Note Holder, Lessee and the Owner Participant;

          (d) the  Owner  Trustee  will  furnish  to the  Note  Holders  and the
Mortgagee,  promptly upon receipt thereof,  duplicates or copies of all reports,
notices, requests, demands,  certificates and other instruments furnished to the
Owner  Trustee under the Lease,  including,  without  limitation,  a copy of any
Termination  Notice and a copy of each  report or notice  received  pursuant  to
Section 9 or 8.2 or Annex D,  Paragraph  E of the Lease to the  extent  that the
same shall not have been  furnished  or is not  required to be  furnished by the
Lessee to the Note Holders or the Mortgagee pursuant to the Lease;

          (e) except  with the  consent of the  Mortgagee  (acting  pursuant  to
instructions  given in  accordance  with  Section 9.01 hereof) or as provided in
Sections 2, 11 and 16 of the Participation Agreement, the Owner Trustee will not
contract for,  create,  incur,  assume or suffer to exist any Debt, and will not
guarantee  (directly  or  indirectly  or by an  instrument  having the effect of
assuring  another's payment or performance on any obligation or capability of so
doing,  or otherwise),  endorse or otherwise be or become  contingently  liable,
directly or indirectly, in connection with the Debt of any other person; and



          (f) the  Owner  Trustee  will not  enter  into any  business  or other
activity other than the business of owning the Aircraft,  the leasing thereof to
Lessee and the carrying out of the transactions  contemplated  hereby and by the
Lease,  the  Participation  Agreement  and the  Trust  Agreement  and the  other
Operative Agreements.

     SECTION 4.02.  EVENT OF DEFAULT.

          "Event of Default"  means any of the  following  events  (whatever the
reason for such Event of Default and whether  such event shall be  voluntary  or
involuntary  or come about or be effected by  operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

          (a) any Lease Event of Default  (provided that any such Lease Event of
Default  caused solely by a failure of Lessee to pay to the Owner Trustee or the
Owner  Participant  when due any amount that is included  in the  definition  of
Excluded  Payments  shall not  constitute  an Event of Default  unless notice is
given by the Owner Trustee to the Mortgagee  that such failure shall  constitute
an Event of Default); or

          (b) the  failure of the Owner  Trustee to pay when due any  payment of
Original Amount of, interest on, Make-Whole  Amount, if any, or other amount due
and payable under any Equipment  Note or hereunder  (other than as a result of a
Lease Event of Default or a Lease Default) and such failure shall have continued
unremedied  for ten Business Days in the case of any payment of Original  Amount
or interest or Make-Whole  Amount, if any, thereon and, in the case of any other
amount,  for ten Business Days after the Owner Trustee or the Owner  Participant
receives written demand from the Mortgagee or any Note Holder; or

          (c) any Lien required to be discharged  by the Owner  Trustee,  in its
individual  capacity  pursuant to Section 4.01(b) hereof or in its individual or
trust capacity pursuant to Section 7.3.1 of the Participation  Agreement,  or by
the Owner Participant  pursuant to Section 7.2.1 of the Participation  Agreement
shall remain undischarged for a period of 30 days after the Owner Trustee or the
Owner  Participant,  as the case may be, shall have received written notice from
the Mortgagee or any Note Holder of such Lien; or

          (d) any  representation  or warranty made by the Owner  Participant or
the Owner Trustee in the  Participation  Agreement or this Trust Indenture or in
any certificate  furnished by the Owner  Participant or the Owner Trustee to the
Mortgagee or any Note Holder in connection with the transactions contemplated by
the Operative  Agreements  shall prove to have been false or incorrect when made
in any  material  respect  and  continues  to be  material  and  adverse  to the
interests of the Mortgagee or the Note Holders; and if such misrepresentation is
capable of being  corrected and if such  correction is being sought  diligently,
such misrepresentation shall not have been corrected within 60 days (or, without
affecting  Section 4.02(f)  hereof,  in the case of the  representation  made in
Section 6.3.6 or 6.2.6 of the  Participation  Agreement as to citizenship of the
Owner  Trustee  in  its  individual   capacity  or  of  the  Owner  Participant,
respectively,  as soon as is reasonably  practicable  but in any event within 60
days)  following  notice  thereof  from the  Mortgagee or any Note Holder to the
Owner Trustee or the Owner Participant, as the case may be; or



          (e) other than as provided  in (c) above or (f) below,  any failure by
the Owner Trustee or Owner  Participant to observe or perform any other covenant
or obligation of the Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Mortgagee or the Note Holders  contained in the Participation
Agreement,  Section 4.2.1 of the Trust  Agreement,  the Equipment  Notes or this
Trust  Indenture  which is not remedied  within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant; or

          (f) if at any time when the Aircraft is  registered  under the Laws of
the United States,  the Owner  Participant shall not be a "citizen of the United
States" within the meaning of Section  40102(a)(15) of Part A of Subtitle VII of
Title 49, United States Code, and as the result thereof the  registration of the
Aircraft  under the  Federal  Aviation  Act,  and  regulations  then  applicable
thereunder, shall cease to be effective; provided that no Event of Default shall
be deemed to have occurred  under this  paragraph (f) unless such  circumstances
continue unremedied for more than 60 days after the Owner Participant has Actual
Knowledge  of the state of facts that  resulted in such  ineffectiveness  and of
such loss of citizenship; or

          (g) at any time either (i) the  commencement of an involuntary case or
other  proceeding in respect of the Owner  Participant,  the Owner Trustee,  the
Trust or the Trust Estate under the federal  bankruptcy Laws, as now constituted
or  hereafter  amended,  or any other  applicable  federal or state  bankruptcy,
insolvency or other similar Law in the United States or seeking the  appointment
of a  receiver,  liquidator,  assignee,  custodian,  trustee,  sequestrator  (or
similar official) of the Owner Participant,  the Owner Trustee, the Trust or the
Trust Estate or for all or  substantially  all of its  property,  or seeking the
winding-up or liquidation of its affairs and the  continuation  of any such case
or other  proceeding  undismissed  and unstayed  for a period of 60  consecutive
days; or (ii) the commencement by the Owner Participant,  the Owner Trustee, the
Trust or the Trust Estate of a voluntary  case or  proceeding  under the federal
bankruptcy  Laws,  as  now  constituted  or  hereafter  amended,  or  any  other
applicable  federal or state bankruptcy,  insolvency or other similar Law in the
United States, or the consent by the Owner Participant,  the Owner Trustee,  the
Trust or the  Trust  Estate to the  appointment  of or  taking  possession  by a
receiver,  liquidator,  assignee,  trustee,  custodian,  sequestrator  (or other
similar official) of the Owner Participant,  the Owner Trustee, the Trust or the
Trust Estate or for all or substantially  all of its property,  or the making by
the Owner Participant,  the Owner Trustee,  the Trust or the Trust Estate of any
assignment  for the benefit of creditors or the Owner  Participant  or the Owner
Trustee  shall  take any action to  authorize  any of the  foregoing;  PROVIDED,
HOWEVER,  that an event referred to in this Section  4.02(g) with respect to the
Owner  Participant shall not constitute an Event of Default if within 30 days of
the  commencement  of the  case  or  proceeding  a final  non-appealable  order,
judgment or decree shall be entered in such case or  proceeding  by a court or a
trustee,  custodian,  receiver or liquidator, to the effect that, no part of the
Trust Estate (except for the Owner  Participant's  beneficial  interest therein)
and no  right,  title or  interest  under the Trust  Indenture  Estate  shall be
included  in,  or  be  subject  to,  any  declaration  or  adjudication  of,  or
proceedings  with respect to, the  bankruptcy,  insolvency or liquidation of the
Owner Participant referred to in this Section 4.02(g).



     SECTION 4.03.  CERTAIN RIGHTS.

          The Mortgagee  shall give the Note Holders,  the Owner Trustee and the
Owner  Participant  prompt  written  notice of any Event of Default of which the
Mortgagee  has  Actual  Knowledge  and shall  give the Note  Holders,  the Owner
Trustee and the Owner Participant not less than ten Business Days' prior written
notice of the date (the "Enforcement Date") on or after which the Mortgagee may,
subject to the limitation set forth in Section 4.04(a),  commence and consummate
the exercise of any remedy or remedies  described in Section 4.04,  4.05 or 4.06
hereof;  provided,  however,  that in the event the Mortgagee shall have validly
terminated the Lease, the Mortgagee shall not sell or lease, or otherwise afford
the use of, the Aircraft or any portion  thereof to the Lessee or any  Affiliate
thereof.  Without limiting the generality of the foregoing,  the Mortgagee shall
give the  Owner  Trustee,  the  Owner  Participant  and the  Lessee at least ten
Business Days' prior written notice (which may be given concurrently with notice
of the  Enforcement  Date) of any  declaration  of the  Lease  to be in  default
pursuant to Sections 14 and 15 of the Lease or any  termination  of the Lease or
of the  exercise of any remedy or remedies  pursuant to Section 15 of the Lease.
If an Event of Default shall have occurred and be continuing,  the Owner Trustee
shall have the rights set forth below, any of which may be exercised directly by
the Owner Participant.

          If as a result of the  occurrence of an Event of Default in respect of
the nonpayment by Lessee of Basic Rent due under the Lease,  the Mortgagee shall
have  insufficient  funds to make any payment of Original Amount and interest on
any Equipment Note on the day it becomes due and payable, the Owner Trustee may,
but shall not be obligated to pay the Mortgagee prior to the  Enforcement  Date,
in the manner  provided in Section 2.04 hereof,  for  application  in accordance
with Section 3.01 hereof,  an amount equal to the portion of the Original Amount
and  interest  (including  interest,  if any,  on any  overdue  payments of such
portion of Original  Amount and interest)  then due and payable on the Equipment
Notes,  and,  unless the Owner Trustee has cured Events of Default in respect of
payments  of Basic Rent on each of the three  immediately  preceding  Basic Rent
payment  dates (or, for so long as any  Affiliate  of The Boeing  Company is the
Owner Participant,  six immediately  preceding Basic Rent payment dates), or the
Owner  Trustee has cured six  previous  Events of Default (or for so long as any
Affiliate of The Boeing Company is the Owner Participant,  eight previous Events
of Default) in respect of  payments  of Basic  Rent,  such  payment by the Owner
Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any
Event of Default which would  otherwise have arisen on account of the nonpayment
by Lessee of such  installment of Basic Rent (but not any other Default or Event
of Default which shall have occurred and be continuing).

          If any Event of Default  (other than in respect of the  nonpayment  of
Basic  Rent by the  Lessee)  which  can be cured  by the  payment  of money  has
occurred,  the Owner Trustee may, but shall not be obligated to, cure such Event
of Default by making such payment prior to the Enforcement  Date as is necessary
to accomplish the observance or performance of the defaulted covenant, condition
or agreement to the party entitled to the same.

          Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall  not,  as a result  of  exercising  the  right  to cure any such  Event of



Default,  obtain any Lien on any of the  Mortgaged  Property or any Rent payable
under the Lease for or on account of costs or expenses  incurred  in  connection
with the  exercise  of such  right,  nor shall  any  claim of the Owner  Trustee
against  Lessee or any other party for the  repayment  of such costs or expenses
impair the prior  right and  security  interest of the  Mortgagee  in and to the
Mortgaged Property.  Upon any payment by the Owner Trustee pursuant to the first
or second preceding  paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by
the Lessee on account of its being overdue and any Supplemental  Rent in respect
of  the  reimbursement  of  amounts  paid  by  Owner  Trustee  pursuant  to  the
immediately  preceding  paragraph  (but in either case shall have no rights as a
secured party  hereunder),  and thereafter,  the Owner Trustee shall be entitled
(so long as the  application  thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental  Rent, as the case
may be, and interest  thereon upon receipt  thereof by the Mortgagee;  PROVIDED,
HOWEVER,  that (i) if the Original  Amount and interest on the  Equipment  Notes
shall have  become due and  payable  pursuant to Section  4.04(b)  hereof,  such
subrogation shall,  until the Secured  Obligations shall have been paid in full,
be  subordinate  to the  rights of the  Mortgagee,  the Note  Holders  and other
holders of Secured Obligations in respect of such payment of overdue Basic Rent,
Supplemental  Rent and such  interest  and (ii) the Owner  Trustee  shall not be
entitled  to seek to recover any such  payment (or any payment in lieu  thereof)
except pursuant to the foregoing right of subrogation.

          Neither  the Owner  Trustee nor the Owner  Participant  shall have the
right to cure any Lease Event of Default or Lease Default except as specified in
this Section 4.03.

     SECTION 4.04.  REMEDIES.

          (a) If an Event of Default shall have  occurred and be continuing  and
so long as the same shall continue  unremedied,  then and in every such case the
Mortgagee  may,  subject  to the  second and third  paragraphs  of this  Section
4.04(a),  exercise any or all of the rights and powers and pursue any and all of
the remedies  pursuant to this Article IV and shall have and may exercise all of
the rights and  remedies of a secured  party under the Uniform  Commercial  Code
and, in the event such Event of Default is also a Lease  Event of  Default,  any
and all of the remedies pursuant to Section 15 of the Lease [and pursuant to any
Permitted Sublease assignment] and may take possession of all or any part of
the  properties  covered or intended to be covered by the Lien created hereby or
pursuant  hereto and may exclude the Owner  Participant,  the Owner  Trustee and
Lessee and all persons  claiming  under any of them wholly or partly  therefrom;
provided,  that  the  Mortgagee  shall  give the  Owner  Trustee  and the  Owner
Participant  twenty  days' prior  written  notice of its  intention  to sell the
Aircraft,  and provided,  further,  that in the event the  Mortgagee  shall have
validly  terminated  the  Lease,  the  Mortgagee  shall  not sell or  lease,  or


___________________

  Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



otherwise  afford the use of, the Aircraft or any portion  thereof to the Lessee
or any  Affiliate  thereof.  Unless an Event of Default  not  resulting  from or
relating to a Lease Event of Default has occurred and is  continuing,  the Owner
Participant may bid at the sale and become the purchaser.  Without  limiting any
of the  foregoing,  it is understood  and agreed that the Mortgagee may exercise
any right of sale of the Aircraft available to it, even though it shall not have
taken  possession of the Aircraft and shall not have  possession  thereof at the
time of such sale.

          Anything in this Trust Indenture to the contrary notwithstanding,  the
Mortgagee shall not be entitled to exercise any remedy  hereunder as a result of
an Event of  Default  which  arises  solely by  reason of one or more  events or
circumstances  which constitute a Lease Event of Default unless the Mortgagee as
security  assignee of the Owner Trustee shall have exercised or  concurrently be
exercising one or more of the dispossessory  remedies provided for in Section 15
of the  Lease  with  respect  to the  Aircraft;  PROVIDED,  HOWEVER,  that  such
requirement  to exercise one or more of such remedies  under the Lease shall not
apply in  circumstances  where the Mortgagee is, and has been,  for a continuous
period in excess of 60 days or such other  period as may be specified in Section
1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "New
Section 1110 Period"),  involuntarily  stayed or prohibited by applicable law or
court order from  exercising  such remedies under the Lease (a "Continuous  Stay
Period");  PROVIDED  FURTHER,  HOWEVER,  that the requirement to exercise one or
more of such remedies under the Lease shall  nonetheless be applicable  during a
Continuous  Stay Period  subsequent  to the  expiration  of the New Section 1110
Period to the  extent  that the  continuation  of such  Continuous  Stay  Period
subsequent to the  expiration of the New Section 1110 Period (A) results from an
agreement by the trustee or the  debtor-in-possession  in such proceeding during
the New Section 1110 Period with the  approval of the relevant  court to perform
the Lease in accordance  with Section  1110(a)(1)(A)  of the Bankruptcy Code and
continues to perform as required by Section  1110(a)(1)(A-B)  of the  Bankruptcy
Code or (B) is an  extension  of the New Section 1110 Period with the consent of
the Mortgagee  pursuant to Section 1110(b) of the Bankruptcy Code or (C) results
from the  Lessee's  assumption  during  the New  Section  1110  Period  with the
approval  of the  relevant  court of the Lease  pursuant  to Section  365 of the
Bankruptcy Code and Lessee's  continuous  performance of the Lease as so assumed
or (D) is the  consequence of the  Mortgagee's own failure to give any requisite
notice to any person. In the event that the applicability of Section 1110 of the
Bankruptcy  Code to the  Aircraft  is being  contested  by  Lessee  in  judicial
proceedings, both of the Mortgagee and the Owner Trustee shall have the right to
participate in such  proceedings;  provided that any such  participation  by the
Owner  Trustee shall not affect in any way any rights or remedy of the Mortgagee
hereunder.

          It is expressly  understood  and agreed that,  subject only to the two
preceding  paragraphs,  the  inability,  described  in such  paragraphs,  of the
Mortgagee  to exercise any right or remedy under the Lease shall in no event and
under no  circumstances  prevent the Mortgagee from exercising any or all of its
rights,  powers and  remedies  under this Trust  Indenture,  including,  without
limitation, this Article IV.

          (b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Mortgagee  may (and shall,  upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), subject to Section



4.03 hereof,  at any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment Notes to be due and
payable,  whereupon  the  unpaid  Original  Amount of all  Equipment  Notes then
outstanding,   together  with  accrued  but  unpaid  interest  thereon  (without
Make-Whole  Amount) and other amounts due thereunder,  shall immediately  become
due and payable without presentment, demand, protest or notice, all of which are
hereby waived; PROVIDED that if an Event of Default referred to in clause (g) of
Section 4.02 hereof shall have occurred,  then and in every such case the unpaid
Original Amount then outstanding,  together with accrued but unpaid interest and
all other amounts due thereunder  and hereunder  shall  immediately  and without
further  act become due and  payable  without  presentment,  demand,  protest or
notice, all of which are hereby waived;  PROVIDED FURTHER that in the event of a
reorganization  proceeding  involving the Lessee  instituted under Chapter 11 of
the  Bankruptcy  Code, if no other Lease Event of Default  (including  any Lease
Event of Default  set forth in Section  14.3 of the Lease) and no other Event of
Default  (other than the  failure to pay the  Original  Amount of the  Equipment
Notes which by such  declaration  shall have become  payable) exists at any time
after  the   consummation  of  such  proceeding,   such  declaration   shall  be
automatically  rescinded  without  any  further  action  on the part of any Note
Holder.

          This Section 4.04(b), however, is subject to the condition that, if at
any time after the Original  Amount of the Equipment  Notes shall have become so
due and payable,  and before any judgment or decree for the payment of the money
so due, or any thereof,  shall be entered, all overdue payments of interest upon
the  Equipment  Notes and all other amounts  payable  under the Equipment  Notes
(except the Original  Amount of the  Equipment  Notes which by such  declaration
shall have become  payable)  shall have been duly paid,  and every other Default
and Event of Default  with  respect to any  covenant or  provision of this Trust
Indenture  shall have been  cured,  then and in every  such case a  Majority  in
Interest  of Note  Holders  may (but  shall not be  obligated  to),  by  written
instrument  filed  with  the  Mortgagee,   rescind  and  annul  the  Mortgagee's
declaration (or such automatic  acceleration) and its consequences;  but no such
rescission  or  annulment  shall extend to or affect any  subsequent  Default or
Event of Default or impair any right consequent thereon.

          Any   acceleration   pursuant  to  this  Section   4.04(b)   shall  be
automatically  rescinded  and any  related  declaration  of an Event of  Default
annulled in the event that the Owner  Trustee  shall have cured,  in  accordance
with  Section  4.03  hereof,   the  Event  of  Default  that  resulted  in  such
acceleration or declaration.

          (c) The Note  Holders  shall be  entitled,  at any  sale  pursuant  to
Section 15 of the Lease or this  Section  4.04,  to credit  against any purchase
price bid at such sale by such holder all or any part of the unpaid  obligations
owing to such Note Holder and secured by the Lien of this Trust  Indenture (only
to the extent that such purchase  price would have been paid to such Note Holder
pursuant to Article III hereof if such purchase  price were paid in cash and the
foregoing provisions of this subsection (c) were not given effect).

          (d) In the event of any sale of the  Trust  Indenture  Estate,  or any
part  thereof,  pursuant to any  judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Original Amount of all Equipment  Notes then  outstanding,  together with



accrued  interest  thereon (without  Make-Whole  Amount),  and other amounts due
thereunder,  shall  immediately  become  due and  payable  without  presentment,
demand, protest or notice, all of which are hereby waived.

          (e)  Notwithstanding  anything  contained  herein, so long as the Pass
Through  Trustee under any Pass Through  Trust  Agreement (or its designee) is a
Note Holder,  the Mortgagee will not be authorized or empowered to acquire title
to any  Mortgaged  Property  or take any action  with  respect to any  Mortgaged
Property so acquired by it if such  acquisition  or action would cause any Trust
to fail to qualify as a "grantor trust" for federal income tax purposes.

     SECTION 4.05.  RETURN OF AIRCRAFT, ETC.

          (a) If an Event of Default shall have  occurred and be continuing  and
the Equipment  Notes have been  accelerated,  subject to Section 4.03 hereof and
unless the Owner Trustee or the Owner Participant shall have elected to purchase
the Equipment  Notes,  at the request of the Mortgagee,  the Owner Trustee shall
promptly  execute and deliver to the  Mortgagee  such  instruments  of title and
other  documents as the Mortgagee may deem  necessary or advisable to enable the
Mortgagee or an agent or  representative  designated by the  Mortgagee,  at such
time or times  and  place or  places as the  Mortgagee  may  specify,  to obtain
possession  of all or any part of the Mortgaged  Property  included in the Trust
Indenture Estate to which the Mortgagee shall at the time be entitled hereunder.
If the Owner  Trustee  shall for any reason  fail to execute  and  deliver  such
instruments and documents after such request by the Mortgagee, the Mortgagee may
(i)  obtain a  judgment  conferring  on the  Mortgagee  the  right to  immediate
possession  and  requiring  the  Owner  Trustee  to  execute  and  deliver  such
instruments  and documents to the Mortgagee,  to the entry of which judgment the
Owner Trustee hereby  specifically  consents to the fullest extent  permitted by
Law, and (ii) pursue all or part of such Mortgaged  Property  wherever it may be
found  and,  in the event  that a Lease  Event of Default  has  occurred  and is
continuing,  may enter any of the  premises of Lessee  wherever  such  Mortgaged
Property may be or be supposed to be and search for such Mortgaged  Property and
take possession of and remove such Mortgaged Property. All expenses of obtaining
such  judgment or of pursuing,  searching  for and taking such  property  shall,
until paid, be secured by the Lien of this Trust Indenture.

          (b) Upon every such taking of possession, the Mortgagee may, from time
to time, at the expense of the Mortgaged  Property,  make all such  expenditures
for  maintenance,   use,  operation,   storage,  insurance,   leasing,  control,
management,  disposition,  modifications  or alterations to and of the Mortgaged
Property, as it may deem proper. In each such case, the Mortgagee shall have the
right to maintain, use, operate, store, insure, lease, control,  manage, dispose
of, modify or alter the  Mortgaged  Property and to carry on the business and to
exercise all rights and powers of the Owner  Participant  and the Owner  Trustee
relating to the Mortgaged Property,  as the Mortgagee shall deem best, including
the  right  to  enter  into  any and all such  agreements  with  respect  to the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  modification  or alteration of the Mortgaged  Property or any part
thereof as the Mortgagee may determine,  and the Mortgagee  shall be entitled to



collect  and receive  directly  all tolls,  rents  (including  Rent),  revenues,
issues,  income,  products and profits of the Mortgaged  Property and every part
thereof, except Excluded Payments,  without prejudice,  however, to the right of
the Mortgagee under any provision of this Trust Indenture to collect and receive
all cash held by, or required to be  deposited  with,  the  Mortgagee  hereunder
other than Excluded  Payments.  Such tolls,  rents (including  Rent),  revenues,
issues, income, products and profits shall be applied to pay the expenses of the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  improvement,  modification or alteration of the Mortgaged Property
and of  conducting  the business  thereof,  and to make all  payments  which the
Mortgagee may be required or may elect to make, if any, for taxes,  assessments,
insurance  or other  proper  charges  upon the  Mortgaged  Property  or any part
thereof  (including  the  employment  of engineers and  accountants  to examine,
inspect and make reports upon the  properties and books and records of the Owner
Trustee),  and all  other  payments  which  the  Mortgagee  may be  required  or
authorized to make under any provision of this Trust Indenture,  as well as just
and  reasonable  compensation  for the  services  of the  Mortgagee,  and of all
persons properly engaged and employed by the Mortgagee with respect hereto.

     SECTION 4.06.  REMEDIES CUMULATIVE.

          Each  and  every  right,  power  and  remedy  given  to the  Mortgagee
specifically  or otherwise in this Trust Indenture 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 be  exercised  from  time to time and as often  and in such  order as may be
deemed  expedient by the  Mortgagee,  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 the  Mortgagee  in the  exercise of any right,
remedy or power or in the  pursuance  of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Owner Trustee or Lessee or to be an acquiescence therein.

     SECTION 4.07.  DISCONTINUANCE OF PROCEEDINGS.

          In case the Mortgagee  shall have instituted any proceeding to enforce
any right,  power or remedy under this Trust Indenture by foreclosure,  entry or
otherwise,  and such proceedings  shall have been  discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner  Trustee,  the Mortgagee and Lessee shall,  subject to
any determination in such proceedings, be restored to their former positions and
rights  hereunder  with  respect  to the  Mortgaged  Property,  and all  rights,
remedies and powers of the Owner Trustee, the Mortgagee or Lessee shall continue
as if no such proceedings had been instituted.

     SECTION 4.08.  WAIVER OF PAST DEFAULTS.

          Upon written  instruction from a Majority in Interest of Note Holders,
the Mortgagee shall waive any past Default  hereunder and its  consequences  and
upon any such waiver such Default  shall cease to exist and any Event of Default



arising  therefrom  shall be deemed to have been cured for every purpose of this
Trust  Indenture,  but no such waiver  shall extend to any  subsequent  or other
Default or impair any right consequent thereon; provided, that in the absence of
written  instructions  from all the Note Holders,  the Mortgagee shall not waive
any Default (i) in the payment of the Original  Amount,  Make-Whole  Amount,  if
any,  and  interest  and  other  amounts  due  under  any  Equipment  Note  then
outstanding,  or (ii) in respect of a covenant or provision hereof which,  under
Article IX hereof,  cannot be  modified  or amended  without the consent of each
Note Holder.

     SECTION 4.09.  APPOINTMENT OF RECEIVER.

          The  Mortgagee  shall,  as a  matter  of  right,  be  entitled  to the
appointment  of a receiver (who may be the Mortgagee or any successor or nominee
thereof)  for  all  or  any  part  of  the  Mortgaged  Property,   whether  such
receivership  be incidental to a proposed sale of the Mortgaged  Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such  appointment.
Any receiver  appointed for all or any part of the Mortgaged  Property  shall be
entitled to exercise all the rights and powers of the Mortgagee  with respect to
the Mortgaged Property.

     SECTION 4.10.  MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.

          Subject to the provisions of this Trust  Indenture,  the Owner Trustee
irrevocably  appoints the Mortgagee the true and lawful  attorney-in-fact of the
Owner Trustee  (which  appointment  is coupled with an interest) in its name and
stead and on its behalf,  for the purpose of effectuating any sale,  assignment,
transfer or delivery for the  enforcement  of the Lien of this Trust  Indenture,
whether  pursuant  to  foreclosure  or  power  of sale,  assignments  and  other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby  ratifying and confirming all that such attorney or any
substitute  shall  do by  virtue  hereof  in  accordance  with  applicable  law.
Nevertheless,  if so requested  by the  Mortgagee  or any  purchaser,  the Owner
Trustee  shall  ratify  and  confirm  any such  sale,  assignment,  transfer  or
delivery,  by executing and  delivering  to the Mortgagee or such  purchaser all
bills of sale, assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such request.

     SECTION 4.11.  RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT.

          Notwithstanding any other provision of this Trust Indenture, the right
of any Note Holder to receive payment of principal of, and premium,  if any, and
interest on an Equipment Note on or after the respective due dates  expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.



                                    ARTICLE V

                             DUTIES OF THE MORTGAGEE

     SECTION 5.01.  NOTICE OF EVENT OF DEFAULT.

          If the Mortgagee shall have Actual Knowledge of an Event of Default or
of a Default arising from a failure to pay Rent, the Mortgagee shall give prompt
written notice thereof to the Owner Trustee, the Owner Participant,  Lessee, and
each Note Holder.  Subject to the terms of Sections 2.13, 4.03, 4.04, 4.08, 5.02
and 5.03 hereof,  the Mortgagee  shall take such action,  or refrain from taking
such action,  with respect to such Event of Default or Default  (including  with
respect to the exercise of any rights or remedies  hereunder)  as the  Mortgagee
shall be  instructed  in writing  by a Majority  in  Interest  of Note  Holders.
Subject to the  provisions  of Section  5.03,  if the  Mortgagee  shall not have
received  instructions  as above provided within 20 days after mailing notice of
such  Event of  Default  to the Note  Holders,  the  Mortgagee  may,  subject to
instructions  thereafter  received pursuant to the preceding  provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain  from taking any action,  with  respect to such
Event  of  Default  or  Default  as it  shall  determine  advisable  in the best
interests of the Note  Holders;  PROVIDED,  HOWEVER,  that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge  on  the  part  of the  Mortgagee,  the  Owner  Trustee  or the  Owner
Participant,  the Mortgagee, the Owner Trustee or the Owner Participant,  as the
case may be,  shall not be deemed to have  knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee,  the failure of Lessee to pay any
installment  of Basic Rent within one  Business  Day after the same shall become
due,  if any  portion of such  installment  was then  required to be paid to the
Mortgagee,  which  failure  shall  constitute  knowledge  of a  Default)  unless
notified in writing by Lessee,  the Owner Trustee,  the Owner Participant or one
or more Note Holders.

     SECTION 5.02.  ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS.

          (a)  Subject to the terms of  Sections  2.13,  4.03,  4.04(a) and (b),
4.08, 5.01 and 5.03 hereof,  upon the written  instructions at any time and from
time to time of a Majority in Interest of Note  Holders,  the  Mortgagee  shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be  specified  in such  instructions:  (i) give such notice or  direction or
exercise  such right,  remedy or power  hereunder  as shall be specified in such
instructions;  (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation  Agreement,  the Purchase Agreement,
the  Purchase  Agreement  Assignment,  or any other part of the Trust  Indenture
Estate  as shall  be  specified  in such  instructions;  and  (iii)  approve  as
satisfactory to the Mortgagee all matters  required by the terms of the Lease to
be  satisfactory  to the Owner  Trustee,  it being  understood  that without the
written  instructions  of a Majority in Interest of Note Holders,  the Mortgagee
shall not approve any such matter as  satisfactory  to the Mortgagee;  provided,
that  anything  contained  in this  Trust  Indenture,  the  Lease  or the  other
Operative  Agreements to the contrary  notwithstanding,  but subject to the next
paragraph hereof:



               (1) the Owner Trustee or the Owner Participant,  may, without the
          consent of the Mortgagee, demand, collect, sue for or otherwise obtain
          all amounts  included in Excluded  Payments from Lessee and seek legal
          or  equitable  remedies to require  Lessee to maintain  the  insurance
          coverage  referred  to in Section 11 of the Lease [(or the  comparable
          provisions of any assigned Permitted Sublease)] provided, that the
          rights  referred  to in this clause (1) shall not be deemed to include
          the exercise of any  remedies  provided for in Section 15 of the Lease
          other than the right to proceed by appropriate court action, either at
          Law or in  equity,  to  enforce  payment  by  Lessee  of such  amounts
          included  in  Excluded  Payments  or  performance  by  Lessee  of such
          insurance covenant or to recover damages for the breach thereof or for
          specific  performance  of  any  other  term  of  the  Lease  [(or  the
          comparable provisions of any assigned Permitted Sublease)];

               (2) (A) the Mortgagee shall not, without the consent of the Owner
          Trustee, enter into, execute or deliver amendments or modifications in
          respect of any of the provisions of the Lease[, any assigned Permitted
          Sublease or any Permitted Sublease assignment],  and (B) unless a
          Mortgagee  Event shall have occurred and be continuing,  the Mortgagee
          shall not,  without the consent of the Owner  Trustee,  which  consent
          shall not be withheld if no right or interest of the Owner  Trustee or
          the Owner  Participant  shall be diminished or impaired  thereby,  (i)
          enter into,  execute or deliver  waivers or consents in respect of any
          of the  provisions  of the Lease,  or (ii)  approve  any  accountants,
          engineers,  appraisers or counsel as  satisfactory  to render services
          for or issue  opinions to the Owner Trustee  pursuant to the Operative
          Agreements,  provided  that  whether  or not any  Mortgagee  Event has
          occurred  and is  continuing,  the Owner  Trustee's  consent  shall be
          required  with respect to any waivers or consents in respect of any of
          the  provisions  of Section  5, 7 or 11 of the Lease,  or of any other
          Section of the Lease to the extent  such action  shall  affect (y) the
          amount or timing of, or the right to enforce  payment of any  Excluded
          Payment  or (z) the  amount or timing of any  amounts  payable  by the
          Lessee  under the Lease as  originally  executed  (or as  subsequently
          modified  with the  consent of the Owner  Trustee)  which,  absent the
          occurrence and continuance of an Event of Default hereunder,  would be
          distributable to the Owner Trustee under Article III hereof;

               (3) whether or not a Default or Event of Default  under the Trust
          Indenture  has occurred and is  continuing,  the Owner Trustee and the
          Owner Participant  shall have the right,  together with the Mortgagee,
          (i)  to  receive  from  Lessee  [or  any   Permitted   Sublessee]
          certificates  and other  documents  and  information  which  Lessee is


___________________

  Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.

  Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.

 Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.

 Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



          required  to  give or  furnish  to the  Owner  Trustee  or the  Lessor
          pursuant to any Operative  Agreement and (ii) to inspect in accordance
          with the Lease the Airframe and Engines and all Aircraft Documents;

               (4) whether or not a Default or Event of Default  under the Trust
          Indenture has occurred and is continuing, the Owner Trustee shall have
          the  right  to  adjust  upwards  Rent,   Stipulated  Loss  Values  and
          Termination  Values  as  provided  in  Section  3.2.1 of the  Lease or
          pursuant  to a  transfer  under  Section  10.1.1 of the  Participation
          Agreement;

               (5) so long as no Mortgagee Event has occurred and is continuing,
          the Owner  Trustee  shall  have the  right,  to the  exclusion  of the
          Mortgagee,   to  adjust  Basic  Rent,   Stipulated   Loss  Values  and
          Termination  Values  as  provided  in  Section  3.2 of the Lease or to
          adjust  downward any  installment or amount of Basic Rent,  Stipulated
          Loss Value or Termination  Value, as such installments and amounts are
          set forth in Schedules 2, 3 and 4, respectively,  to the Lease, to the
          extent of the portion of such installment or amount that would,  under
          Section  3.01,   3.02  or  3.03  hereof,   as  the  case  may  be,  be
          distributable to the Owner Trustee or the Owner Participant;

               (6) whether or not a Default or Event of Default  under the Trust
          Indenture  has  occurred  and is  continuing,  the Owner  Trustee may,
          without the consent of the  Mortgagee,  (i) solicit and make bids with
          respect to the Aircraft  under  Section 9 of the Lease in respect of a
          termination of the Lease by Lessee pursuant to Section 9 thereof, (ii)
          determine  Fair Market Sales Value and Fair Market  Rental Value under
          Section 17 of the Lease for all purposes except  following a Mortgagee
          Event pursuant to Section 15 of the Lease,  and (iii) make an election
          pursuant to and in accordance with the provisions of Sections  9.1(b),
          9.2 and 9.3 of the Lease; and

               (7) so long as no  Mortgagee  Event  shall have  occurred  and be
          continuing,  all other rights of the "Lessor"  under the Lease [or any
          assigned  Permitted  Sublease]  shall be  exercised  by the Owner
          Trustee  to  the  exclusion  of  the  Mortgagee   including,   without
          limitation,  the right to (i)  exercise  all  rights  with  respect to
          Lessee's  use  and  operation,  modification  or  maintenance  of  the
          Aircraft  and any Engine which the Lease  specifically  confers on the
          Lessor,  and (ii)  consent to and approve any  assignment  pursuant to
          Section 13 of the Lease;  PROVIDED  that the  foregoing  shall not (x)
          limit (A) any rights  separately  granted to the  Mortgagee  under the
          Operative  Agreements or (B) the right of the Mortgagee to receive any
          funds to be  delivered to the  "Lessor"  under the Lease  (except with
          respect to Excluded  Payments) and under the Purchase Agreement or (y)
          confer  upon the Owner  Trustee  the  right to  adversely  affect  the
          validity or enforceability of the lien of this Indenture.


___________________

 Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



          Notwithstanding  anything to the contrary  contained herein (including
this Section 5.02),  the Mortgagee shall have the right, to the exclusion of the
Owner  Trustee  and the Owner  Participant,  to (A)  declare  the Lease to be in
default  under  Section 15 thereof and (B)  subject  only to the  provisions  of
Sections 4.03, 4.04(a) and (b) and 2.14 hereof,  exercise the remedies set forth
in such Section 15 (other than in connection with Excluded Payments and provided
that  each  of  the  Owner  Trustee,   Owner  Participant  and  Mortgagee  shall
independently  retain the rights set forth in clause  (ii) of Section  15.1.5 of
the Lease) at any time that a Lease Event of Default  shall have occurred and be
continuing. Further and for the avoidance of doubt, and anything to the contrary
contained  herein  (including  this  Section  5.02),  in no event  may the Owner
Trustee  amend or otherwise  modify the  provisions  of Section  3.2.1(e) of the
Lease or of the final  sentence of the  definition of  Stipulated  Loss Value or
Termination  Value,  in any such case,  without the prior written consent of the
Mortgagee.

          The Mortgagee will execute and the Owner Trustee will file or cause to
be filed such  continuation  statements  with  respect to  financing  statements
relating to the  security  interest  created  hereunder  in the Trust  Indenture
Estate  as may be  specified  from  time to time in  written  instructions  of a
Majority in Interest of Note Holders (which instructions shall be accompanied by
the form of such  continuation  statement so to be filed).  The  Mortgagee  will
furnish to each Note Holder (and,  during the continuation of a Mortgagee Event,
to the Owner  Trustee and Owner  Participant),  promptly  upon receipt  thereof,
duplicates or copies of all reports, notices,  requests,  demands,  certificates
and other  instruments  furnished to the Mortgagee under the Lease or hereunder,
including,  without limitation,  a copy of any Termination Notice (as defined in
the Lease) and a copy of each  report or notice  received  pursuant to Section 9
and  Paragraph  E of Annex D of the Lease,  respectively  to the extent that the
same shall not have been furnished to such holder pursuant hereto or the Lease.

          (b)  If  any  Lease  Event  of  Default  shall  have  occurred  and be
continuing  and the Owner Trustee shall not have cured fully such Lease Event of
Default  under and in  accordance  with  Section  4.03  hereof,  on request of a
Majority in Interest of Note Holders,  the Mortgagee  shall declare the Lease to
be in  default  pursuant  to  Section 15 thereof  and  exercise  those  remedies
specified  by such Note  Holders.  The  Mortgagee  agrees to provide to the Note
Holders,  the Owner  Trustee and the Owner  Participant  concurrently  with such
declaration by the Mortgagee, notice of such declaration by the Mortgagee.

     SECTION 5.03.  INDEMNIFICATION.

          The Mortgagee shall not be required to take any action or refrain from
taking any action under  Section 5.01 (other than the first  sentence  thereof),
5.02 or Article IV hereof unless the Mortgagee  shall have been  indemnified  to
its reasonable  satisfaction  against any liability,  cost or expense (including
counsel  fees)  which may be  incurred  in  connection  therewith  pursuant to a
written  agreement with one or more Note Holders.  The Mortgagee  agrees that it
shall look solely to the Note  Holders  for the  satisfaction  of any  indemnity
(except  expenses for  foreclosure  of the type referred to in clause "First" of
Section 3.03 hereof) owed to it pursuant to this  Section  5.03.  The  Mortgagee
shall not be under any obligation to take any action under this Trust  Indenture
or any other Operative Agreement and nothing herein or therein shall require the



Mortgagee  to expend or risk its own  funds or  otherwise  incur the risk of any
financial  liability  in the  performance  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  written  indemnity  of any  Note  Holder  who is a QIB,  signed  by an
authorized  officer  thereof,  in favor of,  delivered to and in form reasonably
satisfactory  to the  Mortgagee  shall be accepted as  reasonable  assurance  of
adequate  indemnity).  The  Mortgagee  shall not be  required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof,  nor shall any other  provision  of this  Trust  Indenture  or any other
Operative  Agreement  be deemed to  impose a duty on the  Mortgagee  to take any
action,  if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.

     SECTION 5.04.  NO  DUTIES  EXCEPT  AS  SPECIFIED  IN  TRUST  INDENTURE   OR
                    INSTRUCTIONS.

          The Mortgagee  shall not have any duty or obligation to use,  operate,
store,  lease,  control,  manage,  sell,  dispose of or otherwise  deal with the
Aircraft or any other part of the Trust Indenture  Estate,  or to otherwise take
or refrain  from taking any action  under,  or in  connection  with,  this Trust
Indenture  or any  part of the  Trust  Indenture  Estate,  except  as  expressly
provided  by the terms of this  Trust  Indenture  or as  expressly  provided  in
written instructions from Note Holders as provided in this Trust Indenture;  and
no implied duties or obligations shall be read into this Trust Indenture against
the Mortgagee.  The Mortgagee 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 7.01 hereof),  promptly take such action
as may be necessary duly to discharge all liens and  encumbrances on any part of
the Trust Indenture Estate which result from claims against it in its individual
capacity not related to the ownership of the Aircraft or the  administration  of
the Trust  Indenture  Estate or any other  transaction  pursuant  to this  Trust
Indenture or any document included in the Trust Indenture Estate.

     SECTION 5.05.  NO   ACTION   EXCEPT   UNDER   LEASE,   TRUST   INDENTURE OR
                    INSTRUCTIONS.

          The Owner  Trustee  and the  Mortgagee  agree  that they will not use,
operate, store, lease, control,  manage, sell, dispose of or otherwise deal with
the  Aircraft  or any other  part of the Trust  Indenture  Estate  except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the  authority  conferred  upon,  the  Owner  Trustee  and the  Mortgagee
pursuant  to this Trust  Indenture  and in  accordance  with the  express  terms
hereof.

     SECTION 5.06.  REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.

          At any time an Airframe or Engine is to be replaced  under or pursuant
to Section 10 of the Lease by a Replacement  Airframe or Replacement  Engine, if
no Lease Event of Default is  continuing,  the Owner  Trustee  shall  direct the
Mortgagee to execute and deliver to the Owner Trustee an appropriate  instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this Trust
Indenture  and the  Mortgagee  shall  execute and  deliver  such  instrument  as



aforesaid,  but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease.

     SECTION 5.07.  INDENTURE SUPPLEMENTS FOR REPLACEMENTS.

          If a Replacement  Airframe or Replacement  Engine is being substituted
as contemplated by Section 10 of the Lease,  the Owner Trustee and the Mortgagee
agree for the benefit of the Note Holders and Lessee,  subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the  requirements  of Section  5.06  hereof  with
respect to such  Replacement  Airframe  or  Replacement  Engine,  to execute and
deliver a Lease Supplement and a Trust Indenture Supplement,  as applicable,  as
contemplated by Section 10 of the Lease.

     SECTION 5.08.  EFFECT OF REPLACEMENT.

          In the event of the  substitution  of an Airframe or of a  Replacement
Engine  pursuant  to  Section  10 of the  Lease,  all  provisions  of this Trust
Indenture  relating to the Airframe or Engine or Engines being replaced shall be
applicable to such  Replacement  Airframe or Replacement  Engine or Engines with
the same force and effect as if such Replacement  Airframe or Replacement Engine
or Engines were the same  airframe or engine or engines,  as the case may be, as
the Airframe or Engine or Engines being  replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced.

     SECTION 5.09.  INVESTMENT OF AMOUNTS HELD BY MORTGAGEE.

          Any amounts held by the  Mortgagee as assignee of the Owner  Trustee's
rights to hold monies for security pursuant to Section 4.4 of the Lease shall be
held in accordance with the terms of such Section and the Mortgagee agrees,  for
the  benefit of Lessee,  to perform the duties of the Owner  Trustee  under such
Section.  Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any  other  Operative  Agreement  providing  for  amounts  to be  held by the
Mortgagee which are not distributed  pursuant to the other provisions of Article
III  hereof  shall  be  invested  by the  Mortgagee  from  time  to time in Cash
Equivalents  as  directed  by the Owner  Trustee  so long as the  Mortgagee  may
acquire  the same  using  its best  efforts.  All Cash  Equivalents  held by the
Mortgagee pursuant to Section 4.4 of the Lease or this Section 5.09 shall either
be (a) registered in the name of, payable to the order of, or specially indorsed
to,  the  Mortgagee,  or (b)  held  in an  Eligible  Account.  Unless  otherwise
expressly  provided in this Trust Indenture,  any income realized as a result of
any such  investment,  net of the  Mortgagee's  reasonable  fees and expenses in
making such  investment,  shall be held and applied by the Mortgagee in the same
manner as the  principal  amount of such  investment  is to be  applied  and any
losses, net of earnings and such reasonable fees and expenses,  shall be charged
against the principal amount invested. The Mortgagee shall not be liable for any
loss resulting  from any  investment  required to be made by it under this Trust
Indenture  other than by reason of its willful  misconduct or gross  negligence,
and any such  investment  may be sold  (without  regard to its  maturity) by the
Mortgagee  without  instructions  whenever  such  sale  is  necessary  to make a
distribution required by this Trust Indenture.



                                   ARTICLE VI

                       THE OWNER TRUSTEE AND THE MORTGAGEE

     SECTION 6.01.  ACCEPTANCE OF TRUSTS AND DUTIES.

          The Mortgagee  accepts the duties hereby  created and applicable to it
and agrees to perform  the same but only upon the terms of this Trust  Indenture
and agrees to receive and  disburse  all monies  constituting  part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee,  in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable  or  accountable  under any  circumstances,  except (i) for their own
willful  misconduct or gross  negligence  (other than for the handling of funds,
for  which  the  standard  of  accountability  shall be  willful  misconduct  or
negligence),  (ii) in the  case of the  Mortgagee,  as  provided  in the  fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for  liabilities  that may result,  in the case of the Owner  Trustee,
from the  inaccuracy  of any  representation  or warranty  of the Owner  Trustee
expressly made in its individual  capacity in the Participation  Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note  Holder in  connection  with the  transactions  contemplated  by the
Operative  Agreements)  or,  in the  case of the  Mortgagee  (in its  individual
capacity),  from  the  inaccuracy  of  any  representation  or  warranty  of the
Mortgagee  (in  its  individual  capacity)  in the  Participation  Agreement  or
expressly made  hereunder.  Neither the Owner Trustee nor the Mortgagee shall be
liable for any action or inaction of the other or of the Owner Participant.

     SECTION 6.02.  ABSENCE OF DUTIES.

          In the  case of the  Mortgagee,  except  in  accordance  with  written
instructions  furnished  pursuant to Section 5.01 or 5.02 hereof,  and except as
provided in, and without  limiting the  generality of,  Sections 5.03,  5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b)  hereof,  the Owner Trustee and the Mortgagee  shall have no duty (i) to
see to any  registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other  document,  or to see to the maintenance
of any such registration,  recording or filing,  (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance,  whether or not Lessee
shall  be in  default  with  respect  thereto,  (iii) to see to the  payment  or
discharge of any lien or  encumbrance  of any kind against any part of the Trust
Estate or the Trust Indenture  Estate,  (iv) to confirm,  verify or inquire into
the failure to receive any financial  statements from Lessee,  or (v) to inspect
the  Aircraft  at any time or  ascertain  or  inquire as to the  performance  or
observance of any of Lessee's covenants under the Lease [or any of the Permitted
Sublessee's  covenants under any assigned Permitted  Sublease] with respect


___________________

 Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



to the Aircraft. The Owner Participant shall not have any duty or responsibility
hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above;  provided,  that nothing contained in this sentence shall
limit any obligations of the Owner Participant under the Participation Agreement
or relieve the Owner Participant from any restriction under Section 4.03 hereof.

     SECTION 6.03.  NO   REPRESENTATIONS   OR  WARRANTIES  AS   TO  AIRCRAFT  OR
                    DOCUMENTS.

          NEITHER THE  MORTGAGEE  IN ITS  INDIVIDUAL  OR TRUST  CAPACITY NOR THE
OWNER  TRUSTEE IN ITS  INDIVIDUAL  CAPACITY OR AS OWNER  TRUSTEE UNDER THE TRUST
AGREEMENT,  MAKES OR SHALL BE  DEEMED  TO HAVE  MADE AND EACH  HEREBY  EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  AS TO THE TITLE,
AIRWORTHINESS,   VALUE,  COMPLIANCE  WITH  SPECIFICATIONS,   CONDITION,  DESIGN,
QUALITY,  DURABILITY,  OPERATION,  MERCHANTABILITY  OR  FITNESS  FOR  USE  FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER  DEFECTS,  WHETHER  OR  NOT  DISCOVERABLE,   AS  TO  THE  ABSENCE  OF  ANY
INFRINGEMENT  OF ANY  PATENT,  TRADEMARK  OR  COPYRIGHT,  AS TO THE  ABSENCE  OF
OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT OR ANY OTHER  REPRESENTATION  OR
WARRANTY  WHATSOEVER,  except  the  Owner  Trustee  in its  individual  capacity
warrants  that (i) the Owner  Trustee has received on the Delivery Date whatever
title was  conveyed  to it,  and (ii) the  Aircraft  is free and clear of Lessor
Liens attributable to the Owner Trustee in its individual capacity.  Neither the
Owner Trustee,  in its  individual  capacity or as Owner Trustee under the Trust
Agreement,  nor the Mortgagee,  in its individual or trust capacities,  makes or
shall be deemed to have made any  representation or warranty as to the validity,
legality or  enforceability  of this Trust Indenture,  the Trust Agreement,  the
Participation  Agreement, the Equipment Notes, the Lease, the Purchase Agreement
or the Purchase  Agreement  Assignment  with the Consent and  Agreement  and the
Engine Consent and Agreement  attached thereto,  or as to the correctness of any
statement  contained  in  any  thereof,   except  for  the  representations  and
warranties  of the  Owner  Trustee  made  in its  individual  capacity  and  the
representations and warranties of the Mortgagee in its individual  capacity,  in
each  case  expressly  made  in this  Trust  Indenture  or in the  Participation
Agreement.  The Loan  Participants,  the Note Holders and the Owner  Participant
make no representation or warranty hereunder whatsoever.

     SECTION 6.04.  NO SEGREGATION OF MONIES; NO INTEREST.

          Any  monies  paid to or  retained  by the  Mortgagee  pursuant  to any
provision  hereof and not then required to be  distributed  to the Note Holders,
Lessee or the Owner  Trustee  as  provided  in Article  III  hereof  need not be
segregated in any manner except to the extent  required by Law or Section 4.4 of
the Lease and Section  5.09  hereof,  and may be  deposited  under such  general
conditions as may be  prescribed  by Law, and the Mortgagee  shall not be liable
for any interest thereon (except that the Mortgagee shall invest all monies held
as directed by Lessee so long as no Lease Event of Default or Lease  Default has



occurred and is continuing (or in the absence of such direction, by the Majority
In Interest of Note Holders) in Cash Equivalents;  PROVIDED,  HOWEVER,  that any
payments received, or applied hereunder, by the Mortgagee shall be accounted for
by the  Mortgagee so that any portion  thereof paid or applied  pursuant  hereto
shall be identifiable as to the source thereof.

     SECTION 6.05.  RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.

          Neither the Owner Trustee nor the Mortgagee  shall incur any 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.  The  Owner  Trustee  and  the  Mortgagee  may  accept  a copy of a
resolution  of the Board of Directors (or  Executive  Committee  thereof) of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary  thereof as duly adopted and in full force and effect,  as  conclusive
evidence that such resolution has been duly adopted and that the same is in full
force and effect.  As to the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date,  the Owner Trustee may for all purposes  hereof rely
on a  certificate  signed by any Vice  President or other  authorized  corporate
trust officer of the Mortgagee.  As to any fact or matter relating to Lessee the
manner of which is not specifically  described herein, the Owner Trustee and the
Mortgagee may for all purposes  hereof rely on a  certificate,  signed by a duly
authorized  officer of Lessee,  as to such fact or matter,  and such certificate
shall  constitute full protection to the Owner Trustee and the Mortgagee for any
action  taken or omitted to be taken by them in good faith in reliance  thereon.
The Mortgagee shall assume,  and shall be fully protected in assuming,  that the
Owner  Trustee is  authorized  by the Trust  Agreement  to enter into this Trust
Indenture  and to take all action to be taken by it pursuant  to the  provisions
hereof,  and shall not inquire into the  authorization of the Owner Trustee with
respect  thereto.  In the  administration  of the  trusts  hereunder,  the Owner
Trustee and the  Mortgagee  each may execute any of the trusts or powers  hereof
and  perform  its powers  and duties  hereunder  directly  or through  agents or
attorneys  and may, at the expense of the Trust  Indenture  Estate,  advise with
counsel,  accountants  and other skilled  persons to be selected and retained by
it, and the Owner  Trustee and the  Mortgagee  shall not be liable for  anything
done,  suffered or omitted in good faith by them in accordance  with the written
advice or written  opinion of any such  counsel,  accountants  or other  skilled
persons.

     SECTION 6.06.  CAPACITY IN WHICH ACTING.

          The Owner  Trustee acts  hereunder  solely as trustee as herein and in
the Trust  Agreement  provided,  and not in its individual  capacity,  except as
otherwise  expressly  provided  herein,  in  the  Trust  Agreement  and  in  the
Participation Agreement.

     SECTION 6.07.  COMPENSATION.

          The Mortgagee shall be entitled to reasonable compensation,  including
expenses  and  disbursements  (including  the  reasonable  fees and  expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder,  have a priority claim on the Trust Indenture Estate
for the payment of such compensation, to the extent that such compensation shall
not be paid by Lessee,  and shall have the right,  on and subsequent to an Event



of Default  hereunder,  to use or apply any monies held by it  hereunder  in the
Trust Indenture Estate toward such payments.  The Mortgagee agrees that it shall
have no right against the Loan Participants, the Note Holders, the Owner Trustee
or the Owner Participant for any fee as compensation for its services as trustee
under this Trust Indenture.

     SECTION 6.08.  INSTRUCTIONS FROM NOTE HOLDERS.

          In the administration of the trusts created  hereunder,  the Mortgagee
shall have the right to seek  instructions  from a Majority  in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions.  The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 6.08.

                                   ARTICLE VII

                  INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

     SECTION 7.01.  SCOPE OF INDEMNIFICATION.

          The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee,  hereby  agrees,  whether or not any of the  transactions  contemplated
hereby  shall be  consummated,  except as to matters  covered  by any  indemnity
furnished  as  contemplated  by Section  5.03  hereof  and  except as  otherwise
provided in Section 2.03 or 2.04(b)  hereof,  to assume  liability for, and does
hereby  indemnify,  protect,  save  and  keep  harmless  the  Mortgagee  (in its
individual  and trust  capacities),  and its  successors,  assigns,  agents  and
servants,  from  and  against  any and  all  liabilities,  obligations,  losses,
damages,  penalties,  taxes  (excluding any taxes payable by the Mortgagee on or
measured by any  compensation  received by the Mortgagee for its services  under
this Trust Indenture),  claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on,  incurred by or asserted  against the  Mortgagee  (whether or not
also  indemnified  against by any other person under any other  document) in any
way relating to or arising out of this Trust  Indenture  or any other  Operative
Agreement to which it is a party or the  enforcement  of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture,  purchase,
acceptance,  non-acceptance,  rejection, ownership, delivery, lease, possession,
use, operation,  condition, sale, return or other disposition of the Aircraft or
any Engine (including,  without limitation,  latent or other defects, whether or
not   discoverable,   and  any  claim  for  patent,   trademark   or   copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Mortgagee  hereunder
except only in the case of willful misconduct or gross negligence (or negligence
in the case of handling funds) of the Mortgagee in the performance of its duties
hereunder or resulting from the inaccuracy of any  representation or warranty of
the Mortgagee (in its individual  capacity)  referred to in Section 6.03 hereof,
or as provided in Section  6.01 hereof or in the last  sentence of Section  5.04
hereof,  or as  otherwise  excluded  by the terms of  Section  9.1 or 9.3 of the
Participation  Agreement  from  Lessee's  indemnities  under such  Sections.  In



addition, if necessary,  the Mortgagee shall be entitled to indemnification from
the Trust Indenture Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement  indemnified against pursuant
to this  Section  7.01 to the extent  not  reimbursed  by Lessee or others,  but
without releasing any of them from their respective agreements of reimbursement;
and to  secure  the same the  Mortgagee  shall  have a prior  Lien on the  Trust
Indenture  Estate.  Without  limiting the foregoing,  the Mortgagee agrees that,
prior to  seeking  indemnification  from the  Trust  Indenture  Estate,  it will
demand,  and  diligently  pursue in good faith (but with no duty to exhaust  all
legal remedies therefor), indemnification available to the Mortgagee from Lessee
under the Lease or the Participation Agreement.

                                  ARTICLE VIII

                         SUCCESSOR AND SEPARATE TRUSTEES

     SECTION 8.01.  NOTICE OF SUCCESSOR OWNER TRUSTEE.

          In the case of any  appointment  of a successor  to the Owner  Trustee
pursuant  to  the  Trust  Agreement  including  upon  any  merger,   conversion,
consolidation  or sale of  substantially  all of the corporate trust business of
the Owner Trustee pursuant to the Trust  Agreement,  the successor Owner Trustee
shall give prompt written  notice thereof to the Mortgagee,  Lessee and the Note
Holders.

     SECTION 8.02.  RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR.

          (a) The  Mortgagee  or any  successor  thereto  may resign at any time
without  cause by giving at least 30 days' prior written  notice to Lessee,  the
Owner Trustee,  the Owner Participant and each Note Holder,  such resignation to
be effective upon the acceptance of the trusteeship by a successor Mortgagee. In
addition,  a Majority in Interest of Note Holders may at any time (but only with
the consent of the Lessee,  which  consent shall not be  unreasonably  withheld,
except that such  consent  shall not be necessary if a Lease Event of Default is
continuing)  remove the  Mortgagee  without  cause by an  instrument  in writing
delivered to the Owner Trustee, Lessee, the Owner Participant and the Mortgagee,
and the Mortgagee  shall  promptly  notify each Note Holder  thereof in writing,
such  removal  to be  effective  upon the  acceptance  of the  trusteeship  by a
successor Mortgagee. In the case of the resignation or removal of the Mortgagee,
a Majority in Interest of Note  Holders may appoint a successor  Mortgagee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default  shall have  occurred  and be  continuing,  shall be subject to Lessee's
reasonable  approval.  If a successor  Mortgagee  shall not have been  appointed
within 30 days after such notice of resignation or removal,  the Mortgagee,  the
Owner Trustee,  the Owner  Participant or any Note Holder may apply to any court
of  competent  jurisdiction  to appoint a successor  Mortgagee to act until such
time, if any, as a successor  shall have been appointed as above  provided.  The
successor  Mortgagee so appointed  by such court shall  immediately  and without
further  act be  superseded  by  any  successor  Mortgagee  appointed  as  above
provided.



          (b) Any  successor  Mortgagee,  however  appointed,  shall execute and
deliver  to the Owner  Trustee,  the  predecessor  Mortgagee  and the  Lessee an
instrument  accepting  such  appointment  and  assuming the  obligations  of the
Mortgagee under the  Participation  Agreement arising from and after the time of
such appointment,  and thereupon such successor Mortgagee,  without further act,
shall become vested with all the estates, properties,  rights, powers and duties
of the predecessor  Mortgagee hereunder in the trust hereunder  applicable to it
with like effect as if originally named the Mortgagee  herein;  but nevertheless
upon the written request of such successor Mortgagee, such predecessor Mortgagee
shall  execute  and  deliver  an  instrument   transferring  to  such  successor
Mortgagee,  upon the trusts herein expressed  applicable to it, all the estates,
properties,   rights  and  powers  of  such  predecessor  Mortgagee,   and  such
predecessor Mortgagee shall duly assign, transfer,  deliver and pay over to such
successor  Mortgagee all monies or other property then held by such  predecessor
Mortgagee hereunder.

          (c) Any successor  Mortgagee,  however  appointed,  shall be a bank or
trust  company  having  its  principal  place  of  business  in the  Borough  of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington,  Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative  Agreements are guaranteed by an affiliated entity having) a
combined  capital  and  surplus  of at least  $100,000,000,  if there be such an
institution  willing,  able and legally  qualified  to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.

          (d)  Any  corporation  into  which  the  Mortgagee  may be  merged  or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Mortgagee shall be a
party,  or any  corporation  to  which  substantially  all the  corporate  trust
business of the Mortgagee  may be  transferred,  shall,  subject to the terms of
paragraph (c) of this Section  8.02, be a successor  Mortgagee and the Mortgagee
under this Trust Indenture without further act.

     SECTION 8.03.  APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.

          (a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any  jurisdiction in which all or any part of the
Trust Indenture  Estate shall be situated or to make any claim or bring any suit
with respect to or in connection  with the Trust  Indenture  Estate,  this Trust
Indenture,  any other  Indenture  Agreement,  the Equipment  Notes or any of the
transactions  contemplated by the  Participation  Agreement,  (ii) the Mortgagee
shall be  advised  by  counsel  satisfactory  to it that it is so  necessary  or
prudent in the interests of the Note Holders (and the Mortgagee  shall so advise
the Owner Trustee and Lessee),  or (iii) the Mortgagee shall have been requested
to do so by a Majority in Interest of Note Holders,  then in any such case,  the
Mortgagee  and, upon the written  request of the  Mortgagee,  the Owner Trustee,
shall  execute  and  deliver  an  indenture  supplemental  hereto and such other
instruments  as may from time to time be necessary  or  advisable  either (1) to
constitute one or more bank or trust  companies or one or more persons  approved
by the Mortgagee, either to act jointly with the Mortgagee as additional trustee
or  trustees  of all or any part of the  Trust  Indenture  Estate,  or to act as
separate  trustee or trustees of all or any part of the Trust Indenture  Estate,
in each case with such rights,  powers,  duties and obligations  consistent with



this Trust Indenture as may be provided in such supplemental  indenture or other
instruments  as the Mortgagee or a Majority in Interest of Note Holders may deem
necessary or advisable,  or (2) to clarify,  add to or subtract from the rights,
powers,  duties and  obligations  theretofore  granted  any such  additional  or
separate  trustee,  subject  in each case to the  remaining  provisions  of this
Section 8.03. If the Owner Trustee shall not have taken any action  requested of
it under this Section  8.03(a) that is permitted or required by its terms within
15 days after the receipt of a written  request from the  Mortgagee so to do, or
if an Event of Default shall have occurred and be continuing,  the Mortgagee may
act  under  the  foregoing  provisions  of  this  Section  8.03(a)  without  the
concurrence  of the Owner  Trustee,  and the Owner  Trustee  hereby  irrevocably
appoints  (which  appointment  is coupled with an interest) the  Mortgagee,  its
agent and  attorney-in-fact to act for it under the foregoing provisions of this
Section  8.03(a) in either of such  contingencies.  The  Mortgagee  may, in such
capacity,  execute,  deliver and perform any such supplemental indenture, or any
such  instrument,  as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction from
the  rights,  powers,  duties or  obligations  theretofore  granted  to any such
additional  or separate  trustee.  In case any  additional  or separate  trustee
appointed  under this Section  8.03(a)  shall die,  become  incapable of acting,
resign or be moved, all the assets, property, rights, powers, trusts, duties and
obligations of such additional or separate trustee shall revert to the Mortgagee
until a successor  additional  or separate  trustee is  appointed as provided in
this Section 8.03(a).

          (b) No  additional  or separate  trustee shall be entitled to exercise
any of the rights,  powers,  duties and obligations conferred upon the Mortgagee
in  respect  of the  custody,  investment  and  payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Trust Indenture Estate or otherwise payable under any Operative Agreement to
the  Mortgagee  shall be promptly  paid over by it to the  Mortgagee.  All other
rights,  powers, duties and obligations conferred or imposed upon any additional
or separate  trustee  shall be exercised or performed by the  Mortgagee and such
additional or separate  trustee jointly except to the extent that applicable Law
of any  jurisdiction in which any particular act is to be performed  renders the
Mortgagee  incompetent  or  unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Trust Indenture Estate in any such jurisdiction)  shall be exercised
and performed by such additional or separate trustee.  No additional or separate
trustee shall take any  discretionary  action except on the  instructions of the
Mortgagee or a Majority in Interest of Note Holders.  No trustee hereunder shall
be  personally  liable  by reason of any act or  omission  of any other  trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting,  and the Mortgagee's own actions in acting
with, any additional or separate  trustee.  Each additional or separate  trustee
appointed  pursuant to this Section 8.03 shall be subject to, and shall have the
benefit of Articles IV through  VIII and Article X hereof  insofar as they apply
to the  Mortgagee.  The powers of any additional or separate  trustee  appointed
pursuant  to this  Section  8.03  shall  not in any  case  exceed  those  of the
Mortgagee hereunder.

          (c) If at any time the Trustee shall deem it no longer necessary or in
order to conform to any such Law or take any such  action or shall be advised by
such  counsel  that it is no longer so necessary or desirable in the interest of
the Note Holders,  or in the event that the Mortgagee  shall have been requested
to do so in writing by a Majority  in Interest of Note  Holders,  the  Mortgagee



and, upon the written request of the Mortgagee, the Owner Trustee, shall execute
and  deliver an  indenture  supplemental  hereto and all other  instruments  and
agreements necessary or proper to remove any additional or separate trustee. The
Mortgagee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.

                                   ARTICLE IX

               SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
                               AND OTHER DOCUMENTS

     SECTION 9.01.  INSTRUCTIONS OF MAJORITY; LIMITATIONS.

          (a) Except as  provided  in Section  5.02  hereof,  the Owner  Trustee
agrees it shall not enter into any amendment of or supplement to the Lease,  the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Engine Consent and  Agreement,  or execute and deliver any written waiver
or  modification  of, or consent  under,  the terms of the Lease,  the  Purchase
Agreement,  the Purchase Agreement Assignment,  the Consent and Agreement or the
Engine  Consent  and  Agreement,  unless  such  supplement,  amendment,  waiver,
modification  or consent is  consented  to in  writing  by the  Mortgagee  and a
Majority in Interest of Note Holders.  Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of any of the Note Holders
or the Mortgagee, (i) any Excluded Payments payable to the Owner Participant may
be modified,  amended, changed or waived in such manner as shall be agreed to by
the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into  amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under
Section 15 of the Lease) or Section 17 of the Lease so long as such  amendments,
modifications and changes do not and would not affect the time of, or reduce the
amount of, Rent payments  (except to the extent  expressly  permitted by Section
5.02  hereof)  until  after the payment in full of all  Secured  Obligations  or
otherwise adversely affect the Note Holders.

          (b) Without  limiting  the  provisions  of Section  9.01  hereof,  the
Mortgagee  agrees  with  the  Note  Holders  that it shall  not  enter  into any
amendment,  waiver or  modification  of,  supplement  or  consent  to this Trust
Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement, the Engine Consent and Agreement or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement,  amendment,  waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders,  but upon the written request
of a Majority in Interest of Note  Holders,  the Trustee shall from time to time
enter into any such  supplement  or  amendment,  or execute and deliver any such
waiver,  modification or consent, as may be specified in such request and as may
be (in the case of any  such  amendment,  supplement  or  modification),  to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate,  the Airframe  Manufacturer  or the Engine  Manufacturer;
PROVIDED,  HOWEVER,  that,  without  the  consent of each  holder of an affected
Equipment Note then outstanding and of the Liquidity Provider, no such amendment



of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and
Agreement or the Participation  Agreement or waiver or modification of the terms
of, or consent  under,  any thereof,  shall (i) modify any of the  provisions of
this Section 9.01, or of Article II or III or Section  4.02,  4.04(c),  4.04(d),
5.02 or 5.06 hereof,  Section 13.3, 14 (except to add an Event of Default) or 16
of the Lease,  Section 15.1 of the Participation  Agreement,  the definitions of
"Event of  Default,"  "Default,"  "Lease  Event of  Default,"  "Lease  Default,"
"Majority in Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or
the percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount,  or change the time of payment or method of  calculation
of any amount, of Original Amount,  Make-Whole  Amount, if any, or interest with
respect to any Equipment  Note, or alter or modify the provisions of Article III
hereof with respect to the order of priorities in which distribution  thereunder
shall be made as among the Note  Holders,  the Owner  Trustee and Lessee,  (iii)
reduce,  modify or amend any  indemnities  in favor of the  Owner  Trustee,  the
Mortgagee or the Note Holders  (except that the Owner Trustee (in its individual
capacity)  or the  Mortgagee,  as the case may be, may  consent to any waiver or
reduction of an indemnity payable to it) or the Pass Through  Indemnitees,  (iv)
consent to any change in the Trust  Indenture  or the Lease which  would  permit
redemption of Equipment  Notes earlier than permitted under Section 2.10 or 2.11
hereof  or the  purchase  or  exchange  of the  Equipment  Notes  other  than as
permitted by Section 2.13 hereof, (v) except as contemplated by the Lease or the
Participation  Agreement,  reduce  the  amount or extend  the time of payment of
Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each
case as set forth in the Lease,  or  modify,  amend or  supplement  the Lease or
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations  in respect of the payment of Basic Rent,  Stipulated  Loss Value or
Termination  Value for the Aircraft or altering  the absolute and  unconditional
character  of the  obligations  of Lessee to pay Rent as set forth in Sections 3
and 16 of the  Lease  or (vi)  permit  the  creation  of any  Lien on the  Trust
Indenture  Estate or any part thereof other than Permitted  Liens or deprive any
Note  Holder of the  benefit  of the Lien of this Trust  Indenture  on the Trust
Indenture Estate, except as provided in connection with the exercise of remedies
under Article IV hereof.

          (c) At any time  after  the date  hereof,  the Owner  Trustee  and the
Mortgagee may enter into one or more agreements  supplemental hereto without the
consent of any Note Holder for any of the  following  purposes:  (i) (a) to cure
any defect or  inconsistency  herein or in the Equipment  Notes,  or to make any
change not  inconsistent  with the provisions  hereof (PROVIDED that such change
does not  adversely  affect the  interests  of any Note  Holder in its  capacity
solely as Note Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the  succession  of another party as the Owner Trustee in accordance
with the terms of the Trust  Agreement  or to evidence the  succession  of a new
trustee hereunder  pursuant hereto,  the removal of the trustee hereunder or the
appointment  of any  co-trustee  or  co-trustees  or any separate or  additional
trustee or trustees; (iii) to convey,  transfer,  assign, mortgage or pledge any
property to or with the Mortgagee or to make any other  provisions  with respect
to matters or  questions  arising  hereunder  so long as such  action  shall not
adversely  affect the  interests of the Note  Holders in its capacity  solely as
Note Holder;  (iv) to correct or amplify the  description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the



Lien of this  Trust  Indenture,  the  Airframe  or  Engines  or any  Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee
for the benefit of the Note Holders,  or to surrender any rights or power herein
conferred upon the Owner Trustee,  the Owner Participant or the Lessee;  (vi) to
add to the rights of the Note  Holders;  and (vii) to  include on the  Equipment
Notes any legend as may be required by Law.

     SECTION 9.02.  TRUSTEES PROTECTED.

          If, in the opinion of the  institution  acting as Owner  Trustee under
the Trust  Agreement  or the  institution  acting as  Mortgagee  hereunder,  any
document  required to be  executed  by it pursuant to the terms of Section  9.01
hereof  affects any right,  duty,  immunity or  indemnity  with  respect to such
institution under this Trust Indenture or the Lease, such institution may in its
discretion decline to execute such document.

     SECTION 9.03.  DOCUMENTS MAILED TO NOTE HOLDERS.

          Promptly  after the execution by the Owner Trustee or the Mortgagee of
any document  entered into pursuant to Section 9.01 hereof,  the Mortgagee shall
mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each
Note Holder at its address last set forth in the Equipment  Note  Register,  but
the failure of the  Mortgagee to mail such copies shall not impair or affect the
validity of such document.

     SECTION 9.04.  NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST INDENTURE
                    SUPPLEMENT.

          No written  request or consent of the  Mortgagee,  the Note Holders or
the Owner  Participant  pursuant  to Section  9.01  hereof  shall be required to
enable  the  Owner  Trustee  to enter  into any  Lease  Supplement  specifically
required by the terms of the Lease or to execute  and deliver a Trust  Indenture
Supplement specifically required by the terms hereof.

                                    ARTICLE X

                                  MISCELLANEOUS

     SECTION 10.01. TERMINATION OF TRUST INDENTURE.

          Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole  Amount,  if any, and interest on and all other amounts due under all
Equipment  Notes  and  provided  that  there  shall  then  be no  other  Secured
Obligations due to the Note Holders,  the Mortgagee and other holders of Secured
Obligations  hereunder  or  under  the  Participation  Agreement  or  any  other
Operative Agreement, the Owner Trustee shall direct the Mortgagee to execute and
deliver  to or as  directed  in  writing  by the Owner  Trustee  an  appropriate
instrument  releasing  the  Aircraft and the Engines from the Lien of this Trust
Indenture  and  releasing  the  Lease,  the  Purchase  Agreement,  the  Purchase
Agreement  Assignment  with the Consent and Agreement and the Engine Consent and
Agreement  attached thereto from the assignment and pledge thereof hereunder and
the Mortgagee  shall  execute and deliver such  instrument as aforesaid and give



written notice thereof to Lessee;  PROVIDED,  HOWEVER, that this Trust Indenture
and the trusts created hereby shall earlier  terminate and this Trust  Indenture
shall be of no further force or effect upon any sale or other final  disposition
by the Mortgagee of all property constituting part of the Trust Indenture Estate
and the final  distribution  by the Mortgagee of all monies or other property or
proceeds  constituting part of the Trust Indenture Estate in accordance with the
terms hereof.  Except as aforesaid otherwise provided,  this Trust Indenture and
the trusts  created hereby shall continue in full force and effect in accordance
with the terms hereof.

     SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN NOTE HOLDERS.

          No holder of an  Equipment  Note shall have legal title to any part of
the Trust Indenture  Estate. No transfer,  by operation of law or otherwise,  of
any Equipment Note or other right,  title and interest of any Note Holder in and
to the Trust Indenture Estate or hereunder shall operate to terminate this Trust
Indenture or entitle such holder or any  successor or  transferee of such holder
to an  accounting or to the transfer to it of any legal title to any part of the
Trust Indenture Estate.

     SECTION 10.03. SALE OF AIRCRAFT BY MORTGAGEE IS BINDING.

          Any sale or other  conveyance of the Trust  Indenture  Estate,  or any
part thereof (including any part thereof or interest therein),  by the Mortgagee
made pursuant to the terms of this Trust  Indenture  shall bind the Note Holders
and shall be  effective  to transfer or convey all right,  title and interest of
the Trustee, the Owner Trustee, the Owner Participant and such holders in and to
such Trust Indenture Estate or part thereof. No purchaser or other grantee shall
be  required  to  inquire  as to the  authorization,  necessity,  expediency  or
regularity of such sale or conveyance  or as to the  application  of any sale or
other proceeds with respect thereto by the Mortgagee.

     SECTION 10.04. TRUST  INDENTURE  FOR  BENEFIT  OF OWNER TRUSTEE, MORTGAGEE,
                    OWNER PARTICIPANT, NOTE HOLDERS AND OTHER HOLDERS OF SECURED
                    OBLIGATIONS.

          Nothing in this Trust Indenture,  whether express or implied, shall be
construed to give any person other than the Owner Trustee,  the  Mortgagee,  the
Owner  Participant,  the Note Holders and other holders of Secured  Obligations,
any legal or equitable right,  remedy or claim under or in respect of this Trust
Indenture.

     SECTION 10.05. 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 Trust  Indenture  to be made,  given,
furnished  or filed  shall be in  writing,  personally  delivered  or  mailed by
certified mail, postage prepaid,  or by facsimile or confirmed telex, and (i) if
to the Owner Trustee,  addressed to it at 79 South Main Street,  Salt Lake City,
Utah 84111 with a copy to the Owner Participant  addressed as provided in clause
(iii)  below,  (ii) if to  Mortgagee,  addressed  to it at its  office at Rodney
Square North, 1100 North Market Street,  Wilmington,  Delaware 19890, Attention:



Corporate Trust Administration, facsimile number (302) 651-8882, (iii) if to any
Participant, Lessee, or any Note Holder, addressed to such party at such address
as such  party  shall  have  furnished  by notice to the Owner  Trustee  and the
Mortgagee,  or,  until an address is so  furnished,  addressed to the address of
such party (if any) set forth on Schedule 1 to the Participation Agreement or in
the Equipment  Note  Register.  Whenever any notice in writing is required to be
given by the Owner Trustee,  any Participant or the Mortgagee or any Note Holder
to any of the  other  of  them,  such  notice  shall be  deemed  given  and such
requirement  satisfied when such notice is received, or if such notice is mailed
by certified  mail,  postage  prepaid,  three  Business Days after being mailed,
addressed  as provided  above.  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 Trust Indenture.

     SECTION 10.06. SEVERABILITY.

          Any  provision  of  this  Trust   Indenture  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. Any such prohibition or  unenforceability  in any
particular  jurisdiction  shall  not  invalidate  or render  unenforceable  such
provision in any other jurisdiction.

     SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS.

          No term or provision of this Trust  Indenture or the  Equipment  Notes
may be  changed,  waived,  discharged  or  terminated  orally,  but  only  by an
instrument  in  writing  signed  by the  Owner  Trustee  and the  Mortgagee,  in
compliance  with Section  9.01 hereof.  Any waiver of the terms hereof or of any
Equipment  Note shall be  effective  only in the  specific  instance and for the
specific purpose given.

     SECTION 10.08. SUCCESSORS AND ASSIGNS.

          All covenants and agreements  contained  herein shall be binding upon,
and inure to the  benefit  of,  each of the  parties  hereto  and the  permitted
successors and assigns of each,  all as herein  provided.  Any request,  notice,
direction,  consent,  waiver or other  instrument  or action by any Note  Holder
shall bind the successors and assigns of such holder.  This Trust  Indenture and
the Trust Indenture  Estate shall not be affected by any amendment or supplement
to the Trust  Agreement  or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Trust Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and  supplemented  from time
to  time  to the  extent  permitted  hereby,  thereby  and by the  Participation
Agreement.  Each Note Holder by its acceptance of an Equipment Note agrees to be
bound by this Trust Indenture and all provisions of the Participation  Agreement
applicable to a Loan Participant or a Note Holder.



     SECTION 10.09. 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 10.10. NORMAL COMMERCIAL RELATIONS.

          Anything   contained   in  this  Trust   Indenture   to  the  contrary
notwithstanding,  Owner Trustee, Mortgagee, any Participant or any bank or other
Affiliate  of such  Participant  may  conduct  any  banking  or other  financial
transactions,  and have banking or other commercial  relationships,  with Lessee
[or any  Permitted  Sublessee],  fully to the same  extent as if this Trust
Indenture were not in effect,  including without  limitation the making of loans
or other  extensions  of credit to Lessee for any  purpose  whatsoever,  whether
related to any of the transactions contemplated hereby or otherwise.

     SECTION 10.11. GOVERNING LAW; COUNTERPART FORM.

          THIS  TRUST  INDENTURE  SHALL IN ALL  RESPECTS  BE  GOVERNED  BY,  AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE OF NEW YORK,
INCLUDING  ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE.  THIS TRUST
INDENTURE IS BEING  DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties  hereto in separate  counterparts  (or upon  separate
signature  pages bound  together into one or more  counterparts),  each of which
when so executed and delivered shall be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

     SECTION 10.12. VOTING BY NOTE HOLDERS.

          All  votes  of the  Note  Holders  shall  be  governed  by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.

     SECTION 10.13. BANKRUPTCY.

          It is the intention of the parties that the Owner  Trustee,  as lessor
under the Lease (and the Mortgagee as assignee of the Owner Trustee  hereunder),
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 the
Lease in the event of a case under  Chapter 11 of the  Bankruptcy  Code in which
Lessee is a debtor,  and in any  instance  where more than one  construction  is
possible of the terms and  conditions  hereof or any other  pertinent  Operative


___________________

 Insert bracketed  language  if  the Lease provides for the assignment of a
      permitted sublease.



Agreement,  each such party agrees that a construction which would preserve such
benefits  shall  control over any  construction  which would not  preserve  such
benefits.



          IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Trust
Indenture and Mortgage to be duly executed by their respective  officers thereof
duly authorized as of the day and year first above written.

                                      FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                                         not in its individual capacity,  except
                                         as  expressly   provided  herein,   but
                                         solely  as  Owner  Trustee,   as  Owner
                                         Trustee



                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________


                                      WILMINGTON TRUST COMPANY, as Mortgagee



                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________



                                                                       EXHIBIT A
                                             TO TRUST INDENTURE AND MORTGAGE ___


                   TRUST INDENTURE AND MORTGAGE ___ SUPPLEMENT


          This  TRUST  INDENTURE  AND  MORTGAGE  ___  SUPPLEMENT  NO.  1,  dated
___________,  199_ (herein called this "Trust  Indenture  Supplement")  of FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  not in its individual capacity, but solely
as Owner Trustee  (herein called the "Owner  Trustee")  under that certain Trust
Agreement ___ dated as of ___________, 199_ (the "Trust Agreement"), between the
Owner Trustee and the Owner Participant named therein.

                              W I T N E S S E T H:

          WHEREAS,   the  Trust   Indenture  and  Mortgage  ___,   dated  as  of
____________,  199_ (as amended and supplemented to the date hereof,  the "Trust
Indenture") between the Owner Trustee and Wilmington Trust Company, as Mortgagee
(the  "Mortgagee"),  provides  for the  execution  and  delivery of a supplement
thereto  substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and

          WHEREAS,  each of the Trust Agreement and Trust  Indenture  relates to
the  Airframe  and  Engines  described  below,  and a  counterpart  of the Trust
Indenture  is attached  hereto and made a part  hereof and this Trust  Indenture
Supplement,  together with such  counterpart  of the Trust  Indenture,  is being
filed for recordation on the date hereof with the FAA as one document;

          NOW, THEREFORE,  this Trust Indenture  Supplement  witnesseth that the
Owner Trustee hereby  confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right,  title and interest in and
to the following described property:

                                    AIRFRAME

          One airframe identified as follows:

FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------------- --------------- The Boeing Company
together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to either of such engines. Together with all of Owner Trustee's right, title and interest in and to (a) all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts) and (b) all Aircraft Documents. As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Mortgagee, its successors and assigns, for the security and benefit of the Loan Participants, the Note Holders and the other holders of Secured Obligations, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement of even date herewith covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Mortgagee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Loan Participants, the Note Holders and the other holders of Secured Obligations, except as provided in Section 2.14 and Article III of the Trust Indenture without any preference, distinction or priority of any one Equipment Note over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By:______________________________________ Name: Title: TRUST INDENTURE AND MORTGAGE SCHEDULE I
Original Amount Interest Rate --------------- ------------- Series A: Series B: Series C:
TRUST INDENTURE AND MORTGAGE Equipment Note Amortization Percentage of Original Amount Payment Date to be Paid ------------ ---------------

          ------------------------------------------------------------
          |  CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION  |
          |          SET FORTH IN SECTION 7 OF THIS AGREEMENT        |
          ------------------------------------------------------------




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





                         PARTICIPATION AGREEMENT ______

                          Dated as of _________________

                                      Among

                           CONTINENTAL AIRLINES, INC.,
                                     Owner,

                                       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

                          ____________________________


                    ONE BOEING MODEL ______ AIRCRAFT
                     Bearing Manufacturer's Serial No. ______
                        and U.S. Registration No. ______


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



                                    CONTENTS

SECTION 1.   DEFINITIONS AND CONSTRUCTION.................................     2

SECTION 2.   SECURED LOANS; CLOSING.......................................     2
             2.1   Making of Loans and Issuance of Equipment Notes........     2
             2.2   Closing................................................     2

SECTION 3.   [Intentionally omitted]......................................     3

SECTION 4.   CONDITIONS PRECEDENT.........................................     3
             4.1   Conditions Precedent to the Obligations of
                   the Pass Through Trustees..............................     3
             4.2   Conditions Precedent to Obligations of Mortgagee.......     7
             4.3   Conditions Precedent to Obligations of Owner...........     7
             4.4   Post-Registration Opinion..............................     8

SECTION 5.   REPRESENTATIONS AND WARRANTIES...............................     8
             5.1   Owner's Representations and Warranties.................     8
             5.2   WTC's Representations and Warranties...................    12

SECTION 6.   COVENANTS, UNDERTAKINGS AND AGREEMENTS.......................    15
             6.1   Covenants of Owner.....................................    15
             6.2   Covenants of WTC.......................................    17
             6.3   Covenants of Note Holders..............................    18
             6.4   Agreements.............................................    19

SECTION 7.   CONFIDENTIALITY..............................................    22

SECTION 8.   INDEMNIFICATION AND EXPENSES.................................    23
             8.1   General Indemnity......................................    23
             8.2   Expenses...............................................    29
             8.3   General Tax Indemnity..................................    30
             8.4   Payments...............................................    40
             8.5   Interest...............................................    40
             8.6   Benefit of Indemnities.................................    40

SECTION 9.   ASSIGNMENT OR TRANSFER OF INTEREST...........................    40
             9.1   Note Holders...........................................    40
             9.2   Effect of Transfer.....................................    41

SECTION 10.  SECTION 1110.................................................    41

SECTION 11.  CHANGE OF CITIZENSHIP........................................    41
             11.1  Generally..............................................    41
             11.2  Mortgagee..............................................    42



SECTION 12.  MISCELLANEOUS................................................    42
             12.1  Amendments.............................................    42
             12.2  Severability...........................................    42
             12.3  Survival...............................................    43
             12.4  Reproduction of Documents..............................    43
             12.5  Counterparts...........................................    43
             12.6  No Waiver..............................................    43
             12.7  Notices................................................    44
             12.8  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.......    44
             12.9  Third-Party Beneficiary................................    45
             12.10 Entire Agreement.......................................    45
             12.11 Further Assurances.....................................    46


SCHEDULES AND EXHIBITS

SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries


EXHIBIT A -  Opinion of special counsel to Owner
EXHIBIT B -  Opinion of corporate counsel to Owner
EXHIBIT C -  Opinion of special counsel to Mortgagee and to Pass Through
             Trustees
EXHIBIT D -  Opinion of special counsel in Oklahoma City, Oklahoma



                         PARTICIPATION AGREEMENT _____

     PARTICIPATION  AGREEMENT  _____,  dated  as of  ____________________  (this
"Agreement"),  among (a)  CONTINENTAL  AIRLINES,  INC.,  a Delaware  corporation
("Owner"), (b) 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"), (c) 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
(d)  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.  Owner  and  Airframe   Manufacturer  have  entered  into  the  Purchase
Agreement,  pursuant to which,  among other things,  Airframe  Manufacturer  has
agreed to  manufacture  and sell to Owner and Owner has agreed to purchase  from
Airframe Manufacturer, certain aircraft, including the Aircraft.

     B. Pursuant to each of the Pass Through Trust Agreements,  the Pass Through
Trusts were created and the Pass Through Certificates were issued and sold.

     C. Each Pass  Through  Trustee has agreed to use a portion of the  proceeds
from the issuance and sale of the Pass Through  Certificates issued by each Pass
Through  Trust to purchase  from Owner,  on behalf of the related  Pass  Through
Trust,  the  Equipment  Note bearing the same  interest rate as the Pass Through
Certificates issued by such Pass Through Trust.

     D.  Owner and  Mortgagee,  concurrently  with the  execution  and  delivery
hereof,  have  entered  into the Trust  Indenture  for the  benefit  of the Note
Holders,  pursuant  to which,  among  other  things,  Owner  agrees (1) to issue
Equipment  Notes,  in the  amounts  and  otherwise  as  provided  in  the  Trust
Indenture,  and (2) to mortgage,  pledge and assign to Mortgagee  all of Owner's
right,  title and interest in the Collateral to secure the Secured  Obligations,
including, without limitation, Owner's obligations under the Equipment Notes.

     E. 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  (including  in the initial
paragraph and Recitals  above) shall have the  respective  meanings set forth or
incorporated by reference,  and shall be construed and interpreted in the manner
described, in Annex A to the Trust Indenture.

SECTION 2.     SECURED LOANS; CLOSING

     2.1       MAKING OF LOANS AND ISSUANCE OF EQUIPMENT NOTES

     Subject to the terms and conditions of this  Agreement,  on the date hereof
or on such other date agreed to by the parties hereto (the "Closing Date"):

     (a)  Each Pass  Through  Trustee  listed on Schedule 2 shall make a secured
          loan to the Owner in the amount in  Dollars  opposite  such  Trustee's
          name on Schedule 2; and

     (b)  The  Owner  shall  issue,  pursuant  to and  in  accordance  with  the
          provisions of Article II of the Trust Indenture,  to the Subordination
          Agent as the  registered  holder on  behalf of each such Pass  Through
          Trustee,  one or more Equipment Notes,  dated the Closing Date, of the
          Series set forth  opposite  such  Trustee's  name on Schedule 2, in an
          aggregate principal amount equal to the secured loan made by each such
          Pass Through Trustee.

     In  addition,  the  Owner  shall  have the  option  to issue  the  Series D
Equipment  Notes on or after the Closing Date,  subject to the terms of the Note
Purchase  Agreement.  If Series D Equipment  Notes are issued  after the Closing
Date,  the Note  Holder of such  Equipment  Notes shall be entitled to execute a
counterpart to this Agreement and become a party hereto.

     2.2       CLOSING

     (a) The Closing of the transactions contemplated hereby shall take place at
the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza,  New York, New
York 10004, or at such other place as the parties shall agree.



     (b) All payments  pursuant to this  Section 2 shall be made in  immediately
available funds to such accounts set forth in Schedule 1 hereto.

SECTION 3.     [INTENTIONALLY OMITTED]

SECTION 4.     CONDITIONS PRECEDENT

     4.1       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PASS THROUGH
               TRUSTEES

     The  obligation of each Pass Through  Trustee  listed on Schedule 2 to make
the  secured  loan  described  in  Section  2.1(a)  and  to  participate  in the
transactions  contemplated  by this  Agreement on the Closing Date is subject to
the  fulfillment,  prior to or on the Closing Date, of the following  conditions
precedent:

               4.1.1  EQUIPMENT NOTES

     The Owner shall have tendered the Equipment Notes to be issued to such Pass
Through  Trustees to the Mortgagee for  authentication  and the Mortgagee  shall
have  authenticated  such  Equipment  Notes to be issued  to such  Pass  Through
Trustees and shall have tendered the Equipment Notes to the Subordination  Agent
on behalf of such Pass Through Trustee, against receipt of the loan proceeds, in
accordance with Section 2.1.

               4.1.2  DELIVERY OF DOCUMENTS

     The  Subordination  Agent on behalf of each such Pass Through Trustee shall
have  received  executed  counterparts  or  conformed  copies  of the  following
documents:

           (i) this Agreement;

          (ii) the Trust Indenture;

         (iii) the initial Trust Indenture Supplement;

          (iv) the  broker's  report  and  insurance  certificates  required  by
     Section 4.06 of the Trust Indenture;
 
           (v) the Consent and Agreement and the Engine Consent and Agreement;

          (vi) the Bills of Sale;

         (vii) (A)  a copy of the  Certificate of  Incorporation  and By-Laws of
     Owner  and  resolutions  of the  board of  directors  of Owner  and/or  the



     executive committee thereof, in each case certified as of the Closing Date,
     by the Secretary or an Assistant  Secretary of Owner,  duly authorizing the
     execution, delivery and performance by Owner of the Operative Agreements to
     which it is party  required to be  executed  and  delivered  by Owner on or
     prior to the Closing  Date in  accordance  with the  provisions  hereof and
     thereof;  and (B) an  incumbency  certificate  of Owner as to the person or
     persons  authorized  to execute  and deliver the  Operative  Agreements  on
     behalf of Owner;

        (viii) an  Officer's  Certificate  of Owner,  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);

          (ix) the Financing Statements;

           (x) the following opinions of counsel, in each case dated the Closing
     Date:

               (A) an opinion of Hughes Hubbard & Reed LLP,  special  counsel to
          Owner, substantially in the form of Exhibit A;

               (B) an opinion of Owner's Legal Department,  substantially in the
          form of Exhibit B;

               (C) an opinion of Richards,  Layton & Finger,  special counsel to
          Mortgagee and to the Pass Through Trustees,  substantially in the form
          of Exhibit C;

               (D) an  opinion  of Lytle  Soule &  Curlee,  special  counsel  in
          Oklahoma City, Oklahoma, substantially in the form of Exhibit D; and

          (xi) a copy of a current,  valid Standard Certificate of Airworthiness
     for the  Aircraft  duly issued by the FAA,  together  with a copy of a duly
     executed  application for  registration of the Aircraft with the FAA in the
     name of the Owner.

               4.1.3  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's right,  title and
interest in the Aircraft, subject only to Permitted Liens.



               4.1.4  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) Owner,  any Pass Through
Trustee,  Subordination  Agent or Mortgagee to execute,  deliver and perform the
Operative  Agreements  to which  any of them is a party or (b) any Pass  Through
Trustee to make the loan  contemplated  by Section  2.1, to acquire an Equipment
Note or to realize the benefits of the security afforded by the Trust Indenture.

               4.1.5  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.

               4.1.6  NO EVENT OF DEFAULT

     On the Closing  Date, no event shall have  occurred and be  continuing,  or
would result from the mortgage of the Aircraft,  which  constitutes a Default or
an Event of Default.

               4.1.7  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.

               4.1.8  TITLE

     Owner 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 all Liens, except
Permitted Liens.



               4.1.9  CERTIFICATION

     The Aircraft  shall have been duly  certificated  by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.

               4.1.10  SECTION 1110

     Mortgagee  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 Trust  Indenture in the event of a case under Chapter
11 of the Bankruptcy Code in which Owner is a debtor.

               4.1.11  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 (or shall be in the  process of being so
duly filed) in the appropriate jurisdiction.

               4.1.12  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.

               4.1.13  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.

               4.1.14  NOTE PURCHASE AGREEMENT

     The conditions  precedent to the  obligations of the Pass Through  Trustees
and the other requirements  relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.



     4.2       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,  on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.

               4.2.1  DOCUMENTS

     Executed  originals  of  the  agreements,   instruments,   certificates  or
documents  described  in Section  4.1.2 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.

               4.2.2  OTHER CONDITIONS PRECEDENT

     Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and 4.1.10
shall  have been  satisfied  unless  the  failure  of any such  condition  to be
satisfied is the result of any action or inaction by Mortgagee.

     4.3       CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER

     The  obligation of Owner to  participate  in the  transaction  contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing  Date,  of the  conditions  precedent set forth below in
this Section 4.3.

               4.3.1  DOCUMENTS

     Executed  originals  of  the  agreements,   instruments,   certificates  or
documents  described in Section 4.1.2 shall have been received by Owner,  except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such  agreement,  instrument,  certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:

          (i) (A) an incumbency  certificate  of WTC as to the person or persons
     authorized to execute and deliver the Operative Agreements on behalf of WTC
     and (B) a copy of the Certificate of Incorporation  and By-Laws and general
     authorizing  resolution of the board of directors (or executive  committee)
     or other satisfactory evidence of authorization of WTC, certified as of the
     Closing Date by the  Secretary or Assistant or Attesting  Secretary of WTC,



     which  authorize  the  execution,  delivery and  performance  by WTC of the
     Operative Agreements to which it is a party; and

          (ii) 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);

               4.3.2  OTHER CONDITIONS PRECEDENT

     Each of the conditions set forth in Sections 4.1.4,  4.1.5,  4.1.6,  4.1.7,
4.1.8,  4.1.9,  4.1.10,  4.1.11,  4.1.12 and 4.1.13 shall have been satisfied or
waived by Owner, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner.

     4.4       POST-REGISTRATION OPINION

     Promptly upon the  registration  of the Aircraft and the recordation of the
FAA Filed Documents  pursuant to the Act, Owner will cause Lytle Soule & Curlee,
special  counsel in  Oklahoma  City,  Oklahoma,  to deliver to Owner,  each Pass
Through Trustee and Mortgagee a favorable opinion or opinions  addressed to each
of them with respect to such registration and recordation.

SECTION 5.     REPRESENTATIONS AND WARRANTIES

     5.1       OWNER'S REPRESENTATIONS AND WARRANTIES

     Owner represents and warrants to each Pass Through  Trustee,  Subordination
Agent and Mortgagee that:

               5.1.1  ORGANIZATION; QUALIFICATION

     Owner 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 Operative  Agreements to which it is party. Owner 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 Owner.



               5.1.2  CORPORATE AUTHORIZATION

     Owner 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  Operative  Agreements to
which it is party, and the performance of its obligations thereunder.

               5.1.3  NO VIOLATION

     The execution and delivery by Owner of the Operative Agreements to which it
is  party,  the  performance  by Owner  of its  obligations  thereunder  and the
consummation  by  Owner 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 Owner, (b) violate any Law applicable to or binding
on  Owner 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), or result in the creation of any Lien (other than as permitted under the
Trust  Indenture)  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 Owner is a party or by which
Owner or any of its properties is bound.

               5.1.4  APPROVALS

     The execution  and delivery by Owner of the  Operative  Agreements to which
Owner is a party, the performance by Owner of its obligations thereunder and the
consummation  by  Owner 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 and (b) any Government Entity, other than the filing
of (x) the FAA Filed Documents and the Financing  Statements  (and  continuation
statements  periodically)  and  (y)  filings,   recordings,   notices  or  other
ministerial actions pursuant to any routine recording, contractual or regulatory
requirements applicable to it.

               5.1.5  VALID AND BINDING AGREEMENTS

     The  Operative  Agreements  to  which  Owner  is a  party  have  been  duly
authorized, executed and delivered by Owner and, assuming the due authorization,



execution and delivery thereof by the other party or parties thereto, constitute
the legal,  valid and binding  obligations of Owner and are enforceable  against
Owner  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.

               5.1.6  REGISTRATION AND RECORDATION

     Except for (a) the  registration  of the Aircraft  with the FAA pursuant to
the Act in the name of Owner, (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),  and (d) the
affixation  of the  nameplates  referred  to in  Section  4.02(f)  of the  Trust
Indenture, 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  Mortgagee's  security
interest in the Aircraft as against Owner and any other Person, in each case, in
any applicable jurisdictions in the United States.

               5.1.7  CHIEF EXECUTIVE OFFICE

     The chief  executive  office  (as such term is  defined in Article 9 of the
UCC) of Owner is located at 2929 Allen Parkway, Houston, Texas 77019.

               5.1.8  NO EVENT OF LOSS

     No Event of Loss has  occurred  with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Owner, 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.

               5.1.9  COMPLIANCE WITH LAWS

     (a) Owner is a Citizen of the United States and a U.S. Air Carrier.

     (b) Owner holds all licenses,  permits and franchises  from the appropriate
Government  Entities  necessary  to  authorize  Owner 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 Owner.

     (c) Owner 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.

               5.1.10  SECURITIES LAWS

     Neither  Owner 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 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.

               5.1.11  BROKER'S FEES

     No Person  acting on behalf of Owner is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions,  other than
the fees and expenses  payable by Owner in connection  with the sale of the Pass
Through Certificates.

               5.1.12  SECTION 1110

     Mortgagee  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 Trust  Indenture  in the event of a case under  Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.

     5.2       WTC'S REPRESENTATIONS AND WARRANTIES

     WTC represents and warrants (with respect to Section 5.2.10,  solely in its
capacity as Subordination Agent) to Owner that:

               5.2.1  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 Pass
Through Trustee Agreements and the Operative Agreements to which it is a party.



               5.2.2  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 Pass Through Trustee Agreements and the Operative  Agreements to which it is
a party and the performance of its obligations thereunder.

               5.2.3  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 Pass Through Trustee Agreements and the Operative  Agreements to which it is
a party, 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.

               5.2.4  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 Pass Through Trustee Agreements and the Operative  Agreements to which it is
a party, 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.

               5.2.5  VALID AND BINDING AGREEMENTS

     The Pass Through Trustee  Agreements and the Operative  Agreements to which
it is a party 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.

               5.2.6  CITIZENSHIP

     WTC is a Citizen of the United States.

               5.2.7  NO LIENS

     On the Closing Date,  there are no Liens  attributable to WTC in respect of
all or any part of the Collateral.

               5.2.8  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.

               5.2.9  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 Collateral or any of the Equipment  Notes
or any  other  interest  in or  security  under the  Collateral  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 Subordination  Agent
and the Pass  Through  Trustees,  except for the  offering  and sale of the Pass
Through Certificates.

               5.2.10  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 9, the  disposition by it of
its Equipment Notes shall at all times be within its control.

               5.2.11  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;

               5.2.12  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 6.     COVENANTS, UNDERTAKINGS AND AGREEMENTS

     6.1       COVENANTS OF OWNER

     Owner covenants and agrees,  at its own cost and expense,  with Note Holder
and Mortgagee as follows:

               6.1.1  CORPORATE EXISTENCE; U.S. AIR CARRIER

     Owner  shall at all  times  maintain  its  corporate  existence,  except as
permitted by Section 4.07 of the Trust Indenture,  and shall at all times remain
a U.S. Air Carrier.

               6.1.2  NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

     Owner will give 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  6.1.3(c) as a
result of such relocation.

               6.1.3  CERTAIN ASSURANCES

     (a) Owner 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 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 Owner  will not expand any
obligations  or  limit  any  rights  of  Owner in  respect  of the  transactions
contemplated by any Operative Agreement.

     (b) Owner shall  promptly  take such action with respect to the  recording,
filing,  re-recording  and refiling of the Trust  Indenture and any  supplements



thereto, including,  without limitation, the initial Trust Indenture Supplement,
as shall be  necessary  to  continue  the  perfection  and  priority of the Lien
created by the Trust Indenture.

     (c)  Owner,  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 of the
Owner,  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 Mortgagee,  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 4.02(e) of the Trust Indenture, Owner will furnish to
Mortgagee  annually after such  registration,  commencing with the calendar year
after such  registration is effected,  an opinion of special counsel  reasonably
satisfactory to 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 the Lien
created by the Trust Indenture, reciting the details of such actions, or (ii) no
such action is necessary to maintain the perfection of such Lien.

               6.1.4  SECURITIES LAWS

     Neither Owner 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 any interest in 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.

     6.2       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 Owner as
follows:



               6.2.1  LIENS

     WTC (a) will not directly or indirectly create,  incur, assume or suffer to
exist any Lien  attributable  to it on or with respect to all or any part of the
Collateral or the Aircraft, (b) will, at its own cost and expense, promptly take
such action as may be necessary to discharge any Lien attributable to WTC on all
or any part of the  Collateral  or the  Aircraft  and (c) will  personally  hold
harmless  and  indemnify  Owner,  each  Note  Holder,  each of their  respective
Affiliates,  successors  and  permitted  assigns,  and the  Collateral  from and
against (i) any and all Expenses, and (ii) 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 Lien.

               6.2.2  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  Collateral,  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.

               6.2.3  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
Pass Through Trustee Agreements and the Operative  Agreements in accordance with
the terms thereof.

               6.2.4  WITHHOLDING TAXES

     WTC shall indemnify (on an after-tax basis) and hold harmless Owner 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.



     6.3       COVENANTS OF NOTE HOLDERS

     Each  Note  Holder  (including  Subordination  Agent)  as  to  itself  only
covenants and agrees with Owner and Mortgagee as follows:

               6.3.1  WITHHOLDING TAXES

     Such Note Holder (if it is a Non-U.S.  Person)  agrees to indemnify  (on an
after-tax basis) and hold harmless Owner 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.

               6.3.2  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 for the transfer of the  interests of each Pass Through  Trustee
in the  Equipment  Notes to the trustee of the Related Trust (as defined in each
Pass Through Trust  Agreement) in accordance with the related Pass Through Trust
Agreement, 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
Owner 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
     Owner,  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).

     6.4       AGREEMENTS

               6.4.1  QUIET ENJOYMENT

     Each Pass  Through  Trustee,  Subordination  Agent,  each Note  Holder  and
Mortgagee  agrees as to itself with Owner  that,  so long as no 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 Owner's  rights in  accordance  with the  Indenture to the quiet
enjoyment, possession and use of the Aircraft.

               6.4.2  CONSENTS

     Each Pass Through Trustee,  Subordination Agent and Mortgagee covenants and
agrees,  for the benefit of Owner,  that it shall not unreasonably  withhold its
consent to any consent or approval requested of it under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.

               6.4.3  INSURANCE

     Each Pass Through  Trustee,  Subordination  Agent,  Mortgagee and each Note
Holder  agrees  not to obtain  or  maintain  insurance  for its own  account  as
permitted by Section 4.06 of the Trust  Indenture if such insurance  would limit
or  otherwise  adversely  affect the  coverage of any  insurance  required to be
obtained or maintained by Owner pursuant to Section 4.06 of the Trust Indenture.

               6.4.4  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  Collateral  when and if the principal and Make-Whole
Amount,  if any, of and interest on the Equipment Note held by such Holder,  and
all other  sums,  then due and payable to such  Holder  hereunder  and under any
other Operative Agreement, shall have been paid in full.



               6.4.5  FOREIGN REGISTRATION

     Each Note Holder and Mortgagee  hereby agree,  for the benefit of Owner but
subject to the provisions of Section 4.02(b) of the Trust Indenture:

     (a) that Owner  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)  no Special Default or Event of Default shall have occurred and be
               continuing at the time of such registration;

          (B)  such proposed change of registration is made in connection with a
               Permitted Lease to a Permitted Air Carrier;

          (C)  such  country  is a 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 Mortgagee shall have received an opinion of counsel  (subject
     to customary exceptions) reasonably satisfactory to the Mortgagee addressed
     to Mortgagee as to the effect that:

               (A) such country would recognize the Owner's  ownership  interest
          in the Aircraft;

               (B) after giving effect to such change in registration,  the Lien
          of the Trust Indenture on the Owner's right, title and interest in and
          to the Aircraft  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 Mortgagee shall have received a certificate from
          Owner  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 Mortgagee on or prior
          to the effective date of such change in registration;



               (C) unless Owner or the  Permitted  Air Carrier 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 Owner prior to such
          proposed  reregistration  has obtained such license or permit) for the
          taking or requisition by such government of such use; and

               (D) it is not  necessary,  solely as a consequence of such change
          in registration and without giving effect to any other activity of the
          Mortgagee  (or any Affiliate of the  Mortgagee),  for 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.

     (b) In addition,  as a condition  precedent  to any change in  registration
Owner  shall have  given to  Mortgagee  assurances  reasonably  satisfactory  to
Mortgagee:

           (i)  to the effect that the  provisions  of Section 4.06 of the Trust
                Indenture  have been  complied  with after giving effect to such
                change of registration;

          (ii)  of the payment by Owner of all reasonable out-of-pocket expenses
                of each Note Holder and Mortgagee in connection with such change
                of registry,  including,  without  limitation (1) the reasonable
                fees and  disbursements of counsel to 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 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
                Owner  shall  have  agreed  upon  additional  indemnities  that,



                together  with  such  original  indemnities,  in the  reasonable
                judgment of Mortgagee, afford such protection).

               6.4.6  INTEREST IN CERTAIN ENGINES

     Each Note  Holder  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, Owner or any Permitted  Lessee  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 7.     CONFIDENTIALITY

     Owner,  Note Holders and Mortgagee shall keep the  Participation  Agreement
and Annex B to the Trust Indenture confidential and shall not disclose, or cause
to be disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner's, a Note Holder's,  the Liquidity Provider'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  Owner's,  a Note  Holder's,  the
Liquidity Provider's,  a Pass Through 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 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 Certificates or to
support an NAIC rating for the Equipment  Notes or (E) 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; PROVIDED,  that any and all disclosures permitted by clauses (C), (D), or



(E)  above  shall be made  only to the  extent  necessary  to meet the  specific
requirements or needs of the Persons making such disclosures.

SECTION 8.     INDEMNIFICATION AND EXPENSES

     8.1       GENERAL INDEMNITY

               8.1.1  INDEMNITY

     Whether or not any of the transactions contemplated hereby are consummated,
Owner 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 Owner (or any Permitted
Lessee),  (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; and

     (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 Owner under any  Operative  Agreement  to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.



               8.1.2  EXCEPTIONS

     Notwithstanding  anything  contained in Section  8.1.1,  Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:

     (a) For any  Taxes  or a loss  of Tax  benefit,  whether  or not  Owner  is
required to indemnify therefor pursuant to Section 8.3;

     (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
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust  Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture;  PROVIDED, that nothing in this clause (b)
shall be deemed to exclude or limit any claim that any Indemnitee may have under
applicable  Law by reason of an Event of Default or for  damages  from Owner for
breach of Owner's covenants contained in the Operative  Agreements or to release
Owner from any of its obligations under the Operative  Agreements that expressly
provide for performance after termination of the Trust Indenture;

     (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 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;

     (d) [Intentionally Omitted]

     (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) [Intentionally Omitted]

     (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  Certificates,  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 acts or omissions of Owner);

     (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  Subordination  Agent), 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,
(iii) with respect to any Indemnitee (other than the Pass Through Trustees),  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,  (iv) with respect to any Indemnitee  (other than the Escrow Agent),
to the extent  attributable  to the  failure  of the  Escrow  Agent to pay funds
received and payable by it in  accordance  with any Escrow  Agreement,  (v) with
respect  to any  Indemnitee  (other  than  the  Paying  Agent),  to  the  extent
attributable to the failure of the Paying Agent to distribute funds received and
distributable by it in accordance with any Escrow Agreement,  (vi) to the extent
attributable  to the  failure of the  Depositary  to pay funds  payable by it in
accordance with any Deposit Agreement,  (vii) 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,  (viii) 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,  (ix) 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,  (x) with  respect to the
Escrow Agent, to the extent attributable to the negligence or willful misconduct
of the  Escrow  Agent in the  payment  of funds  received  and  payable by it in
accordance with any Escrow Agreement, and (xi) with respect to the Paying Agent,
to the extent attributable to the negligence or willful misconduct of the Paying



Agent  in  the  distribution  of  funds  received  and  distributable  by  it in
accordance with any Escrow Agreement;

     (k) Other  than  during the  continuation  of an 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
Owner 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 Owner;

     (m) To the extent that it is an ordinary  and usual  operating  or overhead
expense;

     (n) [Intentionally Omitted]

     (o) For any Lien attributable to such Indemnitee or any related Indemnitee;

     (p) If  another  provision  of an  Operative  Agreement  or a Pass  Through
Agreement  specifies the extent of Owner's  responsibility  or  obligation  with
respect to such Expense,  to the extent arising from other than failure of Owner
to comply with such specified responsibility or obligation; or

     (q) To the extent incurred by or asserted against an Indemnitee as a result
of any "prohibited  transaction",  within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code.

     For purposes of this Section 8.1, 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 or a successor or permitted  assignee of
any of the foregoing.

               8.1.3  SEPARATE AGREEMENT

     This  Agreement  constitutes  a  separate  agreement  with  respect to each
Indemnitee and is enforceable directly by each such Indemnitee.



               8.1.4  NOTICE

     If a claim for any Expense that an Indemnitee shall be indemnified  against
under this Section 8.1 is made, such Indemnitee shall give prompt written notice
thereof to Owner.  Notwithstanding the foregoing,  the failure of any Indemnitee
to notify Owner as provided in this Section 8.1.4,  or in Section  8.1.5,  shall
not release  Owner from any of its  obligations  to  indemnify  such  Indemnitee
hereunder,  except to the extent  that such  failure  results  in an  additional
Expense  to Owner (in  which  event  Owner  shall  not be  responsible  for such
additional expense) or materially impairs Owner's ability to contest such claim.

               8.1.5  NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS

     (a) In case any action,  suit or  proceeding  shall be brought  against any
Indemnitee  for  which  Owner  is  responsible  under  this  Section  8.1,  such
Indemnitee shall notify Owner of the commencement  thereof and Owner 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 8.1.5(c), settle or compromise the same.

     (b) Owner or its insurer(s)  shall have the right, at its or their expense,
to  investigate  or,  if Owner or its  insurer(s)  shall  agree  not to  dispute
liability to the  Indemnitee  giving  notice of such action,  suit or proceeding
under this Section  8.1.5 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 8.1, and each  Indemnitee  shall cooperate with
Owner or its insurer(s) with respect thereto;  PROVIDED, that Owner shall not be
entitled  to  control  the  defense  of any such  action,  suit,  proceeding  or
compromise any such Expense during the  continuance of any Event of Default.  In
connection with any such action,  suit or proceeding  being controlled by Owner,
such Indemnitee  shall have the right to participate  therein,  at its sole cost
and expense, with counsel reasonably  satisfactory to Owner; PROVIDED, that such
Indemnitee's   participation   does  not,  in  the  reasonable  opinion  of  the
independent  counsel  appointed  by the Owner 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
Owner, 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 8.1.

     (d) In the case of any Expense  indemnified by the Owner hereunder which is
covered by a policy of insurance maintained by Owner pursuant to Section 4.06 of
the Indenture,  at Owner'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,  Owner may require
such  Indemnitee  to agree in writing to the terms of this Section 8 and Section
12.8 prior to making any payment to such Indemnitee under this Section 8.

     (f) Nothing  contained in this Section  8.1.5 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.

               8.1.6  INFORMATION

     Owner will provide the relevant Indemnitee with such information not within
the  control  of such  Indemnitee,  as is in Owner's  control  or is  reasonably
available  to Owner,  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 8.1.5.  The Indemnitee shall supply Owner
with  such  information  not  within  the  control  of  Owner,  as  is  in  such
Indemnitee's control or is reasonably available to such Indemnitee,  which Owner
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 8.1.5.

               8.1.7  EFFECT  OF   OTHER   INDEMNITIES;   SUBROGATION;   FURTHER
                      ASSURANCES

     Upon the payment in full by Owner of any indemnity  provided for under this
Agreement, Owner, 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 6.03
or 8.01 of the Trust  Indenture)  in  respect  of the  matter  as to which  such
indemnity  was  paid.  Each  Indemnitee  will give such  further  assurances  or
agreements  and cooperate  with Owner to permit Owner to pursue such claims,  if
any, to the extent reasonably requested by Owner and at Owner's expense.



               8.1.8  REFUNDS

     If an Indemnitee  receives any refund, in whole or in part, with respect to
any Expense paid by Owner  hereunder,  it will promptly pay the amount  refunded
(but not an amount in excess of the amount Owner or any of its insurers has paid
in respect of such  Expense) over to Owner unless an Event of Default shall have
occurred and be  continuing,  in which case such  amounts  shall be paid over to
Mortgagee  to hold as  security  for  Owner's  obligations  under the  Operative
Agreements or, if requested by Owner, applied to satisfy such obligations.

     8.2       EXPENSES

               8.2.1  INVOICES AND PAYMENT

     The Mortgagee,  the Pass Through Trustees and the Subordination Agent shall
promptly   submit  to  Owner  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 agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.

              8.2.2  PAYMENT OF OTHER EXPENSES

     Owner shall pay (i) the ongoing  fees and expenses of  Mortgagee,  and (ii)
all reasonable  out-of-pocket  costs and expenses (including the reasonable fees
and  disbursements  of  counsel)  incurred  by  Mortgagee  or  any  Note  Holder
attributable to any waiver, amendment or modification of any Operative Agreement
to the extent requested by Owner.

     8.3       GENERAL TAX INDEMNITY

               8.3.1  GENERAL

     Except as provided in Section 8.3.2, Owner agrees that each payment paid by
Owner under the  Equipment  Notes,  and any other  payment or indemnity  paid by
Owner 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 Owner shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Owner shall make
all such  withholdings  or deductions,  (y) the amount payable by Owner 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) Owner shall pay the full amount
withheld  or  deducted to the  relevant  Taxing  Authority  in  accordance  with
applicable  law.  Except as provided in Section  8.3.2 and whether or not any of
the  transactions   contemplated  hereby  are  consummated,   Owner  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,  financing,  refinancing  requested by the
Owner,  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)  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
Collateral) or the transactions contemplated thereby.

               8.3.2  CERTAIN EXCEPTIONS

     The provisions of Section 8.3.1 shall not apply to, and Owner 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 an  Owner  Person  within  the
jurisdiction of the Taxing  Authority  imposing such Tax, or (II) the activities
of any Owner Person in such jurisdiction,  including, but not limited to, use of
any other aircraft by Owner in such jurisdiction,  (III) the status of any Owner
Person as a foreign  entity or as an entity owned in whole or in part by foreign
persons, (IV) Owner 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, the Note Holders or any related Tax Indemnitee, the Owner
being incorporated or organized or 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 the Pass Through  Trustee,  Subordination  Agent or
Mortgagee;

     (d) that are being contested as provided in Section 8.3.4 hereof;

     (e) 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;



     (f)  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 of any interest in the Aircraft,  the Airframe, any Engine or any
Part, any interest arising under the Operative  Agreements or any Equipment Note
or as a result of 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 an Owner
Person that is treated for Tax purposes as a transfer or  disposition,  or (B) a
transfer pursuant to an exercise of remedies upon an Event of Default that shall
have occurred and have been continuing);

     (g) 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 (f) above;

     (h) 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 Owner to  fulfill  its
obligations, if any, under Section 8.3.6 with respect to such return;

     (i) resulting  from, or that would not have been imposed but for, any 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  that the Owner
is not obligated to discharge under the Operative Agreements;

     (j)  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;

     (k) in the nature of an  intangible or similar Tax (i) upon or with respect
to the value or  principal  amount  of the  interest  of any Note  Holder in any
Equipment Note or the loan  evidenced  thereby but 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;



     (l) 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

     (m) 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.

               8.3.3  PAYMENT

     (a) Owner's indemnity obligation to a Tax Indemnitee under this Section 8.3
shall equal the amount which, after taking into account any Tax imposed upon the
receipt or accrual of the  amounts  payable  under this  Section 8.3 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 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.

     (b) At Owner's  request,  the  computation  of the amount of any  indemnity
payment owed by Owner or any amount owed by a Tax  Indemnitee to Owner  pursuant
to this Section 8.3 shall be verified and  certified  by an  independent  public
accounting  firm selected by such Tax Indemnitee and reasonably  satisfactory to
Owner.  Such  verification  shall be  binding.  The  costs of such  verification
(including  the fee of such  public  accounting  firm)  shall  be borne by Owner
unless such verification shall result in an adjustment in Owner'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  Owner  with such  certifications,
information and  documentation as shall be in such Tax  Indemnitee's  possession
and as shall be reasonably  requested by Owner to minimize any indemnity payment
pursuant to this Section 8.3;  provided,  that  notwithstanding  anything to the
contrary  contained herein, no Tax Indemnitee shall be required to provide Owner
with any Tax returns.

     (d) Each Tax Indemnitee shall promptly forward to Owner any written notice,
bill or advice received by it from any Taxing  Authority  concerning any Tax for
which it seeks  indemnification  under this  Section  8.3.  Owner  shall pay any



amount for which it is liable  pursuant  to this  Section  8.3  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  8.3.4,  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,  Owner  shall  furnish  to the
appropriate  Tax  Indemnitee  the original or a certified  copy of a receipt for
Owner's  payment of any Tax paid by Owner or such other  evidence  of payment of
such Tax as is  acceptable  to such Tax  Indemnitee.  Owner  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 Owner 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 8.3, 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 8.3.4,  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 8.3.4
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 Owner pursuant to this Section 8.3 (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
Owner 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 8.3 by Owner to such Tax  Indemnitee
(less any payments  previously  made by such Tax Indemnitee to Owner pursuant to
this  Section  8.3.3 (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 Owner to make payments
to such Tax Indemnitee  pursuant to this Section 8.3);  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  8.3.1  without
regard to the  provisions of Section 8.3.2 (other than Section 8.3.2 (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.

               8.3.4  CONTEST

     (a) If a written  claim is made  against a Tax  Indemnitee  for Taxes  with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee  makes a determination  that a Tax is due for which Owner could
have an indemnity obligation hereunder,  such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not  relieve  Owner of its  indemnity  obligations  hereunder  unless such
failure to notify effectively  forecloses Owner'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 Owner for 30 days following the receipt of such notice
by Owner; 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 Owner, so
inform Owner,  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 Owner) 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 Owner shall have agreed to
keep such information  confidential  other than to the extent necessary in order
to contest the claim) furnish Owner with copies of any requests for  information
from any Taxing Authority relating to such Taxes with respect to which Owner may
be required to indemnify  hereunder.  If requested by Owner in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at the expense
of Owner (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 Owner 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
Owner,  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  Owner to  control  the  conduct of any such
proceeding  and shall  provide to Owner (at Owner'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 Owner in
good faith  regarding the manner of  contesting  such claim and shall keep Owner
reasonably  informed  regarding the progress of such contest.  A Tax  Indemnitee
shall not fail to take any  action  expressly  required  by this  Section  8.3.4
(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 Owner  (except as  contemplated  by
Section 8.3.4(b) or (c)).

     (b)  Notwithstanding  the foregoing,  in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Owner to pursue any contest) unless
(i) Owner 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, Owner 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 Owner 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 Owner 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 Owner in writing promptly after it becomes aware of



any such  risk),  (iv) no Lease  Event of  Default  shall have  occurred  and be
continuing unless Owner 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 Owner,  Owner shall
have  acknowledged its liability for such claim  hereunder,  provided that Owner
shall not be bound by its acknowledgment if the Final Determination  articulates
conclusions of law and fact that demonstrate that Owner 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  Owner  pursuant  to this  Section  8.3  without  the  written
permission of Owner,  Owner'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 8.3.4(c), and subject
to  Section  8.3.4(c),  such Tax  Indemnitee  shall  repay to Owner  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  8.3,  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  Owner's  consent if such
Tax  Indemnitee  (i) shall waive its right to  indemnity  under this Section 8.3
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 Owner any amount  previously  paid or advanced by Owner  pursuant to this
Section 8.3 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 Owner the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.

               8.3.5  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 Owner, such Tax Indemnitee shall pay to Owner 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  Owner  to such Tax
Indemnitee  theretofore  made  pursuant to this Section 8.3 (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 Owner to make  payments to such Tax  Indemnitee  pursuant to this
Section  8.3).  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 Owner 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 Owner prior to the receipt of such refund or realization of such credit.

               8.3.6  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 8.3, Owner shall
timely file the same  (except for any such report,  return or statement  which a
Tax Indemnitee has timely notified the Owner 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 Owner
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 Owner (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).
Owner shall either file such report, return or statement and send a copy of such
report,  return or  statement  to such Tax  Indemnitee,  or,  where Owner 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.

               8.3.7  FORMS

     Each  Tax  Indemnitee  agrees  to  furnish  from  time to time to  Owner or
Mortgagee  or to such  other  person as Owner or  Mortgagee  may  designate,  at
Owner's or Mortgagee'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)
Owner  has  provided  such Tax  Indemnitee  with any  information  necessary  to
complete such form not otherwise reasonably available to such Tax Indemnitee.

               8.3.8  NON-PARTIES

     If a Tax Indemnitee is not a party to this Agreement, Owner may require the
Tax Indemnitee to agree in writing, in a form reasonably acceptable to Owner, to
the terms of this  Section 8.3 and  Section  15.8 prior to making any payment to
such Tax Indemnitee under this Section 8.3.

               8.3.9  SUBROGATION

     Upon  payment of any Tax by Owner  pursuant  to this  Section  8.3 to or on
behalf  of a Tax  Indemnitee,  Owner,  without  any  further  action,  shall  be
subrogated to any claims that such Tax  Indemnitee  may have  relating  thereto.
Such Tax Indemnitee  shall cooperate with Owner (to the extent such  cooperation
does not  result in any  unreimbursed  cost,  expense or  liability  to such Tax
Indemnitee) to permit Owner to pursue such claims.

     8.4       PAYMENTS

     Any payments  made  pursuant to Section 8.1 or 8.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant  Indemnitee
or Tax Indemnitee or to Owner, in immediately available funds at such bank or to
such account as specified by such  Indemnitee or Tax Indemnitee or Owner, 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 Owner,  as the case may be, by certified
mail, postage prepaid, at its address as set forth in this Agreement.

     8.5       INTEREST

     If any amount, payable by Owner, any Indemnitee or any Tax Indemnitee under
Section  8.1 or 8.3 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.



     8.6       BENEFIT OF INDEMNITIES

     The  obligations  of  Owner in  respect  of all  indemnities,  obligations,
adjustments  and  payments  in  Section  8.1 or 8.3 are  expressly  made for the
benefit  of, and shall be  enforceable  by,  the  Indemnitee  or Tax  Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture.

SECTION 9.     ASSIGNMENT OR TRANSFER OF INTEREST

     9.1       NOTE HOLDERS

     Subject to Section  6.3.2 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 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 the Collateral and Owner 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.

     9.2       EFFECT OF TRANSFER

     Upon any Transfer in  accordance  with Section 9.1 (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 a "Note
Holder," for all purposes of this Agreement and the other Operative  Agreements,
and the  transferring  Note Holder shall be released 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  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 10.    SECTION 1110

     It is the intention of each of the Owner,  the Note Holders (such intention
being evidenced by each of their acceptance of an Equipment Note), and Mortgagee
that Mortgagee shall be entitled to the benefits of Section 1110 in the event of
a case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.

SECTION 11.    CHANGE OF CITIZENSHIP

     11.1      GENERALLY

     Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States, each of Owner,
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.

     11.2      MORTGAGEE

     Upon WTC giving any notice in accordance with Section 11.1, 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 Owner, or any Note Holder),  subject to Section
9.02 of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be
such a citizen.

SECTION 12.    MISCELLANEOUS

     12.1      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.

     12.2      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.

     12.3      SURVIVAL

     The  indemnities  set forth herein shall  survive the delivery or return of
the  Aircraft,  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.

     12.4      REPRODUCTION OF DOCUMENTS

     This  Agreement,  all  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.

     12.5      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.

     12.6      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.

     12.7      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.



     12.8      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 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE  UPON IT, OR ANY OF ITS  AGENTS,  IN EACH CASE IN  ACCORDANCE  WITH THIS
SECTION 12.8(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.

     12.9      THIRD-PARTY BENEFICIARY

     This Agreement is not intended to, and shall not,  provide any person not a
party hereto (other than the Indenture Indemnitees, each of which is an intended



third party  beneficiary  with respect to the  provisions of Section 8.1 and the
persons   referred  to  in  Section  6.4.6,   which  are  intended  third  party
beneficiaries  with  respect  to 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 Indenture Indemnitees, with respect to the provisions of Section
8.1, and the persons referred to in Section 6.4.6 with respect to the provisions
of 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.

     12.10     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.

     12.11     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
effectually  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.,
                                          Owner


                                       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, 1998-1A-0


                                       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, 1998-1B-0


                                       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, 1998-1C-0


                                       By:______________________________________
                                          Name:
                                          Title:


                                       WILMINGTON TRUST COMPANY,
                                          not in its individual capacity, except
                                          as  expressly   provided  herein,  but
                                          solely as Subordination Agent


                                       By:______________________________________
                                          Name:
                                          Title:



                                                  -----------------------------
                                                  |         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 ____ Facsimile: (713) 520-6329 WILMINGTON TRUST COMPANY, 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: Continental ____ Facsimile: (302) 651-8882 WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank 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 Reference: Continental ____ 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 1998-1A PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental ____ 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 1998-1B PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental ____ Facsimile: (302) 651-8882
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES -------------------- ------------------- WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square 1998-1C PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental ____ 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 1998-1D PASS THROUGH TRUST] Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Continental ____ Facsimile: (302) 651-8882
----------------------------- | SCHEDULE 2 - COMMITMENTS | | PARTICIPATION AGREEMENT | ----------------------------- COMMITMENTS PASS THROUGH SERIES OF DOLLAR AMOUNT TRUSTEE EQUIPMENT NOTES OF LOAN ------------ --------------- ------------- ----------------------------- | SCHEDULE 3 - CERTAIN TERMS| | PARTICIPATION AGREEMENT | ----------------------------- [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION] ------------------------------------- | SCHEDULE 4 - PERMITTED COUNTRIES | | PARTICIPATION AGREEMENT | ------------------------------------- PERMITTED COUNTRIES Argentina Malta Australia Mexico Austria Morocco Bahamas Netherlands Belgium New Zealand Brazil Norway Canada Paraguay Chile People's Republic of China Denmark Philippines Egypt Portugal Ecuador Republic of China (Taiwan) Finland Singapore France South Africa Germany South Korea Greece Spain Hungary Sweden Iceland Switzerland India Thailand Indonesia Tobago Ireland Trinidad Italy United Kingdom Japan Uruguay Luxembourg Venezuela Malaysia




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



                      TRUST INDENTURE AND MORTGAGE _______

                          Dated as of _______ __, 199_

                                     Between

                           CONTINENTAL AIRLINES, INC.,

                                      Owner

                                       and

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       except as expressly stated herein,
                            but solely as Mortgagee,

                                    Mortgagee




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



                            EQUIPMENT NOTES COVERING
                           ONE BOEING _______ AIRCRAFT
                      BEARING U.S. REGISTRATION MARK N_____
                       AND MANUFACTURER'S SERIAL NO. _____


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



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

GRANTING CLAUSE............................................................    1

ARTICLE I     DEFINITIONS..................................................    4

ARTICLE II    THE EQUIPMENT NOTES..........................................    4

     SECTION 2.01.  Form of Equipment Notes................................    4
     SECTION 2.02.  Issuance and Terms of Equipment Notes..................    9
     SECTION 2.03.  [Intentionally Omitted]................................   11
     SECTION 2.04.  Method of Payment......................................   11
     SECTION 2.05.  Application of Payments................................   13
     SECTION 2.06.  Termination of Interest in Collateral..................   14
     SECTION 2.07.  Registration Transfer and Exchange of
                    Equipment Notes........................................   14
     SECTION 2.08.  Mutilated, Destroyed, Lost or Stolen
                    Equipment Notes........................................   15
     SECTION 2.09.  Payment of Expenses on Transfer;
                    Cancellation...........................................   16
     SECTION 2.10.  Mandatory Redemptions of Equipment Notes...............   16
     SECTION 2.11.  Voluntary Redemptions of Equipment Notes...............   16
     SECTION 2.12.  Redemptions; Notice of Redemption......................   16
     SECTION 2.13.  Subordination..........................................   17

ARTICLE III   RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS............   18

     SECTION 3.01.  Basic Distributions....................................   18
     SECTION 3.02.  Event of Loss; Replacement; Optional Redemption........   19
     SECTION 3.03.  Payments After Event of Default........................   20
     SECTION 3.04.  Certain Payments.......................................   22
     SECTION 3.05.  Other Payments.........................................   23

ARTICLE IV    COVENANTS OF THE OWNER.......................................   23

     SECTION 4.01.  Liens..................................................   23
     SECTION 4.02.  Possession, Operation and Use, Maintenance,
                    Registration and Markings..............................   23
     SECTION 4.03.  Inspection ............................................   28
     SECTION 4.04.  Replacement and Pooling of Parts, Alterations,
                    Modifications and Additions; Substitution of
                    Engines................................................   29
     SECTION 4.05.  Loss, Destruction or Requisition.......................   33
     SECTION 4.06.  Insurance..............................................   37
     SECTION 4.07.  Merger of Owner........................................   38



                                TABLE OF CONTENTS
                                   (Continued)


                                                                            PAGE
                                                                            ----

ARTICLE V     EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE.....................   38

     SECTION 5.01.  Event of Default.......................................   38
     SECTION 5.02.  Remedies...............................................   40
     SECTION 5.03.  Return of Aircraft, Etc................................   41
     SECTION 5.04.  Remedies Cumulative....................................   42
     SECTION 5.05.  Discontinuance of Proceedings..........................   43
     SECTION 5.06.  Waiver of Past Defaults................................   43
     SECTION 5.07.  Appointment of Receiver................................   43
     SECTION 5.08.  Mortgagee Authorized to Execute Bills of Sale, Etc.....   43
     SECTION 5.09.  Rights of Note Holders to Receive Payment..............   44

ARTICLE VI    DUTIES OF THE MORTGAGEE......................................   44

     SECTION 6.01.  Notice of Event of Default.............................   44
     SECTION 6.02.  Action Upon Instructions; Certain Rights and
                    Limitations............................................   45
     SECTION 6.03.  Indemnification........................................   45
     SECTION 6.04.  No Duties Except as Specified in Trust
                    Indenture or Instructions..............................   46
     SECTION 6.05.  No Action Except Under Trust Indenture
                    or Instructions........................................   46
     SECTION 6.06.  Investment of Amounts Held by Mortgagee................   46

ARTICLE VII   THE MORTGAGEE................................................   47

     SECTION 7.01.  Acceptance of Trusts and Duties........................   47
     SECTION 7.02.  Absence of Duties......................................   47
     SECTION 7.03.  No Representations or Warranties as to
                    Aircraft or Documents..................................   47
     SECTION 7.04.  No Segregation of Monies; No Interest..................   48
     SECTION 7.05.  Reliance; Agreements; Advice of Counsel................   48
     SECTION 7.06.  Compensation...........................................   49
     SECTION 7.07.  Instructions from Note Holders.........................   49

ARTICLE VIII  INDEMNIFICATION..............................................   49

     SECTION 8.01.  Scope of Indemnification...............................   49

ARTICLE IX    SUCCESSOR AND SEPARATE TRUSTEES..............................   49

     SECTION 9.01.  Resignation of Mortgagee; Appointment of Successor.....   49
     SECTION 9.02.  Appointment of Additional and Separate Trustees........   51



                                TABLE OF CONTENTS
                                   (Continued)


                                                                            PAGE
                                                                            ----

ARTICLE X     SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
              INDENTURE AND OTHER DOCUMENTS................................   52

     SECTION 10.01. Instructions of Majority; Limitations..................   52
     SECTION 10.02. Mortgagee Protected....................................   53
     SECTION 10.03. Documents Mailed to Note Holders.......................   54
     SECTION 10.04. No Request Necessary for Trust Indenture
                    Supplement.............................................   54

ARTICLE XI    MISCELLANEOUS................................................   54

     SECTION 11.01. Termination of Trust Indenture.........................   54
     SECTION 11.02. No Legal Title to Collateral in Note Holders...........   54
     SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding...............   55
     SECTION 11.04. Trust Indenture for Benefit of Owner,
                    Mortgagee, Note Holders and the other
                    Indenture Indemnitees..................................   55
     SECTION 11.05. Notices................................................   55
     SECTION 11.06. Severability...........................................   56
     SECTION 11.07. No Oral Modification or Continuing Waivers.............   56
     SECTION 11.08. Successors and Assigns.................................   56
     SECTION 11.09. Headings...............................................   56
     SECTION 11.10. Normal Commercial Relations............................   56
     SECTION 11.11. Governing Law; Counterpart Form........................   57
     SECTION 11.12. Voting By Note Holders.................................   57
     SECTION 11.13. Bankruptcy.............................................   57


ANNEX A     Definitions
ANNEX B     Insurance
EXHIBIT A   Form of Trust Indenture and Mortgage Supplement
SCHEDULE I  Equipment Notes Amortization and Interest Rates



                        TRUST INDENTURE AND MORTGAGE ___

          TRUST INDENTURE AND MORTGAGE ___, dated as of ______________  __, 199_
("Trust Indenture"),  between CONTINENTAL AIRLINES, INC., a Delaware corporation
("Owner"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation,  not in
its  individual  capacity,  except as  expressly  stated  herein,  but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").

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

          WHEREAS,  all capitalized  terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;

          WHEREAS,  the parties  hereto  desire by this Trust  Indenture,  among
other  things,  (i) to provide for the  issuance  by the Owner of the  Equipment
Notes and (ii) to provide for the  assignment,  mortgage and pledge by the Owner
to the Mortgagee,  as part of the Collateral  hereunder,  among other things, of
all of the Owner's right,  title and interest in and to the Aircraft and, except
as  hereinafter  expressly  provided,  all payments and other  amounts  received
hereunder in  accordance  with the terms hereof,  as security  for,  among other
things,  the  Owner's   obligations  to  the  Note  Holders  and  the  Indenture
Indemnitees;

          WHEREAS,  all things have been done to make the Equipment Notes,  when
executed  by  the  Owner  and  authenticated  and  delivered  by  the  Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and

          WHEREAS,  all things necessary to make this Trust Indenture the valid,
binding and legal  obligation of the Owner for the uses and purposes  herein set
forth,  in  accordance  with its terms,  have been done and  performed  and have
happened;

                                 GRANTING CLAUSE

          NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt  payment of the Original  Amount of,  interest on,  Make-Whole
Amount,  if any, and all other amounts due with respect to, all Equipment  Notes
from time to time outstanding  hereunder according to their tenor and effect and
to secure the  performance  and  observance by the Owner of all the  agreements,
covenants and provisions contained herein and in the Participation Agreement and
in the  Equipment  Notes,  for the  benefit of the Note  Holders and each of the
Indenture Indemnitees, and in consideration of the premises and of the covenants
herein  contained,  and of the acceptance of the Equipment  Notes by the holders
thereof, and for other good and valuable  consideration the receipt and adequacy
whereof  are  hereby  acknowledged,  the Owner  has  granted,  bargained,  sold,
assigned,  transferred,  conveyed,  mortgaged,  pledged and confirmed,  and does
hereby grant, bargain,  sell, assign,  transfer,  convey,  mortgage,  pledge and
confirm,  unto the  Mortgagee,  its  successors  in trust and  assigns,  for the
security and benefit of, the Note Holders and each of the Indenture Indemnitees,
a first priority security interest in and mortgage lien on all right,  title and



interest of the Owner in, to and under the following described property,  rights
and privileges, whether now or hereafter acquired (which, collectively, together
with all  property  hereafter  specifically  subject  to the Lien of this  Trust
Indenture by the terms hereof or any supplement hereto, are included within, and
are referred to as, the "Collateral"), to wit:

          (1) The Airframe  which is one Boeing  _______  aircraft  with the FAA
Registration number of N_____ and the manufacturer's  serial number of _____ and
Engines, each of which Engines is a ____________________________ engine with the
manufacturer's  serial  numbers  of _____  and  _____,  is of 750 or more  rated
takeoff  horsepower or the  equivalent  of such  horsepower  (such  Airframe and
Engines more particularly  described in the Trust Indenture  Supplement executed
and  delivered  as  provided  herein) as the same is now and will  hereafter  be
constituted,  whether now owned by the Owner or hereafter  acquired,  and in the
case of such  Engines,  whether or not any such Engine  shall be installed in or
attached to the Airframe or any other  airframe,  together with (a) all Parts of
whatever nature,  which are from time to time included within the definitions of
"Airframe" or "Engines",  whether now owned or hereafter acquired, including all
substitutions,   renewals  and  replacements  of  and  additions,  improvements,
accessions and  accumulations to the Airframe and Engines (other than additions,
improvements,  accessions and accumulations which constitute appliances,  parts,
instruments, appurtenances, accessories, furnishings or other equipment excluded
from the definition of Parts) and (b) all Aircraft Documents;

          (2) The  Purchase  Agreement  and the Bills of Sale to the  extent the
same  relate  to  continuing  rights of the Owner in  respect  of any  warranty,
indemnity or agreement, express or implied, as to title, materials, workmanship,
design or patent infringement or related matters with respect to the Airframe or
the Engines  (reserving to the Owner,  however,  all of the Owner's other rights
and interest in and to the Purchase Agreement) together with all rights, powers,
privileges,  options and other benefits of the Owner thereunder (subject to such
reservation)  with respect to the Airframe or the  Engines,  including,  without
limitation,  the right to make all waivers and  agreements,  to give and receive
all notices and other  instruments or  communications,  to take such action upon
the occurrence of a default thereunder, including the commencement,  conduct and
consummation  of  legal,  administrative  or  other  proceedings,  as  shall  be
permitted  thereby or by law, and to do any and all other things which the Owner
is or may be entitled to do thereunder  (subject to such reservation),  subject,
with  respect to the  Purchase  Agreement,  to the terms and  conditions  of the
Consent and Agreement and the Engine Consent and Agreement;

          (3) All proceeds with respect to the requisition of title to or use of
the  Aircraft or any Engine by any  Government  Entity or from the sale or other
disposition  of the  Aircraft,  the  Airframe,  any  Engine  or  other  property
described  in any of these  Granting  Clauses by the  Mortgagee  pursuant to the
terms of this Trust  Indenture,  and all insurance  proceeds with respect to the
Aircraft,  the  Airframe,  any Engine or any part  thereof,  but  excluding  any
insurance maintained by the Owner and not required under Section 4.06;

          (4) All rents,  revenues and other proceeds collected by the Mortgagee
pursuant  to Section  5.03(b)  and all monies and  securities  from time to time



deposited or required to be deposited  with the  Mortgagee by or for the account
of the Owner  pursuant to any terms of this Trust  Indenture held or required to
be held by the Mortgagee hereunder; and

          (5) All proceeds of the foregoing.

          PROVIDED,   HOWEVER,   that   notwithstanding  any  of  the  foregoing
provisions,  so  long  as no  Event  of  Default  shall  have  occurred  and  be
continuing,  (a) the  Mortgagee  shall not take or cause to be taken any  action
contrary to the Owner's right  hereunder to quiet  enjoyment of the Airframe and
Engines,  and to possess,  use,  retain and control the Airframe and Engines and
all revenues, income and profits derived therefrom, and (b) the Owner shall have
the right,  to the  exclusion  of the  Mortgagee,  with  respect to the Purchase
Agreement,  to exercise  in the Owner's  name all rights and powers of the buyer
under the Purchase  Agreement  (other than to amend,  modify or waive any of the
warranties  or  indemnities  contained  therein,  except in the  exercise of the
Owner's  reasonable  business  judgment)  and to retain any  recovery or benefit
resulting from the  enforcement of any warranty or indemnity  under the Purchase
Agreement;  and  PROVIDED  FURTHER  THAT,   notwithstanding  the  occurrence  or
continuation  of an Event of  Default,  the  Mortgagee  shall not enter into any
amendment of the Purchase  Agreement which would increase the obligations of the
Owner thereunder.

          TO HAVE AND TO HOLD all and singular the  aforesaid  property unto the
Mortgagee,  and  its  successors  and  assigns,  in  trust  for  the  equal  and
proportionate  benefit  and  security  of the  Note  Holders  and the  Indenture
Indemnitees,  except as provided in Section 2.13 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of  priority  of time of issue,  sale,  negotiation,  date of maturity
thereof or otherwise  for any reason  whatsoever,  and for the uses and purposes
and in all cases and as to all property  specified in paragraphs (1) through (5)
inclusive  above,  subject to the terms and  provisions  set forth in this Trust
Indenture.

          It is expressly  agreed that anything herein contained to the contrary
notwithstanding, the Owner shall remain liable under the Indenture Agreements to
perform all of the  obligations  assumed by it thereunder,  except to the extent
prohibited  or  excluded  from  doing so  pursuant  to the terms and  provisions
thereof, and the Mortgagee, the Note Holders and the Indenture Indemnitees shall
have no obligation or liability  under the Indenture  Agreements by reason of or
arising  out of the  assignment  hereunder,  nor shall the  Mortgagee,  the Note
Holders or the Indenture  Indemnitees  be required or obligated in any manner to
perform  or  fulfill  any  obligations  of the Owner  under or  pursuant  to the
Indenture  Agreements,  or,  except as herein  expressly  provided,  to make any
payment,  or to make any inquiry as to the nature or  sufficiency of any payment
received  by it, or present or file any claim,  or take any action to collect or
enforce  the  payment of any  amounts  which may have been  assigned to it or to
which it may be entitled at any time or times.

          The Owner does hereby  constitute  the  Mortgagee  the true and lawful
attorney of the Owner, irrevocably,  granted for good and valuable consideration
and coupled with an interest and with full power of substitution,  and with full
power  (in the name of the  Owner or  otherwise)  to ask for,  require,  demand,
receive,  compound  and give  acquittance  for any and all monies and claims for



monies (in each case including  insurance and  requisition  proceeds) due and to
become  due under or  arising  out of the  Indenture  Agreements,  and all other
property which now or hereafter  constitutes part of the Collateral,  to endorse
any checks or other  instruments  or orders in connection  therewith and to file
any  claims or to take any  action or to  institute  any  proceedings  which the
Mortgagee may deem to be necessary or advisable in the  premises;  PROVIDED that
the Mortgagee  shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.

          The  Owner  agrees  that at any time and from  time to time,  upon the
written  request of the Mortgagee,  the Owner will promptly and duly execute and
deliver or cause to be duly  executed  and  delivered  any and all such  further
instruments  and  documents   (including  without  limitation  UCC  continuation
statements) as the Mortgagee may reasonably deem necessary to perfect,  preserve
or protect the mortgage,  security interests and assignments created or intended
to be created  hereby or to obtain for the  Mortgagee  the full  benefits of the
assignment hereunder and of the rights and powers herein granted.

          IT IS HEREBY  COVENANTED  AND AGREED by and between the parties hereto
as follows:

                                    ARTICLE I

                                   DEFINITIONS

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


                                   ARTICLE II

                               THE EQUIPMENT NOTES

          SECTION 2.01. FORM OF EQUIPMENT NOTES

          The  Equipment  Notes  shall be  substantially  in the form set  forth
below:

           THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
       SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE
       SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY
           NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
        APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS
                                   AVAILABLE.



                           CONTINENTAL AIRLINES, INC.

     SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE
        BOEING MODEL _______ AIRCRAFT BEARING UNITED STATES REGISTRATION
                                 NUMBER N_____.

No. ____                                                Date: [__________, ____]

_______________________


INTEREST RATE                                                    MATURITY DATE
- -------------                                                    -------------

[___________]                                                    [___________]

          CONTINENTAL AIRLINES,  INC., a Delaware corporation ("Owner"),  hereby
promises to pay to  __________________,  or the registered assignee thereof, the
principal sum of $____________ (the "Original  Amount"),  together with interest
on the  amount  of the  Original  Amount  remaining  unpaid  from  time  to time
(calculated  on the  basis  of a year of 360 days  comprised  of  twelve  30-day
months) from the date hereof until paid in full at a rate per annum equal to the
Debt  Rate.  The  Original  Amount of this  Equipment  Note  shall be payable in
installments  on  the  dates  set  forth  in  Schedule  I  hereto  equal  to the
corresponding percentage of the Original Amount of this Equipment Note set forth
in Schedule I hereto.  Accrued but unpaid  interest  shall be due and payable in
semiannual  installments  commencing  on  ______,  __ 199_,  and  thereafter  on
[______]  and  [______]  of  each  year,  to  and   including   _______________.
Notwithstanding  the  foregoing,  the final payment made on this  Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid  interest on, and any other  amounts due under,  this
Equipment Note.  Notwithstanding  anything to the contrary  contained herein, if
any date on which a payment under this Equipment Note becomes due and payable is
not a Business Day, then such payment shall not be made on such  scheduled  date
but shall be made on the next  succeeding  Business  Day and if such  payment is
made on such next  succeeding  Business  Day,  no interest  shall  accrue on the
amount of such payment during such extension.

          For  purposes  hereof,  the term  "Trust  Indenture"  means  the Trust
Indenture and Mortgage ________, dated as of _______ __, 199_, between the Owner
and Wilmington  Trust Company (the  "Mortgagee"),  as the same may be amended or
supplemented  from  time to  time.  All  other  capitalized  terms  used in this
Equipment  Note  and not  defined  herein  shall  have the  respective  meanings
assigned in the Trust Indenture.

          This  Equipment Note shall bear  interest,  payable on demand,  at the
Payment Due Rate  (calculated  on the basis of a year of 360 days  comprised  of
twelve 30-day months) on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any,  and (to the extent  permitted by  applicable  Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is  overdue.  Amounts  shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).



          There shall be maintained  an Equipment  Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.

          The Original Amount and interest and other amounts due hereunder shall
be payable in Dollars in  immediately  available  funds at the  Corporate  Trust
Office of the Mortgagee,  or as otherwise provided in the Trust Indenture.  Each
such  payment  shall be made on the date such  payment  is due and  without  any
presentment or surrender of this Equipment Note,  except that in the case of any
final payment with respect to this  Equipment  Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.

          The holder hereof,  by its acceptance of this Equipment  Note,  agrees
that,  except as provided in the Trust  Indenture,  each payment of the Original
Amount,  Make-Whole  Amount, if any, and interest received by it hereunder shall
be applied, FIRST, to the payment of accrued interest on this Equipment Note (as
well as any  interest on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any, or, to the extent  permitted  by Law, any overdue  interest and
other amounts hereunder) to the date of such payment,  SECOND, to the payment of
the Original  Amount of this Equipment Note then due,  THIRD,  to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and FOURTH, the balance, if any, remaining thereafter, to the payment
of installments  of the Original Amount of this Equipment Note remaining  unpaid
in the inverse order of their maturity.

          This Equipment  Note is one of the Equipment  Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner pursuant to the
terms  of the  Trust  Indenture.  The  Collateral  is held by the  Mortgagee  as
security,  in part,  for the Equipment  Notes.  The provisions of this Equipment
Note are subject to the Trust  Indenture.  Reference is hereby made to the Trust
Indenture for a complete  statement of the rights and  obligations of the holder
of, and the nature and extent of the security for, this  Equipment  Note and the
rights  and  obligations  of the  holders  of,  and the nature and extent of the
security for, any other  Equipment  Notes executed and delivered under the Trust
Indenture,  as well as for a statement of the terms and  conditions of the Trust
created by the Trust  Indenture,  to all of which  terms and  conditions  in the
Trust  Indenture  each holder hereof agrees by its  acceptance of this Equipment
Note.

          As provided in the Trust Indenture and subject to certain  limitations
therein set forth,  this  Equipment  Note is  exchangeable  for a like aggregate
Original Amount of Equipment  Notes of different  authorized  denominations,  as
requested by the holder surrendering the same.

          Prior  to  due  presentment  for  registration  of  transfer  of  this
Equipment Note, the Owner and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes,  whether
or not this Equipment  Note be overdue,  and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.

          This  Equipment  Note is subject to redemption as provided in Sections
2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise.  In addition, this
Equipment  Note may be  accelerated  as  provided  in Section  5.02 of the Trust
Indenture.



          [The  indebtedness  evidenced by this Equipment Note is, to the extent
and in the manner  provided in the Trust  Indenture,  subordinate and subject in
right of payment to the prior  payment in full of the  Secured  Obligations  (as
defined in the Trust  Indenture)  in respect of [Series A  Equipment  Notes]
[Series A and Series B  Equipment  Notes]  [Series A,  Series B and Series C
Equipment  Notes]  and  this  Equipment  Note  is  issued  subject  to  such
provisions.  The Note Holder of this Equipment  Note, by accepting the same, (a)
agrees to and shall be bound by such provisions,  (b) authorizes and directs the
Mortgagee on his behalf to take such action as may be  necessary or  appropriate
to  effectuate  the  subordination  as provided in the Trust  Indenture  and (c)
appoints the Mortgagee his attorney-in-fact for such purpose.]

          Unless the certificate of  authentication  hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit  under the Trust  Indenture or be valid or obligatory
for any purpose.

          THIS  EQUIPMENT  NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                      * * *

          IN WITNESS  WHEREOF,  the Owner has caused this  Equipment  Note to be
executed in its corporate name by its officer  thereunto duly  authorized on the
date hereof.



                                       CONTINENTAL AIRLINES, INC.


                                       By:______________________________________
                                          Name:
                                          Title:




___________________

  To be inserted in the case of a Series B Equipment Note.

  To be inserted in the case of a Series C Equipment Note.

  To be inserted in the case of Series D Equipment Note.

  To be  inserted  for each Equipment Note other than any Series A Equipment
      Note.



                    MORTGAGEE'S CERTIFICATE OF AUTHENTICATION

          This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.

                                       WILMINGTON TRUST COMPANY, as Mortgagee




                                       By:______________________________________
                                          Name:
                                          Title:


                                   SCHEDULE I

                           EQUIPMENT NOTE AMORTIZATION


PAYMENT DATE                            PERCENTAGE OF ORIGINAL AMOUNT TO BE PAID
- ------------                            ----------------------------------------


                       [SEE SCHEDULE I TO TRUST INDENTURE
                        WHICH IS INSERTED UPON ISSUANCE]
                                      * * *




          SECTION 2.02. ISSUANCE AND TERMS OF EQUIPMENT NOTES

          The Equipment Notes shall be dated the date of issuance thereof, shall
be issued in three separate series (or if the Series D is issued,  four separate
series) consisting of Series A, Series B, Series C and, if issued,  Series D and
in the maturities and principal  amounts and shall bear interest as specified in
Schedule I hereto (or,  in the case of the Series D if issued  after the Closing
Date,  as  specified  in an  amendment  to this  Trust  Indenture).  On the date
thereof,  each Series A, Series B and Series C Equipment Note shall be issued to
the  Subordination  Agent  on  behalf  of the Pass  Through  Trustee  under  the
applicable  Pass Through Trust  Agreement.  Owner shall have the option to issue
the Series D Equipment Notes at or after the Closing.  The Equipment Notes shall
be issued in  registered  form  only.  The  Equipment  Notes  shall be issued in
denominations  of  $1,000  and  integral  multiples  thereof,  except  that  one
Equipment  Note of  each  Series  may be in an  amount  that is not an  integral
multiple of $1,000.

          Each Equipment  Note shall bear interest at the Debt Rate  (calculated
on the basis of a year of 360 days  comprised  of twelve  30-day  months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on ____ __, 199_, and on each [______] and [______]  thereafter  until maturity.
The Original  Amount of each Equipment Note shall be payable on the dates and in
the installments equal to the corresponding percentage of the Original Amount as
set forth in  Schedule I hereto  which  shall be  attached  as Schedule I to the
Equipment Notes (or, in the case of the Series D Equipment Notes if issued after
the Closing  Date, as set forth in an amendment to this Trust  Indenture,  which
payment  schedule  shall be  attached  as  Schedule I to the Series D  Equipment
Notes).  Notwithstanding  the  foregoing,  the final  payment  made  under  each
Equipment Note shall be in an amount  sufficient to discharge in full the unpaid
Original  Amount and all accrued and unpaid  interest on, and any other  amounts
due under,  such Equipment  Note. Each Equipment Note shall bear interest at the
Payment Due Rate  (calculated  on the basis of a year of 360 days  comprised  of
twelve 30-day months) on any part of the Original Amount,  Make-Whole Amount, if
any,  and, to the extent  permitted by  applicable  Law,  interest and any other
amounts  payable  thereunder  not paid when due for any period  during which the
same shall be overdue, in each case for the period the same is overdue.  Amounts
shall  be  overdue  if not  paid  when  due  (whether  at  stated  maturity,  by
acceleration or otherwise).  Notwithstanding  anything to the contrary contained
herein,  if any date on which a payment under any Equipment Note becomes due and
payable  is not a  Business  Day then  such  payment  shall  not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next  succeeding  Business Day, no interest shall accrue
on the amount of such payment during such extension.

          The  Owner  agrees  to  pay  to  the  Mortgagee  for  distribution  in
accordance with Section 3.04 hereof:  (i) to the extent not payable  (whether or
not in fact paid) under Section 6(a) of the Note Purchase  Agreement,  an amount
equal to the fees payable to the Liquidity  Provider  under Section 2.03 of each
Liquidity  Facility and the related Fee Letter (as defined in the  Intercreditor
Agreement)  multiplied  by a fraction  the  numerator of which shall be the then



outstanding aggregate principal amount of the Series A Equipment Notes, Series B
Equipment  Notes and Series C Equipment Notes and the denominator of which shall
be the then  outstanding  aggregate  principal amount of all "Series A Equipment
Notes,"  "Series B  Equipment  Notes" and "Series C  Equipment  Notes"  (each as
defined in the Note Purchase  Agreement);  (ii) (x) the amount equal to interest
on any Downgrade  Advance  (other than any Applied  Downgrade  Advance)  payable
under Section 3.07 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 foregoing  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 Owner on the
overdue  scheduled  interest  on the  Equipment  Notes in  respect of which such
Unpaid Advance,  Applied Downgrade Advance or Applied  Non-Extension Advance was
made  multiplied  by (y) a fraction  the  numerator  of which  shall be the then
aggregate overdue amounts of interest on the Series A Equipment Notes,  Series B
Equipment Notes and Series C Equipment  Notes (other than interest  becoming due
and payable solely as a result of acceleration of any such Equipment  Notes) and
the denominator of which shall be the then aggregate overdue amounts of interest
on all "Series A  Equipment  Notes,"  "Series B  Equipment  Notes" and "Series C
Equipment  Notes" (each as defined in the Note Purchase  Agreement)  (other than
interest becoming due and payable solely as a result of acceleration of any such
"Equipment Notes");  and (v) Owner'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
(ii),  (iii) or (iv) above,  (c) Owner's pro rata share of all  compensation and
reimbursement of expenses, disbursements and advances payable by Owner under the
Pass Through Trust  Agreements,  (d) Owner'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) in the event
Owner  requests  any  amendment  to any  Operative  Agreement  or  Pass  Through
Agreement,   Owner's  pro  rata  share  of  all  reasonable  fees  and  expenses
(including, without limitation, fees and disbursements of counsel) of the Escrow
Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustees under the Escrow Agreements.  As used herein,  "Owner'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
paragraph,  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.



          The Equipment Notes shall be executed on behalf of the Owner by one of
its authorized  officers.  Equipment Notes bearing the signatures of individuals
who were at any time the  proper  officers  of the Owner  shall  bind the Owner,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment Notes. The Owner
may from time to time  execute and deliver  Equipment  Notes with respect to the
Aircraft  to the  Mortgagee  for  authentication  upon  original  issue and such
Equipment Notes shall thereupon be authenticated  and delivered by the Mortgagee
upon the written  request of the Owner  signed by an  authorized  officer of the
Owner.  No Equipment  Note shall be secured by or entitled to any benefit  under
this Trust  Indenture or be valid or obligatory  for any purposes,  unless there
appears on such  Equipment  Note a  certificate  of  authentication  in the form
provided for herein executed by the Mortgagee by the manual  signature of one of
its  authorized  officers  and  such  certificate  upon any  Equipment  Notes be
conclusive  evidence,  and the only evidence,  that such Equipment Note has been
duly authenticated and delivered hereunder.

          The aggregate  Original Amount of the Equipment Notes issued hereunder
shall not  exceed the amount set forth as the  maximum  therefor  on  Schedule I
hereto.

          SECTION 2.03. [INTENTIONALLY OMITTED]

          SECTION 2.04. METHOD OF PAYMENT

               (a) The Original Amount of, interest on,  Make-Whole  Amount,  if
any,  and other  amounts  due under each  Equipment  Note or  hereunder  will be
payable in Dollars by wire  transfer of  immediately  available  funds not later
than 12:30 PM, New York time, on the due date of payment to the Mortgagee at the
Corporate  Trust  Office for  distribution  among the Note Holders in the manner
provided  herein.   The  Owner  shall  not  have  any   responsibility  for  the
distribution of such payment to any Note Holder.  Notwithstanding  the foregoing
or any provision in any Equipment  Note to the contrary,  the Mortgagee will use
reasonable  efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner),  all amounts paid by the Owner hereunder
and under such holder's  Equipment  Note or Equipment  Notes to such holder or a
nominee therefor (including all amounts  distributed  pursuant to Article III of
this Trust  Indenture) by  transferring,  or causing to be transferred,  by wire
transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York
City time, on the due date of payment,  to an account  maintained by such holder
with  a  bank  located  in  the  continental  United  States  the  amount  to be
distributed to such holder,  for credit to the account of such holder maintained
at such bank. If the  Mortgagee  shall fail to make any such payment as provided
in the  immediately  foregoing  sentence after its receipt of funds at the place
and prior to the time specified above, the Mortgagee, in its individual capacity
and not as trustee,  agrees to compensate  such holders for loss of use of funds
at Debt Rate until such payment is made and the  Mortgagee  shall be entitled to
any interest  earned on such funds until such payment is made.  Any payment made
hereunder  shall be made without any  presentment  or surrender of any Equipment
Note,  except that, in the case of the final payment in respect of any Equipment
Note, such Equipment Note shall be surrendered to the Mortgagee for cancellation
promptly after such payment.  Notwithstanding  any other provision of this Trust



Indenture to the contrary, the Mortgagee shall not be required to make, or cause
to be made, wire transfers as aforesaid prior to the first Business Day on which
it is practicable for the Mortgagee to do so in view of the time of day when the
funds to be so transferred were received by it if such funds were received after
12:30 PM, New York time, at the place of payment.  Prior to the due  presentment
for  registration of transfer of any Equipment Note, the Owner and the Mortgagee
shall deem and treat the Person in whose name any  Equipment  Note is registered
on the  Equipment  Note  Register  as the  absolute  owner  and  holder  of such
Equipment Note for the purpose of receiving  payment of all amounts payable with
respect to such Equipment Note and for all other purposes, and none of the Owner
or the Mortgagee shall be affected by any notice to the contrary. So long as any
signatory  to  the  Participation  Agreement  or  nominee  thereof  shall  be  a
registered Note Holder,  all payments to it shall be made to the account of such
Note Holder specified in Schedule I thereto and otherwise in the manner provided
in or pursuant to the  Participation  Agreement  unless it shall have  specified
some other  account or manner of payment by notice to the  Mortgagee  consistent
with this Section 2.04.

               (b) The  Mortgagee,  as agent for the Owner,  shall  exclude  and
withhold  at the  appropriate  rate from each  payment  of  Original  Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States  withholding  taxes
applicable  thereto as  required  by Law.  The  Mortgagee  agrees to act as such
withholding agent and, in connection  therewith,  whenever any present or future
United States taxes or similar  charges are required to be withheld with respect
to any  amounts  payable  hereunder  or in respect of the  Equipment  Notes,  to
withhold  such amounts and timely pay the same to the  appropriate  authority in
the name of and on behalf of the Note  Holders,  that it will file any necessary
United  States  withholding  tax  returns or  statements  when due,  and that as
promptly as  possible  after the  payment  thereof it will  deliver to each Note
Holder  (with a copy to the Owner)  appropriate  receipts  showing  the  payment
thereof,  together with such  additional  documentary  evidence as any such Note
Holder may reasonably request from time to time.

          If a Note  Holder  which is a  Non-U.S.  Person has  furnished  to the
Mortgagee a properly  completed,  accurate and currently effective U.S. Internal
Revenue  Service  Form  1001 or W-8 (or such  successor  form or forms as may be
required by the United States Treasury  Department)  during the calendar year in
which the payment  hereunder or under the Equipment  Note(s) held by such holder
is made  (but  prior to the  making  of such  payment),  or in either of the two
preceding  calendar years,  and has not notified the Mortgagee of the withdrawal
or  inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no  reason  to  believe  that any  information  set  forth  in such  form is
inaccurate),  the Mortgagee shall withhold only the amount,  if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United  States  federal  income tax. If a Note
Holder (x) which is a Non-U.S.  Person has furnished to the Mortgagee a properly
completed,  accurate and currently  effective U.S. Internal Revenue Service Form
4224 in  duplicate  (or  such  successor  certificate,  form or  forms as may be
required by the United  States  Treasury  Department  as  necessary  in order to
properly  avoid  withholding  of United  States  federal  income tax),  for each
calendar year in which a payment is made (but prior to the making of any payment



for  such  year),  and has not  notified  the  Mortgagee  of the  withdrawal  or
inaccuracy  of such  certificate  or form prior to the date of such payment (and
the  Mortgagee has no reason to believe that any  information  set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly  completed,  accurate and currently  effective U.S.  Internal Revenue
Service  Form W-9,  if  applicable,  prior to a payment  hereunder  or under the
Equipment  Notes held by such holder,  no amount shall be withheld from payments
in respect of United States  federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing  forms or  certificates  is withdrawn or
inaccurate,  or if such holder has not filed a form  claiming an exemption  from
United States  withholding tax or if the Code or the  regulations  thereunder or
the administrative  interpretation  thereof is at any time after the date hereof
amended to require such  withholding  of United States federal income taxes from
payments under the Equipment Notes held by such holder,  the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder  withholding taxes at
the  appropriate  rate  under  Law and  will,  on a timely  basis as more  fully
provided above, deposit such amounts with an authorized depository and make such
returns,  statements,  receipts  and other  documentary  evidence in  connection
therewith as required by Law.

          Owner shall not have any liability for the failure of the Mortgagee to
withhold taxes in the manner provided for herein or for any false, inaccurate or
untrue evidence provided by any Note Holder hereunder.

          SECTION 2.05. APPLICATION OF PAYMENTS

          In the case of each Equipment Note,  each payment of Original  Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:


          First:  to the payment of accrued  interest on such Equipment Note (as
     well as any interest on any overdue Original Amount, any overdue Make-Whole
     Amount,  if any, and to the extent  permitted by Law, any overdue  interest
     and any other overdue amounts thereunder) to the date of such payment;

          Second:  to the payment of the Original  Amount of such Equipment Note
     (or a portion thereof) then due thereunder;

          Third:  to the payment of  Make-Whole  Amount,  if any,  and any other
     amount due hereunder or under such Equipment Note; and

          Fourth: the balance, if any, remaining  thereafter,  to the payment of
     the Original Amount of such Equipment Note remaining  unpaid (provided that
     such Equipment  Note shall not be subject to redemption  except as provided
     in Sections 2.10, 2.11 and 2.12 hereof).

The  amounts  paid  pursuant  to clause  "Fourth"  above shall be applied to the
installments  of Original  Amount of such Equipment Note in the inverse order of
their maturity.



          SECTION 2.06. TERMINATION OF INTEREST IN COLLATERAL

          No Note Holder nor any other Indenture Indemnitee shall, as such, have
any further interest in, or other right with respect to, the Collateral when and
if the Original Amount of, Make-Whole  Amount, if any, and interest on and other
amounts  due under all  Equipment  Notes held by such Note  Holder and all other
sums then due and payable to such Note Holder, such Indenture  Indemnitee or the
Mortgagee hereunder (including, without limitation, under the third paragraph of
Section  2.02  hereof)  and under the other  Operative  Agreements  by the Owner
(collectively, the "Secured Obligations") shall have been paid in full.


          SECTION 2.07. REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT NOTES

          The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee  shall provide for the  registration  of Equipment Notes and
the  registration  of transfers of Equipment  Notes.  No such transfer  shall be
given effect unless and until  registration  hereunder shall have occurred.  The
Equipment  Note  Register  shall be kept at the  Corporate  Trust  Office of the
Mortgagee.  The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of  registering  Equipment  Notes and  transfers of  Equipment  Notes as
herein  provided.  A holder of any  Equipment  Note  intending to exchange  such
Equipment  Note shall  surrender  such  Equipment  Note to the  Mortgagee at the
Corporate  Trust  Office,  together with a written  request from the  registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer,  the name and address of the new holder or holders.
Upon  surrender for  registration  of transfer of any Equipment  Note, the Owner
shall execute,  and the Mortgagee shall authenticate and deliver, in the name of
the designated  transferee or transferees,  one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the option of the Note
Holder,  Equipment  Notes  may be  exchanged  for other  Equipment  Notes of any
authorized  denominations of a like aggregate Original Amount, upon surrender of
the  Equipment  Notes to be exchanged to the  Mortgagee at the  Corporate  Trust
Office.  Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute,  and the Mortgagee shall authenticate and deliver,  the Equipment
Notes which the Note  Holder  making the  exchange  is entitled to receive.  All
Equipment  Notes  issued  upon any  registration  of  transfer  or  exchange  of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise  under this Trust  Indenture)  shall be the valid  obligations  of the
Owner  evidencing  the same  respective  obligations,  and  entitled to the same
security  and  benefits  under  this Trust  Indenture,  as the  Equipment  Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer,  shall (if so required by
the  Mortgagee) be duly endorsed,  or be accompanied by a written  instrument of
transfer in form  satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's  attorney duly  authorized in writing,  and the Mortgagee shall
require  evidence  satisfactory  to it as to the compliance of any such transfer
with the Securities  Act, and the securities Laws of any applicable  state.  The
Mortgagee  shall make a notation on each new Equipment Note of the amount of all
payments  of  Original  Amount  previously  made  on the old  Equipment  Note or
Equipment  Notes with respect to which such new Equipment Note is issued and the
date to which  interest on such old Equipment  Note or Equipment  Notes has been



paid.  Interest  shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment  Note, and
all  payments of the  Original  Amount  marked on such new  Equipment  Note,  as
provided above,  shall be deemed to have been made thereon.  The Owner shall not
be required to exchange any surrendered Equipment Notes as provided above during
the ten-day period preceding the due date of any payment on such Equipment Note.
The Owner  shall in all cases deem the Person in whose name any  Equipment  Note
shall have been issued and  registered as the absolute  owner and holder of such
Equipment  Note for the purpose of receiving  payment of all amounts  payable by
the Owner  with  respect to such  Equipment  Note and for all  purposes  until a
notice  stating  otherwise  is received  from the  Mortgagee  and such change is
reflected on the Equipment Note Register. The Mortgagee will promptly notify the
Owner  of each  registration  of a  transfer  of an  Equipment  Note.  Any  such
transferee of an Equipment Note, by its acceptance of an Equipment Note,  agrees
to the  provisions  of this  Trust  Indenture  and the  Participation  Agreement
applicable  to Note  Holders,  including  Sections  6.3, 6.4 and 9.1 thereof and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters  covenanted by the original  Note Holder in the  Participation
Agreement.  Subject to compliance by the Note Holder and its transferee (if any)
of the  requirements  set forth in this Section 2.07,  Mortgagee and Owner shall
use all  reasonable  efforts  to issue new  Equipment  Notes  upon  transfer  or
exchange  within 10 Business Days of the date an Equipment  Note is  surrendered
for transfer or exchange.

          SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES

          If any  Equipment  Note shall  become  mutilated,  destroyed,  lost or
stolen,  the  Owner  shall,  upon the  written  request  of the  holder  of such
Equipment  Note,  execute and the Mortgagee  shall  authenticate  and deliver in
replacement  thereof a new Equipment  Note,  payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft.  If
the Equipment  Note being  replaced has become  mutilated,  such  Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been  destroyed,  lost or
stolen,  the holder of such  Equipment  Note shall  furnish to the Owner and the
Mortgagee  such  security  or  indemnity  as may be required by them to save the
Owner and the Mortgagee harmless and evidence  satisfactory to the Owner and the
Mortgagee of the  destruction,  loss or theft of such  Equipment Note and of the
ownership thereof. If a "qualified  institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such  destroyed,  lost or stolen  Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of,  delivered to and in form  reasonably  satisfactory  Owner shall be
accepted as  satisfactory  indemnity  and security  and no further  indemnity or
security  shall be required as a condition to the execution and delivery of such
new  Equipment  Note.  Subject  to  compliance  by  the  Note  Holder  with  the
requirements  set forth in this Section 2.08,  Mortgagee and Owner shall use all
reasonable  efforts to issue new Equipment  Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.

          SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION

               (a) No  service  charge  shall be made to a Note  Holder  for any
registration of transfer or exchange of Equipment Notes,  but the Mortgagee,  as



Equipment Note  Registrar,  may require payment of a sum sufficient to cover any
tax or other  governmental  charge  that may be imposed in  connection  with any
registration of transfer or exchange of Equipment Notes.

               (b) The Mortgagee  shall cancel all Equipment  Notes  surrendered
for replacement,  redemption,  transfer,  exchange,  payment or cancellation and
shall destroy the canceled Equipment Notes.


          SECTION 2.10. MANDATORY REDEMPTIONS OF EQUIPMENT NOTES

          On the date on which the Owner is required  pursuant  to Section  4.05
hereof to make payment for an Event of Loss with respect to the Airframe, all of
the  Equipment  Notes shall be redeemed in whole at a redemption  price equal to
100% of the unpaid Original Amount thereof,  together with all accrued  interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note Holders but without Make-Whole Amount.

          SECTION 2.11. VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES

          All (but not less than all) of the Equipment  Notes may be redeemed by
the Owner upon at least 30 days' revocable prior written notice to the Mortgagee
and the Note Holders,  and the  Equipment  Notes shall be redeemed in whole at a
redemption  price equal to 100% of the unpaid Original Amount thereof,  together
with accrued  interest  thereon to the date of redemption  and all other Secured
Obligations  owed or then due and payable to the Note Holders  plus,  Make-Whole
Amount, if any.

          SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION

               (a) No redemption of any Equipment Note may be made except to the
extent  and in the  manner  expressly  permitted  by this  Trust  Indenture.  No
purchase of any Equipment Note may be made by the Mortgagee.

               (b) Notice of  redemption  with  respect to the  Equipment  Notes
shall be given by the Mortgagee by first-class mail, postage prepaid, mailed not
less than 25 nor more than 60 days prior to the applicable  redemption  date, to
each Note Holder of such Equipment  Notes to be redeemed,  at such Note Holder's
address  appearing in the  Equipment  Note  Register;  provided that such notice
shall be revocable by written notice from the Owner to Mortgagee given not later
than three days prior to the redemption  date.  All notices of redemption  shall
state:  (1) the redemption  date, (2) the applicable  basis for  determining the
redemption  price,  (3) that on the redemption  date, the redemption  price will
become due and payable  upon each such  Equipment  Note,  and that,  if any such
Equipment  Notes are then  outstanding,  interest on such Equipment  Notes shall
cease to accrue on and after such  redemption  date, and (4) the place or places
where such Equipment  Notes are to be surrendered  for payment of the redemption
price.

               (c) On or before the redemption date, the Owner (or any person on
behalf of the  Owner)  shall,  to the extent an amount  equal to the  redemption



price for the Equipment  Notes to be redeemed on the  redemption  date shall not
then be held by the  Mortgagee,  deposit  or  cause  to be  deposited  with  the
Mortgagee  by 12:30  PM New  York  time on the  redemption  date in  immediately
available funds the redemption price of the Equipment Notes to be redeemed.

               (d) Notice of  redemption  having  been given as  aforesaid,  the
Equipment  Notes to be redeemed shall,  on the redemption  date,  become due and
payable  at the  Corporate  Trust  Office of the  Mortgagee  or at any office or
agency maintained for such purposes pursuant to Section 2.07, and from and after
such  redemption  date  (unless  there  shall be a default in the payment of the
redemption  price) any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption in accordance
with said notice, such Equipment Note shall be redeemed at the redemption price.
If any Equipment Note called for redemption  shall not be so paid upon surrender
thereof for redemption, the principal amount thereof shall, until paid, continue
to bear interest  from the  applicable  redemption  date at the interest rate in
effect for such Equipment Note as of such redemption date.

          SECTION 2.13. SUBORDINATION

               (a) The Owner and, by acceptance  of its  Equipment  Notes of any
Series,  each Note  Holder of such  Series,  hereby  agree  that no  payment  or
distribution  shall be made on or in respect of the Secured  Obligations owed to
such Note Holder of such Series,  including any payment or distribution of cash,
property  or  securities  after the  commencement  of a  proceeding  of the type
referred  to in  Section  5.01(v),  (vi) or (vii)  hereof,  except as  expressly
provided in Article III hereof.

               (b) By the acceptance of its Equipment Notes of any Series (other
than Series A),  each Note  Holder of such Series  agrees that in the event that
such Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution  on any Secured  Obligations  in respect of such Series which it is
not entitled to receive  under this Section 2.13 or Article III hereof,  it will
hold any  amount so  received  in trust for the  Senior  Holder  (as  defined in
Section  2.13(c)  hereof)  and will  forthwith  turn  over such  payment  to the
Mortgagee in the form received to be applied as provided in Article III hereof.

               (c) As used in this Section 2.13, the term "Senior  Holder" shall
mean, (i) the Note Holders of Series A until the Secured  Obligations in respect
of Series A  Equipment  Notes  have been paid in full,  (ii)  after the  Secured
Obligations  in respect of Series A Equipment  Notes have been paid in full, the
Note  Holders of Series B until the Secured  Obligations  in respect of Series B
Equipment  Notes have been paid in full and (iii) after the Secured  Obligations
in respect of Series B Equipment  Notes have been paid in full, the Note Holders
of Series C until the Secured Obligations in respect of Series C Equipment Notes
have been paid in full.



                                   ARTICLE III

                RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS

               SECTION 3.01. BASIC DISTRIBUTIONS

               Except as  otherwise  provided in Sections  3.02 and 3.03 hereof,
each periodic  payment of principal or interest on the Equipment  Notes received
by the  Mortgagee  shall  be  promptly  distributed  in the  following  order of
priority:

           (i) so much of such payment as shall be  required  to pay in full the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series A  Equipment  Notes shall be
               distributed  to the Note  Holders  of Series A  ratably,  without
               priority of one over the other, in the proportion that the amount
               of such  payment  or  payments  then  due  under  each  Series  A
               Equipment Note bears to the aggregate amount of the payments then
               due under all Series A Equipment Notes;

          (ii) after  giving effect to paragraph (i)  above,  so  much  of  such
               payment  remaining  as  shall  be  required  to pay in  full  the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series B  Equipment  Notes shall be
               distributed  to the Note  Holders  of Series B  ratably,  without
               priority of one over the other, in the proportion that the amount
               of such  payment  or  payments  then  due  under  each  Series  B
               Equipment Note bears to the aggregate amount of the payments then
               due under all Series B Equipment Notes;

         (iii) after  giving  effect to paragraph  (ii) above,  so  much of such
               such  payment  remaining  as shall be required to pay in full the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series C  Equipment  Notes shall be
               distributed  to the Note  Holders  of Series C  ratably,  without
               priority of one over the other, in the proportion that the amount
               of such  payment  or  payments  then  due  under  each  Series  C
               Equipment Note bears to the aggregate amount of the payments then
               due under all Series C Equipment Notes; and

          (iv) if any Series D  Equipment  Notes have been  issued, after giving
               giving effect to paragraph  (iii) above,  so much of such payment
               remaining  as shall  be  required  to pay in full  the  aggregate
               amount of the payment or payments of Original Amount and interest
               (as well as any interest on any overdue  Original  Amount and, to
               the extent  permitted by Law, on any overdue  interest)  then due
               under all Series D Equipment  Notes shall be  distributed  to the
               Note  Holders of Series D ratably,  without  priority of one over
               the other,  in the proportion  that the amount of such payment or
               payments then due under each Series D Equipment Note bears to the



               aggregate  amount of the  payments  then due  under all  Series D
               Equipment Notes.

          SECTION 3.02. EVENT OF LOSS; REPLACEMENT; OPTIONAL REDEMPTION

          Except as  otherwise  provided in Section  3.03  hereof,  any payments
received by the  Mortgagee  (i) with respect to the Airframe or the Airframe and
one or more  Engines  as the result of an Event of Loss or (ii)  pursuant  to an
optional redemption of the Equipment Notes pursuant to Section 2.11 hereof shall
be  applied  to  redemption  of the  Equipment  Notes and to all  other  Secured
Obligations by applying such funds in the following order of priority:

First,         (a) to reimburse the Mortgagee  and  the  Note  Holders  for  any
               reasonable  costs or expenses  incurred in  connection  with such
               redemption  for which  they are  entitled  to  reimbursement,  or
               indemnity by Owner,  under the Operative  Agreements and then (b)
               to pay any other  amounts  then due (except as provided in clause
               "Second" below) to the Mortgagee,  the Note Holders and the other
               Indenture   Indemnitees   under   this   Trust   Indenture,   the
               Participation Agreement or the Equipment Notes;

Second,  (i)   to  pay the amounts specified in paragraph (i) of clause "Third"
               of Section 3.03 hereof plus Make-Whole  Amount,  if any, then due
               and payable in respect of the Series A Equipment Notes;

        (ii)   after  giving  effect to  paragraph (i) above, to pay the amounts
               specified  in  paragraph  (ii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series B Equipment Notes;

       (iii)   after  giving effect to paragraph (ii) above,  to pay the amounts
               specified  in paragraph  (iii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series C Equipment Notes; and

        (iv)   if any Series D  Equipment  Notes have been  issued, after giving
               effect to paragraph (iii) above, to pay the amounts  specified in
               paragraph  (iv) of clause  "Third" of Section  3.03  hereof  plus
               Make-Whole Amount, if any, then due and payable in respect of the
               Series D Equipment Notes; and

Third,         as provided in  clause "Fourth" of Section 3.03 hereof;

PROVIDED, HOWEVER, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof,  any insurance,  condemnation or similar  proceeds which
result from such Event of Loss and are paid over to the Mortgagee  shall be held
by the Mortgagee as permitted by Section 7.04 hereof  (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner under Operative  Agreements and such proceeds (and such
investment earnings),  to the extent not theretofore applied as provided herein,



shall be released to the Owner at the Owner's  written  request upon the release
of such Airframe or Engine and the replacement thereof as provided herein.

          SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT

          Except as  otherwise  provided in Section  3.04  hereof,  all payments
received and amounts held or realized by the  Mortgagee  (including  any amounts
realized by the Mortgagee from the exercise of any remedies  pursuant to Article
V hereof) after an Event of Default  shall have  occurred and be continuing  and
after the  declaration  specified  in  Section  5.02(b)  hereof,  as well as all
payments or amounts then held by the Mortgagee as part of the Collateral,  shall
be promptly distributed by the Mortgagee in the following order of priority:

First,         so  much  of such payments or amounts as shall be required to (i)
               reimburse  the Mortgagee or WTC for any tax (except to the extent
               resulting  from a failure  of the  Mortgagee  to  withhold  taxes
               pursuant  to  Section  2.04(b)  hereof),  expense  or other  loss
               (including, without limitation, all amounts to be expended at the
               expense of, or charged upon the rents, revenues, issues, products
               and profits of, the property included in the Collateral (all such
               property being herein called the "Mortgaged  Property")  pursuant
               to Section 5.03(b)  hereof)  incurred by the Mortgagee or WTC (to
               the extent not previously reimbursed),  the expenses of any sale,
               or other  proceeding,  reasonable  attorneys'  fees and expenses,
               court costs, and any other expenditures  incurred or expenditures
               or advances made by the Mortgagee, WTC or the Note Holders in the
               protection, exercise or enforcement of any right, power or remedy
               or any  damages  sustained  by  the  Mortgagee,  WTC or any  Note
               Holder, liquidated or otherwise, upon such Event of Default shall
               be applied by the Mortgagee as between  itself,  WTC and the Note
               Holders in  reimbursement of such expenses and any other expenses
               for which the Mortgagee,  WTC or the Note Holders are entitled to
               reimbursement  under  any  Operative  Agreement  and (ii) pay all
               amounts payable to the other Indenture  Indemnitees hereunder and
               under the Participation  Agreement; and in the case the aggregate
               amount to be so distributed is  insufficient  to pay as aforesaid
               in clauses (i) and (ii),  then ratably,  without  priority of one
               over the other, in proportion to the amounts owed each hereunder;

Second,        so  much  of  such  payments  or  amounts  remaining  as shall be
               required to reimburse the then existing or prior Note Holders for
               payments  made pursuant to Section 6.03 hereof (to the extent not
               previously reimbursed) shall be distributed to such then existing
               or prior Note Holders  ratably,  without priority of one over the
               other,  in accordance  with the amount of the payment or payments
               made by each such then existing or prior Note Holder  pursuant to
               said Section 6.03 hereof;

Third,   (i)   so  much  of  such  payments  or  amounts  remaining  as shall be
               required to pay in full the aggregate  unpaid  Original Amount of
               all Series A Equipment Notes, and the accrued but unpaid interest
               and other amounts due thereon (other than Make-Whole Amount which
               shall not be due and payable) and all other  Secured  Obligations



               in respect of the Series A Equipment Notes (other than Make-Whole
               Amount) to the date of distribution,  shall be distributed to the
               Note Holders of Series A, and in case the aggregate  amount so to
               be distributed shall be insufficient to pay in full as aforesaid,
               then  ratably,  without  priority  of one over the other,  in the
               proportion  that the  aggregate  unpaid  Original  Amount  of all
               Series A Equipment Notes held by each holder plus the accrued but
               unpaid  interest and other  amounts due  hereunder or  thereunder
               (other  than   Make-Whole   Amount,   if  any)  to  the  date  of
               distribution,  bears to the aggregate  unpaid  Original Amount of
               all Series A Equipment  Notes held by all such  holders  plus the
               accrued but unpaid  interest and other amounts due thereon (other
               than Make-Whole Amount) to the date of distribution;

        (ii)   after  giving  effect  to  paragraph  (i)  above, so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series B Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series B, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution;

       (iii)   after  giving  effect  to  paragraph  (ii) above, so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series C Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series C, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series C Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution; and



        (iv)   if  any  Series  D Equipment Notes have been issued, after giving
               effect to  paragraph  (iii)  above,  so much of such  payments or
               amounts  remaining  as  shall  be  required  to pay in  full  the
               aggregate unpaid Original Amount of all Series D Equipment Notes,
               and the accrued but unpaid interest and other amounts due thereon
               (other than Make-Whole Amount which shall not be due and payable)
               and all other  Secured  Obligations  in  respect  of the Series D
               Equipment  Notes  (other than  Make-Whole  Amount) to the date of
               distribution,  shall be distributed to the Note Holders of Series
               D, and in case the aggregate amount so to be distributed shall be
               insufficient to pay in full as aforesaid,  then ratably,  without
               priority  of one  over  the  other,  in the  proportion  that the
               aggregate  unpaid Original Amount of all Series D Equipment Notes
               held by each  holder plus the  accrued  but unpaid  interest  and
               other  amounts  due  hereunder  or  thereunder  (other  than  the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series D Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution; and

Fourth,        the  balance,  if  any,  of  such  payments  or amounts remaining
               thereafter  shall be  distributed  to the  Owner.

          No Make-Whole  Amount shall be due and payable on the Equipment  Notes
as a consequence of the  acceleration  of the Equipment  Notes as a result of an
Event of Default.

          SECTION 3.04. CERTAIN PAYMENTS

               (a) Any payments received by the Mortgagee for which no provision
as to the application thereof is made in this Trust Indenture and for which such
provision is made in any other Operative Agreement shall be applied forthwith to
the purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.

               (b)  Notwithstanding  anything to the contrary  contained in this
Article III, the Mortgagee will  distribute  promptly upon receipt any indemnity
payment  received  by it from  the  Owner in  respect  of the  Mortgagee  in its
individual capacity, any Note Holder or any other Indenture Indemnitee,  in each
case  whether  or not  pursuant  to  Section 8 of the  Participation  Agreement,
directly to the Person entitled  thereto.  Any payment received by the Mortgagee
under  the  third  paragraph  of  Section  2.02  shall  be  distributed  to  the
Subordination  Agent  in its  capacity  as  Note  Holder  to be  distributed  in
accordance with the terms of the Intercreditor Agreement.

          SECTION 3.05. OTHER PAYMENTS

          Any payments  received by the  Mortgagee  for which no provision as to
the  application  thereof is made  elsewhere  in this Trust  Indenture or in any
other  Operative  Agreement  shall be distributed by the Mortgagee to the extent
received or realized at any time, in the order of priority  specified in Section
3.01 hereof,  and after  payment in full of all amounts  then due in  accordance



with  Section  3.01 in the manner  provided in clause  "Fourth" of Section  3.03
hereof.


                                   ARTICLE IV

                             COVENANTS OF THE OWNER

          SECTION 4.01. LIENS

          The Owner will not directly or  indirectly  create,  incur,  assume or
suffer to exist any Lien or with respect to the Airframe or any Engine, title to
any of the foregoing or any interest of Owner therein,  except  Permitted Liens.
The  Owner  shall  promptly,  at its own  expense,  take  such  action as may be
necessary  to duly  discharge  (by bonding or  otherwise)  any Lien other than a
Permitted Lien arising at any time.

          SECTION 4.02. POSSESSION, OPERATION AND USE, MAINTENANCE, REGISTRATION
AND MARKINGS

               (a) GENERAL.  Except as otherwise  expressly provided herein, the
Owner shall be entitled to operate,  use, locate, employ or otherwise utilize or
not utilize the Airframe,  any Engine or any Parts in any lawful manner or place
in accordance with the Owner's business judgment.

               (b)  POSSESSION.   The  Owner,   without  the  prior  consent  of
Mortgagee,  shall not lease 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;  except  that the Owner may,  without  such prior  written  consent of
Mortgagee:

                     (i)  Subject or permit any Permitted  Lessee to subject any
Engine to normal  interchange  agreements or pooling agreements or arrangements,
in each case  customary in the commercial  airline  industry and entered into by
Owner or such Permitted  Lessee,  as the case may be, in the ordinary  course of
business;  PROVIDED,  HOWEVER,  that if  Owner'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, and
Owner shall comply with Section 4.04(e) in respect thereof;

                    (ii)  Deliver  or permit  any  Permitted  Lessee to  deliver
possession  of  the  Aircraft,  Airframe,  any  Engine  or any  Part  (x) 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 Section 4.04, for
alterations or  modifications  in or additions to the Aircraft,  Airframe or any
Engine or (y) to any Person for the purpose of transport to a Person referred to
in the preceding clause (x);



                   (iii)  Install or permit any  Permitted  Lessee to install an
Engine on an airframe owned by Owner or such Permitted  Lessee,  as the case may
be, free and clear of all Liens,  except (x)  Permitted  Liens and those that do
not apply to the  Engines,  and (y) the  rights of third  parties  under  normal
interchange  or pooling  agreements and  arrangements  of the type that would be
permitted under Section 4.02(b)(i);

                    (iv)  Install or permit any  Permitted  Lessee to install an
Engine on an airframe leased to Owner or such Permitted  Lessee, or purchased by
Owner or such  Permitted  Lessee  subject  to a  mortgage,  security  agreement,
conditional sale or other secured  financing  arrangement,  but only if (x) such
airframe is free and clear of all Liens, except (A) the rights of the parties to
such lease, or any such secured  financing  arrangement,  covering such airframe
and (B)  Liens of the type  permitted  by  clause  (iii)  above and (y) Owner or
Permitted  Lessee,  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 the Lien of this Trust
Indenture;

                     (v)  Install or permit any  Permitted  Lessee to install an
Engine on an airframe owned by Owner or such Permitted  Lessee,  leased to Owner
or such Permitted Lessee, or purchased by Owner or such Permitted Lessee subject
to a conditional  sale or other security  agreement  under  circumstances  where
neither clause (iii) or (iv) above is applicable;  PROVIDED,  HOWEVER,  that any
such installation  shall be deemed an Event of Loss with respect to such Engine,
and Owner shall comply with Section 4.04(e) hereof in respect thereof;

                    (vi)  Transfer  or permit any  Permitted  Lessee to transfer
possession of the Aircraft,  Airframe or any Engine to the U.S.  Government,  in
which  event  Owner  shall  promptly  notify  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;

                   (vii)  Enter  into  a charter  or Wet Lease or other  similar
arrangement  with  respect to the  Aircraft  or any other  aircraft on which any
Engine may be installed  (which shall not be considered a transfer of possession
hereunder);  PROVIDED THAT the Owner's  obligations  hereunder shall continue in
full force and  effect  notwithstanding  any such  charter or Wet Lease or other
similar arrangement;

                  (viii)  So  long as no Event of Default  shall  have  occurred
and be continuing,  and subject to the provisions of the  immediately  following
paragraph,  enter into a lease with  respect to the  Aircraft,  Airframe  or any
Engine to any Permitted Air Carrier that is not then 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; PROVIDED THAT, in the case only
of a lease to a Permitted  Foreign Air Carrier,  (A) the United States maintains
diplomatic  relations with the country of domicile of such Permitted Foreign Air
Carrier  (or, in the case of Taiwan,  diplomatic  relations  at least as good as
those in  effect  on the  Closing  Date)  and (B)  Owner  shall  have  furnished
Mortgagee a favorable opinion of counsel,  reasonably satisfactory to Mortgagee,
in the country of domicile of such Permitted  Foreign Air Carrier,  that (v) the
terms of such lease are the legal, valid and binding  obligations of the parties
thereto enforceable under the laws of such jurisdiction, (w) it is not necessary
for Mortgagee to register or qualify to do business in such jurisdiction, if not
already so  registered or  qualified,  as a result,  in whole or in part, of the
proposed lease, (x) Mortgagee's  Lien in respect of, the Aircraft,  Airframe and
Engines  will  be  recognized  in  such  jurisdiction,  (y)  the  Laws  of  such
jurisdiction  of domicile  require fair  compensation  by the government of such
jurisdiction,  payable in a currency freely  convertible  into Dollars,  for the
loss  of  title  to the  Aircraft,  Airframe  or  Engines  in the  event  of the
requisition  by such  government  of such  title  (unless  Owner  shall  provide
insurance  in the amounts  required  with respect to hull  insurance  under this
Trust Indenture  covering the requisition of title to the Aircraft,  Airframe or
Engines by the government of such jurisdiction so long as the Aircraft, Airframe
or Engines are subject to such lease) and (z) the  agreement  of such  Permitted
Air Carrier that its rights under the lease are subject and  subordinate  to all
the terms of this Trust  Indenture is  enforceable  against such  Permitted  Air
Carrier under applicable law;

PROVIDED that (1) the rights of any transferee who receives possession by reason
of a transfer  permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust  Indenture,  (2) the Owner shall remain primarily liable
for the  performance  of all of the terms of this  Trust  Indenture  and all the
terms and conditions of this Trust Indenture and the other Operative  Agreements
shall remain in effect and (3) no lease or transfer of  possession  otherwise in
compliance  with this Section  4.02(b) shall (x) result in any  registration  or
re-registration  of an  Aircraft,  except to the  extent  permitted  by  Section
4.02(e) or the  maintenance,  operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.

          In the case of any lease  permitted  under this Section  4.02(b),  the
Owner  will  include in such lease  appropriate  provisions  which (t) make such
lease  expressly  subject  and  subordinate  to all of the  terms of this  Trust
Indenture,  including  the  rights of the  Mortgagee  to avoid such lease in the
exercise of its rights to  repossession  of the Airframe and Engines  hereunder;
(u) require the Permitted  Lessee to comply with the terms of Section 4.06;  and
(v)  require  that  the  Airframe  or any  Engine  subject  thereto  be  used in
accordance  with the  limitations  applicable to the Owner's  possession and use
provided in this Trust Indenture.  No lease permitted under this Section 4.02(b)
shall be entered into unless (w) Owner shall provide written notice to Mortgagee
(such notice in the event of a lease to a U.S. Air Carrier to be given  promptly
after  entering  into any such  lease  or,  in the case of a lease to any  other
Permitted  Air Carrier,  10 days in advance of entering  into such  lease);  (x)
Owner shall furnish to Mortgagee evidence  reasonably  satisfactory to Mortgagee
that the insurance required by Section 4.06 remains in effect; (y) all necessary
documents  shall have been duly  filed,  registered  or  recorded in such public
offices  as may be  required  fully to  preserve  the  first  priority  security



interest (subject to Permitted Liens) of Mortgagee in the Aircraft, Airframe and
Engines;  and (z) Owner  shall  reimburse  Mortgagee  for all of its  reasonable
out-of-pocket fees and expenses, including, without limitation,  reasonable fees
and disbursements of counsel,  incurred by Mortgagee in connection with any such
lease.  For all purposes of this  Section,  the term "lease"  shall be deemed to
include interchange agreements with respect to the Aircraft or Airframe.  Except
as otherwise provided herein and without in any way relieving the Owner from its
primary  obligation  for the  performance  of its  obligations  under this Trust
Indenture,  the Owner may in its sole discretion permit a lessee to exercise any
or all rights which the Owner would be entitled to exercise  under Sections 4.02
and  4.04,  and  may  cause  a  lessee  to  perform  any or  all of the  Owner's
obligations under Article IV, and the Mortgagee agrees to accept actual and full
performance thereof by a lessee in lieu of performance by the Owner.

          Mortgagee  hereby  agrees,  and each Note Holder by  acceptance  of an
Equipment  Note  agrees,  for the benefit of each  lessor,  conditional  seller,
indenture  trustee or secured  party of any engine  leased to, or purchased  by,
Owner or any  Permitted  Lessee  subject  to a lease,  conditional  sale,  trust
indenture or other security agreement that Mortgagee, each Note Holder and their
respective  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.

               (c) OPERATION  AND USE. So long as the Aircraft,  Airframe or any
Engine is  subject  to the Lien of this  Trust  Indenture,  the Owner  shall not
operate,  use or locate  the  Aircraft,  Airframe  or any  Engine,  or allow the
Aircraft,  Airframe or any Engine to be  operated,  used or located,  (i) in any
area excluded  from  coverage by any insurance  required by the terms of Section
4.06, except in the case of a requisition by the U.S. Government where the Owner
obtains  indemnity  in lieu of such  insurance  from  the  U.S.  Government,  or
insurance from the U.S. Government, against substantially the same risks and for
at least the amounts of the  insurance  required by Section 4.06  covering  such
area, or (ii) in any recognized area of hostilities unless covered in accordance
with Section 4.06 by war risk insurance,  or in either case unless the Aircraft,
the Airframe or any Engine 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 circumstance,  so long
as Owner  diligently and in good faith proceeds to remove the Aircraft from such
area. So long as the Aircraft, the Airframe or any Engine is subject to the Lien
of this Trust Indenture,  the Owner shall not permit such Aircraft,  Airframe or
any  Engine,  as the case may be, to be used,  operated,  maintained,  serviced,
repaired or  overhauled  (x) in violation of any Law binding on or applicable to
such  Aircraft,  Airframe  or Engine or (y) in  violation  of any  airworthiness
certificate,  license or registration  of any Government  Entity relating to the
Aircraft,  the Airframe or any Engine,  except (i)  immaterial or  non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof,  or (ii) to the
extent the validity or application  of any such Law or  requirement  relating to
any such  certificate,  license or registration is being contested in good faith
by Owner or Permitted Lessee in any reasonable manner which does not involve any




material risk of the sale,  forfeiture or loss of the Aircraft,  Airframe or any
Engine,  any  material  risk of criminal  liability  or material  civil  penalty
against  Mortgagee or impair the Mortgagee's  security interest in the Aircraft,
Airframe or any Engine.

               (d) MAINTENANCE AND REPAIR. So long as the Aircraft,  Airframe or
any Engine is subject to the Lien of this Trust Indenture, the Owner shall cause
the Aircraft, Airframe and each Engine to be maintained,  serviced, repaired and
overhauled  in  accordance  with  (i)  maintenance   standards  required  by  or
substantially  equivalent to those  required by the FAA or the central  aviation
authority of Canada,  France,  Germany,  Japan,  the  Netherlands  or the United
Kingdom for the Aircraft,  Airframe and Engines, so as to (A) keep the Aircraft,
the  Airframe and each Engine in as good  operating  condition as on the Closing
Date,  ordinary wear and tear excepted,  (B) keep the Aircraft in such operating
condition  as  may  be  necessary   to  enable  the   applicable   airworthiness
certification of such Aircraft to be maintained under the regulations of the FAA
or other Aviation  Authority then having  jurisdiction over the operation of the
Aircraft,  except  during (x) temporary  periods of storage in  accordance  with
applicable regulations,  (y) maintenance and modification permitted hereunder or
(z)  periods  when the FAA or such  other  Aviation  Authority  has  revoked  or
suspended the airworthiness  certificates for Similar Aircraft;  and (ii) except
during periods when a Permitted Lease is in effect,  the same standards as Owner
uses with respect to similar  aircraft of similar size in its fleet  operated by
Owner in similar circumstances and, during any period in which a Permitted Lease
is in effect,  the same standards  used by the Permitted  Lessee with respect to
similar  aircraft of similar  size in its fleet and  operated  by the  Permitted
Lessee  in  similar  circumstances.  Owner  further  agrees  that the  Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired, overhauled or
inspected in compliance  with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable  airworthiness  certificate,
license and registration relating to the Aircraft, Airframe or any Engine issued
by the Aviation  Authority,  other than minor or  nonrecurring  violations  with
respect to which corrective measures are taken upon discovery thereof and except
to the extent Owner or Permitted Lessee is contesting in good faith the validity
or application of any such Law or requirement  relating to any such certificate,
license  or  registration  in any  reasonable  manner  which  does not  create a
material risk of sale,  loss or forfeiture of the Aircraft,  the Airframe or any
Engine or the interest of Mortgagee  therein,  or any material  risk of criminal
liability or material civil penalty against Mortgagee.  The Owner shall maintain
or cause to be maintained the Aircraft Documents in the English language.

               (e)  REGISTRATION.  The  Owner  on or  prior  to the  date of the
Closing shall cause the Aircraft to be duly registered in its name under the Act
and  except  as  otherwise  permitted  by  this  Section  4.02(e)  at all  times
thereafter  shall  cause the  Aircraft  to remain so  registered.  So long as no
Special Default or Event of Default shall have occurred and be continuing, Owner
may,  by  written  notice  to  Mortgagee,  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 6.4.5 of the  Participation  Agreement.  Unless the Trust  Indenture has
been discharged,  Owner 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  Mortgagee  to  execute  and  deliver  any
necessary documents).

               (f) MARKINGS.  If permitted by  applicable  Law, on or reasonably
promptly  after the  Closing  Date,  Owner  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, a placard of a reasonable size and shape bearing the
legend:  "Subject to a security  interest in favor of Wilmington  Trust Company,
not in its individual  capacity but solely as  Mortgagee."  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,  Owner shall
promptly  replace  it with a placard  complying  with the  requirements  of this
Section.

          SECTION 4.03. INSPECTION

               (a) At all reasonable  times,  so long as the Aircraft is subject
to  the  Lien  of  this   Trust   Indenture,   Mortgagee   and  its   authorized
representatives  (the  "Inspecting  Parties")  may (not more than once  every 12
months  unless an Event of Default  has  occurred  and is  continuing  then such
inspection  right shall not be so limited)  inspect the  Aircraft,  Airframe and
Engines  (including  without  limitation,  the Aircraft  Documents) and any such
Inspecting  Party may make  copies of such  Aircraft  Documents  not  reasonably
deemed confidential by Owner or such Permitted Lessee.

               (b) Any inspection of the Aircraft  hereunder shall be limited to
a visual,  walk-around  inspection  and shall not  include  the  opening  of any
panels,  bays or other components of the Aircraft,  and no such inspection shall
interfere with Owner's or any Permitted  Lessee's  maintenance  and operation of
the Aircraft, Airframe and Engines.

               (c) With respect to such rights of  inspection,  Mortgagee  shall
not have any duty or  liability  to make,  or any duty or liability by reason of
not making, any such visit, inspection or survey.

               (d)  Each  Inspecting  Party  shall  bear  its  own  expenses  in
connection  with any such  inspection  (including the cost of any copies made in
accordance with Section 4.03(a)).

          SECTION  4.04.   REPLACEMENT   AND  POOLING  OF  PARTS,   ALTERATIONS,
MODIFICATIONS AND ADDITIONS; SUBSTITUTION OF ENGINES

               (a) REPLACEMENT OF PARTS. Except as otherwise provided herein, so
long as the Airframe or Engine is subject to the Lien of this Indenture,  Owner,
at its own cost and expense,  will, or will cause a Permitted  Lessee to, at its
own cost and expense, promptly replace (or cause to be replaced) all Parts which
may  from  time to time be  incorporated  or  installed  in or  attached  to the
Aircraft,  Airframe  or any Engine and which may from time to time  become  worn
out, lost,  stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, Owner
may, at its own cost and  expense,  or may permit a Permitted  Lessee at its own
cost and expense to,  remove (or cause to be removed) in the ordinary  course of



maintenance, service, repair, overhaul or testing any Parts, whether or not worn
out, lost,  stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or
permanently  rendered unfit for use; PROVIDED,  HOWEVER,  that Owner,  except as
otherwise  provided herein,  at its own cost and expense,  will, or will cause a
Permitted  Lessee at its own cost and expense to, replace such Parts as promptly
as  practicable.  All  replacement  Parts  shall be free and clear of all Liens,
except for Permitted Liens and pooling  arrangements to the extent  permitted by
Section  4.04(c)  below  (and  except  in  the  case  of  replacement   property
temporarily  installed  on an  emergency  basis) and shall be in good  operating
condition  and have a value and  utility  not less than the value and utility of
the Parts replaced  (assuming such replaced Parts were in the condition required
hereunder).

               (b) PARTS.  Except as otherwise  provided herein, any Part at any
time removed from the Airframe or any Engine shall remain subject to the Lien of
this Trust  Indenture,  no matter  where  located,  until such time as such Part
shall be  replaced  by a Part  that has been  incorporated  or  installed  in or
attached  to such  Airframe  or any Engine and that meets the  requirements  for
replacement  Parts  specified  above.  Immediately  upon  any  replacement  Part
becoming incorporated or installed in or attached to such Airframe or any Engine
as provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the  Mortgagee  and shall no longer
be deemed a Part hereunder,  and (ii) such replacement Part shall become subject
to this Trust  Indenture and be deemed part of such  Airframe or any Engine,  as
the  case may be,  for all  purposes  hereof  to the same  extent  as the  Parts
originally  incorporated  or  installed  in or attached to such  Airframe or any
Engine.

               (c)  POOLING  OF  PARTS.  Any Part  removed  from  the  Aircraft,
Airframe or an Engine may be subjected  by the Owner or a Permitted  Lessee to a
normal pooling arrangement customary in the airline industry and entered into in
the ordinary course of business of Owner or Permitted Lessee,  provided that the
part  replacing  such  removed  Part shall be  incorporated  or  installed in or
attached to such Airframe or any Engine in accordance with Sections  4.04(a) and
4.04(b) as promptly as  practicable  after the removal of such removed  Part. In
addition,  any replacement part when incorporated or installed in or attached to
the Airframe or any Engine may be owned by any third party,  subject to a normal
pooling arrangement, so long as the Owner or a Permitted Lessee, at its own cost
and expense,  as promptly thereafter as reasonably  possible,  either (i) causes
such  replacement  part to become  subject to the Lien of this Trust  Indenture,
free and  clear  of all  Liens  except  Permitted  Liens,  at  which  time  such
replacement part shall become a Part or (ii) replaces (or causes to be replaced)
such  replacement  part by  incorporating  or  installing in or attaching to the
Aircraft,  Airframe or any Engine a further  replacement Part owned by the Owner
free and clear of all Liens  except  Permitted  Liens  and  which  shall  become
subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).

               (d) ALTERATIONS, MODIFICATIONS AND ADDITIONS. The Owner shall, or
shall cause a Permitted  Lessee to, make (or cause to be made)  alterations  and
modifications in and additions to the Aircraft,  Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation  Authority having  jurisdiction  over the operation of the
Aircraft,  to the extent made mandatory in respect of the Aircraft (a "Mandatory



Modification");  PROVIDED HOWEVER,  that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure,  contest the validity or application of
any law,  rule,  regulation  or order in any  reasonable  manner  which does not
materially  adversely affect  Mortgagee's  interest in the Aircraft and does not
involve any  material  risk of sale,  forfeiture  or loss of the Aircraft or the
interest of Mortgagee therein, or any material risk of material civil penalty or
any material risk of criminal liability being imposed on Mortgagee or the holder
of any Equipment Note. In addition,  the Owner, at its own expense,  may, or may
permit a Permitted Lessee at its own cost and expense to, from time to time make
or cause to be made such  alterations and  modifications in and additions to the
Airframe or any Engine  (each an "Optional  Modification")  as the Owner or such
Permitted  Lessee  may deem  desirable  in the proper  conduct  of its  business
including,  without limitation,  removal of Parts which Owner deems are obsolete
or no longer suitable or appropriate  for use in the Aircraft,  Airframe or such
Engine;  PROVIDED,  HOWEVER,  that  no  such  Optional  Modification  shall  (i)
materially  diminish  the fair  market  value,  utility,  or useful  life of the
Aircraft  or any Engine  below its fair  market  value,  utility or useful  life
immediately prior to such Optional  Modification  (assuming the Aircraft or such
Engine was in the condition required by the Trust Indenture immediately prior to
such  Optional  Modification)  or (ii) cause the  Aircraft  to cease to have the
applicable  standard  certificate of  airworthiness.  All Parts  incorporated or
installed  in or  attached  to any  Airframe  or any Engine as the result of any
alteration,  modification  or  addition  effected by the Owner shall be free and
clear of any Liens except Permitted Liens and become subject to the Lien of this
Trust  Indenture;  PROVIDED that the Owner or any  Permitted  Lessee may, at any
time so long as the  Airframe or any Engine is subject to the Lien of this Trust
Indenture,  remove  any such  Part  (such  Part  being  referred  to herein as a
"REMOVABLE  PART")  from  such  Airframe  or an  Engine  if (i) such  Part is in
addition  to,  and  not in  replacement  of or in  substitution  for,  any  Part
originally  incorporated  or  installed  in or attached to such  Airframe or any
Engine at the time of delivery thereof  hereunder or any Part in replacement of,
or in  substitution  for, any such original Part, (ii) such Part is not required
to be  incorporated or installed in or attached or added to such Airframe or any
Engine  pursuant to the terms of Section  4.02(d) or the first  sentence of this
Section  4.04(d)  and (iii) such Part can be removed  from such  Airframe or any
Engine  without  materially  diminishing  the  fair  market  value,  utility  or
remaining  useful life which such  Airframe or any Engine  would have had at the
time of removal had such  removal not been  effected by the Owner,  assuming the
Aircraft  was  otherwise  maintained  in the  condition  required  by this Trust
Indenture.  Upon the  removal  by the Owner of any such Part as above  provided,
title thereto shall, without further act, be free and clear of all rights of the
Mortgagee  and such Part shall no longer be deemed a Part  hereunder.  Removable
Parts may be leased from or financed by third parties other than Mortgagee.

               (e)  SUBSTITUTION OF ENGINES.  Upon the occurrence of an Event of
Loss with  respect to an Engine  under  circumstances  in which an Event of Loss
with respect to the Airframe has not occurred,  Owner shall promptly (and in any
event within 15 days after such occurrence) give the Mortgagee written notice of
such Event of Loss. The Owner shall have the right at its option at any time, on
at least 5 Business Days' prior notice to the Mortgagee,  to substitute,  and if
an  Event  of  Loss  shall  have  occurred  with  respect  to  an  Engine  under
circumstances  in which an Event of Loss with  respect to the  Airframe  has not
occurred,  shall  within  60  days  of the  occurrence  of  such  Event  of Loss
substitute, a Replacement Engine for any Engine. In such event, immediately upon



the effectiveness of such substitution and without further act, (i) the replaced
Engine shall  thereupon be free and clear of all rights of the Mortgagee and the
Lien of this Trust  Indenture and shall no longer be deemed an Engine  hereunder
and (ii) such  Replacement  Engine shall become subject to this Trust  Indenture
and be deemed part of the Aircraft for all purposes hereof to the same extent as
the replaced Engine.  Such Replacement Engine shall be an engine manufactured by
Engine Manufacturer that is the same model as the Engine to be replaced thereby,
or an improved  model,  and that is  suitable  for  installation  and use on the
Airframe,  and that has a value,  utility and  remaining  useful  life  (without
regard to hours and  cycles  remaining  until  overhaul)  at least  equal to the
Engine to be replaced thereby  (assuming that such Engine had been maintained in
accordance with this Trust  Indenture).  The Owner's right to make a replacement
hereunder  shall be subject to the fulfillment  (which may be simultaneous  with
such replacement) of the following conditions precedent at the Owner's sole cost
and expense,  and the Mortgagee agrees to cooperate with the Owner to the extent
necessary to enable it to timely satisfy such conditions:

                     (i) an  executed  counterpart  of  each  of  the  following
documents shall be delivered to the Mortgagee:

               (A) a Trust Indenture Supplement covering the Replacement Engine,
          which shall have been duly filed for  recordation  pursuant to the Act
          or such other applicable law of the jurisdiction other than the United
          States  in which  the  Aircraft  of  which  such  Engine  is a part is
          registered in accordance with Section 4.02(e), as the case may be;

               (B) a full  warranty  bill of sale (as to  title),  covering  the
          Replacement  Engine,  executed by the former owner thereof in favor of
          the Owner (or, at the Owner's  option,  other  evidence of the Owner's
          ownership of such Replacement Engine,  reasonably  satisfactory to the
          Mortgagee); and

               (C) UCC  financing  statements  covering the  security  interests
          created by this Trust  Indenture  (or any similar  statements or other
          documents  required to be filed or  delivered  pursuant to the laws of
          the  jurisdiction  in which such  Aircraft may be  registered)  as are
          deemed  necessary or desirable by counsel for the Mortgagee to protect
          the security  interests of the  Mortgagee in the  Replacement  Engine;
          (ii) the Owner shall cause to be delivered to the Mortgagee an opinion
          of  counsel  to the  effect  that  the  Lien of this  Trust  Indenture
          continues  to  be in  full  force  and  effect  with  respect  to  the
          Replacement  Engine and such evidence of compliance with the insurance
          provisions of Section 4.06 with respect to such Replacement  Engine as
          Mortgagee shall reasonably request;

                     (iii)  the Owner  shall  have  furnished  to  Mortgagee  an
opinion of Owner's aviation law counsel reasonably satisfactory to Mortgagee and
addressed  to  Mortgagee  as to the due  filing  for  recordation  of the  Trust
Indenture  Supplement with respect to such  Replacement  Engine under the Act or
such other  applicable law of the  jurisdiction  other than the United States in



which the Aircraft is registered in accordance with Section 4.02(e), as the case
may be; and

                     (iv)  the  Owner  shall  have   furnished  to  Mortgagee  a
certificate of a qualified  aircraft  engineer (who may be an employee of Owner)
certifying  that such  Replacement  Engine has a value and utility and remaining
useful life (without  regard to hours and cycles  remaining  until  overhaul) at
least  equal to the  Engine so  replaced  (assuming  that such  Engine  had been
maintained in accordance with this Trust Indenture).

          Upon  satisfaction  of all  conditions to such  substitution,  (x) the
Mortgagee shall execute and deliver to the Owner such documents and instruments,
prepared  at the  Owner's  expense,  as the Owner  shall  reasonably  request to
evidence  the  release  of such  replaced  Engine  from the  Lien of this  Trust
Indenture,  (y) the  Mortgagee  shall assign to the Owner all claims it may have
against  any other  Person  relating  to any Event of Loss  giving  rise to such
substitution and (z) the Owner shall receive all insurance  proceeds (other than
those  reserved to others under Section  4.06(b)) and proceeds in respect of any
Event of Loss  giving  rise to such  replacement  to the extent  not  previously
applied to the purchase price of the  Replacement  Engine as provided in Section
4.05(d).

          SECTION 4.05. LOSS, DESTRUCTION OR REQUISITION
                     
               (a) EVENT OF LOSS WITH RESPECT TO THE AIRFRAME.

          Upon the  occurrence of an Event of Loss with respect to the Airframe,
the Owner shall promptly (and in any event within 15 days after such occurrence)
give the Mortgagee written notice of such Event of Loss. The Owner shall, within
45 days after such  occurrence,  give the  Mortgagee  written  notice of Owner's
election to either replace the Airframe as provided under Section  4.05(a)(i) or
to make  payment  in respect of such  Event of Loss as  provided  under  Section
4.05(a)(ii)  (it being  agreed that if Owner shall not have given the  Mortgagee
such notice of such election within the above  specified time period,  the Owner
shall be deemed to have elected to make payment in respect of such Event of Loss
as  provided  under  Section  4.05(a)(ii)):

                     (i) if Owner elects to replace the  Airframe,  Owner shall,
subject to the satisfaction of the conditions  contained in Section 4.05(c),  as
promptly as possible  and in any event within 120 days after the  occurrence  of
such Event of Loss,  cause to be subjected to the Lien of this Trust  Indenture,
in replacement of the Airframe with respect to which the Event of Loss occurred,
a  Replacement  Airframe  and, if any Engine  shall have been  installed  on the
Airframe when it suffered the Event of Loss, a Replacement Engine therefor, such
Replacement  Airframe and Replacement  Engines to be free and clear of all Liens
except  Permitted Liens and to have a value,  utility and remaining  useful life
(without regard to hours or cycles remaining until the next regular  maintenance
check)  at least  equal to the  Airframe  or  Engine,  as the case may be, to be
replaced  thereby  (assuming that such Airframe or Engine had been maintained in
accordance  with this Trust  Indenture);  PROVIDED  THAT if the Owner  shall not
perform its obligation to effect such  replacement  under this clause (i) during
the 120-day period of time provided herein, it shall pay the amounts required to
be paid pursuant to and within the time frame specified in clause (ii) below; or




                     (ii) if Owner  elects to make a payment  in respect of such
Event of Loss of the  Airframe,  Owner shall make a payment to the Mortgagee for
purposes of redeeming  Equipment Notes in accordance with Section 2.10 hereof on
a date on or before the Business Day next following the earlier of (x) the 120th
day  following  the date of the  occurrence  of such Event of Loss,  and (y) the
fourth Business Day following the receipt of insurance  proceeds with respect to
such  Event of Loss  (but in any  event  not  earlier  than the date of  Owner's
election under Section 4.05(a) to make payment under this Section 4.05 (a)(ii));
and upon such payment and payment of all other Secured  Obligations then due and
payable, the Mortgagee shall, at the cost and expense of the Owner, release from
the Lien of this Trust Indenture the Airframe and the Engines,  by executing and
delivering  to  the  Owner  all  documents  and  instruments  as the  Owner  may
reasonably request to evidence such release.

               (b)  EFFECT OF  REPLACEMENT.  Should  the Owner  have  provided a
Replacement Airframe and Replacement Engines, if any, as provided for in Section
4.05(a)(i),  (i) the Lien of this Trust Indenture shall continue with respect to
such Replacement Airframe and Replacement Engines, if any, as though no Event of
Loss had  occurred;  (ii) the  Mortgagee  shall,  at the cost and expense of the
Owner,  release from the Lien of this Trust Indenture the replaced  Airframe and
Engines,  if any, by executing and  delivering  to the Owner such  documents and
instruments  as the Owner may reasonably  request to evidence such release;  and
(iii) in the case of a replacement  upon an Event of Loss,  the Mortgagee  shall
assign to the Owner all claims the  Mortgagee  may have against any other Person
arising  from the  Event of Loss  and the  Owner  shall  receive  all  insurance
proceeds  (other  than those  reserved  to others  under  Section  4.06(b))  and
proceeds  from any award in respect of  condemnation,  confiscation,  seizure or
requisition,  including  any  investment  interest  thereon,  to the  extent not
previously  applied  to the  purchase  price  of the  Replacement  Airframe  and
Replacement Engines, if any, as provided in Section 4.05(d).

               (c)  CONDITIONS TO AIRFRAME AND ENGINE  REPLACEMENT.  The Owner's
right to substitute a Replacement  Airframe and Replacement  Engines, if any, as
provided  in Section  4.05(a)(i)  shall be subject  to the  fulfillment,  at the
Owner's sole cost and expense,  in addition to the conditions  contained in such
Section 4.05(a)(i), of the following conditions precedent:

                     (i)  on  the  date  when  the   Replacement   Airframe  and
Replacement  Engines,  if any, is subjected to the Lien of this Trust  Indenture
(such date being  referred to in this Section 4.05 as the  "Replacement  Closing
Date"), an executed  counterpart of each of the following  documents (or, in the
case of the FAA Bill of Sale and full warranty bill of sale referred to below, a
photocopy thereof) shall have been delivered to the Mortgagee:

               (A)  a  Trust  Indenture   Supplement  covering  the  Replacement
          Airframe and Replacement  Engines,  if any, which shall have been duly
          filed for recordation pursuant to the Act or such other applicable law
          of such  jurisdiction  other  than the  United  States  in  which  the
          Replacement  Airframe  and  Replacement  Engines,  if  any,  are to be
          registered in accordance with Section 4.02(e), as the case may be;



               (B) an FAA Bill of Sale (or a  comparable  document,  if any,  of
          another Aviation  Authority,  if applicable)  covering the Replacement
          Airframe and Replacement Engines, if any, executed by the former owner
          thereof in favor of the Owner;

               (C) a full  warranty  (as to title)  bill of sale,  covering  the
          Replacement  Airframe and Replacement Engines, if any, executed by the
          former owner thereof in favor of the Owner (or, at the Owner's option,
          other evidence of the Owner's  ownership of such Replacement  Airframe
          and  Replacement  Engines,  if  any,  reasonably  satisfactory  to the
          Mortgagee); and

               (D) UCC financing  statements (or any similar statements or other
          documents  required to be filed or  delivered  pursuant to the laws of
          the  jurisdiction  in which the  Replacement  Airframe and Replacement
          Engines, if any, may be registered in accordance with Section 4.02(e))
          as are deemed  necessary or desirable by counsel for the  Mortgagee to
          protect the  security  interests of the  Mortgagee in the  Replacement
          Airframe  and  Replacement  Engines,  if  any;

                     (ii) the Replacement  Airframe and Replacement  Engines, if
any, shall be of the same model as the Airframe or Engines,  as the case may be,
or an improved  model of such aircraft or engines of the  manufacturer  thereof,
shall  have a value and  utility  (without  regard to hours or cycles  remaining
until the next regular  maintenance  check) at least equal to, and be in as good
operating  condition  and repair  as,  the  Airframe  and any  Engines  replaced
(assuming such Airframe and Engines had been  maintained in accordance with this
Trust Indenture);

                     (iii) the Mortgagee (acting directly or by authorization to
its  special  counsel)  shall  have  received  satisfactory  evidence  as to the
compliance  with  Section  4.06 with  respect to the  Replacement  Airframe  and
Replacement Engines, if any; (iv) on the Replacement Closing Date, (A) the Owner
shall cause the  Replacement  Airframe and  Replacement  Engines,  if any, to be
subject to the Lien of this Trust  Indenture free and clear of Liens (other than
Permitted Liens), (B) the Replacement Airframe shall have been duly certified by
the FAA as to type and  airworthiness in accordance with the terms of this Trust
Indenture and (C)  application for  registration of the Replacement  Airframe in
accordance  with Section 4.02(e) shall have been duly made with the FAA or other
applicable  Aviation Authority and the Owner shall have authority to operate the
Replacement Airframe;

                     (v) the  Mortgagee at the expense of the Owner,  shall have
received  (acting  directly or by  authorization  to its special counsel) (A) an
opinion  of  counsel,  addressed  to the  Mortgagee,  to  the  effect  that  the
Replacement  Airframe and Replacement Engine, if any, has or have duly been made
subject to the Lien of this Trust  Indenture,  and Mortgagee will be entitled to
the benefits of Section 1110 with respect to the Replacement Airframe,  provided
that such  opinion  with  respect to Section  1110 need not be  delivered to the
extent that  immediately  prior to such replacement the benefits of Section 1110



were not, solely by reason of a change in law or court  interpretation  thereof,
available  to  Mortgagee,  and (B) an opinion of Owner's  aviation  law  counsel
reasonably satisfactory to and addressed to Mortgagee as to the due registration
of any such  Replacement  Airframe  and the due filing for  recordation  of each
Trust  Indenture  Supplement  with  respect  to  such  Replacement  Airframe  or
Replacement   Engine  under  the  Act  or  such  other  applicable  law  of  the
jurisdiction  other than the United States in which the Replacement  Airframe is
to be registered in accordance with Section 4.02(e), as the case may be; and

                     (vi) the Owner  shall have  furnished  to the  Mortgagee  a
certificate of a qualified  aircraft  engineer (who may be an employee of Owner)
certifying that the Replacement Airframe and Replacement Engines, if any, have a
value and utility and remaining  useful life (without regard to hours and cycles
remaining  until  overhaul)  at least equal to the  Airframe  and any Engines so
replaced  (assuming  that such  Airframe  and  Engines  had been  maintained  in
accordance with this Trust Indenture).

               (d)  NON-INSURANCE  PAYMENTS  RECEIVED  ON ACCOUNT OF AN EVENT OF
LOSS. Any amounts,  other than  insurance  proceeds in respect of damage or loss
not  constituting an Event of Loss (the  application of which is provided for in
Annex B), received at any time by Mortgagee or Owner from any Government  Entity
or any other Person in respect of any Event of Loss will be applied as follows:

               (i) If such  amounts are received  with respect to the  Airframe,
          and any  Engine  installed  thereon at the time of such Event of Loss,
          upon compliance by Owner with the applicable  terms of Section 4.05(c)
          with respect to the Event of Loss for which such amounts are received,
          such amounts shall be paid over to, or retained by, Owner;

               (ii) If such  amounts  are  received  with  respect  to an Engine
          (other  than an  Engine  installed  on the  Airframe  at the time such
          Airframe suffers an Event of Loss),  upon compliance by Owner with the
          applicable  terms of Section 4.04(e) with respect to the Event of Loss
          for which such amounts are  received,  such amounts shall be paid over
          to, or retained by, Owner;

               (iii) If such  amounts are  received,  in whole or in part,  with
          respect to the  Airframe,  and Owner  makes,  has made or is deemed to
          have made the election set forth in Section 4.05(a)(ii),  such amounts
          shall be applied as follows:

                    FIRST,  if the sum described in Section  4.05(a)(ii) has not
          then  been  paid  in  full  by  Owner,  such  amounts shall be paid to
          Mortgagee to the extent necessary to pay in full such sum; and

                    SECOND, the remainder, if any, shall be paid to Owner.

               (e) REQUISITION FOR USE. In the event of a requisition for use by
any  Government  Entity of the  Airframe  and the  Engines,  if any,  or engines
installed on such  Airframe  while such  Airframe is subject to the Lien of this



Trust  Indenture,  the  Owner  shall  promptly  notify  the  Mortgagee  of  such
requisition and all of the Owner's  obligations under this Trust Indenture shall
continue to the same extent as if such  requisition  had not occurred  except to
the extent that the  performance  or observance  of any  obligation by the Owner
shall have been  prevented  or delayed by such  requisition;  PROVIDED  THAT the
Owner's obligations under this Section 4.05 with respect to the occurrence of an
Event of Loss for the payment of money and under  Section 4.06 (except  while an
assumption  of  liability  by the U.S.  Government  of the scope  referred to in
Section  4.02(c)  is in  effect)  shall  not  be  reduced  or  delayed  by  such
requisition.  Any payments  received by the  Mortgagee or the Owner or Permitted
Lessee from such Government Entity with respect to such requisition of use shall
be paid over to, or retained by, the Owner.  In the event of an Event of Loss of
an Engine resulting from the requisition for use by a Government  Entity of such
Engine (but not the Airframe),  the Owner will replace such Engine  hereunder by
complying  with the terms of Section  4.04(e) and any  payments  received by the
Mortgagee  or the  Owner  from  such  Government  Entity  with  respect  to such
requisition shall be paid over to, or retained by, the Owner.

               (f) CERTAIN PAYMENTS TO BE HELD AS SECURITY.  Any amount referred
to in this Section 4.05 or Section  4.06 which is payable or  creditable  to, or
retainable  by, the Owner shall not be paid or  credited  to, or retained by the
Owner if at the time of such payment,  credit or retention a Special  Default or
an Event of Default shall have occurred and be continuing,  but shall be paid to
and held by the  Mortgagee  as security for the  obligations  of the Owner under
this Trust  Indenture  and the Operative  Agreements,  and at such time as there
shall not be continuing any such Special Default or Event of Default such amount
and any gain realized as a result of investments required to be made pursuant to
Section 6.06 shall to the extent not theretofore  applied as provided herein, be
paid over to the Owner.

          SECTION 4.06.  INSURANCE

               (a) OWNER'S  OBLIGATION  TO INSURE.  Owner shall comply with,  or
cause to be complied with,  each of the provisions of Annex B, which  provisions
are hereby incorporated by this reference as if set forth in full herein.

               (b)  INSURANCE  FOR OWN  ACCOUNT.  Nothing in Section  4.06 shall
limit or prohibit (a) Owner from maintaining the policies of insurance  required
under  Annex B with  higher  limits  than  those  specified  in  Annex B, or (b)
Mortgagee from obtaining insurance for its own account (and any proceeds payable
under  such  separate  insurance  shall be  payable  as  provided  in the policy
relating  thereto);  PROVIDED,  HOWEVER,  that no  insurance  may be obtained or
maintained  that would limit or otherwise  adversely  affect the coverage of any
insurance  required  to be  obtained  or  maintained  by Owner  pursuant to this
Section 4.06 and Annex B.

               (c) INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE. Mortgagee
agrees to accept,  in lieu of  insurance  against  any risk with  respect to the
Aircraft described in Annex B,  indemnification  from, or insurance provided by,
the U.S. Government, or upon the written consent of Mortgagee,  other Government
Entity,  against  such  risk in an  amount  that,  when  added to the  amount of
insurance (including permitted  self-insurance),  if any, against such risk that
Owner (or any Permitted  Lessee) may continue to maintain,  in  accordance  with



this Section 4.06,  during the period of such requisition or transfer,  shall be
at least equal to the amount of insurance  against such risk otherwise  required
by this Section 4.06.

               (d)  APPLICATION  OF  INSURANCE  PROCEEDS.  As between  Owner and
Mortgagee,  all insurance  proceeds received as a result of the occurrence of an
Event of Loss with respect to the Aircraft or any Engine under policies required
to be  maintained  by Owner  pursuant  to this  Section  4.06 will be applied in
accordance  with  Section  4.05(d).  All  proceeds of  insurance  required to be
maintained by Owner,  in accordance  with Section 4.06 and Section B of Annex B,
in respect of any property damage or loss not constituting an Event of Loss with
respect to the  Aircraft,  Airframe or any Engine will be applied in payment (or
to reimburse  Owner) for repairs or for  replacement  property,  and any balance
remaining after such repairs or replacement  with respect to such damage or loss
shall be paid over to, or retained by, Owner.


          SECTION 4.07.  MERGER OF OWNER

               (a) IN GENERAL.

          Owner shall not consolidate  with or merge into any other person under
circumstances  in  which  Owner is not the  surviving  corporation,  or  convey,
transfer or lease in one or more  transactions all or  substantially  all of its
assets to any other person,  unless:

                     (i) such person is organized, existing and in good standing
under  the Laws of the  United  States,  any State of the  United  States or the
District of Columbia and, upon  consummation  of such  transaction,  such person
will be a U.S. Air Carrier;

                     (ii) such person  executes and delivers to Mortgagee a duly
authorized,   legal,  valid,  binding  and  enforceable  agreement,   reasonably
satisfactory  in form  and  substance  to  Mortgagee,  containing  an  effective
assumption by such person of the due and punctual  performance and observance of
each  covenant,  agreement  and  condition  in the  Operative  Agreements  to be
performed or observed by Owner;

                     (iii) such person  makes such filings and  recordings  with
the FAA pursuant to the Act as shall be necessary to evidence such consolidation
or merger; and

                     (iv) immediately after giving effect to such  consolidation
or merger no Event of Default shall have occurred and be continuing.

               (b) EFFECT OF MERGER.

          Upon any such  consolidation  or merger of Owner with or into,  or the
conveyance, transfer or lease by Owner of all or substantially all of its assets
to, any Person in accordance  with this Section  4.07,  such Person will succeed
to, and be  substituted  for, and may  exercise  every right and power of, Owner
under the Operative  Agreements  with the same effect as if such person had been
named as  "Owner"  therein.  No such  consolidation  or merger,  or  conveyance,
transfer or lease,  shall have the effect of releasing Owner or such Person from
any of the  obligations,  liabilities,  covenants or undertakings of Owner under
the Trust Indenture.




                                    ARTICLE V

                    EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE

          SECTION 5.01. EVENT OF DEFAULT

          "Event of Default"  means any of the  following  events  (whatever the
reason for such Event of Default and whether  such event shall be  voluntary  or
involuntary  or come about or be effected by  operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

                     (i) the  failure  of the  Owner  to pay (i)  principal  of,
interest on or Make-Whole Amount, if any, under any Equipment Note when due, and
such failure shall continue unremedied for a period of 10 Business Days, or (ii)
any other amount payable by it to the Note Holders under this Trust Indenture or
the  Participation  Agreement  when due, and such failure  shall  continue for a
period in excess of 10 Business  Days after Owner has  received  written  notice
from Mortgagee of the failure to make such payment when due;

                     (ii) Owner shall fail to carry and maintain, or cause to be
carried and  maintained,  insurance on and in respect of the Aircraft,  Airframe
and Engines in accordance with the provisions of Section 4.06;

                     (iii)  Owner shall fail to observe or perform (or caused to
be observed and performed) in any material respect any other covenant, agreement
or  obligation  set forth  herein or in any other  Operative  Agreement to which
Owner is a party and such failure shall  continue  unremedied for a period of 30
days from and after the date of written notice thereof to Owner from  Mortgagee,
unless such failure is capable of being  corrected and Owner shall be diligently
proceeding  to correct  such  failure,  in which case there shall be no Event of
Default unless and until such failure shall continue  unremedied for a period of
270 days after receipt of such notice;

                     (iv) any  representation  or warranty made by Owner herein,
in the  Participation  Agreement  or in any other  Operative  Agreement to which
Owner is a party  (a)  shall  prove to have been  untrue  or  inaccurate  in any
material   respect  as  of  the  date  made,   (b)  such  untrue  or  inaccurate
representation or warranty is material at the time in question, (c) and the same
shall remain uncured (to the extent of the adverse impact of such  incorrectness
on the  interest  of the  Mortgagee)  for a period in excess of 30 days from and
after the date of written notice thereof from Mortgagee to Owner;

                     (v) the Owner shall consent to the appointment of or taking
possession  by a receiver,  trustee or  liquidator of itself or of a substantial
part of its  property,  or the Owner shall admit in writing its inability to pay
its debts generally as they come due or shall make a general  assignment for the
benefit of its  creditors,  or the Owner  shall  file a  voluntary  petition  in
bankruptcy  or  a  voluntary  petition  or  an  answer  seeking  reorganization,
liquidation or other relief under any bankruptcy  laws or insolvency laws (as in
effect at such time),  or an answer  admitting  the  material  allegations  of a
petition  filed  against it in any such case,  or the Owner shall seek relief by



voluntary  petition,  answer  or  consent,  under  the  provisions  of any other
bankruptcy  or similar law  providing  for the  reorganization  or winding-up of
corporations  (as in effect at such time), or the Owner shall seek an agreement,
composition,  extension or adjustment  with its creditors under such laws or the
Owner's board of directors shall adopt a resolution authorizing corporate action
in furtherance of any of the foregoing;

                     (vi) an order,  judgment or decree  shall be entered by any
court of competent jurisdiction appointing,  without the consent of the Owner, a
receiver,  trustee or liquidator of the Owner or of any substantial  part of its
property,  or any  substantial  part  of the  property  of the  Owner  shall  be
sequestered,  or granting  any other  relief in respect of the Owner as a debtor
under any bankruptcy laws or other  insolvency laws (as in effect at such time),
and any such order, judgment,  decree, or decree of appointment or sequestration
shall remain in force undismissed, unstayed or unvacated for a period of 90 days
after the date of entry thereof; or

                     (vii) a petition  against the Owner in a  proceeding  under
any  bankruptcy  laws or other  insolvency  laws (as in effect at such  time) is
filed and not withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of corporations
which may apply to the Owner, any court of competent  jurisdiction  shall assume
jurisdiction,  custody or control  of the Owner of any  substantial  part of its
property  and such  jurisdiction,  custody  or  control  shall  remain  in force
unrelinquished, unstayed or unterminated for a period of 90 days.

          SECTION 5.02. REMEDIES

               (a) If an Event of Default  shall have occurred and be continuing
and so long as the same shall continue  unremedied,  then and in every such case
the  Mortgagee  may  exercise any or all of the rights and powers and pursue any
and all of the  remedies  pursuant  to this  Article  V and  shall  have and may
exercise  all of the rights and  remedies  of a secured  party under the Uniform
Commercial  Code and may take  possession  of all or any part of the  properties
covered or intended to be covered by the Lien created hereby or pursuant  hereto
and may  exclude the Owner and all  persons  claiming  under it wholly or partly
therefrom;  PROVIDED, that the Mortgagee shall give the Owner twenty days' prior
written  notice of its intention to sell the Aircraft.  Without  limiting any of
the  foregoing,  it is understood and agreed that the Mortgagee may exercise any
right of sale of the  Aircraft  available  to it,  even though it shall not have
taken  possession of the Aircraft and shall not have  possession  thereof at the
time of such sale.

               (b) If an Event of Default shall have occurred and be continuing,
then and in every such case the  Mortgagee  may (and  shall,  upon  receipt of a
written  demand  therefor from a Majority in Interest of Note  Holders),  at any
time,  by  delivery of written  notice or notices to the Owner,  declare all the
Equipment  Notes to be due and payable,  whereupon the unpaid Original Amount of
all Equipment Notes then outstanding,  together with accrued but unpaid interest
thereon  (without  Make-Whole  Amount)  and  other  amounts  due  thereunder  or
otherwise payable  hereunder,  shall immediately  become due and payable without
presentment, demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default  referred to in clause (v), (vi) or (vii) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original



Amount then outstanding, together with accrued but unpaid interest and all other
amounts  due  hereunder  and under the  Equipment  Notes shall  immediately  and
without further act become due and payable without presentment,  demand, protest
or notice, all of which are hereby waived.

          This Section 5.02(b), however, is subject to the condition that, if at
any time after the Original  Amount of the Equipment  Notes shall have become so
due and payable,  and before any judgment or decree for the payment of the money
so due, or any thereof,  shall be entered, all overdue payments of interest upon
the  Equipment  Notes  and all  other  amounts  payable  hereunder  or under the
Equipment Notes (except the Original Amount of the Equipment Notes which by such
declaration  shall have  become  payable)  shall have been duly paid,  and every
other  Default and Event of Default with respect to any covenant or provision of
this  Trust  Indenture  shall  have been  cured,  then and in every  such case a
Majority  in Interest of Note  Holders may (but shall not be  obligated  to), by
written  instrument filed with the Mortgagee,  rescind and annul the Mortgagee's
declaration (or such automatic  acceleration) and its consequences;  but no such
rescission  or  annulment  shall extend to or affect any  subsequent  Default or
Event of Default or impair any right  consequent  thereon.

               (c) The Note Holders  shall be entitled,  at any sale pursuant to
this Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid  obligations  owing to such Note Holder and
secured  by the Lien of this  Trust  Indenture  (only to the  extent  that  such
purchase price would have been paid to such Note Holder  pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing  provisions of
this subsection (c) were not given effect).

               (d) In the  event  of any  sale of the  Collateral,  or any  part
thereof,  pursuant  to any  judgment  or  decree of any  court or  otherwise  in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Original Amount of all Equipment  Notes then  outstanding,  together with
accrued  interest  thereon (without  Make-Whole  Amount),  and other amounts due
thereunder,  shall  immediately  become  due and  payable  without  presentment,
demand, protest or notice, all of which are hereby waived.

               (e)  Notwithstanding  anything  contained  herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is
a Note Holder,  the  Mortgagee  will not be  authorized  or empowered to acquire
title to any  Collateral  or take any action with respect to any  Collateral  so
acquired by it if such  acquisition  or action  would cause any Trust to fail to
qualify as a "grantor trust" for federal income tax purposes.

          SECTION 5.03. RETURN OF AIRCRAFT, ETC.

               (a) If an Event of Default  shall have occurred and be continuing
and the Equipment Notes have been accelerated,  at the request of the Mortgagee,
the Owner shall promptly  execute and deliver to the Mortgagee such  instruments
of title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative  designated by the Mortgagee,
at such  time or times and place or places  as the  Mortgagee  may  specify,  to
obtain  possession  of all or any part of the  Collateral to which the Mortgagee



shall at the time be entitled hereunder.  If the Owner shall for any reason fail
to execute and deliver such  instruments and documents after such request by the
Mortgagee,  the Mortgagee may (i) obtain a judgment  conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee,  to the entry of which judgment
the Owner hereby  specifically  consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral  wherever it may be found and may
enter  any of the  premises  of  Owner  wherever  such  Collateral  may be or be
supposed to be and search for such  Collateral and take possession of and remove
such  Collateral.  All  expenses of  obtaining  such  judgment  or of  pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.

               (b) Upon every such taking of possession, the Mortgagee may, from
time to time, at the expense of the Collateral,  make all such  expenditures for
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  modifications  or alterations to and of the Collateral,  as it may
deem proper.  In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the  Collateral  and to exercise all rights and powers of the Owner  relating to
the Collateral,  as the Mortgagee shall deem best,  including the right to enter
into  any  and  all  such  agreements  with  respect  to the  maintenance,  use,
operation,  storage,  insurance,  leasing,  control,  management,   disposition,
modification  or  alteration  of the  Collateral  or  any  part  thereof  as the
Mortgagee  may  determine,  and the  Mortgagee  shall be entitled to collect and
receive  directly all rents,  revenues and other  proceeds of the Collateral and
every part thereof,  without prejudice,  however,  to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be  deposited  with,  the  Mortgagee  hereunder.  Such rents,
revenues  and  other  proceeds  shall  be  applied  to pay the  expenses  of the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  improvement,  modification  or alteration of the Collateral and of
conducting  the business  thereof,  and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments,  insurance
or other proper charges upon the  Collateral or any part thereof  (including the
employment of engineers  and  accountants  to examine,  inspect and make reports
upon the properties and books and records of the Owner),  and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this  Trust  Indenture,  as well as just  and  reasonable  compensation  for the
services of the Mortgagee,  and of all persons  properly engaged and employed by
the Mortgagee with respect hereto.

          SECTION 5.04. REMEDIES CUMULATIVE

          Each  and  every  right,  power  and  remedy  given  to the  Mortgagee
specifically  or otherwise in this Trust Indenture 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 be  exercised  from  time to time and as often  and in such  order as may be
deemed  expedient by the  Mortgagee,  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 the  Mortgagee  in the  exercise of any right,



remedy or power or in the  pursuance  of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Owner or to be an acquiescence therein.

          SECTION 5.05. DISCONTINUANCE OF PROCEEDINGS

          In case the Mortgagee  shall have instituted any proceeding to enforce
any right,  power or remedy under this Trust Indenture by foreclosure,  entry or
otherwise,  and such proceedings  shall have been  discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner and the Mortgagee shall,  subject to any determination
in such proceedings,  be restored to their former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers of the Owner
or the Mortgagee shall continue as if no such proceedings had been instituted.

          SECTION 5.06. WAIVER OF PAST DEFAULTS

          Upon written  instruction from a Majority in Interest of Note Holders,
the Mortgagee shall waive any past Default  hereunder and its  consequences  and
upon any such waiver such Default  shall cease to exist and any Event of Default
arising  therefrom  shall be deemed to have been cured for every purpose of this
Trust  Indenture,  but no such waiver  shall extend to any  subsequent  or other
Default or impair any right consequent thereon; provided, that in the absence of
written  instructions  from all the Note Holders,  the Mortgagee shall not waive
any Default (i) in the payment of the Original  Amount,  Make-Whole  Amount,  if
any,  and  interest  and  other  amounts  due  under  any  Equipment  Note  then
outstanding,  or (ii) in respect of a covenant or provision hereof which,  under
Article X hereof, cannot be modified or amended without the consent of each Note
Holder.

          SECTION 5.07. APPOINTMENT OF RECEIVER

          The  Mortgagee  shall,  as a  matter  of  right,  be  entitled  to the
appointment  of a receiver (who may be the Mortgagee or any successor or nominee
thereof) for all or any part of the  Collateral,  whether such  receivership  be
incidental  to a proposed  sale of the  Collateral  or the taking of  possession
thereof or otherwise, and the Owner hereby consents to the appointment of such a
receiver and will not oppose any such  appointment.  Any receiver  appointed for
all or any part of the  Collateral  shall be entitled to exercise all the rights
and powers of the Mortgagee with respect to the Collateral.

          SECTION 5.08. MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.

          The Owner irrevocably appoints, while an Event of Default has occurred
and is  continuing,  the Mortgagee the true and lawful  attorney-in-fact  of the
Owner (which  appointment is coupled with an interest) in its name and stead and
on its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery  for the  enforcement  of the  Lien of this  Trust  Indenture,  whether
pursuant to foreclosure or power of sale,  assignments and other  instruments as
may be  necessary or  appropriate,  with full power of  substitution,  the Owner
hereby  ratifying and confirming all that such attorney or any substitute  shall



do by virtue hereof in  accordance  with  applicable  law.  Nevertheless,  if so
requested by the Mortgagee or any purchaser,  the Owner shall ratify and confirm
any such sale, assignment,  transfer or delivery, by executing and delivering to
the  Mortgagee or such  purchaser all bills of sale,  assignments,  releases and
other proper  instruments to effect such ratification and confirmation as may be
designated in any such request.

          SECTION 5.09. RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT

          Notwithstanding any other provision of this Trust Indenture, the right
of any Note Holder to receive payment of principal of, and premium,  if any, and
interest on an Equipment Note on or after the respective due dates  expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.


                                   ARTICLE VI

                             DUTIES OF THE MORTGAGEE

          SECTION 6.01. NOTICE OF EVENT OF DEFAULT

          If the Mortgagee shall have Actual Knowledge of an Event of Default or
of a Default  arising from a failure to pay any  installment  of  principal  and
interest on any Equipment  Note, the Mortgagee  shall give prompt written notice
thereof to each Note  Holder.  Subject to the terms of Sections  5.06,  6.02 and
6.03 hereof,  the Mortgagee shall take such action,  or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies  hereunder) as the Mortgagee  shall be
instructed in writing by a Majority in Interest of Note Holders.  Subject to the
provisions  of  Section   6.03,  if  the  Mortgagee   shall  not  have  received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note  Holders,  the  Mortgagee  may,  subject to  instructions
thereafter  received pursuant to the preceding  provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall  determine  advisable  in the best  interests of the Note
Holders; PROVIDED,  HOWEVER, that the Mortgagee may not sell the Aircraft or any
Engine  without the consent of a Majority in Interest of Note  Holders.  For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the  Mortgagee,  the  Mortgagee  shall not be deemed to have  knowledge  of a
Default  or an  Event  of  Default  (except,  the  failure  of  Owner to pay any
installment  of  principal  or interest  within one  Business Day after the same
shall become due, which failure shall constitute  knowledge of a Default) unless
notified in writing by the Owner or one or more Note Holders.

          SECTION 6.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS

          Subject to the terms of Sections 5.02(a),  5.06, 6.01 and 6.03 hereof,
upon the written instructions at any time and from time to time of a Majority in
Interest of Note  Holders,  the  Mortgagee  shall,  subject to the terms of this
Section  6.02,  take such of the  following  actions as may be specified in such



instructions:  (i) give such notice or direction or exercise such right,  remedy
or power hereunder as shall be specified in such instructions and (ii) give such
notice or  direction  or exercise  such right,  remedy or power  hereunder  with
respect  to  any  part  of  the   Collateral  as  shall  be  specified  in  such
instructions;  it being  understood  that without the written  instructions of a
Majority  in  Interest  of Note  Holders,  the  Mortgagee  shall not,  except as
provided  in  Section  6.01,  approve  any such  matter as  satisfactory  to the
Mortgagee.

          The Mortgagee  will execute and the Owner will file such  continuation
statements  with  respect  to  financing  statements  relating  to the  security
interest  created  hereunder in the  Collateral as may be specified from time to
time in written  instructions  of a Majority in Interest of Note Holders  (which
instructions shall be accompanied by the form of such continuation  statement so
to be filed).  The  Mortgagee  will furnish to each Note Holder,  promptly  upon
receipt  thereof,  duplicates  or  copies  of all  reports,  notices,  requests,
demands,   certificates  and  other  instruments   furnished  to  the  Mortgagee
hereunder.

          SECTION 6.03. INDEMNIFICATION

          The Mortgagee shall not be required to take any action or refrain from
taking any action under  Section 6.01 (other than the first  sentence  thereof),
6.02 or Article V hereof unless the Mortgagee shall have been indemnified to its
reasonable  satisfaction  against  any  liability,  cost or  expense  (including
counsel  fees)  which may be  incurred  in  connection  therewith  pursuant to a
written  agreement with one or more Note Holders.  The Mortgagee  agrees that it
shall look solely to the Note  Holders  for the  satisfaction  of any  indemnity
(except  expenses for  foreclosure  of the type referred to in clause "First" of
Section 3.03 hereof) owed to it pursuant to this  Section  6.03.  The  Mortgagee
shall not be under any obligation to take any action under this Trust  Indenture
or any other Operative Agreement and nothing herein or therein shall require the
Mortgagee  to expend or risk its own  funds or  otherwise  incur the risk of any
financial  liability  in the  performance  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  written  indemnity  of any  Note  Holder  who is a QIB,  signed  by an
authorized  officer  thereof,  in favor of,  delivered to and in form reasonably
satisfactory  to the  Mortgagee  shall be accepted as  reasonable  assurance  of
adequate  indemnity).  The  Mortgagee  shall not be  required to take any action
under Section 6.01 (other than the first sentence  thereof) or 6.02 or Article V
hereof,  nor shall any other  provision  of this  Trust  Indenture  or any other
Operative  Agreement  be deemed to  impose a duty on the  Mortgagee  to take any
action,  if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to Law.

          SECTION  6.04.  NO DUTIES  EXCEPT AS SPECIFIED  IN TRUST  INDENTURE OR
INSTRUCTIONS

          The Mortgagee  shall not have any duty or obligation to use,  operate,
store,  lease,  control,  manage,  sell,  dispose of or otherwise  deal with the
Aircraft or any other part of the  Collateral,  or to otherwise  take or refrain
from taking any action under, or in connection with, this Trust Indenture or any



part of the Collateral,  except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written  instructions from Note Holders as
provided in this Trust Indenture;  and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee.  The Mortgagee 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 8.01
hereof),  promptly  take such action as may be necessary  duly to discharge  all
liens and  encumbrances  on any part of the Collateral  which result from claims
against it in its individual  capacity not related to the  administration of the
Collateral  or any other  transaction  pursuant to this Trust  Indenture  or any
document included in the Collateral.

          SECTION 6.05. NO ACTION EXCEPT UNDER TRUST INDENTURE OR INSTRUCTIONS

          The Mortgagee will not use, operate,  store, lease,  control,  manage,
sell,  dispose of or  otherwise  deal with the Aircraft or any other part of the
Collateral  except in  accordance  with the powers  granted to, or the authority
conferred upon the Mortgagee  pursuant to this Trust Indenture and in accordance
with the express terms hereof.

          SECTION 6.06. INVESTMENT OF AMOUNTS HELD BY MORTGAGEE

          Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any  other  Operative  Agreement  providing  for  amounts  to be  held by the
Mortgagee which are not distributed  pursuant to the other provisions of Article
III  hereof  shall  be  invested  by the  Mortgagee  from  time  to time in Cash
Equivalents  as directed by the Owner so long as the  Mortgagee  may acquire the
same using its best efforts. All Cash Equivalents held by the Mortgagee pursuant
to this Section 6.06 shall either be (a)  registered in the name of,  payable to
the  order  of, or  specially  endorsed  to,  the  Mortgagee,  or (b) held in an
Eligible Account.  Unless otherwise  expressly provided in this Trust Indenture,
any income realized as a result of any such  investment,  net of the Mortgagee's
reasonable  fees and  expenses  in  making  such  investment,  shall be held and
applied by the  Mortgagee  in the same  manner as the  principal  amount of such
investment is to be applied and any losses,  net of earnings and such reasonable
fees and expenses,  shall be charged against the principal amount invested.  The
Mortgagee  shall  not be  liable  for any loss  resulting  from  any  investment
required to be made by it under this Trust Indenture other than by reason of its
willful  misconduct or gross  negligence,  and any such  investment  may be sold
(without regard to its maturity) by the Mortgagee without instructions  whenever
such sale is necessary to make a distribution required by this Trust Indenture.


                                   ARTICLE VII

                                  THE MORTGAGEE

          SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES

          The Mortgagee  accepts the duties hereby  created and applicable to it
and agrees to perform  the same but only upon the terms of this Trust  Indenture
and  agrees  to  receive  and  disburse  all  monies  constituting  part  of the
Collateral in accordance with the terms hereof. The Mortgagee, in its individual



capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own  willful  misconduct  or gross  negligence  (other  than for the
handling of funds,  for which the  standard of  accountability  shall be willful
misconduct or  negligence),  (ii) as provided in the fourth  sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof,  and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or expressly made hereunder.

          SECTION 7.02. ABSENCE OF DUTIES

          Except in accordance with written  instructions  furnished pursuant to
Section 6.01 or 6.02 hereof, and except as provided in, and without limiting the
generality of,  Sections 6.03,  6.04 and 7.07 hereof the Mortgagee shall have no
duty (i) to see to any  registration  of the Aircraft or any recording or filing
of this Trust Indenture or any other  document,  or to see to the maintenance of
any such registration,  recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Owner shall
be in default with respect thereto,  (iii) to see to the payment or discharge of
any lien or encumbrance of any kind against any part of the Collateral,  (iv) to
confirm,  verify or inquire into the failure to receive any financial statements
from Owner,  or (v) to inspect the  Aircraft at any time or ascertain or inquire
as to the  performance or observance of any of Owner's  covenants  herein or any
Permitted  Lessee's covenants under any assigned Permitted Lease with respect to
the Aircraft.

          SECTION  7.03.  NO  REPRESENTATIONS  OR  WARRANTIES  AS TO AIRCRAFT OR
DOCUMENTS

          THE MORTGAGEE IN ITS  INDIVIDUAL  OR TRUST  CAPACITY DOES NOT MAKE AND
SHALL  NOT  BE  DEEMED  TO  HAVE  MADE  AND  HEREBY   EXPRESSLY   DISCLAIMS  ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,  AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS,  CONDITION,  DESIGN, QUALITY, DURABILITY,
OPERATION,  MERCHANTABILITY  OR FITNESS FOR USE FOR A PARTICULAR  PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER  REPRESENTATION  OR  WARRANTY  WHATSOEVER.  The  Mortgagee,  in its
individual  or trust  capacities,  does not make or shall  not be deemed to have
made  any   representation   or  warranty  as  to  the  validity,   legality  or
enforceability  of  this  Trust  Indenture,  the  Participation  Agreement,  the
Equipment  Notes,  or the Purchase  Agreement,  or as to the  correctness of any
statement  contained  in  any  thereof,   except  for  the  representations  and
warranties of the Owner made in its individual  capacity and the representations
and  warranties  of the  Mortgagee  in its  individual  capacity,  in each  case
expressly made in this Trust Indenture or in the  Participation  Agreement.  The
Note Holders make no representation or warranty hereunder whatsoever.




          SECTION 7.04. NO SEGREGATION OF MONIES; NO INTEREST

          Any  monies  paid to or  retained  by the  Mortgagee  pursuant  to any
provision hereof and not then required to be distributed to the Note Holders, or
the Owner as provided in Article III hereof need not be segregated in any manner
except  to the  extent  required  by Law or  Section  6.06  hereof,  and  may be
deposited  under such general  conditions  as may be  prescribed by Law, and the
Mortgagee  shall  not be  liable  for any  interest  thereon  (except  that  the
Mortgagee  shall invest all monies held as directed by Owner so long as no Event
of Default has occurred and is continuing (or in the absence of such  direction,
by the  Majority  In Interest of Note  Holders) in Cash  Equivalents;  PROVIDED,
HOWEVER,  that any payments  received,  or applied  hereunder,  by the Mortgagee
shall be  accounted  for by the  Mortgagee  so that any portion  thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.

          SECTION 7.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL

          The  Mortgagee  shall not incur any 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.  The
Mortgagee  may  accept a copy of a  resolution  of the  Board of  Directors  (or
Executive  Committee  thereof) of the Owner,  certified  by the  Secretary or an
Assistant  Secretary  thereof as duly  adopted and in full force and effect,  as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and  effect.  As to the  aggregate  unpaid  Original  Amount of
Equipment  Notes  outstanding  as of any date,  the  Owner may for all  purposes
hereof rely on a certificate  signed by any Vice  President or other  authorized
corporate  trust officer of the Mortgagee.  As to any fact or matter relating to
the  Owner  the  manner  of  which is not  specifically  described  herein,  the
Mortgagee may for all purposes  hereof rely on a  certificate,  signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall  constitute  full  protection  to the  Mortgagee  for any action  taken or
omitted  to  be  taken  by  it  in  good  faith  in  reliance  thereon.  In  the
administration  of the trusts  hereunder,  the  Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder  directly or
through  agents or attorneys and may, at the expense of the  Collateral,  advise
with counsel,  accountants and other skilled persons to be selected and retained
by it, and the  Mortgagee  shall not be liable for  anything  done,  suffered or
omitted in good faith by it in  accordance  with the  written  advice or written
opinion of any such counsel, accountants or other skilled persons.

          SECTION 7.06. COMPENSATION

          The Mortgagee shall be entitled to reasonable compensation,  including
expenses  and  disbursements  (including  the  reasonable  fees and  expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default  hereunder,  have a priority  claim on the  Collateral  for the
payment of such compensation,  to the extent that such compensation shall not be
paid by Owner,  and  shall  have the  right,  on and  subsequent  to an Event of
Default  hereunder,  to use or apply  any  monies  held by it  hereunder  in the



Collateral  toward such  payments.  The  Mortgagee  agrees that it shall have no
right against the Note Holders for any fee as  compensation  for its services as
trustee under this Trust Indenture.

          SECTION 7.07. INSTRUCTIONS FROM NOTE HOLDERS

          In the administration of the trusts created  hereunder,  the Mortgagee
shall have the right to seek  instructions  from a Majority  in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions.  The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 7.07.


                                  ARTICLE VIII

                                 INDEMNIFICATION

          SECTION 8.01. SCOPE OF INDEMNIFICATION

          The Mortgagee  shall be  indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.


                                   ARTICLE IX

                         SUCCESSOR AND SEPARATE TRUSTEES

          SECTION 9.01. RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR

               (a) The Mortgagee or any successor thereto may resign at any time
without cause by giving at least 30 days' prior written  notice to the Owner and
each Note Holder,  such  resignation  to be effective upon the acceptance of the
trusteeship  by a successor  Mortgagee.  In addition,  a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner,  which consent
shall  not be  unreasonably  withheld,  except  that such  consent  shall not be
necessary if an Event of Default is  continuing)  remove the  Mortgagee  without
cause by an instrument in writing delivered to the Owner and the Mortgagee,  and
the Mortgagee  shall promptly  notify each Note Holder thereof in writing,  such
removal to be effective  upon the  acceptance of the  trusteeship by a successor
Mortgagee.  In the  case of the  resignation  or  removal  of the  Mortgagee,  a
Majority  in Interest of Note  Holders may appoint a successor  Mortgagee  by an
instrument  signed  by such  holders,  which  successor,  so long as no Event of
Default  shall  have  occurred  and be  continuing,  shall be subject to Owner's
reasonable  approval.  If a successor  Mortgagee  shall not have been  appointed
within 30 days after such notice of resignation or removal,  the Mortgagee,  the
Owner or any Note  Holder may apply to any court of  competent  jurisdiction  to
appoint a  successor  Mortgagee  to act until such time,  if any, as a successor
shall  have  been  appointed  as above  provided.  The  successor  Mortgagee  so
appointed by such court shall  immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.




               (b) Any successor Mortgagee, however appointed, shall execute and
deliver to the Owner and the predecessor  Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment,  and thereupon such successor  Mortgagee,  without
further act,  shall  become  vested with all the  estates,  properties,  rights,
powers and duties of the predecessor  Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally  named the Mortgagee  herein;
but  nevertheless  upon the written  request of such successor  Mortgagee,  such
predecessor  Mortgagee  shall execute and deliver an instrument  transferring to
such successor Mortgagee, upon the trusts herein expressed applicable to it, all
the estates,  properties,  rights and powers of such predecessor Mortgagee,  and
such predecessor Mortgagee shall duly assign, transfer,  deliver and pay over to
such  successor  Mortgagee  all  monies  or  other  property  then  held by such
predecessor Mortgagee hereunder.

               (c) Any successor Mortgagee,  however appointed,  shall be a bank
or trust  company  having its  principal  place of  business  in the  Borough of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington,  Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative  Agreements are guaranteed by an affiliated entity having) a
combined  capital  and  surplus  of at least  $100,000,000,  if there be such an
institution  willing,  able and legally  qualified  to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.

               (d) Any  corporation  into which the  Mortgagee  may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Mortgagee shall be a
party,  or any  corporation  to  which  substantially  all the  corporate  trust
business of the Mortgagee  may be  transferred,  shall,  subject to the terms of
paragraph (c) of this Section  9.01, be a successor  Mortgagee and the Mortgagee
under this Trust Indenture without further act.

          SECTION 9.02. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES

               (a)  Whenever  (i)  the  Mortgagee  shall  deem it  necessary  or
desirable in order to conform to any Law of any jurisdiction in which all or any
part of the Collateral  shall be situated or to make any claim or bring any suit
with respect to or in connection with the Collateral,  this Trust Indenture, any
other  Indenture  Agreement,  the  Equipment  Notes  or any of the  transactions
contemplated by the Participation Agreement, (ii) the Mortgagee shall be advised
by  counsel  satisfactory  to it  that  it is so  necessary  or  prudent  in the
interests of the Note Holders (and the Mortgagee shall so advise the Owner),  or
(iii) the Mortgagee shall have been requested to do so by a Majority in Interest
of Note  Holders,  then in any such case,  the  Mortgagee  and, upon the written
request of the  Mortgagee,  the Owner,  shall  execute and deliver an  indenture
supplemental  hereto  and such  other  instruments  as may from  time to time be
necessary  or  advisable  either  (1) to  constitute  one or more  bank or trust
companies  or one or more  persons  approved  by the  Mortgagee,  either  to act
jointly with the Mortgagee as additional  trustee or trustees of all or any part
of the Collateral,  or to act as separate trustee or trustees of all or any part
of the Collateral, in each case with such rights, powers, duties and obligations
consistent  with this Trust  Indenture  as may be provided in such  supplemental
indenture  or other  instruments  as the  Mortgagee or a Majority in Interest of



Note  Holders may deem  necessary  or  advisable,  or (2) to clarify,  add to or
subtract from the rights, powers, duties and obligations theretofore granted any
such  additional  or  separate  trustee,  subject in each case to the  remaining
provisions  of this Section  9.02.  If the Owner shall not have taken any action
requested of it under this Section  9.02(a) that is permitted or required by its
terms within 15 days after the receipt of a written  request from the  Mortgagee
so to do, or if an Event of Default shall have occurred and be  continuing,  the
Mortgagee may act under the foregoing provisions of this Section 9.02(a) without
the concurrence of the Owner, and the Owner hereby  irrevocably  appoints (which
appointment  is  coupled  with  an  interest)  the  Mortgagee,   its  agent  and
attorney-in-fact  to act for it under the  foregoing  provisions of this Section
9.02(a) in either of such  contingencies.  The Mortgagee  may, in such capacity,
execute,  deliver  and  perform  any such  supplemental  indenture,  or any such
instrument,  as may be required for the  appointment  of any such  additional or
separate  trustee or for the  clarification  of, addition to or subtraction from
the  rights,  powers,  duties or  obligations  theretofore  granted  to any such
additional  or separate  trustee.  In case any  additional  or separate  trustee
appointed  under this Section  9.02(a)  shall die,  become  incapable of acting,
resign or be moved, all the assets, property, rights, powers, trusts, duties and
obligations of such additional or separate trustee shall revert to the Mortgagee
until a successor  additional  or separate  trustee is  appointed as provided in
this Section 9.02(a).

               (b) No  additional  or  separate  trustee  shall be  entitled  to
exercise any of the rights,  powers,  duties and obligations  conferred upon the
Mortgagee  in respect of the custody,  investment  and payment of monies and all
monies received by any such additional or separate  trustee from or constituting
part of the Collateral or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee.  All other rights,
powers,  duties and  obligations  conferred  or imposed upon any  additional  or
separate  trustee  shall be exercised or  performed  by the  Mortgagee  and such
additional or separate  trustee jointly except to the extent that applicable Law
of any  jurisdiction in which any particular act is to be performed  renders the
Mortgagee  incompetent  or  unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part  of the  Collateral  in any  such  jurisdiction)  shall  be  exercised  and
performed by such  additional  or separate  trustee.  No  additional or separate
trustee shall take any  discretionary  action except on the  instructions of the
Mortgagee or a Majority in Interest of Note Holders.  No trustee hereunder shall
be  personally  liable  by reason of any act or  omission  of any other  trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting,  and the Mortgagee's own actions in acting
with, any additional or separate  trustee.  Each additional or separate  trustee
appointed  pursuant to this Section 9.02 shall be subject to, and shall have the
benefit of Articles V through IX and Article XI hereof  insofar as they apply to
the  Mortgagee.  The powers of any  additional  or  separate  trustee  appointed
pursuant  to this  Section  9.02  shall  not in any  case  exceed  those  of the
Mortgagee hereunder.

               (c)  If at  any  time  the  Mortgagee  shall  deem  it no  longer
necessary  or in order to  conform  to any such Law or take any such  action  or
shall be advised by such  counsel that it is no longer so necessary or desirable
in the interest of the Note Holders,  or in the event that the  Mortgagee  shall
have been  requested  to do so in  writing  by a Majority  in  Interest  of Note
Holders,  the Mortgagee  and,  upon the written  request of the  Mortgagee,  the



Owner, shall execute and deliver an indenture  supplemental hereto and all other
instruments  and  agreements  necessary  or proper to remove any  additional  or
separate  trustee.  The  Mortgagee  may act on behalf of the  Owner  under  this
Section  9.02(c)  when and to the extent it could so act under  Section  9.02(a)
hereof.


                                    ARTICLE X

               SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
                               AND OTHER DOCUMENTS

          SECTION 10.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS

               (a) The Mortgagee  agrees with the Note Holders that it shall not
enter into any amendment,  waiver or modification  of,  supplement or consent to
this Trust Indenture,  or any other Operative  Agreement to which it is a party,
unless such supplement,  amendment, waiver, modification or consent is consented
to in writing by a Majority in Interest  of Note  Holders,  but upon the written
request of a Majority in Interest of Note Holders, the Mortgagee shall from time
to time enter into any such supplement or amendment,  or execute and deliver any
such waiver, modification or consent, as may be specified in such request and as
may be (in the case of any such amendment,  supplement or modification),  to the
extent  such  agreement  is  required,  agreed  to by the Owner  and,  as may be
appropriate,  the Airframe  Manufacturer or the Engine  Manufacturer;  PROVIDED,
HOWEVER,  that, without the consent of each holder of an affected Equipment Note
then  outstanding and of the Liquidity  Provider,  no such amendment,  waiver or
modification  of the terms of, or consent under,  any thereof,  shall (i) modify
any of the provisions of this Section 10.01,  or of Article II or III or Section
5.01,  5.02(c),  5.02(d), or 6.02 hereof, the definitions of "Event of Default,"
"Default," "Majority in Interest of Note Holders,"  "Make-Whole Amount" or "Note
Holder,"  or the  percentage  of Note  Holders  required  to take or approve any
action  hereunder,  (ii)  reduce  the  amount,  or change the time of payment or
method of calculation of any amount, of Original Amount,  Make-Whole  Amount, if
any, or interest with respect to any  Equipment  Note,  (iii) reduce,  modify or
amend any indemnities in favor of the Mortgagee or the Note Holders (except that
the Mortgagee may consent to any waiver or reduction of an indemnity  payable to
it), or the other Indenture  Indemnitees or (iv) permit the creation of any Lien
on the Trust Indenture  Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the  benefit of the Lien of this Trust  Indenture  on
the  Collateral,  except as provided in connection with the exercise of remedies
under Article V hereof.  Notwithstanding  the foregoing,  without the consent of
the affected  Liquidity  Providers,  neither the Owner nor the  Mortgagee  shall
enter into any amendment,  waiver or modification  of,  supplement or consent to
this Trust  Indenture  or the other  Operative  Agreements  which shall  reduce,
modify or amend any indemnities in favor of such Liquidity Providers.

               (b) The  Owner  and the  Mortgagee  may  enter  into  one or more
agreements supplemental hereto without the consent of any Note Holder for any of
the following purposes: (i) (a) to cure any defect or inconsistency herein or in
the Equipment Notes, or to make any change not inconsistent  with the provisions
hereof (PROVIDED that such change does not adversely affect the interests of any
Note Holder in its capacity  solely as Note Holder) or (b) to cure any ambiguity



or correct any mistake;  (ii) to evidence the succession of another party as the
Owner in accordance with the terms hereof or to evidence the succession of a new
trustee hereunder  pursuant hereto,  the removal of the trustee hereunder or the
appointment  of any  co-trustee  or  co-trustees  or any separate or  additional
trustee or trustees; (iii) to convey,  transfer,  assign, mortgage or pledge any
property to or with the Mortgagee or to make any other  provisions  with respect
to matters or  questions  arising  hereunder  so long as such  action  shall not
adversely  affect the  interests of the Note  Holders in its capacity  solely as
Note Holder;  (iv) to correct or amplify the  description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this  Trust  Indenture,  the  Airframe  or  Engines  or any  Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner for the
benefit  of the Note  Holders,  or to  surrender  any  rights  or  power  herein
conferred upon the Owner;  (vi) to add to the rights of the Note Holders;  (vii)
to  provide  for the  issuance  of Series D  Equipment  Notes  and Pass  Through
Certificates  issued  by the  Class D Pass  Through  Trust  and to make  changes
relating  thereto,  provided  that the  Series D  Equipment  Notes are issued in
accordance  with the Note  Purchase  Agreement;  and  (viii) to  include  on the
Equipment Notes any legend as may be required by Law.

          SECTION 10.02. MORTGAGEE PROTECTED

          If, in the opinion of the institution  acting as Mortgagee  hereunder,
any  document  required  to be  executed  by it pursuant to the terms of Section
10.01 hereof affects any right, duty, immunity or indemnity with respect to such
institution  under this Trust Indenture,  such institution may in its discretion
decline to execute such document.

          SECTION 10.03. DOCUMENTS MAILED TO NOTE HOLDERS

          Promptly  after the  execution  by the Owner or the  Mortgagee  of any
document  entered into  pursuant to Section 10.01  hereof,  the Mortgagee  shall
mail, by first class mail,  postage  prepaid,  a copy thereof to Owner (if not a
party  thereto)  and to each Note  Holder at its  address  last set forth in the
Equipment  Note  Register,  but the failure of the Mortgagee to mail such copies
shall not impair or affect the validity of such document.

          SECTION 10.04. NO REQUEST NECESSARY FOR TRUST INDENTURE  SUPPLEMENT No
written request or consent of the Note

          Holders  pursuant to Section  10.01 hereof shall be required to enable
the Mortgagee to execute and deliver a Trust Indenture  Supplement  specifically
required by the terms hereof.




                                   ARTICLE XI

                                  MISCELLANEOUS

          SECTION 11.01. TERMINATION OF TRUST INDENTURE

          Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole  Amount,  if any, and interest on and all other amounts due under all
Equipment  Notes  and  provided  that  there  shall  then  be no  other  Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner  shall  direct the  Mortgagee  to execute and deliver to or as directed in
writing by the Owner an  appropriate  instrument  releasing the Aircraft and the
Engines and all other  Collateral  from the Lien of the Trust  Indenture and the
Mortgagee  shall execute and deliver such  instrument  as  aforesaid;  PROVIDED,
HOWEVER,  that this Trust  Indenture and the trusts created hereby shall earlier
terminate and this Trust  Indenture  shall be of no further force or effect upon
any  sale  or  other  final   disposition  by  the  Mortgagee  of  all  property
constituting part of the Collateral and the final  distribution by the Mortgagee
of all monies or other property or proceeds  constituting part of the Collateral
in accordance  with the terms hereof.  Except as aforesaid  otherwise  provided,
this Trust  Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.

          SECTION 11.02. NO LEGAL TITLE TO COLLATERAL IN NOTE HOLDERS

          No holder of an  Equipment  Note shall have legal title to any part of
the Collateral.  No transfer, by operation of law or otherwise, of any Equipment
Note or  other  right,  title  and  interest  of any Note  Holder  in and to the
Collateral  or  hereunder  shall  operate to terminate  this Trust  Indenture or
entitle  such  holder  or any  successor  or  transferee  of such  holder  to an
accounting  or to the  transfer  to it of any  legal  title  to any  part of the
Collateral.

          SECTION 11.03. SALE OF AIRCRAFT BY MORTGAGEE IS BINDING

          Any sale or other  conveyance of the  Collateral,  or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust  Indenture  shall bind the Note  Holders and shall be
effective to transfer or convey all right,  title and interest of the Mortgagee,
the  Owner  and such  holders  in and to such  Collateral  or part  thereof.  No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity,  expediency  or  regularity  of such sale or  conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.

          SECTION 11.04. TRUST INDENTURE FOR BENEFIT OF OWNER,  MORTGAGEE,  NOTE
HOLDERS AND THE OTHER  INDENTURE  INDEMNITEES

          Nothing in this Trust Indenture,  whether express or implied, shall be
construed  to give any  person  other than the Owner,  the  Mortgagee,  the Note
Holders  and the other  Indenture  Indemnitees,  any legal or  equitable  right,
remedy or claim  under or in respect of this Trust  Indenture,  except  that the



persons  referred to in the last  paragraph  of Section  4.02(b)  shall be third
party beneficiaries of such paragraph.

          SECTION 11.05. 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 Trust  Indenture  to be made,  given,
furnished  or filed  shall be in  writing,  personally  delivered  or  mailed by
certified mail, postage prepaid,  or by facsimile or confirmed telex, and (i) if
to the Owner,  addressed  to it at 2929 Allen  Parkway,  Houston,  Texas  77019,
Attention:  Chief Financial Officer, facsimile number (713) 520-6329, (ii) if to
Mortgagee,  addressed  to it at its office at Rodney  Square  North,  1100 North
Market  Street,   Wilmington,   Delaware  19890,   Attention:   Corporate  Trust
Administration,  facsimile number (302) 651-8882, (iii) if to any Note Holder or
any Indenture Indemnitee,  addressed to such party at such address as such party
shall have  furnished  by notice to the Owner and the  Mortgagee,  or,  until an
address is so  furnished,  addressed  to the  address of such party (if any) set
forth on Schedule 1 to the  Participation  Agreement  or in the  Equipment  Note
Register. Whenever any notice in writing is required to be given by the Owner or
the Mortgagee or any Note Holder to any of the other of them,  such notice shall
be deemed given and such requirement  satisfied when such notice is received, or
if such notice is mailed by certified mail, postage prepaid, three Business Days
after being mailed, addressed as provided above. 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 Trust Indenture.

          SECTION 11.06. SEVERABILITY

          Any  provision  of  this  Trust   Indenture  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. Any such prohibition or  unenforceability  in any
particular  jurisdiction  shall  not  invalidate  or render  unenforceable  such
provision in any other jurisdiction.

          SECTION 11.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS

          No term or provision of this Trust  Indenture or the  Equipment  Notes
may be  changed,  waived,  discharged  or  terminated  orally,  but  only  by an
instrument in writing signed by the Owner and the Mortgagee,  in compliance with
Section  10.01 hereof.  Any waiver of the terms hereof or of any Equipment  Note
shall be effective  only in the specific  instance and for the specific  purpose
given.

          SECTION 11.08. SUCCESSORS AND ASSIGNS

          All covenants and agreements  contained  herein shall be binding upon,
and inure to the  benefit  of,  each of the  parties  hereto  and the  permitted
successors and assigns of each,  all as herein  provided.  Any request,  notice,
direction,  consent,  waiver or other  instrument  or action by any Note  Holder
shall bind the  successors  and assigns of such holder.  Each Note Holder by its



acceptance of an Equipment  Note agrees to be bound by this Trust  Indenture and
all provisions of the Operative Agreements applicable to a Note Holder.

          SECTION 11.09. 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 11.10. NORMAL COMMERCIAL RELATIONS

          Anything   contained   in  this  Trust   Indenture   to  the  contrary
notwithstanding.  Owner and Mortgagee may conduct any banking or other financial
transactions,  and have banking or other commercial  relationships,  with Owner,
fully  to the  same  extent  as if this  Trust  Indenture  were  not in  effect,
including  without  limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever,  whether related to any of the transactions
contemplated hereby or otherwise.

          SECTION 11.11. GOVERNING LAW; COUNTERPART FORM

          THIS  TRUST  INDENTURE  SHALL IN ALL  RESPECTS  BE  GOVERNED  BY,  AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE OF NEW YORK,
INCLUDING  ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE.  THIS TRUST
INDENTURE IS BEING  DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties  hereto in separate  counterparts  (or upon  separate
signature  pages bound  together into one or more  counterparts),  each of which
when so executed and delivered shall be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

          SECTION 11.12. VOTING BY NOTE HOLDERS

          All  votes  of the  Note  Holders  shall  be  governed  by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.

          SECTION 11.13. BANKRUPTCY

          It is the  intention  of the  parties  that  the  Mortgagee  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  herein in
the event of a case under Chapter 11 of the Bankruptcy  Code in which Owner is a
debtor,  and in any instance where more than one construction is possible of the
terms and conditions  hereof or any other pertinent  Operative  Agreement,  each
such party agrees that a  construction  which would preserve such benefits shall
control over any construction which would not preserve such benefits.



          IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Trust
Indenture and Mortgage to be duly executed by their respective  officers thereof
duly authorized as of the day and year first above written.



                                       CONTINENTAL AIRLINES, INC.


                                       By:______________________________________
                                          Name:
                                          Title:



                                       WILMINGTON TRUST COMPANY,
                                         as Mortgagee


                                       By:______________________________________
                                          Name:
                                          Title:






                                     ANNEX A

                                   DEFINITIONS

                               GENERAL PROVISIONS

               (a) In  each  Operative  Agreement,  unless  otherwise  expressly
provided, a reference to:

     (i)  each of  "Owner,"  "Mortgagee,"  "Note  Holder"  or any  other  person
          includes,  without  prejudice  to  the  provisions  of  any  Operative
          Agreement,   any  successor  in  interest  to  it  and  any  permitted
          transferee, permitted purchaser or permitted assignee of it;

    (ii)  words  importing the plural  include the singular and words  importing
          the singular include the plural;

   (iii)  any  agreement,  instrument  or  document,  or any annex,  schedule or
          exhibit  thereto,  or  any  other  part  thereof,   includes,  without
          prejudice  to  the  provisions  of  any  Operative   Agreement,   that
          agreement,  instrument or document,  or annex, schedule or exhibit, or
          part, respectively,  as amended, modified or supplemented from time to
          time in accordance with its terms and in accordance with the Operative
          Agreements, and any agreement,  instrument or document entered into in
          substitution or replacement therefor  (including,  without limitation,
          in the case of each Pass Through  Trust  Agreement,  the "Related Pass
          Through Trust Agreement" as defined therein);

    (iv)  any  provision  of any Law  includes  any such  provision  as amended,
          modified,  supplemented,  substituted,  reissued or reenacted prior to
          the 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 Default or Event of Default referred to in Section 5.01(v),(vi)
or (vii)  shall not be deemed to  prohibit  the Owner from  taking any action or
exercising any right that is conditioned on no Special Default, Default or Event
of Default having occurred and be continuing if such Special Default, Default or
Event of Default consists of the institution of reorganization  proceedings with
respect to Owner  under  Chapter 11 of the  Bankruptcy  Code and the  trustee or
debtor-in-possession  in such  proceedings  shall  have  agreed to  perform  its
obligations  under the Trust Indenture with the approval of the applicable court
and thereafter  shall have  continued to perform such  obligations in accordance
with Section 1110.


                                  DEFINED TERMS

          "ACT" means part A of subtitle VII of title 49, United States Code.

          "ACTUAL  KNOWLEDGE"  means  (a) as it  applies  to  Mortgagee,  actual
knowledge of a responsible  officer in the Corporate Trust Office, and (b) as it
applies to Owner, actual knowledge of a Vice President or more senior officer of
Owner or any other officer of Owner having  responsibility  for the transactions
contemplated  by the  Operative  Agreements;  PROVIDED  that  each of Owner  and
Mortgagee  shall be deemed to have "Actual  Knowledge" of any matter as to which
it has received  notice from Owner,  any Note Holder or  Mortgagee,  such notice
having been given pursuant to Section 11.05 of the Trust Indenture.

          "AFFILIATE"  means,  with  respect  to any  person,  any other  person
directly or indirectly  controlling,  controlled by or under common control with
such  person.  For  purposes  of this  definition,  "control"  means the  power,
directly or  indirectly,  to direct or cause the direction of the management and
policies of such person,  whether through the ownership of voting  securities or
by contract or otherwise and  "controlling,"  "controlled  by" and "under common
control with" have correlative meanings.

          "AIRCRAFT" means, collectively, the Airframe and Engines.

          "AIRCRAFT  BILL OF SALE" means the full warranty bill of sale covering
the Aircraft delivered by Airframe Manufacturer to Owner on the Closing Date.




          "AIRCRAFT  DOCUMENTS" means all technical data, manuals and log books,
and all inspection, modification and overhaul records and other service, repair,
maintenance and technical  records that are required by the FAA (or the relevant
Aviation  Authority),  to be maintained with respect to the Aircraft,  Airframe,
Engines or Parts, and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations,  and in each case in
whatever form and by whatever means or medium  (including,  without  limitation,
microfiche,  microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Owner (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 the initial Trust
Indenture  Supplement  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  the Lien of the Trust
Indenture  shall not be applicable to such Parts in accordance with Section 4.04
of the Trust Indenture. Upon substitution of a Replacement Airframe under and in
accordance  with the Trust  Indenture,  such  Replacement  Airframe shall become
subject to the Trust  Indenture and shall be the  "Airframe" for all purposes of
the Trust  Indenture  and the  other  Operative  Agreements  and  thereupon  the
Airframe  for which the  substitution  is made shall no longer be subject to the
Trust Indenture, and such replaced Airframe shall cease to be the "Airframe."

          "AIRFRAME   MANUFACTURER"   means  The  Boeing  Company,   a  Delaware
corporation.

          "AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of
any Payment Date, the amount  determined by multiplying the percentage set forth
opposite such Payment Date on the  Amortization  Schedule by the Original Amount
of such Equipment Note.

          "AMORTIZATION  SCHEDULE"  means,  with respect to each Equipment Note,
the amortization  schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.

          "APPRAISER" means a firm of  internationally  recognized,  independent
aircraft appraisers.

          "AVERAGE  LIFE  DATE" for any  Equipment  Note shall be the date which
follows the time of  determination  by a period equal to the Remaining  Weighted
Average Life of such  Equipment  Note.  "Remaining  Weighted  Average Life" on a
given date with respect to any Equipment  Note shall be the number of days equal
to the  quotient  obtained  by  dividing  (a) the  sum of  each of the  products
obtained by multiplying (i) the amount of each then remaining  scheduled payment
of  principal  of such  Equipment  Note by (ii)  the  number  of days  from  and
including  such  determination  date to but  excluding  the date on  which  such
payment  of  principal  is  scheduled  to be made,  by (b) the then  outstanding
principal amount of such Equipment Note.




          "AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to
be, and is,  registered with any other Government Entity under and in accordance
with  Section  4.02  (e)  of  the  Trust  Indenture  and  Section  6.4.5  of the
Participation Agreement, such other Government Entity.

          "BANKRUPTCY  CODE" means the United States  Bankruptcy Code, 11 U.S.C.
Sections 101 ET SEQ.

          "BASIC PASS THROUGH  TRUST  AGREEMENT"  means the Pass  Through  Trust
Agreement, dated September 25, 1997, between Owner and Pass Through Trustee, but
does not include any Trust Supplement.

          "BENEFICIAL  OWNER" when used in relation to an Equipment Note means a
Person  that,  by reason of  direct  ownership,  contract,  share  ownership  or
otherwise,  has the right to receive or  participate  in receiving,  directly or
indirectly,  payments of principal,  interest or Make-Whole Amount in respect of
such  Equipment  Note;  PROVIDED  that a  Person  shall  not be  deemed  to be a
Beneficial  Owner of an Equipment  Note solely  because  another Person in which
such a Person owns  common  stock or other  equity  securities  is a  registered
holder or  Beneficial  Owner of such  Equipment  Note  unless  such Person is an
Affiliate of such other Person.

          "BILLS OF SALE"  means the FAA Bill of Sale and the  Aircraft  Bill of
Sale.

          "BUSINESS  DAY" means any day other than a  Saturday,  Sunday or other
day on which  commercial banks are authorized or required by law to close in New
York, New York, 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,  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
Ratings Services or Moody's Investors Service, Inc. equal to A1 or higher.

          "CITIZEN  OF  THE  UNITED   STATES"  is  defined  in  49  U.S.C.   ss.
40102(a)(15).

          "CLASS D ISSUANCE DATE" means the date of issuance of the Pass Through
Certificates by the Class D Pass Through Trust.

          "CLASS D PASS  THROUGH  TRUST"  means the  Continental  Airlines  Pass
Through Trust 1998-1D.




          "CLOSING"  means the closing of the  transactions  contemplated by the
Participation Agreement.

          "CLOSING DATE" means the date on which the Closing occurs.

          "CODE" means the Internal  Revenue Code of 1986, as amended;  provided
that,  when used in relation to a Plan,  "Code" shall mean the Internal  Revenue
Code of 1986 and any regulations and rulings issued  thereunder,  all as amended
and in effect from time to time.

          "COLLATERAL" is defined in the Granting Clause of the Trust Indenture.

          "CONSENT AND AGREEMENT" means the  Manufacturer  Consent and Agreement
____,  dated as of even  date  with the  Participation  Agreement,  of  Airframe
Manufacturer.

          "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 Owner
and each Note Holder.

          "CRAF" means the Civil Reserve Air Fleet Program established  pursuant
to 10 U.S.C. Section 9511-13 or any similar substitute program.

          "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) for 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.

          "DEPOSIT AGREEMENT" means each of the three Deposit Agreements between
the Escrow  Agent and the  Depositary,  dated as of the Issuance  Date,  each of
which relates to one of the Pass Through Trusts,  PROVIDED that, for purposes of
any  obligation  of Owner,  no  amendment,  modification  or  supplement  to, or
substitution  or replacement  of, any such Deposit  Agreement shall be effective
unless consented to by Owner.

          "DEPOSITARY"  means Credit  Suisse First Boston,  New York branch,  as
Depositary under each Deposit Agreement.

          "DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of
the United States.

          "DOT" means the Department of  Transportation  of the United States or
any  Government  Entity  succeeding  to the  functions  of  such  Department  of
Transportation.




          "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  Owner,  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.

          "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 the initial Trust Indenture Supplement
and  originally  installed  on  the  Airframe  on  the  Closing  Date,  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 the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust  Indenture.  Upon  substitution  of a Replacement  Engine under and in
accordance  with the Trust  Indenture,  such  Replacement  Engine  shall  become
subject to the Trust  Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative  Agreements and thereupon the Engine for
which  the  substitution  is made  shall  no  longer  be  subject  to the  Trust
Indenture, and such replaced Engine shall cease to be an "Engine."

          "ENGINE CONSENT AND AGREEMENT" means the Engine  Manufacturer  Consent
and Agreement  ___ dated as of even date with the  Participation  Agreement,  of
Engine Manufacturer.

          "ENGINE MANUFACTURER" means  _________________ a corporation organized
under the laws of  __________.  "EQUIPMENT  NOTE REGISTER" is defined in Section
2.07 of the Trust Indenture.

          "EQUIPMENT  NOTES" means and includes any equipment notes issued under
the Trust  Indenture in the form specified in Section 2.01 thereof (as such form
may be varied  pursuant to the terms of the Trust  Indenture)  and any Equipment
Note issued  under the Trust  Indenture in exchange  for or  replacement  of any
Equipment Note.


          "ERISA" means the Employee Retirement Income Security Act of 1974, and
any regulations and rulings issued  thereunder all as amended and in effect from
time to time.




          "ESCROW  AGENT" means First Security Bank,  National  Association,  as
Escrow Agent under each of the Escrow Agreements.

          "ESCROW  AGREEMENT"  means each of the three  Escrow and Paying  Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass  Through  Certificates  named  therein  and one of the Pass  Through
Trustees,  dated as of the Issuance  Date,  each of which  relates to one of the
Pass Through Trusts,  PROVIDED that, for purposes of any obligation of Owner, no
amendment, modification or supplement to, or substitution or replacement of, any
such Escrow Agreement shall be effective unless consented to by Owner. "EVENT OF
DEFAULT" is defined in Section 5.01 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 Owner;

               (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 Permitted
Government Entity) for a period exceeding 180 consecutive days;

               (e) 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 Owner's  business of passenger  air  transportation  is
prohibited  for a period of 180  consecutive  days  unless  Owner,  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 Owner,  but in any event if such use shall have
been prohibited for a period of two consecutive years, provided that no Event of
Loss shall be deemed to have occurred if such prohibition has been applicable to
Owner's entire U.S. fleet of such property and Owner, prior to the expiration of
such two-year period, shall have conformed at least one unit of such property in
its fleet to the requirements of any such law, rule, regulation,  order or other
action and commenced regular commercial use of the same 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 Owner, but in any event
if such use shall have been prohibited for a period of three years.

          "EXPENSES"  means  any  and  all  liabilities,   obligations,  losses,
damages,  settlements,  penalties,  claims,  actions, suits, costs, expenses and
disbursements (including, without limitation,  reasonable fees and disbursements
of legal counsel,  accountants,  appraisers,  inspectors or other professionals,
and costs of investigation).

          "FAA" means the Federal Aviation  Administration  of the United States
or any Government  Entity  succeeding to the functions of such Federal  Aviation
Administration.

          "FAA BILL OF SALE"  means a bill of sale for the  Aircraft  on AC Form
8050-2 (or such other form as may be approved by the FAA)  delivered to Owner on
the Closing Date by Airframe Manufacturer.

          "FAA FILED  DOCUMENTS"  means the Trust  Indenture,  the initial Trust
Indenture  Supplement,  the FAA Bill of Sale and an application for registration
of the Aircraft with the FAA in the name of Owner.

          "FAA  REGULATIONS"  means the Federal Aviation  Regulations  issued or
promulgated pursuant to the Act from time to time.

          "FINANCING   STATEMENTS"  means,   collectively,   UCC-1  (and,  where
appropriate,  UCC-3) financing statements covering the Collateral,  by Owner, as
debtor,  showing  Mortgagee as secured party, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Collateral.

          "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.

          "INDEMNITEE"  means  (i) WTC and  Mortgagee,  (ii)  each  separate  or
additional  trustee  appointed  pursuant  to  the  Trust  Indenture,  (iii)  the
Subordination  Agent, the Paying Agent and the Escrow Agent,  (iv) the Liquidity
Provider,  (v) the Pass  Through  Trustees,  (vi) each  Affiliate of the persons



described in clauses (i) and (ii), (vii) each Affiliate of the persons described
in clauses  (iii),  (iv) and (v),  (viii) the  respective  directors,  officers,
employees,  agents and servants of each of the persons described in clauses (i),
(ii) and (vi), (ix) the respective directors,  officers,  employees,  agents and
servants of each of the persons described in clauses (iii), (iv), (v) and (vii),
(x) the  successors  and permitted  assigns of the persons  described in clauses
(i),  (ii) and (viii),  and (xi) the  successors  and  permitted  assigns of the
persons  described  in clauses  (iii),  (iv),  (v) and (ix);  provided  that the
persons  described  in  clauses  (iii),  (iv),  (v),  (vii),  (ix)  and (xi) are
Indemnitees only for purposes of Section 8.1 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 Note Holder.

          "INDENTURE  AGREEMENTS" means the Purchase  Agreement and the Bills of
Sale, to the extent included in Granting Clause (2) of the Trust Indenture,  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 5.01 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,  (vi) the Paying  Agent,  (vii) the Escrow Agent and (viii) each of the
respective directors,  officers,  employees,  agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.

          "INTERCREDITOR  AGREEMENT" means that certain Intercreditor  Agreement
among the Pass Through  Trustees,  the Liquidity  Provider and the Subordination
Agent,  dated as of the  Issuance  Date,  provided  that,  for  purposes  of any
obligation  of  Owner,   no  amendment,   modification   or  supplement  to,  or
substitution or replacement of, such Intercreditor  Agreement shall be effective
unless consented to by Owner.

          "IRS" means the Internal  Revenue  Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.

          "ISSUANCE DATE" means February 20, 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.

          "LIEN" means any mortgage,  pledge, lien, charge, claim,  encumbrance,
lease or security interest affecting the title to or any interest in property.



          "LIQUIDITY  FACILITIES"  means 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  Owner,   no  amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Liquidity Facility shall be effective unless consented to by Owner.

          "LIQUIDITY  PROVIDER"  means AIG  Matched  Funding  Corp.,  a Delaware
corporation, as 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.

          "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 or any of its  Affiliates  (unless all Equipment  Notes then
outstanding shall be held by Owner or any Affiliate of Owner); 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.

          "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.

          "MINIMUM  LIABILITY  INSURANCE AMOUNT" is defined in Schedule 3 to the
Participation Agreement.

          "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 mortgagee  under the
Trust Indenture.

          "NET WORTH" means, for any person, the excess of its total assets over
its total liabilities.

          "NON-U.S.  PERSON" means any Person other than a United States person,
as defined in Section 7701(a)(30) of the Code.

          "NOTE HOLDER" means at any time each registered  holder of one or more
Equipment Notes.

          "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement,  dated as
of the Issuance Date, among Continental Airlines, Inc., the Subordination Agent,
the Escrow Agent,  the Paying Agent and the Pass Through Trustee under each Pass
Through Trust Agreement providing for, among other things, the issuance and sale
of certain equipment notes.

          "OFFICER'S  CERTIFICATE"  means,  in  respect  of  any  party  to  the
Participation  Agreement,  a certificate signed by the Chairman,  the President,
any Vice  President  (including  those with  varying  ranks  such as  Executive,
Senior,  Assistant or Staff Vice  President),  the Treasurer or the Secretary of
such party.

          "OPERATIVE   AGREEMENTS"   means,   collectively,   the  Participation
Agreement,  the Trust  Indenture,  the initial Trust Indenture  Supplement,  the
Bills of Sale, and the Equipment Notes.

          "OPERATIVE  INDENTURES" means each of the indentures under which notes
have been issued and purchased by the Pass Through Trustees pursuant to the Note
Purchase Agreement.

          "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 PERSON" means Owner, any lessee,  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).

          "PARTICIPATION  AGREEMENT" means the  Participation  Agreement _______
dated as of  ________________  among  Owner,  the  Pass  Through  Trustees,  the
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 Removable Part leased by
Owner from a third  party or subject to a security  interest  granted to a third
party),  that may from time to time be installed or  incorporated in or attached
or appurtenant to the Airframe or any Engine.

          "PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Note Purchase  Agreement,  the Deposit  Agreements,  the Escrow Agreements,  the
Intercreditor  Agreement,  the Liquidity Facilities and the Fee Letters referred
to in  Section  2.03 of  each  of the  Liquidity  Facilities,  provided  that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be  effective  for  purposes of any  obligation  of Owner,
unless consented to by Owner.

          "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  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 Owner and a Pass Through
Trustee.

          "PASS THROUGH  TRUSTEE" means  Wilmington  Trust  Company,  a Delaware
banking  corporation,  in its capacity as trustee  under each Pass Through Trust
Agreement.

          "PASS THROUGH TRUSTEE  AGREEMENTS" means the Participation  Agreement,
the Pass Through  Trust  Agreements,  the Note Purchase  Agreement,  the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.

          "PAYING AGENT" means Wilmington  Trust Company,  as paying agent under
each of the Escrow Agreements.

          "PAYMENT  DATE" means each March 15 and  September  15,  commencing on
_________.




          "PAYMENT  DUE RATE"  means,  with respect to (i) any payment made to a
Note Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable  to  such  Series  plus  2% and (b) the  maximum  rate  permitted  by
applicable law and (ii) any other payment made under any Operative  Agreement to
any other  Person,  [______]  per annum  (computed on the basis of a year of 360
days comprised of twelve 30-day months).

          "PERMITTED  AIR CARRIER"  means (i) any  manufacturer  of airframes or
aircraft  engines,  or any Affiliate of a manufacturer  of airframes or aircraft
engines,  (ii) any Permitted  Foreign Air Carrier,  (iii) any person approved in
writing by Lessor or (iv) any U.S. Air Carrier.

          "PERMITTED  COUNTRY"  means any  country  listed on  Schedule 4 to the
Participation Agreement.

          "PERMITTED  FOREIGN  AIR  CARRIER"  means  any air  carrier  with  its
principal  executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.

          "PERMITTED  GOVERNMENT  ENTITY" means (i) the U.S.  Government or (ii)
any Government  Entity if the Aircraft is then registered  under the laws of the
country of such Government Entity.

          "PERMITTED LIEN" means (a) the rights of Mortgagee under the Operative
Agreements,  or of any  Permitted  Lessee under any Permitted  Lease;  (b) Liens
attributable  to  Mortgagee  (both in its  capacity  as trustee  under the Trust
Indenture  and in its  individual  capacity);  (c) the  rights of  others  under
agreements or  arrangements  to the extent  expressly  permitted by the terms of
Section 4.02(b) or 4.04 of the Trust Indenture; (d) Liens of Taxes of Owner (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 Owner is
obligated  to  indemnify  such  Tax  Indemnitee   under  any  of  the  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,  or any Engine or the interest of Mortgagee therein or impair the Lien
of the Trust Indenture;  (e) materialmen's,  mechanics',  workers',  repairers',
employees'  or other like Liens  arising in the ordinary  course of business for
amounts the payment of which is either not yet  delinquent for more than 60 days
or is being contested in good faith by appropriate proceedings,  so long as such
Liens  and such  proceedings  do not  involve  any  material  risk of the  sale,
forfeiture or loss of the Aircraft,  the Airframe, or any Engine or the interest
of  Mortgagee  therein  or  impair  the Lien of the Trust  Indenture;  (f) Liens
arising out of any judgment or award against Owner (or any Permitted Lessee), 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,  or any Engine or the interest of Mortgagee
therein  or impair  the Lien of the  Trust  Indenture;  (g) any other  Lien with



respect to which Owner (or any  Permitted  Lessee)  shall have  provided a bond,
cash  collateral  or  other  security  adequate  in the  reasonable  opinion  of
Mortgagee.

          "PERMITTED LEASE" means a lease permitted under Section 4.02(b) of the
Trust Indenture.

          "PERMITTED LESSEE" means the lessee under a Permitted Lease.

          "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.

          "PURCHASE  AGREEMENT"  means the Purchase  Agreement  No. ____,  dated
________________,   between  Airframe  Manufacturer  and  Owner  (including  all
exhibits thereto, together with all letter agreements entered into that by their
terms constitute part of such Purchase Agreement), to the extent included in the
Granting Clause (2) of the Trust Indenture.

          "QIB" is defined in Section 2.08 of the Trust Indenture.

          "REMOVABLE PART" is defined in Section 4.04(d) of the Trust Indenture.

          "REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe
pursuant to Article IV of the Trust Indenture.

          "REPLACEMENT  ENGINE"  means  an  engine  substituted  for  an  Engine
pursuant to Article IV of the Trust Indenture.

          "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.  Section 1110 of the Bankruptcy Code or
any successor or analogous section of the federal  bankruptcy law in effect from
time to time.

          "SECURED  OBLIGATIONS"  is  defined  in  Section  2.06  of  the  Trust
Indenture.

          "SECURITIES ACT" means the Securities Act of 1933, as amended.

          "SECURITY"  means a  "security"  as  defined  in  Section  2(l) of the
Securities Act.

          "SENIOR HOLDER" is defined in Section 2.13(c) of the Trust Indenture.

          "SERIES" means any of Series A, Series B, Series C or Series D.




          "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."

          "SERIES D" or "SERIES D EQUIPMENT  NOTES" means Equipment Notes issued
under the Trust  Indenture  and  designated  as  "Series D"  thereunder,  in the
Original  Amount and maturities and bearing  interest as specified in Schedule I
to the Trust  Indenture  under the  heading  "Series D (or,  if the Series D are
issued  after the  Closing  Date,  as  specified  in an  amendment  to the Trust
Indenture at the time of issuance of the Series D).

          "SIMILAR AIRCRAFT" means a Boeing Model _______ aircraft.

          "SPECIAL  DEFAULT" means (i) the failure by Owner to pay any amount of
principal of or interest on any Equipment  Note when due or (ii) the  occurrence
of any  Default or Event of Default  referred  to in  Section  5.01(v),  (vi) or
(vii).

          "SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement, or any successor thereto.

          "TAX  INDEMNITEE"  means (a) WTC and  Mortgagee,  (b) each separate or
additional  trustee  appointed  pursuant to the Trust  Indenture,  (c) each Note
Holder and (d) the respective  successors,  assigns,  agents and servants of the
foregoing.

          "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.

          "TRANSACTION  EXPENSES"  means  all  costs and  expenses  incurred  by
Mortgagee in connection with (a) the preparation,  execution and delivery of the
Operative Agreements and the recording or filing of any documents,  certificates



or instruments in accordance with any Operative  Agreement,  including,  without
limitation,  the FAA  Filed  Documents  and the  Financing  Statements,  (b) the
initial fee of Mortgagee  under the Trust  Indenture and (c) the reasonable fees
and  disbursements of counsel for each Mortgagee and special counsel in Oklahoma
City, Oklahoma, in each case, in connection with the Closing.

          "TRANSACTIONS"   means   the   transactions    contemplated   by   the
Participation Agreement.

          "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 Note  Holder  purports  or
intends to Transfer any or all of its right,  title or interest in the Equipment
Note, as described in Section 9 of the Participation Agreement.

          "TRUST  INDENTURE" means the Trust Indenture and Mortgage  __________,
dated as of the date of the Participation Agreement between Owner and Mortgagee.

          "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.  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.

          "U.S.  PERSON"  means any Person  described in Section 7701 (a)(30) of
the Code.

          "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 Owner or a Permitted Lessee
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 Owner or a  Permitted  Lessee,  provided  that  Owner's
obligations  under the Trust  Indenture  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.




                                                 -------------------------------
                                                 |      ANNEX B - INSURANCE    |
                                                 |      TRUST INDENTURE ___    |
                                                 -------------------------------


                                     ANNEX B

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]





                                                                       EXHIBIT A
                                                                              TO
                                                    TRUST INDENTURE AND MORTGAGE


                     TRUST INDENTURE AND MORTGAGE SUPPLEMENT

          This  TRUST   INDENTURE   AND   MORTGAGE   SUPPLEMENT   NO.  1,  dated
______________  ___, ____ (herein called this "Trust  Indenture  Supplement") of
CONTINENTAL AIRLINES, INC., as Owner (the "Owner").

                              W I T N E S S E T H:

          WHEREAS, the Trust Indenture and Mortgage,  dated as of ______________
__, 199_ (as amended and supplemented to the date hereof, the "Trust Indenture")
between the Owner and Wilmington Trust Company,  as Mortgagee (the "Mortgagee"),
provides for the execution and delivery of a supplement thereto substantially in
the form  hereof,  which shall  particularly  describe the  Aircraft,  and shall
specifically mortgage such Aircraft to the Mortgagee; and

          WHEREAS,  each of the Trust Agreement and Trust  Indenture  relates to
the  Airframe  and  Engines  described  below,  and a  counterpart  of the Trust
Indenture  is attached  hereto and made a part  hereof and this Trust  Indenture
Supplement,  together with such  counterpart  of the Trust  Indenture,  is being
filed for recordation on the date hereof with the FAA as one document;

          NOW, THEREFORE,  this Trust Indenture  Supplement  WITNESSETH that the
Owner hereby  confirms  that the Lien of the Trust  Indenture on the  Collateral
covers  all of  Owner's  right,  title  and  interest  in  and to the  following
described property:

                                    AIRFRAME

One airframe identified as follows:

                                           FAA REGISTRATION      MANUFACTURER'S
MANUFACTURER                 MODEL              NUMBER           SERIAL NUMBER
- -----------------        -------------     ----------------      --------------

The Boeing Company

together with all of the Owner's  right,  title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.

                                AIRCRAFT ENGINES

          Two  aircraft  engines,  each such  engine  having  750 or more  rated
take-off horsepower or the equivalent thereof, identified as follows:



MANUFACTURER             MANUFACTURER'S MODEL               SERIAL NUMBER
- ------------             --------------------               -------------





together  with all of Owner's  right,  title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.

          Together with all of Owner's  right,  title and interest in and to (a)
all Parts of whatever  nature,  which from time to time are included  within the
definition of "Airframe" or "Engine",  whether now owned or hereafter  acquired,
including  all  substitutions,  renewals  and  replacements  of  and  additions,
improvements,  accessions and  accumulations  to the Airframe and Engines (other
than additions,  improvements,  accessions and  accumulations  which  constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.

          TO HAVE AND TO HOLD all and singular the  aforesaid  property unto the
Mortgagee,  its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture  Indemnitees,  except
as provided in Section 2.13 and Article III of the Trust  Indenture  without any
preference,  distinction or priority of any one Equipment Note over any other by
reason of priority of time of issue, sale, negotiation, date of maturity thereof
or  otherwise  for any  reason  whatsoever,  and for the uses and  purposes  and
subject to the terms and provisions set forth in the Trust Indenture.

          This Trust Indenture  Supplement shall be construed as supplemental to
the Trust  Indenture and shall form a part thereof.  The Trust Indenture is each
hereby  incorporated by reference  herein and is hereby  ratified,  approved and
confirmed.

          AND, FURTHER, the Owner hereby acknowledges that the Aircraft referred
to in this Trust  Indenture  Supplement  has been  delivered to the Owner and is
included in the property of the Owner subject to the pledge and mortgage thereof
under the Trust Indenture.

                                      * * *

          IN  WITNESS  WHEREOF,  the  Owner  has  caused  this  Trust  Indenture
Supplement  to  be  duly  executed  by  one  of  its  officers,  thereunto  duly
authorized, on the day and year first above written.



                                          CONTINENTAL AIRLINES, INC.


                                          By:___________________________________
                                             Name:
                                             Title:





                                   SCHEDULE I


                             ORIGINAL AMOUNT                   INTEREST RATE
                             ---------------                   -------------

Series A:

Series B:

Series C:

[Series D:]

Maximum Aggregate
Original Amount:

                          Trust Indenture and Mortgage
                           Equipment Note Amortization



                                                  PERCENTAGE OF ORIGINAL
          PAYMENT DATE                               AMOUNT TO BE PAID
     ------------------------                 ------------------------------









                                   CERTIFICATE


Certificate
No. 1

          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 1998-1A-O

     6.648% Continental Airlines Pass Through Certificate, Series 1998-1A-O
                        Issuance Date: February 20, 1998

                       Final Maturity Date: March 15, 2019

          Evidencing A Fractional Undivided Interest In The Continental
          Airlines Pass Through Trust 1998-1A-O, The Property Of Which
          Includes Certain Equipment Notes Each Secured By An Aircraft
          Leased To Or Owned By Continental Airlines, Inc.


                   $ 200,000,000 Fractional Undivided Interest
          representing 0.000205929% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT CEDE & CO., for value received,  is the registered
owner of a  $200,000,000  (Two  hundred  million  dollar)  Fractional  Undivided
Interest in the Continental  Airlines Pass Through Trust 1998-1A-O (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. 1998-1A-O
thereto,  dated as of February 20, 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 "6.648%  Continental  Airlines Pass
Through Certificates, Series 1998-1A-O" (herein called the "Certificates"). This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the 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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "Regular  Distribution  Date")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the




Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER,  THIS CERTIFICATE  SHALL BE GOVERNED




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

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







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

                                      CONTINENTAL AIRLINES PASS THROUGH
                                      TRUST 1998-1A-O

                                      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:



                                   CERTIFICATE


Certificate
No. 2

          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 1998-1A-O

     6.648% Continental Airlines Pass Through Certificate, Series 1998-1A-O
                        Issuance Date: February 20, 1998

                       Final Maturity Date: March 15, 2019

          Evidencing A Fractional Undivided Interest In The Continental
          Airlines Pass Through Trust  1998-1A-O,  The Property Of Which
          Includes Certain Equipment  Notes  Each  Secured By An  Aircraft
          Leased To Or Owned By Continental Airlines, Inc.


                   $ 200,000,000 Fractional Undivided Interest
          representing 0.000205929% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT CEDE & CO., for value received,  is the registered
owner of a  $200,000,000  (Two  hundred  million  dollar)  Fractional  Undivided
Interest in the Continental  Airlines Pass Through Trust 1998-1A-O (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. 1998-1A-O
thereto,  dated as of February 20, 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 "6.648%  Continental  Airlines Pass
Through Certificates, Series 1998-1A-O" (herein called the "CERTIFICATES"). This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the 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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the




Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER,  THIS CERTIFICATE  SHALL BE GOVERNED




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

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







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

                                          CONTINENTAL AIRLINES PASS THROUGH
                                          TRUST 1998-1A-O

                                          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:



                                  CERTIFICATE


Certificate
No. 3

          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 1998-1A-O

     6.648% Continental Airlines Pass Through Certificate, Series 1998-1A-O
                        Issuance Date: February 20, 1998

                       Final Maturity Date: March 15, 2019

          Evidencing   A   Fractional   Undivided   Interest   In  The
          Continental  Airlines  Pass  Through  Trust  1998-1A-O,  The
          Property  Of Which  Includes  Certain  Equipment  Notes Each
          Secured  By An  Aircraft  Leased To Or Owned By  Continental
          Airlines, Inc.


                   $ 85,605,000 Fractional Undivided Interest
          representing 0.000205929% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT CEDE & CO., for value received,  is the registered
owner of an  $85,605,000  (Eighty  five  million six  hundred and five  thousand
dollar) Fractional  Undivided Interest in the Continental  Airlines Pass Through
Trust 1998-1A-O (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.  1998-1A-O  thereto,  dated as of February  20, 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 "6.648%  Continental  Airlines Pass Through  Certificates,  Series
1998-1A-O" (herein called the "CERTIFICATES").  This Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement.  By
virtue  of  its  acceptance   hereof,   the  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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the



Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST



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

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



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

                                        CONTINENTAL AIRLINES PASS THROUGH TRUST
                                        1998-1A-O

                                        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:


                                   CERTIFICATE


Certificate
No. 1

          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 1998-1B-O

     6.748% Continental Airlines Pass Through Certificate, Series 1998-1B-O
                        Issuance Date: February 20, 1998

                     Final Maturity Date: September 15, 2018

          Evidencing   A   Fractional   Undivided   Interest   In  The
          Continental  Airlines  Pass  Through  Trust  1998-1B-O,  The
          Property  Of Which  Includes  Certain  Equipment  Notes Each
          Secured  By An  Aircraft  Leased To Or Owned By  Continental
          Airlines, Inc.


                   $150,371,000 Fractional Undivided Interest
          representing 0.000665022% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT CEDE & CO., for value received,  is the registered
owner of a  $150,371,000  (One hundred fifty  million three hundred  seventy-one
thousand dollar) Fractional  Undivided Interest in the Continental Airlines Pass
Through Trust 1998-1B-O (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.  1998-1B-O  thereto,  dated as of February  20, 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 "6.748%  Continental  Airlines Pass Through  Certificates,  Series
1998-1B-O" (herein called the "CERTIFICATES").  This Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement.  By
virtue  of  its  acceptance   hereof,   the  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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the



Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST



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

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



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

                                        CONTINENTAL AIRLINES PASS THROUGH TRUST
                                        1998-1B-O

                                        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:


                                   CERTIFICATE


Certificate
No. 1

          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 1998-1C-O

     6.541% Continental Airlines Pass Through Certificate, Series 1998-1C-O
                        Issuance Date: February 20, 1998

                     Final Maturity Date: September 15, 2009

          Evidencing   A   Fractional   Undivided   Interest   In  The
          Continental  Airlines  Pass  Through  Trust  1998-1C-O,  The
          Property  Of Which  Includes  Certain  Equipment  Notes Each
          Secured  By An  Aircraft  Leased To Or Owned By  Continental
          Airlines, Inc.


                   $136,542,000 Fractional Undivided Interest
          representing 0.000732375% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT CEDE & CO., for value received,  is the registered
owner of a $136,542,000 (One hundred  thirty-six  million five hundred forty-two
thousand dollar) Fractional  Undivided Interest in the Continental Airlines Pass
Through Trust 1998-1C-O (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.  1998-1C-O  thereto,  dated as of February  20, 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 "6.541%  Continental  Airlines Pass Through  Certificates,  Series
1998-1C-O" (herein called the "CERTIFICATES").  This Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement.  By
virtue  of  its  acceptance   hereof,   the  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 or owned by the Company.

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

          Subject to and in  accordance  with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each March 15 and September 15 (a "REGULAR  DISTRIBUTION  DATE")
commencing  March 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.

          Under  certain  circumstances  set forth in Section  7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust  pursuant  to  the  Assignment   and   Assumption   Agreement.   Upon  the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"),  the
Trust shall be  terminated,  the  Certificateholders  shall  receive  beneficial
interests  in the Related  Trust in exchange  for their  interests  in the Trust
equal to their  respective  beneficial  interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the  Agreement  and the Related Pass Through  Trust  Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder,  by its acceptance of this
Certificate  or a  beneficial  interest  herein,  agrees  to  be  bound  by  the



Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a  Certificateholder  thereunder.  From and after the
Transfer,  unless and to the extent the context otherwise  requires,  references
herein to the Trust, the Agreement and the Trustee shall  constitute  references
to the Related  Trust,  the Related Pass Through Trust  Agreement and trustee of
the Related Trust, respectively.

          The Certificates are issuable only as registered  Certificates without
coupons in minimum  denominations of $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,  UNTIL THE  TRANSFER,  THIS  CERTIFICATE  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE
AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED  IN  ACCORDANCE  WITH SUCH  LAWS.  THE  RELATED  PASS  THROUGH  TRUST



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

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



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

                                        CONTINENTAL AIRLINES PASS THROUGH TRUST
                                        1998-1C-O

                                        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:



                       AIRCRAFT INFORMATION SERVICES, INC.
                         23232 Peralta Drive, Suite 115
                             Laguna Hills, CA 92653


                                             February 6, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PRELIMINARY PROSPECTUS SUPPLEMENT, DATED FEBRUARY 6, 1998, TO THE
               PROSPECTUS  DATED  SEPTEMBER  4, 1997,  INCLUDED IN  REGISTRATION
               STATEMENT NO. 333-34545 OF CONTINENTAL AIRLINES, INC.
               -----------------------------------------------------------------

Ladies and Gentlemen:

          We consent to the use of our report and to the  reference  to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Preliminary  Prospectus Supplement and to the summary contained
in the text under such headings of the report prepared by us with respect to the
Aircraft referred to therein. We also consent to such use, reference and summary
in the Final Prospectus  Supplement  relating to the offering  described in such
Preliminary  Prospectus  Supplement,  to the  extent  such use,  references  and
summary are unchanged.

                                             Sincerely,



                                             AIRCRAFT INFORMATION SERVICES, INC.


                                                   /S/ FRED E. BEARDEN
                                             -----------------------------------
                                             Name: Fred E. Bearden
                                             Title:President





                       AIRCRAFT INFORMATION SERVICES, INC.
                         23232 Peralta Drive, Suite 115
                             Laguna Hills, CA 92653


                                             February 11, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PROSPECTUS SUPPLEMENT, DATED FEBRUARY 11, 1998, TO THE PROSPECTUS
               DATED SEPTEMBER 4, 1997,  INCLUDED IN REGISTRATION  STATEMENT NO.
               333-34545 OF CONTINENTAL AIRLINES, INC.
               -----------------------------------------------------------------

Ladies and Gentlemen:

          We consent to the use of our reports and to the  reference to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Prospectus  Supplement and to the summary contained in the text
under such  headings of the reports  prepared by us with respect to the Aircraft
referred to therein.

                                             Sincerely,



                                             AIRCRAFT INFORMATION SERVICES, INC.


                                                    /S/ FRED E. BEARDEN
                                             -----------------------------------
                                             Name:  Fred E. Bearden
                                             Title: President




                               BK ASSOCIATES, INC.
                             1295 Northern Boulevard
                            Manhasset, New York 11030




                                         February 6, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PRELIMINARY PROSPECTUS SUPPLEMENT, DATED FEBRUARY 6, 1998, TO THE
               PROSPECTUS  DATED  SEPTEMBER  4, 1997,  INCLUDED IN  REGISTRATION
               STATEMENT NO. 333-34545 OF CONTINENTAL AIRLINES, INC.
               -----------------------------------------------------------------

Ladies and Gentlemen:

          We consent to the use of our report and to the  reference  to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Preliminary  Prospectus Supplement and to the summary contained
in the text under such headings of the report prepared by us with respect to the
Aircraft referred to therein. We also consent to such use, reference and summary
in the Final Prospectus  Supplement  relating to the offering  described in such
Preliminary  Prospectus  Supplement,  to the  extent  such use,  references  and
summary are unchanged.

                                         Sincerely,

                                         BK ASSOCIATES, INC.


                                                /S/ JOHN F. KEITZ
                                         -----------------------------------
                                         Name:  John F. Keitz
                                         Title: President
                                                ISTAT Senior Certified Appraiser




                               BK ASSOCIATES, INC.
                             1295 Northern Boulevard
                            Manhasset, New York 11030




                                         February 11, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PROSPECTUS SUPPLEMENT, DATED FEBRUARY 11, 1998, TO THE PROSPECTUS
               DATED SEPTEMBER 4, 1997,  INCLUDED IN REGISTRATION  STATEMENT NO.
               333-34545 OF CONTINENTAL AIRLINES, INC.
               -----------------------------------------------------------------

Ladies and Gentlemen:

          We consent to the use of our reports and to the  reference to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Prospectus  Supplement and to the summary contained in the text
under such  headings of the reports  prepared by us with respect to the Aircraft
referred to therein.

                                         Sincerely,

                                         BK ASSOCIATES, INC.


                                                /S/ JOHN F. KEITZ
                                         --------------------------------------
                                         Name:  John F. Keitz
                                         Title: President
                                                ISTAT Senior Certified Appraiser



                          MORTEN BEYER AND AGNEW, INC.
                        8180 Greensboro Drive, Suite 1000
                                McLean, VA 22102




                                         February 6, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PRELIMINARY PROSPECTUS SUPPLEMENT, DATED FEBRUARY 6, 1998, TO THE
               PROSPECTUS  DATED  SEPTEMBER  4, 1997,  INCLUDED IN  REGISTRATION
               STATEMENT NO. 333-34545 OF CONTINENTAL AIRLINES, INC.
               -----------------------------------------------------------------

Ladies and Gentlemen:

          We consent to the use of our report and to the  reference  to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Preliminary  Prospectus Supplement and to the summary contained
in the text under such headings of the report prepared by us with respect to the
Aircraft referred to therein. We also consent to such use, reference and summary
in the Final Prospectus  Supplement  relating to the offering  described in such
Preliminary  Prospectus  Supplement,  to the  extent  such use,  references  and
summary are unchanged.



                                         Sincerely,

                                         MORTON BEYER AND AGNEW, INC.


                                               /S/ BRYSON MONTELEONE
                                         ---------------------------------------
                                         Name:  Bryson Monteleone
                                         Title: Manager - Operations





                          MORTEN BEYER AND AGNEW, INC.
                        8180 Greensboro Drive, Suite 1000
                                McLean, VA 22102




                                         February 11, 1998




CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX  77019

          Re:  PROSPECTUS SUPPLEMENT, DATED FEBRUARY 11, 1998, TO THE PROSPECTUS
               DATED SEPTEMBER 4, 1997,  INCLUDED IN REGISTRATION  STATEMENT NO.
               333-34545 OF CONTINENTAL AIRLINES, INC.

Ladies and Gentlemen:

          We consent to the use of our reports and to the  reference to our name
in the text under the headings "Prospectus Supplement  Summary--Equipment  Notes
and the Aircraft," "Risk Factors--Risk  Factors Relating to the Certificates and
the  Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft   and   the   Appraisals--The   Appraisals"   and   "Experts"   in  the
above-captioned  Prospectus  Supplement and to the summary contained in the text
under such  headings of the reports  prepared by us with respect to the Aircraft
referred to therein.



                                         Sincerely,

                                         MORTON BEYER AND AGNEW, INC.


                                                /S/ BRYSON MONTELEONE
                                         ---------------------------------------
                                         Name:  Bryson Monteleone
                                         Title: Manager - Operations