[Execution copy]

                          AMBAC ASSURANCE CORPORATION,
                               as Policy Provider,






                           CONTINENTAL AIRLINES, INC.






                                       and


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






                        INSURANCE AND INDEMNITY AGREEMENT





                           CONTINENTAL AIRLINES, INC.

                           PASS THROUGH CERTIFICATES,
                       SERIES 2002-G-1 and SERIES 2002-G-2






                           Dated as of March 25, 2002

<PAGE>

            (This Table of Contents is for convenience of reference only and
shall not be deemed to be part of this Insurance Agreement. All capitalized
terms used in this Insurance Agreement and not otherwise defined shall have the
meanings set forth in Article I of this Insurance Agreement.)

                                TABLE OF CONTENTS

                                                                            PAGE


                                    ARTICLE I

                                   DEFINITIONS

Section 1.01      Defined Terms................................................2
Section 1.02      Other Definitional Provisions................................7
Section 1.03      Negotiated Document..........................................7

                                   ARTICLE II

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01      Representations and Warranties of Continental................8
Section 2.02      Covenants of Continental....................................10
Section 2.03      Representations, Warranties and Covenants of WTC and
                  Subordination Agent.........................................12
Section 2.04      Representations, Warranties and Covenants of the
                  Policy Provider.............................................12

                                   ARTICLE III

                  THE POLICIES; REIMBURSEMENT; INDEMNIFICATION

Section 3.01      Issuance of the Policies....................................14
Section 3.02      Payment of Fees and Premium.................................16
Section 3.03      Reimbursement Obligation....................................17
Section 3.04      Indemnification.............................................18
Section 3.05      Procedure for Payment of Fees and Premiums..................18
Section 3.06      Late Payments...............................................19

                                   ARTICLE IV

                               FURTHER AGREEMENTS

Section 4.01      Effective Date; Term of the Insurance Agreement.............19
Section 4.02      Further Assurances and Corrective Instruments...............19
Section 4.03      Obligations Absolute........................................19
Section 4.04      Assignments; Reinsurance; Third-Party Rights................21
Section 4.05      Liability of the Policy Provider............................21

<PAGE>

                                    ARTICLE V

                                  MISCELLANEOUS

Section 5.01      Amendments, Etc.............................................22
Section 5.02      Notices.....................................................22
Section 5.03      Severability................................................23
Section 5.04      Governing Law...............................................23
Section 5.05      Consent to Jurisdiction.....................................23
Section 5.06      Consent of Policy Provider..................................24
Section 5.07      Counterparts................................................24
Section 5.08      Headings....................................................24
Section 5.09      Trial by Jury Waived........................................24
Section 5.10      Limited Liability...........................................24
Section 5.11      Entire Agreement............................................25

<PAGE>

            INSURANCE AND INDEMNITY AGREEMENT (as may be amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated as of March
25, 2002, by and among AMBAC ASSURANCE CORPORATION, as Policy Provider (the
"Policy Provider"), CONTINENTAL AIRLINES, INC. ("Continental") and WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Subordination Agent
(the "Subordination Agent").

                              W I T N E S S E T H :

            WHEREAS, Continental intends to finance (or refinance) the
acquisition of up to seven Aircraft through separate secured loan Transactions
in which Continental will own the Aircraft;

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

            WHEREAS, WTC, not in its individual capacity but as Trustee under
each of the Class G-1 Trust Agreement and Class G-2 Trust Agreement, will create
the Class G-1 Trust and Class G-2 Trust, which will acquire the Series G-1
Equipment Notes and Series G-2 Equipment Notes, respectively, under the Note
Purchase Agreement;

            WHEREAS, (i) Landesbank Hessen-Thuringen Girozentrale, as Primary
Liquidity Provider, has entered into two Primary Liquidity Facilities, one each
for the benefit of the Class G-1 Certificateholders and Class G-2
Certificateholders (together, the "Class G Certificateholders") with WTC, as the
Subordination Agent, as agent and Trustee for the applicable Trust, and (ii)
Merrill Lynch Capital Services, Inc., as Class G-1 Above-Cap Liquidity Provider,
has entered into an irrevocable interest rate cap agreement for the benefit of
the Class G-1 Certificateholders with WTC, as the Subordination Agent, as agent
and Trustee of the Class G-1 Trust and (iii) WTC, as Trustee of each Trust, the
Primary Liquidity Provider, the Class G-1 Above-Cap Liquidity Provider, Policy
Provider and the Subordination Agent have entered into the Intercreditor
Agreement;

            WHEREAS, pursuant to the Class G-1 Trust Agreement and Class G-2
Trust Agreement (together, the "Class G Trust Agreements"), the Class G-1 Trust
and Class G-2 Trust have been created to facilitate the sale of the Class G-1
Certificates and Class G-2 Certificates (together, the "Class G Certificates");

                  WHEREAS, the Policy Provider has issued the Class G-1 Policy
in respect of the Class G-1 Certificates and the Class G-2 Policy in respect of
the Class G-2 Certificates, pursuant to which it has agreed to guarantee the
payment of interest to the Subordination Agent for the benefit of the Class G-1
Trustee and Class G-1 Certificateholders, on the one hand, and the Class G-2
Trustee and Class G-2 Certificateholders, on the other hand, and the payment of

<PAGE>

principal of the Class G-1 Certificates and the Class G-2 Certificates on the
Final Legal Distribution Date and as otherwise provided herein;

            WHEREAS, the Policy Provider shall be paid the Premium as set forth
herein; and

            WHEREAS, each of Continental and the Subordination Agent has agreed
to undertake certain obligations in consideration for the Policy Provider's
issuance of the Policies.


            NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01 DEFINED TERMS. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Intercreditor Agreement or, if not
defined therein, in the Policies described below. For purposes of this Insurance
Agreement, the following terms shall have the following meanings:

            "ACT" means Part A of subtitle VII of Title 49, United States Code.

            "AIRCRAFT" means any aircraft which is or will be part of the
Collateral.

            "AIRCRAFT DOCUMENT" means all technical data, manuals, and log
books, and all inspection, modification, and overhaul records and other service,
repair, maintenance, and technical records that the relevant Aviation Authority
requires be maintained with respect to the Aircraft, including all required
additions, renewals, revisions, and replacements of any such materials required
by the relevant Aviation Authority Regulations, in each case in whatever form
and by whatever means or medium (including microfiche, microfilm, paper, or
computer disk) such materials are maintained or retained by or on behalf of
Continental (provided, that all such materials shall be maintained in the
English language).

            "AIRFRAME" means any airframe which is or will be part of the
Collateral.

            "APPRAISED VALUE" means the Appraised Value of an Aircraft as set
forth in the Offering Document under the heading "Description of the Aircraft
and the Appraisals - The Appraisals."

            "AVIATION AUTHORITY" means the FAA or, if the Aircraft is registered
with any other Government Entity in accordance with the applicable Participation
Agreement, such other Government Entity.

<PAGE>

            "BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.

            "CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of
the Act and in the FAA Regulations.

            "CLASS G-1 POLICY" means the Certificate Guaranty Insurance Policy
No. AB0542BE, together with all endorsements thereto, issued by the Policy
Provider in favor of the Subordination Agent for the benefit of the Class G-1
Certificateholders and the Class G-1 Primary Liquidity Provider to the extent
provided therein.

            "CLASS G-2 POLICY" means the Certificate Guaranty Insurance Policy
No. AB0543BE, together with all endorsements thereto, issued by the Policy
Provider in favor of the Subordination Agent for the benefit of the Class G-2
Certificateholders and the Class G-2 Primary Liquidity Provider to the extent
provided therein.

            "CLASS G-1 POLICY FEE LETTER" means the fee letter, dated as of
March 25, 2002, between the Policy Provider and Continental setting forth the
Premium in respect of the Class G-1 Certificates and certain other amounts
payable in respect of the Class G-1 Policy.

            "CLASS G-2 POLICY FEE LETTER" means the fee letter, dated as of
March 25, 2002, between the Policy Provider and Continental setting forth the
Premium in respect of the Class G-2 Certificates and certain other amounts
payable in respect of the Class G-2 Policy.

            "COLLATERAL" means the "Collateral" as defined or to be defined in
any Indenture with respect to an Aircraft.

            "DELIVERY DATE" means with respect to each Participation Agreement,
the "Closing Date" as defined or to be defined in each such Participation
Agreement.

            "DEPOSITORY INFORMATION" means the information pertaining to the
Depository under the caption "Description of the Deposit Agreements-Depository"
in the Offering Document.

            "DEPRECIATED AIRCRAFT VALUE" means the initial Appraised Value of
each Aircraft, as reduced by 3% of the initial Appraised Value of such Aircraft
per annum on each anniversary date of the initial delivery of such Aircraft to
Continental.

            "ENGINE" means any engine which is or will be part of the
Collateral.

            "EXPENSES" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).

            "EVENT OF LOSS" means any Event of Loss defined or to be defined in
any Indenture.

<PAGE>

            "FAA" means the Federal Aviation Administration of the United States
of America or any Government Entity succeeding to the functions of the Federal
Aviation Administration.

            "FAA FILED DOCUMENTS" with respect to each Aircraft has the meaning
given to such term in the related Indenture.

            "FAA REGULATIONS" with respect to each Aircraft has the meaning
given to the term in the related Indenture.

            "FINAL LEGAL DISTRIBUTION DATE" means February 15, 2013 with respect
to the Class G-1 Certificates and August 15, 2013 with respect to the Class G-2
Certificates.

            "FINANCING STATEMENTS" means collectively, UCC-1 (and, where
appropriate, UCC-3) financing statements covering in respect of each Aircraft,
the related Collateral, showing Mortgagee as secured party, for filing in
Delaware and each other jurisdiction in which such filing is made on or before
the related Delivery Date.

            "GAAP" means generally accepted accounting principles as set forth
in the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any Person, shall mean such principles applied on a basis
consistent with prior periods except as may be disclosed in such Person's
financial statements.

            "GOVERNMENT ENTITY" means (i) any federal, state, provincial, local,
municipal or similar government, and any body, board, department, commission,
court, tribunal, authority, agency or other instrumentality of any such
government or otherwise exercising any executive, legislative, judicial,
administrative or regulatory functions of such government or (ii) any other
government entity having jurisdiction over any matter contemplated by the
Operative Agreements or relating to the observance or performance of the
obligations of any of the parties to the Operative Agreements.

            "HOLDER" has the meaning given such term in the Policies.

            "INSURANCE AGREEMENT" has the meaning given such term in the initial
paragraph hereof.

            "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
(2002-1), dated as the date hereof, by and among WTC, as Trustee under each of
the Trusts, the Primary Liquidity Provider, the Class G-1 Above-Cap Liquidity
Provider, the Policy Provider and the Subordination Agent.

            "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

<PAGE>

            "LATE PAYMENT RATE" shall mean with respect to any period, a rate
per annum equal to LIBOR (as determined pursuant to the Reference Agency
Agreement) plus 2%.

            "LAW" means (i) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (ii) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.

            "LIEN" means any mortgage, pledge, lien, charge, encumbrance or
security interest affecting the title to or any interest in property.

            "MATERIAL ADVERSE CHANGE" means, in respect of any Person as at any
date, a material adverse change in the ability of such Person to perform its
obligations under any of the Operative Agreements to which it is a party as of
such date, or any material adverse change in the business, financial condition
or results of operations of such Person on a consolidated basis with its
subsidiaries.

            "MOODY'S" means Moody's Investors Service, Inc., and any successor
thereto.

            "MORTGAGEE" with respect to each Aircraft means WTC in its capacity
as Mortgagee under the related Indenture.

            "OFFER DATE" means March 11, 2002.

            "OFFERING DOCUMENT" means the prospectus, dated August 23, 2001,
including all documents incorporated therein by reference, as supplemented by
the final prospectus supplement, dated March 11, 2002, relating to the offering
of the Class G Certificates, as amended and supplemented. "OPERATIVE AGREEMENTS"
means this Insurance Agreement, the Intercreditor Agreement, each Participation
Agreement, the Note Purchase Agreement, each Indenture, the Series G-1 Equipment
Notes, the Series G-2 Equipment Notes, the Class G Certificates, the Liquidity
Facilities, the Class G Trust Agreements, the Underwriting Agreement, the
Policies and the Policy Fee Letters, together with all exhibits and schedules
included with any of the foregoing.

            "PERSON" means an individual, joint stock company, trust,
unincorporated association, joint venture, limited liability company,
corporation, business or owner trust, partnership or other organization or
entity (whether governmental or private).

            "POLICIES" means the Class G-1 Policy and Class G-2 Policy.

            "POLICY FEE LETTERS" means the Class G-1 Policy Fee Letter and Class
G-2 Policy Fee Letter.

            "POLICY PROVIDER" means Ambac Assurance Corporation, or any
successor thereto, as issuer of the Policies.

<PAGE>

            "POLICY PROVIDER INFORMATION" means the information set forth (or
incorporated by reference) under the caption "Description of the Policy
Provider" in the Offering Document.

            "PREMIUM" means the premium payable in respect of the Policies on
the Closing Date and on each Semi-Annual Distribution Date thereafter in an
amount equal to 1/2 of the product of (i) the Premium Percentage and (ii) with
respect to the payment to be made on the Closing Date, the Pool Balance of the
Class G Certificates on the Closing Date, or with respect to the payments to be
made on each Semi-Annual Distribution Date, the Pool Balance of the Class G
Certificates on such Semi-Annual Distribution Date after giving effect to any
distributions to be made on such Semi-Annual Distribution Date; PROVIDED,
HOWEVER, the Premium payable on the Closing Date shall be pro rated from the
Closing Date to the first Semi-Annual Distribution Date (based upon a 360 day
year of twelve 30 day months).

            "PREMIUM PERCENTAGE" shall have the meaning set forth in the Policy
Fee Letters.

            "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

            "SEC" means the Securities and Exchange Commission of the United
States of America, or any successor thereto.

            "SECTION 1110" means 11 U.S.C. ss.1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy law in effect from time
to time.

            "SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.

            "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

            "SECURITY" means a "security" as defined in Section 2(a)(1) of the
Securities Act.

            "SEMI-ANNUAL DISTRIBUTION DATE" means each February 15 and August 15
Regular Distribution Date.

            "SERIES G-1 EQUIPMENT NOTES" means the Series G-1 Equipment Notes
issued pursuant to any Indenture by Continental, and authenticated by the
Mortgagee thereunder, and any Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.

            "SERIES G-2 EQUIPMENT NOTES" means the Series G-2 Equipment Notes
issued pursuant to any Indenture by Continental, and authenticated by the
Mortgagee thereunder, and any Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.

            "TAXING AUTHORITY" means any federal, state, or local government or
other taxing authority in the United States or its possessions, any foreign

<PAGE>

government or political subdivision or taxing authority thereof, any
international taxing authority, or any territory or possession of the United
States or taxing authority thereof.

            "TRANSACTIONS" means the transactions contemplated by the Operative
Agreements.

            "UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.

            "UNDERWRITERS" means Credit Suisse First Boston Corporation, Salomon
Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc. and Morgan Stanley & Co. Incorporated.

            "UNDERWRITERS INFORMATION" means the information provided by the
Underwriters in writing specifically for inclusion in the Offering Document, as
revised from time to time, and as included in such Offering Document.

            "UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
March 11, 2002, among the Underwriters, the Depositary and Continental, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.

            "U.S. AIR CARRIER" means any United States air carrier that is a
Citizen of the United States holding an air carrier operating certificate
pursuant to the Act for aircraft capable of carrying 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.

            "WTC" means Wilmington Trust Company, a Delaware banking
corporation.

            SECTION 1.02 OTHER DEFINITIONAL PROVISIONS. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Insurance
Agreement shall refer to this Insurance Agreement as a whole and not to any
particular provision of this Insurance Agreement. Section, subsection, Schedule
and Exhibit references are to this Insurance Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation."

            SECTION 1.03 NEGOTIATED DOCUMENT. This Insurance Agreement is the
result of negotiations among and has been reviewed by the parties hereto and
their respective counsel. Accordingly, this Insurance Agreement shall be deemed
to be the product of all parties hereto, and no ambiguity shall be construed in
favor of or against any such party on the grounds that a particular party was
the drafter or author of this Insurance Agreement or any part thereof.
Accordingly, in any dispute concerning the meaning of the Insurance Agreement,
or any term or condition hereof, such dispute shall be resolved without
reference to the doctrine of CONTRA PROFERENTEM or any related or similar
doctrine.

<PAGE>

                                   ARTICLE II

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

            SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF CONTINENTAL.
Continental represents and warrants as of the Closing Date as follows:

            (a) ORGANIZATION; QUALIFICATION. Continental is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to conduct its business in
which it is currently engaged and to own or hold under lease its properties and
to enter into and perform its obligations under the Operative Agreements to
which it is a party as of such date. Continental is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in which
the nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Continental.

            (b) CORPORATE AUTHORIZATION. Continental has taken, or caused to be
taken, all necessary corporate action (including, without limitation, the
obtaining of any consent or approval of stockholders required by its certificate
of incorporation or by-laws) to authorize the execution and delivery of each of
the Operative Agreements to which it is a party as of such date, and the
performance of its obligations thereunder.

            (c) NO VIOLATION. The execution and delivery by Continental of the
Operative Agreements to which it is a party as of such date, the performance by
Continental of its obligations thereunder and the consummation by Continental of
the Transactions contemplated thereby, do not and will not (a) violate any
provision of the certificate of incorporation or by-laws of Continental, (b)
violate any law, regulation, rule or order applicable to or binding on
Continental or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Continental), or result in the creation of any Lien (other than as permitted
under the related Indenture) upon the Aircraft under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Continental is a party
or by which it or any of its properties is bound.

            (d) APPROVALS. The execution and delivery by Continental of the
Operative Agreements to which it is a party as of such date, the performance by
Continental of its respective obligations thereunder and the consummation by
Continental of the Transactions contemplated thereby do not and will not require
the consent or approval of, or the giving of notice to, or the registration
with, or the recording or filing of any documents with, or the taking of any
other action in respect of, (a) any trustee or other creditor of Continental and
(b) any Government Entity, other than the filing of (w) the FAA Filed Documents
and the Financing Statements (and continuation statements periodically), (x)
filings, recordings, notices or other ministerial actions pursuant to any
routine recording, contractual or regulatory requirements applicable to it, (y)
filings, recordings, notices or other actions contemplated by the Operative
Agreements in connection with the subleasing or reregistration of the Aircraft
and (z) filings, recordings, notices or other actions relating to the Securities
Act or state securities laws.

<PAGE>

            (e) VALID AND BINDING AGREEMENTS. The Operative Agreements executed
and delivered by Continental on or prior to such date have been duly executed
and delivered by Continental and, assuming the due authorization, execution and
delivery thereof by the other party or parties thereto, constitute the legal,
valid and binding obligations of Continental and are enforceable against
Continental in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity and subject to principles of public policy
limiting the right to enforce the indemnification and contribution provisions
contained herein, insofar as such provisions relate to indemnification or
contribution for liabilities arising under federal securities laws.

            (f) LITIGATION. Except as set forth in the Offering Document, the
most recent Annual Report on Form 10-K, as amended, of Continental filed with
the SEC on or prior to the Closing Date, or in any Quarterly Report on Form 10-Q
or Current Report on Form 8-K filed by Continental with the SEC subsequent to
such Form 10-K, no action, claim or proceeding is now pending or, to the actual
knowledge of Continental, threatened against Continental before any court,
governmental body, arbitration board, tribunal or administrative agency, which
is reasonably likely to be determined adversely to Continental and if determined
adversely to Continental is reasonably likely to result in a Material Adverse
Change to Continental.

            (g) FINANCIAL CONDITION. The audited consolidated balance sheet of
Continental as of December 31, 2001 included in Continental's Annual Report for
the fiscal year ending December 31, 2001 on Form 10-K, as amended, filed by
Continental with the SEC, and the related consolidated statements of operations
and cash flows for the fiscal year then ended, have been prepared in conformity
with GAAP and present fairly in all material respects the consolidated financial
condition of Continental and its consolidated subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods. Since
December 31, 2001, there has been no material adverse change in the financial
condition or operations of Continental, except as disclosed in the Offering
Document, the foregoing SEC filings or any Current Report on Form 8-K filed by
Continental with the SEC since December 31, 2001.

            (h) REGISTRATION AND RECORDATION. In the case of each Aircraft,
except for (a) the registration of such Aircraft with the FAA pursuant to the
Act in the name of Continental, (b) the filing for recordation (and recordation)
of the FAA Filed Documents with respect to such Aircraft, (c) the filing of the
Financing Statements (and continuation statements relating thereto at periodic
intervals) with respect to such Aircraft, and (d) the affixation of the
nameplates referred to in Section 4.02(f) of the Indenture with respect to such
Aircraft at the Delivery Date with respect to such Aircraft, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC), is necessary in order
to establish and perfect the Mortgagee's perfected security interest in such
Aircraft (subject only to Permitted Liens as defined in the related Indenture),
as against Continental and any other Person, in each case, in any applicable
jurisdiction in the United States.

            (i) NO DEFAULT. No event exists that, in respect of any Aircraft
delivered on the date hereof, constitutes an Event of Default (as defined in the
Indenture for such Aircraft).

<PAGE>

            (j) NO EVENT OF LOSS. No Event of Loss has occurred with respect to
any Airframe or any Engine which is Collateral under any Indenture executed on
the date hereof, and to the actual knowledge of Continental, no circumstance,
condition, act or event has occurred that, with the giving of notice or lapse of
time or both gives rise to or constitutes an Event of Loss with respect to such
Airframe or any such Engine.

            (k) COMPLIANCE WITH LAWS.

                  (a) Continental is a Citizen of the United States and a U.S.
            Air Carrier.

                  (b) Continental holds all licenses, permits and franchises
            from the appropriate Government Entities necessary to authorize
            Continental to lawfully engage in air transportation and to carry on
            scheduled commercial passenger service as currently conducted,
            except where the failure to so hold any such license, permit or
            franchise would not give rise to a Material Adverse Change to
            Continental.

                  (c) Continental is not an "investment company" or a company
            controlled by an "investment company" within the meaning of the
            Investment Company Act.

            (l) SECURITIES LAWS. Neither Continental nor any Person authorized
to act on its behalf has directly or indirectly offered any beneficial interest
or Security relating to the ownership of the Aircraft, or any of the Equipment
Notes or any other interest in or security under any Indenture, for sale, to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any Person in violation of the Securities Act.

            (m) OFFERING DOCUMENT. Except for the Policy Provider Information,
the Depository Information and the Underwriters Information, the Offering
Document on the Offer Date, and as of the Closing Date, neither contained or
will contain any untrue statement of a material fact nor omitted or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

            (n) SECTION 1110. The Mortgagee under each Indenture will be
entitled to the benefits of Section 1110 with respect to the Aircraft subject to
such Indenture (as in effect on the Delivery Date for such Aircraft) in the
event of a case under Chapter 11 of the Bankruptcy Code in which Continental is
a debtor.

            SECTION 2.02 COVENANTS OF CONTINENTAL. Continental covenants and
agrees with the Policy Provider as follows:

            (a) Without the prior written consent of the Policy Provider (which
may be granted or withheld in its sole discretion), each Participation Agreement
and the other Financing Agreements (as defined in the Note Purchase Agreement)
to be entered into pursuant to such Participation Agreement (i) will not vary
the Mandatory Economic Terms and will contain the Mandatory Document Terms in
the form attached to the Note Purchase Agreement without modification in any
adverse respect (without regard to the materiality thereof) as regards the
interests, rights and remedies of the Policy Provider, notwithstanding the

<PAGE>

provisions in the Note Purchase Agreement permitting such modifications to be
made if the effect thereof is not materially adverse to certain parties and
(iii) will not make any modification of any kind (without regard to the
materiality thereof or whether such modification has any adverse effect on the
interests, rights and remedies of the Policy Provider) to the terms and
provisions set forth on Schedule I attached hereto.

            (b) Notwithstanding the provisions of any Indenture or any other
Operative Agreement and in addition to and not in limitation of any other right
which the Policy Provider may have under any other Operative Agreement,
Continental agrees that the Policy Provider and its representatives may once in
any 24-month period following the issuance of the Class G Certificates, at their
expense, inspect any Aircraft or Aircraft Documents, and may otherwise meet with
the relevant officers and managers of Continental to discuss the affairs,
finances and accounts of Continental, upon reasonable request by the Policy
Provider; PROVIDED that (i) each such inspection or meeting shall be conducted
during times reasonably acceptable to Continental, (ii) each such inspection or
meeting shall be conducted in a manner so as not to interfere with Continental
's (or any Permitted Lessee's (as defined the Indenture)) maintenance and
operation of the Aircraft, (iii) the Policy Provider shall give Continental at
least thirty (30) days notice of its request to inspect any Aircraft or Aircraft
Documents, and (iv) any inspection of the Aircraft hereunder shall be limited to
a visual, walk-around inspection, and shall not include the opening of any
panels, bays, or other components of the Aircraft. Continental will reasonably
cooperate with the Policy Provider in response to each such request by the
Policy Provider.

            (c) Anything in the Note Purchase Agreement to the contrary
notwithstanding, without the consent of the Policy Provider, Continental agrees
not to utilize debt in relation to the Aircraft to be financed under the Note
Purchase Agreement such that the principal amount of the Series G-1 Equipment
Notes and Series G-2 Equipment Notes taken together (assuming the amortization
of the Series G-1 Equipment Notes and Series G-2 Equipment Notes taken together
occurs as set forth on the amortization schedule established on the Delivery
Date with respect to such Series G-1 Equipment Notes and Series G-2 Equipment
Notes, or, if such amortization schedule is modified thereafter by amendment of
the applicable Indenture, assuming the amortization of the Series G-1 Equipment
Notes and Series G-2 Equipment Notes taken together occurs as set forth on such
modified amortization schedule), in aggregate or in relation to an individual
Aircraft, as of each Semi-Annual Distribution Date (assuming any amortization
that was scheduled on such date had been paid) referred to below, expressed as a
percentage of the Depreciated Aircraft Value, in aggregate or in relation to an
individual Aircraft, as of such Semi-Annual Distribution Date, would be
scheduled to exceed the applicable percentage set forth in the following
schedule:

              SEMI-ANNUAL           SCHEDULE A      SCHEDULE B
           DISTRIBUTION DATE

            Initial Date<F1>          52.6%           52.9%
             August 15, 2002          52.6%           52.9%
           February 15, 2003          52.6%           52.9%

------------------
* The Initial Date for an individual Aircraft is the Delivery Date of such
Aircraft and the Initial Date for the aggregate of all Aircraft is the Closing
Date.

<PAGE>

             August 15, 2003          51.5%           51.8%
           February 15, 2004          52.0%           52.3%
             August 15, 2004          50.5%           50.7%
           February 15, 2005          51.0%           51.2%
             August 15, 2005          49.4%           49.7%
           February 15, 2006          49.9%           50.2%
             August 15, 2006          48.3%           48.6%
           February 15, 2007          48.8%           49.1%
             August 15, 2007          47.2%           47.4%
           February 15, 2008          47.7%           48.0%
             August 15, 2008          46.1%           46.3%
           February 15, 2009          46.6%           46.9%
             August 15, 2009          44.9%           45.2%
           February 15, 2010          45.5%           45.8%
             August 15, 2010          43.8%           44.0%
           February 15, 2011          44.4%           44.6%
             August 15, 2011          42.6%           42.8%
           February 15, 2012          42.6%           42.8%

Schedule A applies in the case of the aggregate of all Aircraft.

Schedule B applies to any individual Aircraft.

            (d) Upon request of the Policy Provider (which such request shall
not exceed one time in any applicable calendar year), Continental agrees to
provide to the Policy Provider the name and location of any airline that then
has possession of an Engine (subject to any of the liens under any Indenture)
through a pooling or interchange arrangement or otherwise.

            SECTION 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF WTC AND
SUBORDINATION AGENT. Each of WTC and Subordination Agent represents, warrants
and covenants to Continental and the Policy Provider that it shall perform and
observe, in all material respects, all of its respective covenants, obligations
and agreements in any Operative Agreement to which it is a party to be observed
or performed by it.

            SECTION 2.04 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE POLICY
PROVIDER. The Policy Provider represents, warrants and covenants to Continental
and the Subordination Agent as follows:

            (a) ORGANIZATION AND LICENSING. The Policy Provider is duly
organized, validly existing and in good standing as a Wisconsin-domiciled stock
insurance company, duly qualified to conduct an insurance business in every
jurisdiction where qualification may be necessary to accomplish the
Transactions.

            (b) CORPORATE POWER. The Policy Provider has the corporate power and
authority to issue the Policies, to execute and deliver this Insurance Agreement
and the other Operative Agreements to which it is a party and to perform all of
its obligations hereunder and thereunder.

<PAGE>

            (c) AUTHORIZATION; APPROVALS. All proceedings legally required for
the issuance and execution, delivery and performance of the Policies and the
execution, delivery and performance of this Insurance Agreement have been taken
and all licenses, orders, consents or other authorizations or approvals of any
Government Entity legally required for the enforceability of the Policies have
been obtained; any proceedings not taken and any licenses, authorizations or
approvals not obtained do not affect the enforceability of the Policies.

            (d) ENFORCEABILITY. This Insurance Agreement, the Intercreditor
Agreement, the Policy Fee Letters and the Policies, when issued, will
constitute, a legal, valid and binding obligation of the Policy Provider,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting
creditors' rights generally and to general principles of equity and subject to
principles of public policy limiting the right to enforce the indemnification
provisions contained herein, insofar as such provisions relate to
indemnification for liabilities arising under federal securities laws.

            (e) FINANCIAL INFORMATION. (i) The consolidated financial statements
of the Policy Provider and its subsidiaries as of December 31, 2000 and December
31, 1999, and for each of the years in the three-year period ended December 31,
2000, prepared in accordance with accounting principles generally accepted in
the United States of America, included in the Annual Report on Form 10-K of
Ambac Financial Group, Inc. (which was filed with the Commission on March 28,
2001, Commission File Number 1-10777); (ii) the unaudited consolidated financial
statements of the Policy Provider and its subsidiaries as of March 31, 2001 and
for the periods ending March 31, 2001 and March 31, 2000 included in the
Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. (which was filed
with the Commission on May 15, 2001); (iii) the unaudited consolidated financial
statements of the Policy Provider and its subsidiaries as of June 30, 2001 and
for the periods ending June 30, 2001 and June 30, 2000 included in the Quarterly
Report on Form 10-Q of Ambac Financial Group, Inc. (which was filed with the
Commission on August 10, 2001); (iv) the unaudited consolidated financial
statements of the Policy Provider and its subsidiaries as of September 30, 2001
for the periods ending September 30, 2001 and September 30, 2000 included in the
Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. (which was filed
with the Commission on November 14, 2001); and (v) the Current Reports on Form
8-K filed with the Commission on January 24, 2001, March 19, 2001, July 23,
2001, September 17, 2001, September 19, 2001, October 22, 2001, December 4, 2001
and January 25, 2002, as such reports related to Ambac, fairly present in all
material respects the financial condition of the Policy Provider as of such
dates and for the periods covered by such statements in accordance with
generally accepted accounting principles consistently applied. Since September
30, 2001, there has been no change in the financial condition or operations of
the Policy Provider that would materially and adversely affect its ability to
perform its obligations under the Policies.

            (f) POLICY PROVIDER INFORMATION. The Policy Provider Information is
true and correct in all material respects, did not as of the Offer Date contain
and will not as of the Closing Date contain any untrue statement of a material
fact and did not as of the Offer Date omit and will not as of the Closing Date
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.

<PAGE>

            (g) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Policy Provider's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if decided
adversely, would materially and adversely affect its ability to perform its
obligations under the Operative Agreements to which it is a party.

            (h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Policy Provider in the conduct of
its business violates any law, regulation, judgment, agreement, order or decree
applicable to the Policy Provider that, if enforced, could result in a Material
Adverse Change with respect to the Policy Provider.

            (i) NO ACCELERATION PAYMENTS. The Policy Provider shall not make any
payment under the Policy except as specifically required in the definition of
"Deficiency Amount" therein and in respect of any "Preference Amount" as defined
in the Policy.

            (j) SECURITIES ACT. The issuance of the Policy as described in the
Offering Document is exempt from registration under the Securities Act pursuant
to Section 3(a)(8) thereof.

                                   ARTICLE III

                  THE POLICIES; REIMBURSEMENT; INDEMNIFICATION

            SECTION 3.01 ISSUANCE OF THE POLICIES. The Policy Provider agrees to
issue the Policies on the Closing Date, subject to satisfaction of the
conditions precedent set forth below on or prior to the Closing Date:

            (a) OPERATIVE AGREEMENTS. The Policy Provider shall have received a
copy of (i) each of the Operative Agreements, with the exception of the
Policies, required to be executed and delivered on or prior to the Closing Date,
in form and substance reasonably satisfactory to the Policy Provider, duly
authorized, executed and delivered by each party thereto, other than the Policy
Provider, and (ii) a copy of the Offering Document;

            (b) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Policy Provider shall
have received (i) a copy of the certificate of incorporation and by-laws of
Continental and (ii) a certificate of the Secretary or Assistant Secretary of
Continental dated the Closing Date stating that attached thereto is a true,
complete and correct copy of resolutions duly adopted by the Board of Directors
of Continental authorizing the execution, delivery and performance by
Continental of the Operative Agreements to which it is a party and the
consummation of the Transactions and that such applicable organizational
documents and resolutions are in full force and effect without amendment or
modification on the Closing Date;

            (c) INCUMBENCY CERTIFICATE. The Policy Provider shall have received
a certificate of the Secretary or an Assistant Secretary of each of Continental
and the Subordination Agent certifying the names and signatures of the officers
of Continental and the Subordination Agent, respectively, authorized to execute
and deliver the Operative Agreements to which it is a party on or prior to the
Closing Date;

<PAGE>

            (d) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Continental and the Subordination Agent set forth in this
Insurance Agreement and the other Operative Documents to which they are a party,
respectively, shall be true and correct on and as of the Closing Date;

            (e) DOCUMENTATION. The Policy Provider shall have received a copy of
each document, instrument, certificate and opinion delivered on or before the
Closing Date pursuant to the Operative Agreements, including each opinion of
counsel addressed to any of Moody's, S&P, the Trustee, Continental, the
Subordination Agent and the Underwriters (except for the opinion of counsel to
the Underwriters addressed only to the Underwriters), in respect of Continental
and the Subordination Agent or any of the other parties to the Operative
Agreements and the Transactions dated the Closing Date, in form and substance
reasonably satisfactory to the Policy Provider, addressed to the Policy Provider
(or accompanied by a letter from the counsel rendering such opinion to the
effect that the Policy Provider is entitled to rely on such opinion as of its
date as if it were addressed to the Policy Provider) and addressing such matters
as the Policy Provider may reasonably request (including the opinion of counsel
to Continental in respect to the bankruptcy remoteness of the Deposits), and the
counsel providing each such opinion shall have been instructed by its client to
deliver such opinion to the addressees thereof;

            (f) APPROVALS, ETC. The Policy Provider shall have received true and
correct copies of all governmental approvals, licenses and consents, if any,
required in connection with the Transactions;

            (g) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall be
pending or threatened before any court, governmental or administrative agency or
arbitrator in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with any of the Operative Agreements or the
consummation of the Transactions;

            (h) LEGALITY. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court that would make the Transactions illegal or
otherwise prevent the consummation thereof;

            (i) ISSUANCE OF RATINGS. The Policy Provider shall have received
confirmation in writing that the risk insured by the Policies (without regard to
the Policies) is rated no lower than "A" by S&P and "Baa2" by Moody's, the Class
G Certificates, when issued, will be rated "AAA" by S&P and "Aaa" by Moody's and
shall have received confirmation in writing from S&P of a capital charge
acceptable to the Policy Provider as set forth in the financing proposal letter,
dated January 16, 2002, between the Policy Provider and Continental;

            (j) SATISFACTORY DOCUMENTATION. The Policy Provider and its counsel
shall have reasonably determined that all documents, certificates and opinions
to be delivered in connection with the Certificates conform to the terms of the
related Trust Agreement, the Offering Document, this Insurance Agreement and the
Intercreditor Agreement;

            (k) FILINGS. The Policy Provider shall have received evidence that
there shall have been made and shall be in full force and effect, all filings,

<PAGE>

recordings and registrations, and there shall have been given or taken any
notice or similar action as is necessary in order to establish, perfect, protect
and preserve the right, title and interest of the Policy Provider created by the
Operative Agreements executed and delivered on or prior to the Closing Date;

            (l) CONDITIONS PRECEDENT. All conditions precedent to the issuance
of the Certificates under the Trust Agreements shall have been satisfied, or
waived with the consent of the Policy Provider. All conditions precedent to the
effectiveness of the Liquidity Facilities shall have been satisfied or waived,
and all conditions precedent to the purchases of the Certificates by the
Underwriters under the Underwriting Agreement shall have been satisfied or
waived by the Underwriters; and

            (m) EXPENSES. The Policy Provider shall have received payment in
full of all amounts required to be paid by Continental to or for account of the
Policy Provider on or prior to the Closing Date.

            SECTION 3.02 PAYMENT OF FEES AND PREMIUM.

            (a) LEGAL FEES. Promptly upon receipt of an invoice, Continental
shall pay or cause to be paid to, or as directed by, the Policy Provider, legal
fees, disbursements and charges incurred by the Policy Provider in connection
with the issuance of the Policies and this Insurance Agreement in accordance
with the Policy Fee Letters. Any additional reasonable fees of the Policy
Provider's counsel or auditors payable in respect of any amendment or supplement
to the Offering Document requested by Continental and incurred after the Closing
Date shall be paid by Continental promptly following receipt of documentation
thereof (but in no event later than thirty days following the receipt of such
documentation).

            (b) RATING AGENCY FEES. Continental shall promptly pay the initial
fees of S&P and Moody's with respect to rating the Certificates and the
Transactions following receipt of a statement with respect thereto. All periodic
and subsequent fees of S&P or Moody's with respect to, and directly allocable
to, the Certificates shall be for the account of, and shall be billed to,
Continental. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating unless such other agency is a substitute
for S&P or Moody's in the event that S&P or Moody's is no longer rating the
Certificates, in which case the fees for such agency shall be paid by
Continental.

            (c) CONSULTING FEES. Continental shall pay as directed by the Policy
Provider on the Closing Date the cost of consulting services in respect of
valuating the Aircraft performed by Morten Beyer and Agnew, Inc. for the Policy
Provider, not to exceed $1,500 in total.

            (d) PREMIUM.

            (i) In consideration of the issuance by the Policy Provider of the
      Policies, Continental shall pay or cause to be paid to the Policy
      Provider, the Premium, PROVIDED that such requirement shall not be
      duplicative of any payments in respect of Premiums made in accordance with
      Section 6(c) of the Note Purchase Agreement and the provisions of each
      Indenture. Continental shall also pay any additional amounts, as and when
      due, to be paid by it under the Policy Fee Letters.

<PAGE>

            (ii) No portion of the Premium paid shall be refundable, without
      regard to whether the Policy Provider makes any payment under the Policies
      or any other circumstances relating to the Class G Certificates or
      provision being made for payment of the Class G Certificates prior to
      maturity.

            SECTION 3.03 REIMBURSEMENT OBLIGATION.

            (a) As and when due in accordance with and from the funds specified
in Sections 2.4(b), 3.2 and 3.3 of the Intercreditor Agreement, the Policy
Provider shall be entitled to reimbursement for any payment made by the Policy
Provider under the Policies to the Subordination Agent or to the Primary
Liquidity Provider under Sections 2.6(c) or 3.7(c) of the Intercreditor
Agreement, which reimbursement shall be due and payable on the date provided in
such Sections, in an amount equal to the amount to be so paid and all amounts
previously paid that remain unreimbursed. In addition, to the extent that any
such payment by the Policy Provider shall have been made as a result of a
default by a Primary Liquidity Provider in its obligation to make an Advance, as
provided in the Intercreditor Agreement, the Policy Provider shall be entitled
to the payment of interest on such amounts to the extent, at the time and in the
priority specified in Sections 2.4(b), 3.2 and 3.3 of the Intercreditor
Agreement.

            (b) Upon the occurrence and during the continuance of a Direct
Payment Event, Continental agrees to reimburse the Policy Provider immediately,
upon demand, to the extent of any payment made under the Policies or to the
Subordination Agent or to the Primary Liquidity Provider under Sections 2.6(c)
or 3.7(c) of the Intercreditor Agreement, less any amount in respect of such
payment paid to and received by the Policy Provider pursuant to the Operative
Agreements. Notwithstanding the foregoing, Continental shall not be required to
make any payment to the Policy Provider under this Section 3.03(b)(i) that has
already been received by the Policy Provider pursuant to the Intercreditor
Agreement or (ii) in the case of a Direct Payment Event referred to in clause
(A) of the next sentence, unless Continental has, upon making the payment to the
Policy Provider under this Section 3.03(b), been released and discharged from
its obligation to pay the amount under the Series G-1 and Series G-2 Equipment
Notes and the Indentures that corresponds to the amount for which reimbursement
is demanded under this Section 3.03(b). "Direct Payment Event" shall be deemed
to occur (A) when the following conditions have been simultaneously satisfied:
(i) an Event of Default has occurred under an Indenture and the Series G-1
Equipment Notes or Series G-2 Equipment Notes under such Indenture have not been
sold in connection with the exercise of remedies thereunder or under the
Intercreditor Agreement; and (ii) the Policy Provider has made a payment under
the Policies to the Subordination Agent or to the Primary Liquidity Provider
under Sections 2.6(c) or 3.7(c) of the Intercreditor Agreement with respect to
or caused by the occurrence of an Event of Default under such Indenture or (B)
if, after all Equipment Notes have been paid in full or, to the extent not so
paid, such Equipment Notes have been sold or the Collateral securing such
Equipment Notes has been sold, and such payments and the proceeds of all such
sales have been distributed pursuant to the Intercreditor Agreement, and the
Policy Provider has not received reimbursement of all payments made by it under
the Policies to the Subordination Agent and the Primary Liquidity Provider under
Sections 2.6(c) or 3.7(c) of the Intercreditor Agreement.

            (c) Continental agrees to pay to the Policy Provider any and all
charges, fees, costs and expenses that the Policy Provider may reasonably pay or

<PAGE>

incur, including reasonable attorneys' and accountants' fees and expenses
(without duplication of amounts paid to the Policy Provider in respect of the
Operative Agreements), in connection with (i) the preservation (in connection
with the occurrence of an Event of Default under any Indenture), enforcement or
defense of any rights in respect of this Insurance Agreement, including
defending, monitoring or participating in any litigation or proceeding and (ii)
any amendment, waiver or other action requested by Continental with respect to,
or related to, any Operative Agreements or to any form document attached to any
Operative Agreement as an exhibit, schedule or annex thereto, whether or not
executed or completed. Provided that three Business Days' written notice of the
intended payment or incurrence shall have been given to Continental by the
Policy Provider, such reimbursement shall be due on the dates on which such
charges, fees, costs or expenses are paid or incurred by the Policy Provider.

            (d) The Policy Provider agrees that with respect to any amendment to
a Policy that would increase the reimbursement obligations to the Policy
Provider hereunder above the level set at the Closing Date ("Increased
Obligation Amounts"), reimbursement to the Policy Provider for such Increased
Obligation Amounts shall not be required, unless Continental shall have
consented to such amendment.

            SECTION 3.04 INDEMNIFICATION.

            (a) Continental agrees (i) that the Policy Provider is hereby
entitled to the full benefit of the General Indemnity and the General Tax
Indemnity contained in the form of Participation Agreement attached to the Note
Purchase Agreement as if such provisions were set forth in full herein, the
Policy Provider were an Indemnitee thereunder and the Operative Agreements
referred to therein include this Insurance Agreement and the Note Purchase
Agreement and (ii) that it shall name the Policy Provider as an Indemnitee in
each Participation Agreement; PROVIDED, HOWEVER, any exclusion contained in any
Participation Agreement or form thereof related to any representation or
warranty by any Indemnitee other than the Policy Provider, the failure by any
Indemnitee other than the Policy Provider to perform or observe any agreement,
covenant or condition in any of the Operative Agreements, the acts or omissions
involving the willful misconduct or gross negligence of any Indemnitee other
than the Policy Provider shall not apply to the indemnification obligations of
Continental to the Policy Provider. In seeking any indemnity under the
Participation Agreement, the Policy Provider agrees to comply with all
obligations of an Indemnitee thereunder.

            (b) Notwithstanding any provisions to the contrary, Continental and
the Policy Provider agree that, as between them, Section 8.1.4 of each
Participation Agreement shall read as follows: "If a claim for any Expense that
an Indemnitee shall be indemnified against under this Section 8.1 is made, such
Indemnitee shall give prompt written notice thereof to Owner. Notwithstanding
the foregoing, the failure of any Indemnitee to notify Owner as provided in this
Section 8.1.4, or in Section 8.1.5, shall not release Owner from any of its
obligations to indemnify such Indemnitee hereunder, except to the extent that
such failure materially impairs Owner's ability to contest such claim. If such
failure results in an additional Expense to Owner, Owner shall not be
responsible for such additional expense."

            SECTION 3.05 PROCEDURE FOR PAYMENT OF FEES AND PREMIUMS. All
payments to be made to the Policy Provider under this Insurance Agreement shall

<PAGE>

be made to the Policy Provider in lawful currency of the United States of
America in immediately available funds on the date when due to such account as
the Policy Provider shall direct by written notice given at least one Business
Day prior to such date to Continental. In the event that the date of any payment
to the Policy Provider or the expiration of any time period hereunder occurs on
a day that is not a Business Day, then such payment shall be made, or such
expiration of time period shall occur, on the next succeeding Business Day with
the same force and effect as if such payment was made or time period expired on
the scheduled date of payment or expiration date, as applicable.

            SECTION 3.06 LATE PAYMENTS. If Continental fails to pay the Premium
or any other amounts owing to the Policy Provider under this Insurance Agreement
or the Policy Fee Letters when due, interest on such amount shall be assessed
against, and due and payable by, Continental at the Late Payment Rate from the
date such amount was due until the date such amount is paid.

                                   ARTICLE IV

                               FURTHER AGREEMENTS

            SECTION 4.01 EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Closing Date and shall remain in
effect until the later of (a) such time as the Policy Provider is no longer
subject to a claim under the Policies and the Policies shall have been
surrendered to the Policy Provider for cancellation and (b) all amounts payable
to the Policy Provider by Continental or the Subordination Agent hereunder or
from any other source hereunder or under the Operative Agreements and all
amounts payable under the Class G Certificates have been paid in full; provided,
however, that the provisions of Sections 3.04, 3.05, 3.06, 3.07 and 3.08, hereof
shall survive any termination of this Insurance Agreement.

            SECTION 4.02 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.

            (a) Neither Continental nor the Subordination Agent shall grant any
waiver of rights or agree to any amendment or modification to any of the
Operative Agreements to which either of them is a party, which waiver,
amendment, or modification would have an adverse effect on the rights or
remedies of the Policy Provider without the prior written consent of the Policy
Provider so long as the Policy Provider shall be the Controlling Party and any
such waiver without prior written consent of the Policy Provider shall be null
and void and of no force or effect.

            (b) To the extent permitted by law, each of Continental and the
Subordination Agent agrees that it will, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as the Policy Provider may
reasonably request and as may be required to effectuate the intention of or
facilitate the performance of this Insurance Agreement.

            SECTION 4.03 OBLIGATIONS ABSOLUTE.

            (a) So long as no Policy Provider Default shall have occurred and be
continuing, the obligations of Continental hereunder shall be absolute and

<PAGE>

unconditional and shall be paid or performed strictly in accordance with this
Insurance Agreement under all circumstances irrespective of:

            (i) any lack of validity or enforceability of, or any amendment or
      other modifications of, or waiver, with respect to any of the Operative
      Agreements (other than the Policies) or the Certificates;

            (ii) any exchange or release of any other obligations hereunder;

            (iii) the existence of any claim, setoff, defense, reduction,
      abatement or other right that Continental may have at any time against the
      Policy Provider or any other Person;

            (iv) any document presented in connection with the Policies proving
      to be forged, fraudulent, invalid or insufficient in any respect or any
      statement therein being untrue or inaccurate in any respect;

            (v) any payment by the Policy Provider under the Policies against
      presentation of a certificate or other document that does not strictly
      comply with the terms of the Policies;

            (vi) any failure of Continental to receive the proceeds from the
      sale of the Certificates; and

            (vii) any other circumstances, other than payment in full, that
      might otherwise constitute a defense available to, or discharge of,
      Continental in respect of any Operative Agreements.

            (b) So long as no Policy Provider Default shall have occurred and be
continuing and except as expressly provided herein or in any Operative
Agreement, Continental renounces the right to assert as a defense to the
performance of its obligations each of the following: (i) to the extent
permitted by law, any and all redemption and exemption rights and the benefit of
all valuation and appraisement privileges against the indebtedness and
obligations evidenced by any Operative Agreements or by any extension or renewal
thereof; (ii) presentment and demand for payment, notices of nonpayment and of
dishonor, protest of dishonor and notice of protest; (iii) all notices in
connection with the delivery and acceptance hereof and all other notices in
connection with the performance, default or enforcement of any payment
hereunder, except as required by the Operative Agreements; and (iv) all rights
of abatement, diminution, postponement or deduction, and all rights of setoff or
recoupment arising out of any breach under any of the Operative Agreements, by
any party thereto or any beneficiary thereof, or out of any obligation at any
time owing to Continental.

            (c) Continental (i) agrees that any consent, waiver or forbearance
hereunder with respect to an event shall operate only for such event and not for
any subsequent event; (ii) consents to any and all extensions of time that may
be granted to Continental by the Policy Provider with respect to any payment
hereunder or other provisions hereof; and (iii) consents to the addition of any
and all other makers, endorsers, guarantors and other obligors for any payment
hereunder, and to the acceptance of any and all other security for any payment

<PAGE>

hereunder, and agrees that the addition of any such obligors or security shall
not affect the liability of Continental for any payment hereunder.

            (d) No failure by the Policy Provider to exercise, and no delay by
the Policy Provider in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by the Policy Provider of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein to
the Policy Provider are declared in every case to be cumulative and not
exclusive of any remedies provided by law or equity.

            (e) Nothing herein shall be construed as prohibiting Continental
from pursuing any rights or remedies it may have against any Person in a
separate legal proceeding.

            SECTION 4.04 ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.

            (a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The Subordination
Agent, except as provided in Section 8.1 of the Intercreditor Agreement, and
Continental, except for any transaction expressly permitted by Section 5.02 of
the Basic Agreement, may not assign their respective rights under this Insurance
Agreement, or delegate any of their duties hereunder, without the prior written
consent of the other parties hereto. Any assignments made in violation of this
Insurance Agreement shall be null and void.

            (b) The Policy Provider shall have the right to grant participations
in its rights under this Insurance Agreement and to enter into contracts of
reinsurance with respect to the Policies upon such terms and conditions as the
Policy Provider may in its discretion determine; PROVIDED, HOWEVER, that no such
participation or reinsurance agreement or arrangement shall relieve the Policy
Provider of any of its obligations hereunder or under the Policies or grant to
any participant or reinsurer any rights hereunder or under any Operative
Agreement or shall result in any increased liability to Continental.

            (c) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right, remedy
or claim, express or implied, upon any Person, including, particularly, any
Holder, other than upon the Policy Provider against Continental, or upon
Continental against the Policy Provider (either directly or as the Controlling
Party), and all the terms, covenants, conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and permitted assigns. None of the Subordination
Agent, the Primary Liquidity Provider, the Above-Cap Liquidity Provider, the
Trustee or any Holder shall have any right to payment from the Premium paid or
payable hereunder or from any amounts paid by Continental pursuant to Section
3.02, 3.03, 3.04, 3.05 or 3.06 hereof.

            SECTION 4.05 LIABILITY OF THE POLICY PROVIDER. Neither the Policy
Provider nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use that may be made of the Policies by the
Subordination Agent or for any acts or omissions of the Subordination Agent in
connection therewith; or (b) the validity, sufficiency, accuracy or genuineness
of documents delivered to the Policy Provider in connection with any claim under

<PAGE>

the Policies, or of any signatures thereon, even if such documents or signatures
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged (unless the Policy Provider shall have actual knowledge
thereof). In furtherance and not in limitation of the foregoing, the Policy
Provider may accept documents that appear on their face to be in order, without
responsibility for further investigation.

                                    ARTICLE V

                                  MISCELLANEOUS

            SECTION 5.01 AMENDMENTS, ETC. This Insurance Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto; PROVIDED that if such
amendment, modification, supplement or termination would have a material adverse
affect on the interests of the Subordination Agent, a Pass Through Trustee or
any Certificateholder, Ratings Confirmation shall also be obtained prior to such
amendment, modification, supplement or termination being effective. Continental
agrees to provide a copy of any amendment to this Insurance Agreement promptly
to the Subordination Agent and the Rating Agencies. No act or course of dealing
shall be deemed to constitute an amendment, modification, supplement or
termination hereof.

            SECTION 5.02 NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
and telecopied to the recipient as follows:

            (a) To the Policy Provider:

                  Ambac Assurance Corporation
                  One State Street Plaza
                  New York, New York 10004
                  Attention: Surveillance Department
                  Facsimile: (212) 363-1459
                  Confirmation: (212) 668-0340

            In each case in which notice or other communication to the Policy
Provider refers to an event of default under any Operative Agreement, a claim on
the Policies or with respect to which failure on the part of the Policy Provider
to respond shall be deemed to constitute consent or acceptance, then a copy of
such notice or other communication should also be sent to the attention of the
general counsel of each of the Policy Provider at its address set forth above
(if by facsimile to (212) 208-3566) and Continental at its address set forth
below and, in all cases, both any original and all copies shall be marked to
indicate "URGENT MATERIAL ENCLOSED.")

<PAGE>

            (b) To Continental:

                  Continental Airlines Inc.
                  1600 Smith Street HQSFN
                  Houston, Texas  77002
                  Attention:  Treasurer
                  Facsimile:  713-324-2447
                  Confirmation:  713-324-2544

            (c) To the Subordination Agent:

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE  19890-0001
                  Attention:  Corporate Trust Administration
                  Facsimile:  302-651-8882

      A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt unless received after
business hours on any day, in which case on the opening of business on the next
Business Day.

            SECTION 5.03 SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.

            SECTION 5.04 GOVERNING LAW. This Insurance Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance. This Insurance
Agreement is being delivered in New York.

            SECTION 5.05 CONSENT TO JURISDICTION.

            (a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and any court of appropriate jurisdiction in the State of
New York located in the City and County of New York, and any appellate court
from any thereof, in any action, suit or proceeding brought against it or in
connection with any of the Operative Agreements or the Transactions or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York state court or,
to the extent permitted by law, in such federal court. The parties hereto agree
that a final unappealable judgment in any such action, suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. To the extent permitted by applicable
law, the parties hereto hereby waive and agree not to assert by way of motion,
as a defense or otherwise in any such suit, action or proceeding, any claim that

<PAGE>

it is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the related documents or the
subject matter thereof may not be litigated in or by such courts.

            (b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.

            (c) Service on any party may be made by delivering, by U.S.
registered mail, messenger or courier service, copies of the summons and
complaint and other process which may be served in any suit, action or
proceeding to such party addressed to its street address shown in Section
5.02(b), Attention: General Counsel, and such service shall be effective service
of process for any litigation brought against such party in any court. Such
address may be changed by such party by written notice to the other parties
hereto.

            (d) Nothing contained in this Insurance Agreement shall limit or
affect any party's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Operative Agreements
against any other party or its properties in the courts of any jurisdiction.

            SECTION 5.06 CONSENT OF POLICY PROVIDER. In the event that the
consent of the Policy Provider is required under any Operative Agreement, the
determination whether to grant or withhold such consent shall be made by the
Policy Provider in its sole discretion without any implied duty towards any
other Person, except as otherwise expressly provided therein.

            SECTION 5.07 COUNTERPARTS. This Insurance Agreement may be executed
in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.

            SECTION 5.08 HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation.

            SECTION 5.09 TRIAL BY JURY WAIVED. Each party hereby waives, to the
fullest extent permitted by law, any right to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
this Insurance Agreement. Each party hereto (A) certifies that no
representative, agent or attorney of any party hereto has represented, expressly
or otherwise, that it would not, in the event of litigation, seek to enforce the
foregoing waiver and (B) acknowledges that it has been induced to enter into the
Operative Agreements to which it is a party by, among other things, this waiver.

            SECTION 5.10 LIMITED LIABILITY. No recourse under any Operative
Agreement or the Policies shall be had against, and no personal liability shall
attach to, any officer, employee, director, affiliate or shareholder of any
party hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Operative Agreements, the Certificates or the Policies, it being expressly
agreed and understood that each Operative Agreement is solely an obligation of
each party hereto, and that any and all personal liability, either at common law

<PAGE>

or in equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches of any party hereto of any
obligations under any Operative Agreement is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.

            SECTION 5.11 ENTIRE AGREEMENT. This Insurance Agreement, the
Policies, the Policy Fee Letters and the other Operative Agreements set forth
the entire agreement between the parties with respect to the subject matter
hereof and thereof, and supersede and replace any agreement or understanding
that may have existed between the parties prior to the date hereof in respect of
such subject matter. This Insurance Agreement and the Policies are separate and
independent agreements and nothing herein shall be construed to vary or
otherwise modify any terms of the Policies. No breach by any party hereto of any
representation, warranty, covenant, agreement or undertaking contained herein
shall in any way affect the obligations of the Policy Provider under the
Policies.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Insurance Agreement, all as of the day and year first above mentioned.

                                      AMBAC ASSURANCE CORPORATION,
                                       as Policy Provider



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



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



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



                                      CONTINENTAL AIRLINES, INC.



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

<PAGE>

                                   SCHEDULE I


1.    Section 9.1(c) of the Intercreditor Agreement

2.    Section 9.1(d) of the Intercreditor Agreement.

3.    The definition of "Secured Obligations" in Annex A to the Indenture.

4.    The definition of "Related Secured Obligations" in Annex A to the
      Indenture.

5.    The Granting Clause of the Indenture (except to the insert model and
      identification information with respect to the Aircraft and Engines).

6.    Article 3 of the Indenture.

7.    Section 1(d) of the Note Purchase Agreement.


8.    Clause (vi) of Section 4(a) of the Note Purchase Agreement.


9.    The Class I Certificates, if redeemed, can not be reissued.

10.   The Capped Interest Rate (as defined in the Revolving Credit Agreement)
      shall not exceed, during each of the periods set forth below, the Capped
      Interest Rate set forth opposite each such period:

                   PERIOD                     CAPPED INTEREST RATE
      ------------------------------------------------------------
      Initial Date - August 14, 2002                 8.05%
      August 15, 2002 - February 14, 2003            8.15%
      February 15, 2003 - August 14, 2003            8.25%
      August 15, 2003 - February 14, 2004            8.35%
      February 15, 2004 - August 14, 2004            8.55%
      August 15, 2004 - February 14, 2005            8.75%
      February 15, 2005 - August 14, 2005            9.05%
      August 15, 2005 - February 14, 2006            9.35%
      February 15, 2006 - August 14, 2006            9.75%
      August 15, 2006 - February 14, 2007            10.15%
      February 15, 2007 - August 14, 2007            10.65%
      August 15, 2007 - February 14, 2008            11.15%
      February 15, 2008 - August 14, 2008            11.65%
      August 15, 2008 - February 14, 2009            12.15%
      February 15, 2009 - August 14, 2009            12.75%
      August 15, 2009 - February 14, 2010            13.35%
      February 15, 2010 - August 14, 2010            14.05%
      August 15, 2010 - February 14, 2011            14.75%
      February 15, 2011 - August 14, 2011            15.55%
      August 15, 2011 - February 14, 2012            16.35%
      February 15, 2012 - August 14, 2012            17.25%

<PAGE>

11.   The maximum amount of Series G Equipment Notes (including both Series G-1
      Equipment Notes and Series G-2 Equipment Notes) shall not exceed, on a per
      aircraft basis and on an aggregate basis, on each Semi-Annual Distribution
      Date set forth below, the US Dollar amounts set forth opposite each such
      Semi-Annual Distribution Date:


                     B757-300        B767-400ER      B777-200ER      AGGREGATE
                                                                     (ALL SEVEN
                                                                      AIRCRAFT)
                      MAXIMUM         MAXIMUM         MAXIMUM         MAXIMUM
SEMI-ANNUAL          G-1 + G-2       G-1 + G-2       G-1 + G-2       G-1 + G-2
DISTRIBUTION DATE     BALANCE         BALANCE         BALANCE         BALANCE
--------------------------------------------------------------------------------
Initial Date         32,360,310      49,025,984      68,341,444      329,166,000
August 15, 2002      32,360,310      49,025,984      68,341,444      329,166,000
February 15, 2003    31,369,640      47,525,116      66,249,256      319,089,000
August 15, 2003      30,755,989      46,595,433      64,953,290      312,847,000
February 15, 2004    30,080,206      45,571,619      63,526,112      305,973,000
August 15, 2004      29,184,995      44,215,371      61,635,526      296,867,000
February 15, 2005    28,529,267      43,221,942      60,250,698      290,197,000
August 15, 2005      27,647,328      41,885,801      58,388,140      281,226,000
February 15, 2006    27,011,656      40,922,755      57,045,668      274,760,000
August 15, 2006      26,143,185      39,607,019      55,211,554      265,926,000
February 15, 2007    25,527,568      38,674,356      53,911,440      259,664,000
August 15, 2007      24,672,468      37,378,876      52,105,560      250,966,000
February 15, 2008    24,076,807      36,476,449      50,847,590      244,907,000
August 15, 2008      23,235,077      35,201,225      49,069,946      236,345,000
February 15, 2009    22,659,472      34,329,181      47,854,332      230,490,000
August 15, 2009      21,831,112      33,074,212      46,104,928      222,064,000
February 15, 2010    21,275,562      32,232,553      44,931,664      216,413,000
August 15, 2010      20,460,572      30,997,840      43,210,496      208,123,000
February 15, 2011    19,925,078      30,186,564      42,079,588      202,676,000
August 15, 2011      19,123,458      28,972,107      40,386,656      194,522,000
February 15, 2012         -              -                -              -