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 constitut