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       |      CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION     |
       |            SET FORTH IN SECTION 8 OF THIS AGREEMENT             |
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                          PARTICIPATION AGREEMENT [TN]
                                Dated as of [ID]

                                      Among

                           CONTINENTAL AIRLINES, INC.,
                                     Lessee,

                                  REFINE, INC.,
                               Owner Participant,

                WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
                         Not in its individual capacity
                      except as expressly provided herein,
                          but solely as owner trustee,
                            Owner Trustee and Lessor

                            WILMINGTON TRUST COMPANY,
                         Not in its individual capacity
                      except as expressly provided herein,
                  but solely as Mortgagee, Subordination Agent
               under the Intercreditor Agreement, and Pass Through
                 Trustee under the Pass Through Trust Agreement,
                         Mortgagee and Loan Participant,

                                       and

                 EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
                              Airframe Manufacturer

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

                      One Embraer Model EMB-145 XR Aircraft
                     Bearing Manufacturer's Serial No. [MSN]
                        and U.S. Registration No. N[REG]
                    with Two Allison Model AE3007A1E Engines

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<PAGE>
                                    CONTENTS

SECTION 1.  DEFINITIONS AND CONSTRUCTION.....................................2

SECTION 2.  ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF
            OBLIGATION TO PARTICIPATE........................................2
      2.1   Issuance of Equipment Notes......................................2
      2.2   Termination of Obligation to Participate.........................2

SECTION 3.  TERMINATION OF EXISTING FINANCING AGREEMENTS;
            COMMITMENT TO LEASE AIRCRAFT.....................................2
      3.1   Termination of Existing Financing Agreements.....................2
      3.2   Commitment to Lease..............................................3

SECTION 4.  CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF
            SCHEDULED CLOSING DATE...........................................3
      4.1   Closing..........................................................3
      4.2   Payment of Proceeds..............................................3
      4.3   Postponement of Scheduled Closing Date...........................4

SECTION 5.  CONDITIONS PRECEDENT.............................................4
      5.1   Conditions Precedent to Obligations of Participants..............4
      5.2   Conditions Precedent to Obligations of Owner Trustee.............9
      5.3   Conditions Precedent to Obligations of Mortgagee................10
      5.4   Conditions Precedent to Obligations of Lessee...................10
      5.5   Post-Registration Opinion.......................................11

SECTION 6.  REPRESENTATIONS AND WARRANTIES..................................11
      6.1   Lessee's Representations and Warranties.........................11
      6.2   Owner Participant's Representations and Warranties..............14
      6.3   Wells Fargo's Representations and Warranties....................16
      6.4   WTC's Representations and Warranties............................19
      6.5   Airframe Manufacturer's Representations and Warranties..........22

SECTION 7.  COVENANTS, UNDERTAKINGS AND AGREEMENTS..........................24
      7.1   Covenants of Lessee.............................................24
      7.2   Covenants of Owner Participant..................................25
      7.3   Covenants of Wells Fargo and Owner Trustee......................28
      7.4   Covenants of WTC................................................30
      7.5   Covenants of Note Holders.......................................31
      7.6   Agreements......................................................32

SECTION 8.  CONFIDENTIALITY.................................................38

SECTION 9.  INDEMNIFICATION AND EXPENSES....................................38
      9.1   General Indemnity...............................................38
      9.2   Expenses........................................................44
      9.3   General Tax Indemnity...........................................44

<PAGE>

      9.4   Payments........................................................54
      9.5   Interest........................................................54
      9.6   Benefit of Indemnities..........................................54

SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS.............................54
      10.1  Participants, Owner Trustee and Note Holders....................54
      10.2  Effect of Transfer..............................................56

SECTION 11. [RESERVED]......................................................57

SECTION 12. SECTION 1110....................................................57

SECTION 13. CHANGE OF CITIZENSHIP...........................................57
      13.1  Generally.......................................................57
      13.2  Owner Participant...............................................57
      13.3  Owner Trustee...................................................58
      13.4  Mortgagee.......................................................58

SECTION 14. CONCERNING OWNER TRUSTEE........................................58

SECTION 15. MISCELLANEOUS...................................................58
      15.1  Amendments......................................................58
      15.2  Severability....................................................59
      15.3  Survival........................................................59
      15.4  Reproduction of Documents.......................................59
      15.5  Counterparts....................................................59
      15.6  No Waiver.......................................................59
      15.7  Notices.........................................................60
      15.8  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE................60
      15.9  Third-Party Beneficiary.........................................61
      15.10 Entire Agreement................................................61
      15.11 Further Assurances..............................................62

ANNEX, SCHEDULES AND EXHIBITS

ANNEX A -         Definitions

SCHEDULE 1    -  Accounts; Addresses
SCHEDULE 2    -  Commitments
SCHEDULE 3    -  Certain Terms

EXHIBIT A     -  Opinion of special counsel to Lessee
EXHIBIT B     -  Opinion of corporate counsel to Lessee
EXHIBIT C-1   -  Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT C-2   -  Opinion of special counsel to Airframe Manufacturer and Owner
                 Participant

<PAGE>

EXHIBIT D     -  Opinion of special counsel to Owner Trustee
EXHIBIT E     -  Opinion of special counsel to Mortgagee
EXHIBIT F     -  Opinion of special counsel to Seller
EXHIBIT G     -  Opinion of special counsel in Oklahoma City, Oklahoma

<PAGE>
                          PARTICIPATION AGREEMENT [TN]

      PARTICIPATION AGREEMENT [TN], dated as of [ID] (this "Agreement"), among
(a) CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee"), (b) REFINE,
INC., a Delaware corporation ("Owner Participant"), (c) WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee (this and all other capitalized terms used but not defined herein shall
have the respective meanings ascribed thereto in Section 1) (in its capacity as
Owner Trustee, "Owner Trustee" or "Lessor", and in its individual capacity,
"Wells Fargo"), (d) WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly provided herein, but solely
as Mortgagee (in its capacity as Mortgagee, "Mortgagee" and in its individual
capacity, "WTC"), (e) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly provided herein, but solely as Pass Through Trustee under
the Pass Through Trust Agreement ("Pass Through Trustee"), (f) WILMINGTON TRUST
COMPANY, not in its individual capacity, except as expressly provided herein,
but solely as Subordination Agent under the Intercreditor Agreement
("Subordination Agent"), and (g) EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.,
a company organized under the laws of Brazil ("Airframe Manufacturer").

                                    RECITALS

      A. Express and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Express and Express has agreed to purchase
from Airframe Manufacturer certain aircraft, including the Aircraft.

      B. Prior to the date hereof, in connection with the interim financing of
the Aircraft, (i) certain of Express' rights under the Purchase Agreement with
respect to the Aircraft were assigned to Lessor and (ii) the Aircraft was
purchased by Lessor, leased to Lessee pursuant to the Existing Lease and
subleased to Express pursuant to the Existing Sublease.

      C. In order to effectuate the long-term financing of the Aircraft, the
parties hereto intend that (i) the Owner Trustee issue, on a non-recourse basis,
pursuant to the Trust Indenture the Equipment Notes to the Pass Through Trustee,
(ii) the Existing Lease be terminated and replaced with the Lease, and the
Aircraft continue to be leased to Lessee and subleased to Express and (iii)
Owner Trustee grant a security interest to Mortgagee in the Aircraft and the
Lease for the benefit of the Note Holders.

      D. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

SECTION 1.     DEFINITIONS AND CONSTRUCTION

      Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.

SECTION 2.     ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO
               PARTICIPATE

      2.1      ISSUANCE OF EQUIPMENT NOTES

      Subject to the terms and conditions of this Agreement, on the Closing
Date, the Pass Through Trustee shall make a non-recourse secured loan to Owner
Trustee to finance, in part, the Owner Trustee's payment of Lessor's Cost in the
amount in Dollars equal to the Pass Through Trustee's PTT Percentage multiplied
by Lessor's Cost, such loan to be evidenced by one or more Equipment Notes,
dated the Closing Date, issued to the Subordination Agent as the registered
holder on behalf of the Pass Through Trustee for the Pass Through Trust by Owner
Trustee in accordance with this Agreement and the Trust Indenture, in an
aggregate principal amount equal to the Commitment of the Pass Through Trustee.

      2.2      TERMINATION OF OBLIGATION TO PARTICIPATE

      Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of the
Loan Participant and its obligation to participate in the payment of Lessor's
Cost shall expire and be of no further force and effect; PROVIDED, that the
liability of the Loan Participant that has defaulted in the payment of its
Commitment shall not be released.

SECTION 3.     TERMINATION OF EXISTING FINANCING AGREEMENTS;
               COMMITMENT TO LEASE AIRCRAFT

      3.1      TERMINATION OF EXISTING FINANCING AGREEMENTS

      (a) The Existing Lease and Existing Sublease for the Aircraft shall be
terminated in order to be replaced by the Lease and the Express Sublease, and
each of Lessor and Lessee shall take such action to evidence such termination as
Owner Trustee or Mortgagee shall reasonably request, including execution and
delivery of a termination agreement for the Existing Lease and Existing Sublease
in form and substance reasonably acceptable to Owner Trustee and satisfactory
for filing with the FAA, and UCC-3 termination statements with respect to the
termination of the Existing Lease and Existing Sublease.

      (b) The Existing Participation Agreement shall be terminated, effective as
of the Closing, and the parties thereto shall have no further obligation
thereunder except for Sections 7, 10 and 11 thereof and for any breach of such
Agreement arising prior to the Closing.

      (c) Lessor shall refund to Lessee "Basic Rent" (as defined in the Existing
Lease) paid in advance by Lessee attributable to periods on and after the
Closing Date determined by multiplying such Basic Rent by a fraction, the
numerator of which shall be the number of days remaining in the month in which

<PAGE>

the Closing Date occurs (from and including the Closing Date) and the
denominator of which shall be the total number of days in such month.

      (d) Airframe Manufacturer shall pay and discharge all applicable sales,
use or similar Taxes, duties or fees assessed or levied by any federal, state,
provincial or local taxing authority as a result of the replacement of the
existing financing agreements with the Operative Agreements and the Express
Sublease or issuance of the Equipment Notes contemplated by this Agreement.
Owner Trustee and Lessee will cooperate in order to minimize Taxes applicable to
the termination of the existing financing agreements or issuance of the
Equipment Notes contemplated by this Agreement.

      3.2      COMMITMENT TO LEASE

      Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes, Owner Trustee shall continue the lease of
the Aircraft to Lessee, and Lessee shall continue the lease of the Aircraft from
Owner Trustee, under the Lease.

SECTION 4.     CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF
               SCHEDULED CLOSING DATE

      4.1      CLOSING

      The Closing shall occur at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree, at the time specified pursuant to notice given in accordance with
Section 1 of the Note Purchase Agreement.

      4.2      PAYMENT OF PROCEEDS

      (a) The Loan Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its Commitment available, by wire
transfer of immediately available funds to the account of WTC, ABA No.
031100092, Account No. 64021-0, reference Continental Lease [TN], at or before
12:00 Noon, New York City time, on the Scheduled Closing Date. All such funds
made available by the Loan Participant to WTC shall, until payment thereof to
Owner Trustee as provided in Section 4.2(c) or return thereof to the Loan
Participant as provided in Section 4.3, be held by WTC in trust for the benefit
of the Loan Participant, as the sole and exclusive property of the Loan
Participant and not as part of the Trust Estate or the Trust Indenture Estate.

      (b) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Closing Date
pursuant to this Section 4.2, Owner Trustee shall:

            (i) execute the Trust Indenture and the initial Trust Indenture
      Supplement and issue the Equipment Notes to the Subordination Agent in
      accordance with Section 2.1(b);

            (ii) lease the Aircraft to Lessee pursuant to the Lease; and

<PAGE>

            (iii) take such other action as may be required to be taken by the
      Owner Trustee on the Closing Date by the terms of any Operative Agreement.

      (c) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, WTC shall pay to the Owner Trustee
the amounts received from the Loan Participants pursuant to Section 4.2(a).

      4.3      POSTPONEMENT OF SCHEDULED CLOSING DATE

      If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Airframe Manufacturer may by telephonic notice, given by
5:00 p.m., New York City time (such telephonic notice to be promptly confirmed
in writing by personal delivery or facsimile), on the Scheduled Closing Date to
Lessee, the Loan Participant, Owner Trustee and Mortgagee, designate a Delayed
Closing Date, in which case any funds made available by the Loan Participant
shall be returned on such Scheduled Closing Date and the Loan Participant shall
comply with its obligations under Section 2.02(b) of the Trust Supplement.

SECTION 5.     CONDITIONS PRECEDENT

      5.1      CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS

      The obligation of the Loan Participant to make the Dollar amount of its
Commitment available for payment as directed by the Owner Trustee on the Closing
Date and of each Participant to take the other actions required by this
Agreement to be taken by it at the Closing is subject to satisfaction or waiver
by each such Participant, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.1; PROVIDED, that it shall not be a
condition precedent to the obligation of any Participant that any document be
produced or action taken that is to be produced or taken by such Participant or
by a Person within such Participant's control; PROVIDED, FURTHER, that Sections
5.1.2(iii), (xv) and (xxv) (G) shall not be conditions precedent to the
obligation of Loan Participant, and Section 5.1.5 shall not be a condition
precedent to the obligation of Owner Participant.

               5.1.1       NOTICE

      Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.

               5.1.2       DELIVERY OF DOCUMENTS

      Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and each of such counterparts (a) shall have been duly authorized,
executed and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:

            (i) the Lease; PROVIDED, that only Mortgagee shall receive the sole
      executed chattel paper original thereof;

<PAGE>

            (ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
      receive the sole executed chattel paper original thereof;

            (iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
      Participant and Lessee shall receive copies of the Tax Indemnity
      Agreement;

            (iv) the Trust Agreement;

            (v) the Trust Indenture;

            (vi) the initial Trust Indenture Supplement;

            (vii) the Purchase Agreement Assignment;

            (viii) the Consent and Agreement;

            (ix) the Equipment Notes dated the Closing Date; PROVIDED, that only
      the Subordination Agent shall receive the authenticated Equipment Notes;

            (x) an excerpted copy of the Purchase Agreement to the extent
      relating to Airframe Manufacturer's warranties or related obligations or
      any right in the Purchase Agreement assigned to Owner Trustee pursuant to
      the Purchase Agreement Assignment; PROVIDED, that only Owner Trustee and
      Mortgagee shall receive copies of such agreements (copies of which may be
      inspected by Participants and their respective special counsel on the
      Closing Date, but after the Closing Date such copies shall be retained by
      Owner Trustee and Mortgagee and may be inspected and reviewed by Owner
      Participant or Loan Participant or their respective counsel if and only if
      there shall have occurred and be continuing a Lease Default or Lease Event
      of Default);

            (xi) the OP Guaranty;

            (xii) the Express Sublease;

            (xiii) termination agreements with respect to the Existing Lease and
      the Existing Sublease and, in the case of Owner Participant and Lessee,
      the Existing Participation Agreement and the "Tax Indemnity Agreement" as
      defined in the Existing Lease;

            (xiv) the broker's report and insurance certificates required by
      Section 11 of the Lease;

            (xv) the Satisfaction and Discharge Agreement, dated as of the date
      of the Participation Agreement, among the Airframe Manufacturer, Seller
      (if other than the Airframe Manufacturer), Owner Participant and Owner
      Trustee;

            (xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
      Lessee and resolutions of the board of directors of Lessee and/or the
      executive committee thereof, in each case certified as of the Closing
      Date, by the Secretary or an Assistant Secretary of Lessee, duly
      authorizing the execution, delivery and performance by Lessee of the

<PAGE>

      Lessee Operative Agreements required to be executed and delivered by
      Lessee on or prior to the Closing Date in accordance with the provisions
      hereof and thereof; (B) an incumbency certificate of Lessee, Airframe
      Manufacturer, Owner Participant, Wells Fargo and WTC as to the person or
      persons authorized to execute and deliver the relevant Operative
      Agreements on behalf of such party; and (C) a copy of the Certificate of
      Incorporation or Articles of Incorporation and By-Laws and general
      authorizing resolutions of the boards of directors (or executive
      committees) or other satisfactory evidence of authorization of Airframe
      Manufacturer, Owner Participant, Wells Fargo and WTC, certified as of the
      Closing Date by the Secretary or an Assistant or Attesting Secretary of
      Airframe Manufacturer, Owner Participant, Wells Fargo and WTC,
      respectively, which authorize the execution, delivery and performance by
      Airframe Manufacturer, Owner Participant, Wells Fargo and WTC,
      respectively, of each of the Operative Agreements to which it is a party,
      together with such other documents and evidence with respect to it as
      Lessee or any Participant may reasonably request in order to establish the
      consummation of the transactions contemplated by this Agreement and the
      taking of all corporate proceedings in connection therewith;

            (xvii) an Officer's Certificate of Lessee, dated as of the Closing
      Date, stating that its representations and warranties set forth in this
      Agreement are true and correct as of the Closing Date (or, to the extent
      that any such representation and warranty expressly relates to an earlier
      date, true and correct as of such earlier date);

            (xviii) an Officer's Certificate of Wells Fargo, dated as of the
      Closing Date, stating that its representations and warranties, in its
      individual capacity and as Owner Trustee, set forth in this Agreement are
      true and correct as of the Closing Date (or, to the extent that any such
      representation and warranty expressly relates to an earlier date, true and
      correct as of such earlier date);

            (xix) an Officer's Certificate of Owner Participant, dated as of the
      Closing Date, stating that its representations and warranties set forth in
      this Agreement are true and correct as of the Closing Date (or, to the
      extent that any such representation and warranty expressly relates to an
      earlier date, true and correct as of such earlier date);

            (xx) an Officer's Certificate of WTC, dated as of the Closing Date,
      stating that its representations and warranties in its individual capacity
      or as Mortgagee, Pass Through Trustee or Subordination Agent, as the case
      may be, set forth in this Agreement are true and correct as of the Closing
      Date (or, to the extent that any such representation and warranty
      expressly relates to an earlier date, true and correct as of such earlier
      date);

            (xxi) [intentionally omitted];

            (xxii) an Officer's Certificate of Airframe Manufacturer, dated as
      of the Closing Date, stating that its representations and warranties set
      forth in this Agreement are true and correct as of the Closing Date (or,
      to the extent that any such representation and warranty expressly relates
      to an earlier date, true and correct as of such earlier date);

<PAGE>

            (xxiii) a copy of the application for registration of the Aircraft
      with the FAA in the name of Owner Trustee;

            (xxiv) the Financing Statements;

            (xxv) the following opinions of counsel, in each case dated the
      Closing Date:

                  (A) an opinion of Hughes Hubbard & Reed LLP, special counsel
            to Lessee, substantially in the form of Exhibit A;

                  (B) an opinion of Lessee's Legal Department, substantially in
            the form of Exhibit B;

                  (C) an opinion of (x) corporate counsel to Airframe
            Manufacturer, substantially in the form of Exhibit C-1, and (y)
            Katten Muchin Zavis Rosenman, special counsel to Airframe
            Manufacturer and the Owner Participant, substantially in the form
            of Exhibit C-2;

                  (D) an opinion of Ray, Quinney & Nebeker, special counsel to
            Owner Trustee, substantially in the form of Exhibit D;

                  (E) an opinion of Richards, Layton & Finger, special counsel
            to Mortgagee and Loan Participant, substantially in the form of
            Exhibit E;

                  (F) if Seller is not Airframe Manufacturer, an opinion of
            Walkers, special counsel to Seller, substantially in the form of
            Exhibit F;

                  (G) an opinion of Lytle Soule & Curlee, special counsel in
            Oklahoma City, Oklahoma, substantially in the form of Exhibit G;

            (xxvi) a copy of a current, valid Standard Certificate of
      Airworthiness for the Aircraft duly issued by the FAA;

            (xxvii) the Participants and their respective counsel shall have
      received copies of such documents and papers as such Participants may
      reasonably request, other than (A) in the case of Loan Participant, copies
      of the Purchase Agreement, provided that special counsel for Loan
      Participant may inspect the Purchase Agreement in connection with the
      transactions contemplated hereby or as a basis for such counsel's closing
      opinion, and (B) in the case of parties other than Owner Participant and
      its special counsel, the Tax Indemnity Agreement.

               5.1.3       OTHER COMMITMENTS

      The Loan Participant shall have made available the Dollar amount of its
Commitment in accordance with Section 4.

<PAGE>

               5.1.4       VIOLATION OF LAW

      No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) the Loan
Participant to make the Dollar amount of its Commitment available or to acquire
an Equipment Note or to realize the benefits of the security afforded by the
Trust Indenture.

               5.1.5       PERFECTED SECURITY INTEREST

      On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.

               5.1.6       REPRESENTATIONS, WARRANTIES AND COVENANTS

      The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Closing Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Closing Date.

               5.1.7       NO EVENT OF DEFAULT

      On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage or lease of the Aircraft, which constitutes a
Lease Default or Lease Event of Default, or an Indenture Default or Indenture
Event of Default.

               5.1.8       NO EVENT OF LOSS

      On the Closing Date, no Event of Loss with respect to the Airframe or any
Engine shall have occurred and no circumstance, condition, act or event that,
with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.

               5.1.9       TITLE

      Owner Trustee shall have good title to the Aircraft, free and clear of
Liens, except (a) the rights of Lessee under the Lease and Lease Supplement No.
1, (b) the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement and (c) other Permitted Liens.

<PAGE>

               5.1.10      CERTIFICATION

      The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness.

               5.1.11      SECTION 1110

      Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines and to enforce any of its other rights or
remedies as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.

               5.1.12      FILING

      On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.

               5.1.13      NO PROCEEDINGS

      No action or proceeding shall have been instituted, nor shall any action
be threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.

               5.1.14      GOVERNMENTAL ACTION

      All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.

      5.2      CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE

      The obligation of Owner Trustee to execute and deliver the Equipment Notes
on the Closing Date is subject to satisfaction or waiver by Owner Trustee, at or
prior to the Closing, of the conditions precedent set forth below in this
Section 5.2.

               5.2.1       NOTICE

      Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.

<PAGE>

               5.2.2       DOCUMENTS

      Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.

               5.2.3       OTHER CONDITIONS PRECEDENT

      Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.

      5.3      CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE

      The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, at or prior
to the Closing, of the conditions precedent set forth below in this Section 5.3.

               5.3.1       NOTICE

      Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Closing Date, 4.3, when and as required thereby, or shall
have waived such notice.

               5.3.2       DOCUMENTS

      Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.

               5.3.3       OTHER CONDITIONS PRECEDENT

      Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.

      5.4      CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE

      The obligation of Lessee to lease the Aircraft on the Closing Date and to
take the other actions required by this Agreement to be taken by it at the
Closing is subject to the satisfaction or waiver by Lessee, at or prior to the
Closing, of the conditions precedent set forth below in this Section 5.4.

               5.4.1       DOCUMENTS

      Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless

<PAGE>

the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.

               5.4.2       SALES TAX

      Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
transactions to occur at the Closing pursuant to this Agreement to the extent
that Lessee has liability therefor under Section 9.3.

               5.4.3       OTHER CONDITIONS PRECEDENT

      Each of the conditions set forth in Sections 5.1.3, 5.1.4, 5.1.6, 5.1.7
(as to Indenture Defaults or Indenture Events of Default not constituting Lease
Defaults or Lease Events of Default, respectively), 5.1.8, 5.1.9, 5.1.10,
5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall have been satisfied or waived by Lessee,
unless the failure of any such condition to be satisfied is the result of any
action or inaction by Lessee.

      5.5      POST-REGISTRATION OPINION

      Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Airframe Manufacturer will cause Lytle
Soule & Curlee, special counsel in Oklahoma City, Oklahoma, to deliver to
Lessee, each Participant, Owner Trustee and Mortgagee a favorable opinion or
opinions addressed to each of them with respect to such registration and
recordation.

SECTION 6.     REPRESENTATIONS AND WARRANTIES

      6.1      LESSEE'S REPRESENTATIONS AND WARRANTIES

      Lessee represents and warrants to each Participant, Airframe Manufacturer,
Subordination Agent, Owner Trustee and Mortgagee that:

               6.1.1       ORGANIZATION; QUALIFICATION

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

               6.1.2       CORPORATE AUTHORIZATION

      Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to

<PAGE>

authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.

               6.1.3       NO VIOLATION

      The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.

               6.1.4       APPROVALS

      The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee and (b) any Government Entity, other than the filing of (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.

               6.1.5       VALID AND BINDING AGREEMENTS

      The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.

               6.1.6       LITIGATION

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

<PAGE>

               6.1.7       FINANCIAL CONDITION

      The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition of Lessee and its consolidated subsidiaries as of such date
and the results of its operations and cash flows for such period, and since the
date of such balance sheet, there has been no material adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial statements referred to above or (b) any subsequent Quarterly
Report on Form 10-Q or Current Report on Form 8-K (or any amendment thereof)
filed by Lessee with the SEC on or prior to the date hereof.

               6.1.8       REGISTRATION AND RECORDATION

      Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the nameplates referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.

               6.1.9       LOCATION

      Lessee's location (as such term is used in Section 9-307 of the UCC) is
Delaware.

               6.1.10      NO DEFAULT

      No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Event of Default has occurred and is continuing.

               6.1.11      NO EVENT OF LOSS

      No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both gives rise
to or constitutes an Event of Loss with respect to the Airframe or any Engine.

               6.1.12      COMPLIANCE WITH LAWS

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

      (b) Lessee holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Lessee to lawfully engage in air

<PAGE>

transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.

      (c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

               6.1.13      SECURITIES LAWS

      Neither Lessee nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or Security from, or has sold any such interest or
Security to, any person in violation of the Securities Act.

               6.1.14      BROKER'S FEES

      No Person acting on behalf of Lessee is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions.

               6.1.15      SECTION 1110

      Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines and to enforce any of its other rights or remedies as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.

      6.2      OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES

      Owner Participant represents and warrants to Lessee, Loan Participant,
Airframe Manufacturer, Subordination Agent, Owner Trustee and Mortgagee that:

               6.2.1       ORGANIZATION, ETC.

      Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction and has the corporate
power and authority to conduct the business in which it is currently engaged and
to own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements.

               6.2.2       CORPORATE AUTHORIZATION

      Owner Participant has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its Certificate of Incorporation or
By-Laws) to authorize the execution and delivery of each of the Owner
Participant Agreements, and the performance of its obligations thereunder.

<PAGE>

               6.2.3       NO VIOLATION

      The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result in a Material Adverse Change to Owner Participant), or result in the
creation of any Lien (other than as provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Owner Participant is a
party or by which Owner Participant or any of its properties is bound.

               6.2.4       APPROVALS

      The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.

               6.2.5       VALID AND BINDING AGREEMENTS

      The Owner Participant Agreements have been duly authorized, executed and
delivered by Owner Participant and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Owner Participant and are enforceable against Owner
Participant in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.

               6.2.6       CITIZENSHIP

      On the Closing Date, Owner Participant is not a Citizen of the United
States, but holds an interest in the Trust Estate such that the Aircraft can be
registered in the United States (without giving consideration to Section 47.9 of
the FAA Regulations or any other provision that could restrict Lessee's use or
operation of the Aircraft).

               6.2.7       NO LIENS

      On the Closing Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.

<PAGE>

               6.2.8       INVESTMENT BY OWNER PARTICIPANT

      Owner Participant's beneficial interest in the Trust Estate has been
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.

               6.2.9       ERISA

      No part of the funds used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.

               6.2.10      LITIGATION

      There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under, or affect the
validity or enforceability of, the Owner Participant Agreements.

               6.2.11      SECURITIES LAWS

      Neither Owner Participant nor any person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the registration provisions of the
Securities Act or applicable state securities Laws.

               6.2.12      BROKER'S FEES

      No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.

      6.3      WELLS FARGO'S REPRESENTATIONS AND WARRANTIES

      Wells Fargo represents and warrants (in the case of Section 6.3.13, solely
in its capacity as Owner Trustee) to Lessee, Owner Participant, Airframe
Manufacturer, Loan Participants, Subordination Agent and Mortgagee that:

               6.3.1       ORGANIZATION, ETC.

      Wells Fargo is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.

<PAGE>

               6.3.2       CORPORATE AUTHORIZATION

      Wells Fargo has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by Wells Fargo, in its individual capacity
and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.

               6.3.3       NO VIOLATION

      The execution and delivery by Wells Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Wells
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Wells Fargo in its individual capacity and as
Owner Trustee on the Closing Date of the transactions contemplated thereby, do
not and will not (a) violate any provision of the Articles of Association or
By-Laws of Wells Fargo, (b) violate any Law of the State of Utah or federal
banking Law applicable to or binding on Owner Trustee or Wells Fargo or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Wells Fargo, in its
individual capacity or as Owner Trustee), or result in the creation of any Lien
(other than the lien of the Trust Indenture) upon any property of Wells Fargo,
in its individual capacity and as Owner Trustee, or any of its subsidiaries
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Wells Fargo, in its individual capacity or as Owner Trustee, is a party
or by which Wells Fargo, in its individual capacity or as Owner Trustee, or any
of its properties is or may be bound or affected.

               6.3.4       APPROVALS

      The execution and delivery by Wells Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Wells
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Wells Fargo, in its individual capacity and
as Owner Trustee, on the Closing Date of the transactions contemplated thereby
do not and will not require the consent, approval or authorization of, or the
giving of notice to, or the registration with, or the recording or filing of any
documents with, or the taking of any other action in respect of, (a) any trustee
or other holder of any Debt of Wells Fargo or (b) any Government Entity
governing banking and trust powers, other than the filing of the FAA Filed
Documents and the Financing Statements.

               6.3.5       VALID AND BINDING AGREEMENTS

      The Owner Trustee Agreements have been duly authorized, executed and
delivered by Wells Fargo, in its individual capacity or as Owner Trustee, as the
case may be, and constitute the legal, valid and binding obligations of Wells
Fargo, in its individual capacity and as Owner Trustee, and, assuming the due
authorization, execution and delivery thereof by the other party or parties
thereto, are enforceable against Wells Fargo, in its individual capacity and as
Owner Trustee, in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of

<PAGE>

creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.

               6.3.6       CITIZENSHIP

      On the Closing Date, Wells Fargo is a Citizen of the United States.

               6.3.7       LOCATION

      The Owner Trustee's location (as such term is used in Section 9-307 of the
UCC) is Utah.

               6.3.8       TITLE

      On the Delivery Date, Owner Trustee received whatever title to the
Aircraft as was conveyed to it by Seller.

               6.3.9       NO LIENS; FINANCING STATEMENTS

      On the Closing Date, there are no Lessor Liens attributable to Wells Fargo
or Owner Trustee in respect of all or any part of the Aircraft, Trust Estate or
the Trust Indenture Estate. Except for the Financing Statements and the one or
more UCC-1 financing statements covering the Aircraft and filed for
precautionary purposes by the Owner Trustee in connection with the delivery of
the Aircraft to Lessee under the Existing Lease on the Delivery Date, it has
not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.

               6.3.10      LITIGATION

      There are no pending or, to the Actual Knowledge of Wells Fargo,
threatened actions or proceedings against Wells Fargo or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to Wells Fargo or Owner Trustee, would
materially adversely affect the ability of Wells Fargo or Owner Trustee to
perform its obligations under, or affect the validity or enforceability of, the
Owner Trustee Agreements.

               6.3.11      SECURITIES LAWS

      Neither Wells Fargo, nor any person authorized to act on its behalf, has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or Security
from, or has sold any such interest or Security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.

               6.3.12      EXPENSES AND TAXES

      There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, Pass Through Trustee,

<PAGE>

Subordination Agent, Owner Trustee or Mortgagee (except as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in
connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.

               6.3.13      PRIOR ACTIVITIES

      Owner Trustee has not engaged in any activities except holding title to
the Aircraft and leasing the Aircraft pursuant to the terms of the "Trust
Agreement" (as defined in the Existing Lease) and the Existing Lease,
respectively, and Owner Trustee has not incurred any debt or other financial
obligation, except as expressly provided in the "Trust Agreement" (as defined in
the Existing Lease) and the Existing Lease or such other debt that shall have
been satisfied or discharged in full contemporaneously with the Closing.

      6.4      WTC'S REPRESENTATIONS AND WARRANTIES

      WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant, Airframe
Manufacturer, and Owner Trustee that:

               6.4.1       ORGANIZATION, ETC.

      WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.

               6.4.2       CORPORATE AUTHORIZATION

      WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.

               6.4.3       NO VIOLATION

      The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing

<PAGE>

Date of the transactions contemplated thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its individual capacity or (except
in the case of any Law relating to any Plan) as Mortgagee, Pass Through Trustee
or Subordination Agent, or (c) violate or constitute any default under (other
than any violation or default that would not result in a Material Adverse Change
to WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent), or result in the creation of any Lien (other than the lien
of the Trust Indenture) upon any property of WTC, in its individual capacity or
as Mortgagee, Pass Through Trustee or Subordination Agent, or any of WTC's
subsidiaries under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, Pass Through
Trustee or Subordination Agent, is a party or by which WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, or any of
their respective properties is bound.

               6.4.4       APPROVALS

      The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date by WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.

               6.4.5       VALID AND BINDING AGREEMENTS

      The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.

               6.4.6       CITIZENSHIP

      WTC is a Citizen of the United States.

<PAGE>

               6.4.7       NO LIENS

      On the Closing Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.

               6.4.8       LITIGATION

      There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under, or affect the
validity or enforceability of, any of the Mortgagee Agreements, the Pass Through
Trustee Agreements or the Subordination Agent Agreements.

               6.4.9       SECURITIES LAWS

      Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or Security
from, or has sold any such interest or Security to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.

               6.4.10      INVESTMENT

      The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustee, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.

               6.4.11      TAXES

      There are no Taxes payable by the Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
the Pass Through Trustee or WTC, as the case may be, of this Agreement or any of
the Pass Through Trustee Agreements (other than franchise or other taxes based
on or measured by any fees or compensation received by any the Pass Through
Trustee or WTC, as the case may be, for services rendered in connection with the
transactions contemplated by the Pass Through Trust Agreement), and there are no
Taxes payable by the Pass Through Trustee or WTC, as the case may be, imposed by
the State of Delaware or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Pass Through Trustee of any of
the Equipment Notes (other than franchise or other taxes based on or measured by
any fees or compensation received by the Pass Through Trustee or WTC, as the
case may be, for services rendered in connection with the transactions
contemplated by the Pass Through Trust Agreement), and, assuming that the trust

<PAGE>

created by the Pass Through Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust under subpart
E, Part I of Subchapter J of the Code or as a partnership under Subchapter K of
the Code, such trust will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof.

               6.4.12      CONTROL

      WTC is not an Affiliate of the Owner Participant or the Owner Trustee.

               6.4.13      BROKER'S FEES

      No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions.

      6.5      AIRFRAME MANUFACTURER'S REPRESENTATIONS AND WARRANTIES

      Airframe Manufacturer represents and warrants to Lessee, each Participant,
Subordination Agent, Owner Trustee and Mortgagee that:

               6.5.1       ORGANIZATION, ETC.

      Airframe Manufacturer is a corporation duly incorporated, validly existing
and in good standing under the Laws of Brazil, and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into, and perform its obligations
under the Airframe Manufacturer Agreements. OP Guarantor has a tangible net
worth (exclusive of goodwill) greater than $25,000,000.

               6.5.2       CORPORATE AUTHORIZATION

      Airframe Manufacturer 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 constitutional documents) to authorize
the execution and delivery of each of the Airframe Manufacturer Agreements, and
the performance of its obligations thereunder.

               6.5.3       NO VIOLATION

      The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the constitutional documents of Airframe Manufacturer,
(b) violate any Law applicable to or binding on Airframe Manufacturer or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Airframe Manufacturer), or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Airframe Manufacturer is a party or by which Airframe Manufacturer or any
of its properties is bound.

<PAGE>

               6.5.4       APPROVALS

      The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby do not and will not
require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Airframe Manufacturer and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.

               6.5.5       VALID AND BINDING AGREEMENTS

      The Airframe Manufacturer Agreements have been duly authorized, executed
and delivered by Airframe Manufacturer and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Airframe Manufacturer and are
enforceable against Airframe Manufacturer in accordance with the respective
terms thereof, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.

               6.5.6       TITLE

      On the Closing Date, Lessor shall have good and marketable title to the
Aircraft, free and clear of all claims, Liens and encumbrances of any nature,
except Permitted Liens.

               6.5.7       TAXES

      Lessor has filed or will cause to be filed all Federal and all material
state, local and foreign tax returns which are required to be filed by it and
have paid or will cause to be paid all Taxes which are due and payable in
connection with the Aircraft.

               6.5.8       LITIGATION

      There are no pending or, to the Actual Knowledge of Airframe Manufacturer,
threatened actions or proceedings against Airframe Manufacturer before any
court, governmental body, arbitration board, administrative agency or tribunal
which, if determined adversely to Airframe Manufacturer, would materially
adversely affect the ability of Airframe Manufacturer to perform its obligations
under, or affect the validity or enforceability of, the Airframe Manufacturer
Agreements.

               6.5.9       SECURITIES LAWS

      Neither Airframe Manufacturer nor any person Airframe Manufacturer has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any

<PAGE>

offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.

               6.5.10      BROKER'S FEES

      No Person acting on behalf of Airframe Manufacturer is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the placement agent's fees and commissions payable with
respect to the offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor, which are the sole responsibility of Airframe
Manufacturer.

SECTION 7.     COVENANTS, UNDERTAKINGS AND AGREEMENTS

      7.1      COVENANTS OF LESSEE

      Lessee covenants and agrees with Owner Participant, Loan Participant,
Owner Trustee and Mortgagee as follows:

               7.1.1       CORPORATE EXISTENCE; U.S. AIR CARRIER

      Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S.
Air Carrier.

               7.1.2       NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

      Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any change of its location (as such term is used in Section 9-307 of the UCC)
from its then present location and will promptly take any action required by
Section 7.1.3(c) as a result of such relocation.

               7.1.3       CERTAIN ASSURANCES

      (a) Lessee shall duly execute, acknowledge and deliver, or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Owner Participant, Owner Trustee or
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.

      (b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and re-filing of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial Trust Indenture Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture, and Lessee shall pay
all out-of-pocket costs and expenses thereof to the extent not paid by another

<PAGE>

party as Transaction Expenses. Lessee shall furnish to Owner Participant or
Owner Trustee such information (other than with respect to the citizenship of
Owner Participant and Owner Trustee) in Lessee's possession or otherwise
reasonably available to Lessee as may be required to enable Owner Participant or
Owner Trustee to make application for registration of the Aircraft under the Act
(subject to Lessee's rights under Section 7.1.2 of the Lease).

      (c) Lessee will cause the FAA Filed Documents, the Financing Statements
and all continuation statements (and any amendments necessitated by any
combination, consolidation or merger pursuant to Section 13.2 of the Lease, or
any change of its location (as such term is used in Section 9-307 of the UCC))
in respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and Mortgagee, as applicable,
duly and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or the UCC or
similar law of any other applicable jurisdiction (with respect to such other
documents). Lessee hereby authorizes Owner Trustee and/or Mortgagee to prepare
and file any UCC financing statements (including any amendments thereto) and
continuation statements referred to in this Section 7.1.3(c).

      (d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to Owner
Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, re-recording and
re-filing of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.

               7.1.4       SECURITIES LAWS

      Neither Lessee nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or Security from, or sell any such interest or Security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.

               [7.1.5      ADDITIONAL BASIC RENT PAYMENT

      In addition to the provisions of Section 3.2.1 of the Lease, Lessee shall
make a payment of Basic Rent on the [March __, 2004] [Scheduled Expiration Date]
in the amount set forth opposite such date in Schedule 2 to the Lease.][to be
inserted if applicable]

      7.2      COVENANTS OF OWNER PARTICIPANT

      Owner Participant covenants and agrees with Lessee, and except with
respect to Section 7.2.4, Loan Participant, Owner Trustee and Mortgagee as
follows:

<PAGE>

               7.2.1       LIENS

      Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to Owner Participant on all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft.
Owner Participant will hold harmless and indemnify Lessee, Owner Trustee, each
Note Holder, Mortgagee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.

               7.2.2       REVOCATION OF TRUST AGREEMENT

      (a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee and will not amend, modify or supplement the Trust Agreement, or waive
any of the provisions thereof, if such amendment, modification, supplement or
waiver would have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of Mortgagee.

      (b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.

               7.2.3       CHANGE OF SITUS OF OWNER TRUST

      If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; PROVIDED, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustee may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust (it
being agreed that if a Lease Event of Default shall have occurred and is then
continuing, it shall not be unreasonable for Owner Participant to withhold its
consent to moving the situs of the Trust, notwithstanding the provision by
Lessee of such additional tax indemnification, unless a Section 1110 Event shall
have occurred and is then continuing), (b) the rights and obligations under the
Operative Agreements of Owner Participant, the Note Holders, Pass Through
Trustee and Mortgagee shall not be adversely affected as a result of the taking
of such action, (c) the Lien of the Trust Indenture on the Trust Indenture

<PAGE>

Estate shall not be adversely affected by such action, and Lessee and Owner
Trustee shall execute and deliver such documents as may be necessary or as may
reasonably be requested by Mortgagee to protect and maintain the perfection and
priority of such Lien, (d) Owner Participant, Pass Through Trustee and Mortgagee
shall have received an opinion or opinions of counsel (which counsel is
reasonably satisfactory to Owner Participant, Pass Through Trustee and
Mortgagee) in scope, form and substance reasonably satisfactory to Owner
Participant, Pass Through Trustee and Mortgagee to the effect that (i) the
Trust, as thus removed, shall remain a validly established trust, (ii) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties, enforceable in
accordance with their terms, (iii) covering such other matters as Owner
Participant, Pass Through Trustee or Mortgagee may reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
Pass Through Trustee and Mortgagee shall have received an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustee and Mortgagee covering the matters
described in the opinion delivered pursuant to Section 5.1.2(xxv)(D) and (f)
Lessee shall indemnify and hold harmless Owner Participant, Note Holders, Pass
Through Trustee and Wells Fargo, in its individual capacity and as Owner
Trustee, on a net after-tax basis against any and all reasonable out-of-pocket
costs and expenses including attorneys' fees and disbursements, fees and
expenses of any new owner trustee, registration, recording or filing fees and
taxes incurred by Owner Participant, Note Holders, Pass Through Trustee or Owner
Trustee in connection with such change of situs. Owner Participant agrees with
Lessee that it will not consent to or direct a change in the situs of the Trust
Estate without the prior written consent of Lessee, except that if a Lease Event
of Default shall have occurred and is then continuing, except during a Section
1110 Period, such consent shall not be required.

               7.2.4       COMPLIANCE WITH LEASE PROVISIONS

      Owner Participant will, solely for the benefit of Lessee, comply with the
express provisions applicable to it contained in the Lease.

               7.2.5       SECURITIES ACT

      Owner Participant will not directly or indirectly offer any beneficial
interest or Security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or Security from, or sell any such interest or Security to,
any Person in violation of the registration provisions of the Securities Act or
applicable state or foreign Securities Laws, provided that the foregoing shall
not be deemed to impose on Owner Participant any responsibility with respect to
any such offer, sale or solicitation by any other party hereto.

               7.2.6       REGARDING THE OWNER TRUSTEE

      Owner Participant will instruct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.

<PAGE>

      7.3      COVENANTS OF WELLS FARGO AND OWNER TRUSTEE

      Wells Fargo, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:

               7.3.1       LIENS

      Wells Fargo (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to Wells Fargo or Owner
Trustee on all or any part of the Trust Estate, the Trust Indenture Estate or
the Aircraft. Wells Fargo will in its individual capacity hold harmless and
indemnify Lessee, Owner Participant, each Note Holder, Mortgagee, each of their
respective Affiliates, successors and permitted assigns, the Trust Estate and
the Trust Indenture Estate from and against (i) any and all Expenses, (ii) any
reduction in the amount payable out of the Trust Estate or the Trust Indenture
Estate and (iii) any interference with the possession, operation or other use of
all or any part of the Aircraft, in each case imposed on, incurred by or
asserted against any of the foregoing as a consequence of any such Lessor Lien.

               7.3.2       OTHER BUSINESS

      Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.

               7.3.3       NOTICE OF CHANGE OF LOCATION

      Wells Fargo, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
change of its location (as such term is used in Section 9-307 of the UCC) from
its then present location and will promptly take any action required by Section
7.3.8 as a result of such relocation.

               7.3.4       SECURITIES ACT

      Wells Fargo, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or Security from,
or sell any such interest or Security to, any Person in violation of the
registration provisions of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Wells Fargo in its individual capacity or as Owner Trustee, any responsibility
with respect to any such offer, sale or solicitation by any other party hereto.

<PAGE>

               7.3.5       PERFORMANCE OF AGREEMENTS

      Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.

               7.3.6       RELEASE OF LIEN OF TRUST INDENTURE

      Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.

               7.3.7       NOTICES; DOCUMENTS

      In the event any claim with respect to any liabilities is filed against
the Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee and Mortgagee
in writing thereof. Owner Trustee further agrees to provide to Lessee promptly
any documents (including the certificate of aircraft registration) that it
receives from the FAA with respect to the Aircraft.

               7.3.8       FILINGS

      After the Closing Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any change of its location (as such term is
used in Section 9-307 of the UCC)), prepared and delivered to it by Lessee
required to perfect Owner Trustee's title to the Aircraft and the liens of and
security interests granted by the Trust Indenture (or to maintain such
perfection) and to make such title, liens and security interests valid and
enforceable. Owner Trustee hereby authorizes the Mortgagee to prepare and file
any UCC financing statements (including any amendments thereto) and continuation
statements referred to in this Section 7.3.8.

               7.3.9       TRUST AGREEMENT

      Each of Wells Fargo and Owner Trustee hereby (i) agrees with Lessee, Loan
Participant and Mortgagee not to amend, supplement, terminate or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of any such party without the prior written consent of such
party and (ii) agrees with Lessee, Loan Participant and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of Wells Fargo to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.

<PAGE>

      7.4      COVENANTS OF WTC

      WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, covenants and agrees with Lessee, Owner
Participant and Owner Trustee as follows:

               7.4.1       LIENS

      WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will in its
individual capacity hold harmless and indemnify Lessee, Owner Participant, each
Note Holder, Owner Trustee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.

               7.4.2       SECURITIES ACT

      WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture Estate,
or any of the Equipment Notes or any other interest in or Security under the
Trust Indenture for sale to, or solicit any offer to acquire any such interest
or Security from, or sell any such interest or Security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws,
provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.

               7.4.3       PERFORMANCE OF AGREEMENTS

      WTC, in its individual capacity and as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.

               7.4.4       WITHHOLDING TAXES

      WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties and additions to tax) as a result of the failure by
WTC to withhold on payments to any Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.

<PAGE>

      7.5      COVENANTS OF NOTE HOLDERS

      Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:

               7.5.1       WITHHOLDING TAXES

      Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.

               7.5.2       TRANSFER; COMPLIANCE

      (a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act or applicable state or foreign
securities Law; PROVIDED, that the foregoing provisions of this section shall
not be deemed to impose on such Note Holder any responsibility with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set forth in
the Trust Indenture.

      (b) Except as otherwise required by the terms of Section 2.13 of the Trust
Indenture, each Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Lessee and Owner Participant with both of the following:

            (i) a written representation and covenant that either (a) no portion
      of the funds it uses to purchase, acquire and hold such Equipment Note or
      interest directly or indirectly constitutes, or may be deemed under the
      Code or ERISA or any rulings, regulations or court decisions thereunder to
      constitute, the assets of any Plan or (b) the transfer, and subsequent
      holding, of such Equipment Note or interest shall not involve or give rise
      to a transaction that constitutes a prohibited transaction within the
      meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
      involving Lessee, Owner Participant, Pass Through Trustee, the
      Subordination Agent or the proposed transferee (other than a transaction
      that is exempted from the prohibitions of such sections by applicable
      provisions of ERISA or the Code or administrative exemptions or
      regulations issued thereunder); and

            (ii) a written covenant that it will not transfer any Equipment Note
      or any interest in, or represented by, any Equipment Note unless the
      subsequent transferee also makes the representation described in clause
      (i) above and agrees to comply with this clause (ii) and the other
      covenants of the Note Holders contained in the Operative Agreements.

<PAGE>

      7.6      AGREEMENTS

               7.6.1       OWNER TRUSTEE IS OWNER FOR ALL PURPOSES

      Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner of the Aircraft
(except that Owner Participant will be the owner for income tax purposes) and
Lessee will be the lessee thereof. No transfer, by operation of Law or
otherwise, of the beneficial interest of Owner Participant in and to the Trust
Estate shall operate to transfer legal title to any part of the Trust Estate to
any transferee thereof.

               7.6.2       COMMENCEMENT OF BANKRUPTCY PROCEEDINGS

      Lessee, each Participant, each Note Holder, Wells Fargo, Owner Trustee,
WTC and Mortgagee agree for the benefit of each of the others that it will not
commence or join in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust Estate. Nothing
contained herein shall be deemed to preclude any Participant, any Note Holder,
Wells Fargo, Owner Trustee, WTC or Mortgagee from filing any claim against the
Trust Estate in any case commenced against the Trust Estate or preclude the
exercise of remedies pursuant to, or limit the rights of Mortgagee under, the
Trust Indenture.

               7.6.3       CERTAIN BANKRUPTCY MATTERS

      If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
Wells Fargo or Owner Participant is required, by reason of Wells Fargo or Owner
Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of Wells
Fargo or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by Wells Fargo or Owner Participant
on account of (b) above, then such Note Holder or Mortgagee, as the case may be,
shall promptly refund to Wells Fargo or Owner Participant (whichever shall have
made such payment) such Excess Amount.

      For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if Wells Fargo or Owner Participant had not become subject
to the recourse liability referred to in clause (b) above, and such Note Holder
or Mortgagee receives written notice that such amount is an Excess Amount prior
to its distribution thereof. Nothing contained in this Section 7.6.3 shall
prevent a Note Holder or Mortgagee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of Wells Fargo or Owner
Participant under this Agreement (other than as referred to in clause (b) above)
or the Trust Indenture (and any exhibits or annexes thereto) or from retaining
any amount paid by Owner Participant under Sections 2.13 or 4.03 of the Trust
Indenture.

<PAGE>

               7.6.4       QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING

      (a) Owner Participant, Pass Through Trustee, Subordination Agent, each
Note Holder, Owner Trustee and Mortgagee agrees as to itself with Lessee that,
so long as no Lease Event of Default shall have occurred and be continuing, such
Person shall not (and shall not permit any Affiliate or other Person claiming
by, through or under it to) interfere with Lessee's rights in accordance with
the Lease to the quiet enjoyment, possession and use of the Aircraft during the
Term.

      (b) Any assignment, sale, transfer or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant and shall be effective to transfer or convey all right,
title and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.

               7.6.5       RELEASE OF LIEN OF TRUST INDENTURE

      Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and Trust Indenture, promptly execute (at Lessee's cost and expense) such
instruments as Lessor or Lessee may reasonably request to evidence the release
of the Lien of the Trust Indenture with respect to such property.

               7.6.6       NON-RECOURSE

      Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other Operative Agreement and with respect to
the Equipment Notes shall be non-recourse to Owner Participant and to Wells
Fargo and (b) they will look solely to the income and proceeds from the Trust
Estate and the Trust Indenture Estate to the extent available for distribution
to Note Holder or Mortgagee as provided in the Trust Indenture and that neither
Owner Participant nor Wells Fargo will be personally liable to Loan Participant
or Mortgagee for any amounts payable by Owner Trustee under the Trust Indenture
or any other Operative Agreement; PROVIDED, HOWEVER, that the foregoing is not
intended nor shall it be construed to limit any recourse liability of Owner
Participant or Wells Fargo to the extent that such liability is expressly set
forth in this Agreement or in any of the Operative Agreements or arises by
reason of the breach of any representation or warranty or covenant given by such
Person (in the case of Wells Fargo, in its individual capacity).

               7.6.7       OTHER DOCUMENTS; AMENDMENT

      (a) Each of the Owner Participant and the Owner Trustee hereby agrees with
Lessee, the Loan Participant, and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
materially adversely affect such party without the prior written consent of such
party (including without limitation in the case of such agreement with Lessee,
Section 4.2.5 of the Trust Agreement). Notwithstanding the foregoing, so long as

<PAGE>

the Lease has not been terminated or expired, each Participant, the Mortgagee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not amend, supplement or otherwise modify (i)
Article III, Article IX or Sections 2.02 (third paragraph), 2.05 or 3.06 (second
sentence) of the Trust Indenture, (ii) any provision of any Operative Agreement
that will affect the stated principal amount of or premium or interest on the
Equipment Notes or (iii) any other provision of the Trust Indenture or Equipment
Notes in a manner that could materially adversely affect Lessee. Mortgagee and
Owner Trustee agree promptly to furnish to Lessee copies of any supplement,
amendment, waiver or modification of any of the Operative Agreements to which
Lessee is not a party. Loan Participant agrees that it will not take any action
in respect of the Trust Indenture Estate except through the Mortgagee pursuant
to the Trust Indenture or as otherwise permitted by the Trust Indenture.

      (b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (i) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (A) the
application for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have temporary or
permanent authority to operate the Aircraft as contemplated by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.

               7.6.8       CONSENTS

      Owner Participant, Pass Through Trustee, Subordination Agent, Owner
Trustee and Mortgagee each covenants and agrees, for the benefit of Lessee, that
it shall not unreasonably withhold its consent to any consent or approval
requested of it or of Owner Trustee or Mortgagee under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.

               7.6.9       INSURANCE

      Each of Owner Participant, the Pass Through Trustee, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise materially adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to Section 11 and Annex
D of the Lease.

               7.6.10      EXTENT OF INTEREST OF NOTE HOLDERS

      A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Holder, and all other sums, then due and payable to such
Holder hereunder and under any other Operative Agreement, shall have been paid
in full.

<PAGE>

               7.6.11      FOREIGN REGISTRATION

      Each Participant, Owner Trustee and Mortgagee hereby agree, for the
benefit of Lessee but subject to the provisions of Section 7.1.2 of the Lease:

      (a) that Lessee shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:

            (i) each of the following requirements is satisfied:

                  (A)   such registration shall be made only after the Tax
                        Attribute Period, unless Lessee prepays on a lump sum
                        basis calculated pursuant to Section 5(f) of the Tax
                        Indemnity Agreement any liability due under the Tax
                        Indemnity Agreement as a result of such registration
                        based upon the assumption that such registration
                        would continue for the remainder of the term of the
                        Permitted Sublease described in clause (C) below,
                        PROVIDED, that notwithstanding the foregoing, such
                        registration may be made during the taxable year in
                        which the seventh anniversary of the Delivery Date
                        occurs so long as the Aircraft is not "used
                        predominantly outside the United States" within the
                        meaning of Section 168(g) of the Code during such
                        taxable year;

                  (B)   no Lease Event of Default shall have occurred and be
                        continuing at the time of such registration;

                  (C)   such proposed change of registration is made in
                        connection with a Permitted Sublease to a Permitted Air
                        Carrier; and

                  (D)   such country is a Permitted Country with which the
                        United States then maintains normal diplomatic
                        relations.

            (ii) the Owner Trustee, Owner Participant and Mortgagee shall have
      received an opinion, in form and substance reasonably satisfactory to the
      Owner Participant (subject to customary exceptions), of counsel reasonably
      satisfactory to the Owner Participant and Mortgagee addressed to each such
      party to the effect that:

                  (A)   such country would recognize the Owner Trustee's title
                        to, ownership interest in and right to possession of,
                        the Aircraft;

                  (B)   the obligations of Lessee, and the rights and remedies
                        of Owner Trustee, under the Lease are valid, binding and
                        enforceable under the laws of such country (or the laws
                        of the country to which the laws of such country would
                        refer as the applicable governing law);

                  (C)   after giving effect to such change in registration,
                        the Lien of the Trust Indenture on the Owner
                        Trustee's right, title and interest in and to the
                        Aircraft and the Lease shall continue as a valid and

<PAGE>

                        duly perfected first priority security interest and
                        all filing, recording or other action necessary to
                        protect the same shall have been accomplished (or, if
                        such opinion cannot be given at the time of such
                        proposed change in registration because such change
                        in registration is not yet effective, (1) the opinion
                        shall detail what filing, recording or other action
                        is necessary and (2) Owner Trustee and the Mortgagee
                        shall have received a certificate from Lessee that
                        all possible preparations to accomplish such filing,
                        recording and other action shall have been done, and
                        such filing, recording and other action shall be
                        accomplished and a supplemental opinion to that
                        effect shall be delivered to Owner Trustee and the
                        Mortgagee on or prior to the effective date of such
                        change in registration;

                  (D)   it is not necessary, solely as a consequence of such
                        change in registration and without giving effect to
                        any other activity of Owner Trustee, the Owner
                        Participant or the Mortgagee (or any Affiliate
                        thereof), as the case may be, for Owner Trustee, the
                        Owner Participant or the Mortgagee to qualify to do
                        business in such country as a result of such
                        reregistration;

                  (E)   there is no tort liability of the owner or lessor or
                        mortgagee of an aircraft not in possession thereof
                        under the laws of such country (it being agreed that,
                        in the event such latter opinion cannot be given in a
                        form satisfactory to the Owner Participant and
                        Mortgagee, such opinion shall be waived if insurance
                        reasonably satisfactory to the Owner Participant and
                        Mortgagee is provided to cover such risk); and

                  (F)   unless Lessee shall have agreed to provide insurance
                        reasonably satisfactory to Owner Participant and
                        Mortgagee covering the risk of requisition of use of
                        the Aircraft by the government of such country (so
                        long as the Aircraft is registered under the laws of
                        such country), the laws of such country require fair
                        compensation by the government of such country
                        payable in currency freely convertible into Dollars
                        and freely removable from such country (without
                        license or permit, unless Lessee prior to such
                        proposed reregistration has obtained such license or
                        permit) for the taking or requisition by such
                        government of such use.

      (b) In addition, as a condition precedent to any change in registration
Lessee shall have given to Lessor and Mortgagee assurances reasonably
satisfactory to each of them:

            (i)    to the effect that the provisions of Section 11 of the Lease
                   have been complied with after giving effect to such change of
                   registration; and

<PAGE>

            (ii)   of the payment by Lessee of all reasonable out-of-pocket
                   expenses at no after-tax cost to any Participant of
                   Lessor, each Participant and Mortgagee in connection with
                   such change of registry, including, without limitation
                   (1) the reasonable fees and disbursements of counsel to
                   Lessee, Lessor and Mortgagee, (2) any filing or recording
                   fees, Taxes or similar payments incurred in connection
                   with the change of registration of the Aircraft and the
                   creation and perfection of the security interest therein
                   in favor of Mortgagee for the benefit of Note Holders,
                   (3) all costs and expenses incurred in connection with any
                   filings necessary to continue in the United States the
                   perfection of the security interest in the Aircraft and
                   the Lease in favor of Mortgagee for the benefit of Note
                   Holders and (4) costs in connection with the calculation
                   of the lump sum payment described in clause (i)(A) of this
                   Section 7.6.11.

               7.6.12      OTHER COMMERCIAL RELATIONS UNAFFECTED

      Notwithstanding anything to the contrary set forth in any Operative
Agreement:

      (a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or supplier of either;
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and

      (b) The Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, shall not be deemed to have waived any rights, remedies
or claims which Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer) may have against Lessee; and the Operative Agreements do
not and shall not be construed or deemed to create any rights, waivers,
immunities or indemnities in favor of Lessee with respect to any such rights,
remedies or claims of Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer).

               7.6.13      INTEREST IN CERTAIN ENGINES

      Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.

<PAGE>

SECTION 8.     CONFIDENTIALITY

      Lessee, Owner Participant, Note Holders, Owner Trustee, Mortgagee and
Airframe Manufacturer shall keep Annexes B, C and D and Schedules 1, 2, 3 and 4
to the Lease, the Purchase Agreement Assignment and the Tax Indemnity Agreement
confidential and shall not disclose, or cause to be disclosed, the same to any
other Person, except (A) to prospective and permitted transferees of Lessee's,
Owner Participant's, a Note Holder's, Liquidity Provider's, Owner Trustee's,
Mortgagee's or other Indenture Indemnitee's interest or their respective counsel
or special counsel, independent insurance brokers, auditors, or other agents who
agree to hold such information confidential, (B) to Lessee's, Owner
Participant's, a Note Holder's, Liquidity Provider's, Pass Through Trustee's,
Owner Trustee's, Mortgagee's or other Indenture Indemnitee's counsel or special
counsel, independent insurance brokers, auditors, or other agents, Affiliates or
investors who agree to hold such information confidential, (C) as may be
required by any statute, court or administrative order or decree, legal process
or governmental ruling or regulation, including those of any applicable
insurance regulatory bodies (including, without limitation, the National
Association of Insurance Commissioners), federal or state banking examiners,
Internal Revenue Service and state and local income tax auditors or any stock
exchange, (D) with respect to Lessee and Owner Participant, by mutual agreement
of such parties, (E) with respect to a Note Holder or Pass Through Trustee, to a
nationally recognized rating agency for the purpose of obtaining a rating on the
Equipment Notes or the Pass Through Certificates or to support an NAIC rating
for the Equipment Notes or the Pass Through Certificates or (F) such other
Persons as are reasonably deemed necessary by the disclosing party in order to
protect the interests of such party or for the purposes of enforcing such
documents by such party; PROVIDED, that any and all disclosures permitted by
clauses (C), (D), (E) or (F) above shall be made only to the extent necessary to
meet the specific requirements or needs of the Persons making such disclosures.
Notwithstanding the foregoing, or any provision to the contrary in any of the
Operative Agreements, and subject to compliance with applicable federal or state
securities laws, Lessee, Owner Participant, Note Holders, Owner Trustee,
Mortgagee and Airframe Manufacturer, together with any employee, representative
or other agent of such parties, is expressly authorized to disclose to any and
all persons immediately upon commencement of discussions, without limitation of
any kind, the tax structure and tax treatment (as such terms are defined under
Treasury Regulation ss. 1.6011-4(c)) of the transactions contemplated by the
Operative Agreements and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to such tax structure and tax
treatment.

SECTION 9.     INDEMNIFICATION AND EXPENSES

      9.1      GENERAL INDEMNITY

               9.1.1       INDEMNITY

      If the Closing occurs, Lessee shall indemnify, protect, defend and hold
harmless each Indemnitee from, against and in respect of, and shall pay on a net
after-tax basis, any and all Expenses of any kind or nature whatsoever that may
be imposed on, incurred by or asserted against any Indemnitee, relating to,
resulting from, or arising out of or in connection with, any one or more of the
following:

<PAGE>

      (a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;

      (b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;

      (c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and

      (d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.

               9.1.2       EXCEPTIONS

      Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:

      (a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement; PROVIDED, HOWEVER, this Section 9.1.1(a) shall not apply to any taxes
taken into account in making any payment on a net after tax basis;

      (b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance or
failure to perform by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earlier of: (i) with respect
to the Airframe, any Engine or any Part, the return of possession (it being
understood that the date of the placement of the Aircraft in storage as provided
in Section 5 of the Lease constitutes the date of return of the Aircraft under
the Lease) of such Airframe, Engine or Part pursuant to the terms of and in
compliance with the Lease (other than pursuant to Section 15 thereof, in which
case Lessee's liability under this Section 9.1 shall survive for so long as
Lessor or Mortgagee shall be entitled to exercise remedies under such Section
15) or (ii) the termination of the Term in accordance with the Lease;

      (c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,

<PAGE>

except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture;

      (d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for costs and expenses incurred as a result of such
Transfer, if such Transfer arises directly from a Lease Event of Default that
shall have occurred and be continuing;

      (e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);

      (f) In the case of Wells Fargo, to the extent attributable to matters
enumerated in the proviso to Section 14;

      (g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;

      (h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;

      (i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Certificates, the Trust Estate or the Trust Agreement or any
similar interest, in violation of the Securities Act or other applicable
federal, state or foreign securities Laws (other than any offer or sale thereof
caused by the acts or omissions of Lessee);

      (j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the extent
attributable to the failure of the Subordination Agent to distribute funds
received and distributable by it in accordance with the Intercreditor Agreement,
(iv) with respect to any Indemnitee (other than the Pass Through Trustee), to
the extent attributable to the failure of the Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreement, (v) with respect to any Indemnitee (other than the Escrow Agent), to
the extent attributable to the failure of the Escrow Agent to pay funds received
and payable by it in accordance with any Escrow Agreement, (vi) with respect to
any Indemnitee (other than the Paying Agent), to the extent attributable to the
failure of the Paying Agent to distribute funds received and distributable by it
in accordance with any Escrow Agreement, (vii) to the extent attributable to the
failure of the Depositary to pay funds payable by it in accordance with any

<PAGE>

Deposit Agreement, (viii) with respect to Mortgagee, to the extent attributable
to the negligence or willful misconduct of Mortgagee in the distribution of
funds received and distributable by it in accordance with the Trust Indenture,
(ix) with respect to Owner Trustee, to the extent attributable to the negligence
or willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (x) with respect to
the Subordination Agent, to the extent attributable to the negligence or willful
misconduct of the Subordination Agent in the distribution of funds received and
distributable by it in accordance with the Intercreditor Agreement, (xi) with
respect to the Pass Through Trustee, to the extent attributable to the
negligence or willful misconduct of the Pass Through Trustee in the distribution
of funds received and distributable by it in accordance with the Pass Through
Trust Agreement, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in the
payment of funds received and payable by it in accordance with any Escrow
Agreement, and (xiii) with respect to the Paying Agent, to the extent
attributable to the negligence or willful misconduct of the Paying Agent in the
distribution of funds received and distributable by it in accordance with any
Escrow Agreement.

      (k) Other than during the continuation of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Lessee or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);

      (l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Lessee;

      (m) To the extent that it is an ordinary and usual operating or overhead
expense;

      (n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner Participant or Owner Trustee, or any related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);

      (o) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;

      (p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;

      (q) To the extent it is a Transaction Expense;

      (r) To the extent constituting principal, Make-Whole Amount or interest on
the Equipment Notes attributable solely to an Event of Default not constituting
a Lease Event of Default; or

<PAGE>

      (s) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code; or

      (t) To the extent not included in the definition of Supplemental Rent as a
result of the provisions of clause (e) of such definition.

      For purposes of this Section 9.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.

               9.1.3       SEPARATE AGREEMENT

      This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.

               9.1.4       NOTICE

      If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional Expense) or materially impairs Lessee's ability to contest such
claim.

               9.1.5       NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS;
                           LIMITATIONS

      (a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.

      (b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree in writing
not to dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, or proceeding or compromise any such Expense (i) during the continuance of
any Lease Event of Default arising under Section 14.1 of the Lease, (ii) if such
proceedings would entail a material risk of the sale, forfeiture or loss of the
Aircraft or (iii) if such proceedings would entail a risk of criminal liability
or greater than de minimis risk of material civil penalties being imposed on
such Indemnitee. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate

<PAGE>

therein, at its sole cost and expense, with counsel reasonably satisfactory to
Lessee; PROVIDED, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or its
insurers to conduct such proceedings, interfere with the defense of such case.

      (c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.

      (d) In the case of any Expense indemnified by the Lessee hereunder which
is covered by a policy of insurance maintained by Lessee pursuant to Section 11
of the Lease, at Lessee's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.

      (e) If an Indemnitee is not a party to this Agreement, Lessee may require
such Indemnitee to agree in writing to the terms of this Section 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.

      (f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.

      (g) Nothing contained in this Section 9.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.

               9.1.6       INFORMATION

      Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.

               9.1.7       EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
                           ASSURANCES

      Upon the payment in full by Lessee of any indemnity provided for under
this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or 7.01 of the Trust Indenture or Section 5.3 or 7 of the
Trust Agreement) in respect of the matter as to which such indemnity was paid.

<PAGE>

Each Indemnitee will give such further assurances or agreements and cooperate
with Lessee to permit Lessee to pursue such claims, if any, to the extent
reasonably requested by Lessee and at Lessee's expense.

               9.1.8       REFUNDS

      If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Lessee hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Lessee or any of its insurers has
paid in respect of such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts shall be paid
over to Owner Trustee (or, so long as the Trust Indenture shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.

      9.2      EXPENSES

               9.2.1       TRANSACTION EXPENSES

      Owner Participant shall pay all Transaction Expenses (which shall exclude
the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee), up to an aggregate amount equal to the Expense Limit. Airframe
Manufacturer shall pay all Transaction Expenses in excess of the Expense Limit
and the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee, provided that if Airframe Manufacturer shall fail to make any payment
when due of the ongoing fees, disbursements and expenses of Mortgagee or Owner
Trustee, Lessee shall make such payment if so requested by Mortgagee or Owner
Trustee, as applicable, in which case Airframe Manufacturer shall be obligated
to immediately reimburse Lessee for any payment made by Lessee pursuant to this
sentence. Lessee shall have no liability or obligation with respect to
Transaction Expenses, except as provided in the preceding sentence.

               9.2.2       PAYMENT OF OTHER EXPENSES

      Lessee will be responsible for the fees and charges of its counsel
incurred in connection with the preparation, execution and delivery of the
Operative Agreements. All out-of-pocket costs and expenses of Lessee (including,
without limitation, reasonable attorney's fees and charges) incurred in
performance of Sections 7.1.3(a), (b) and (c) (other than with respect to the
first parenthetical of Section 7.1.3(c)) to the extent constituting Transaction
Expenses, shall be paid pursuant to Section 9.2.1 and, otherwise, shall be paid
by Airframe Manufacturer. Airframe Manufacturer shall pay all costs and expenses
incurred by it in connection with the Operative Agreements.

      9.3      GENERAL TAX INDEMNITY

               9.3.1       GENERAL

      Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal withholding taxes on, based on or measured by gross or net
income), and in the event that Lessee shall be required by applicable law to

<PAGE>

make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives (at no after-Tax cost to the Tax Indemnitee) the same
amount that it would have received had no such withholdings or deductions been
made, and (z) Lessee shall pay the full amount withheld or deducted to the
relevant Taxing Authority in accordance with applicable law. Lessee further
agrees that, in the event it is required to withhold from any payment of Basic
Rent, Termination Value, Stipulated Loss Value (and amounts determined by
reference thereto), or amounts payable upon exercise of Lessee's purchase option
pursuant to Section 17.3 of the Lease, any Tax imposed upon Owner Participant or
Owner Trustee (including any withholding Tax based on income or receipts of
Owner Participant or Owner Trustee) and such Tax is excluded from
indemnification pursuant to Section 9.3.2, Lessee shall pay such additional
amount, if any, required so that the total amount paid by Lessee (after making
all required withholdings) is equal to (assuming timely payment of the Equipment
Notes prior to the relevant Payment Date) the aggregate principal amount of
scheduled installments due on the Equipment Notes outstanding on the relevant
Payment Date, together with accrued and unpaid interest, due on the Equipment
Notes; Owner Participant or Owner Trustee, as the case may be, shall reimburse
Lessee for any such additional amounts within two Business Days after demand
therefor. Except as provided in Section 9.3.2 and whether or not any of the
transactions contemplated hereby are consummated, Lessee shall pay, indemnify,
protect, defend and hold each Tax Indemnitee harmless from all Taxes imposed by
any Taxing Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or any Part
or any interest in any of the foregoing (whether or not indemnified against by
any other Person), upon or with respect to the Operative Agreements or the
transactions or payments contemplated thereby, including but not limited to any
Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien (other than a Lessor Lien), financing, refinancing
requested by the Lessee, abandonment or other disposition of the Aircraft, the
Airframe, any Engine, any Part, any data or any other thing delivered or to be
delivered under an Operative Agreement, or (z) rent, interest, fees or any other
income, proceeds, receipts or earnings, whether actual or deemed, arising upon,
in connection with, or in respect of, any of the Operative Agreements (including
the property or income or other proceeds with respect to property held as part
of the Trust Estate) or the transactions contemplated thereby.

               9.3.2       CERTAIN EXCEPTIONS

      The provisions of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:

      (a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority of any jurisdiction within the United States in

<PAGE>

which such Tax Indemnitee is incorporated or maintains its principal place of
business or is otherwise subject to Taxes of such type as a result of
transactions or activities by such Tax Indemnitee or its Affiliates that are
independent of the transactions and activities contemplated by the Operative
Agreements (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), sales, use,
license or property Taxes, Taxes in the nature of sales or use taxes, value
added taxes imposed in lieu of any of the foregoing, airport excise taxes or any
excise taxes imposed in the nature of or in lieu of any of the foregoing and
other than, in the case of clause (ii), any doing business taxes imposed by a
taxing authority in any jurisdiction (other than the jurisdiction within which
such Tax Indemnitee is incorporated or maintains its principal place of
business) if such doing business taxes attributable to the transactions
contemplated by the Operative Agreements were subject to indemnity pursuant to
the provisions of this clause 9.3.2(a) (without regard to this parenthetical)
solely as a result of the usage or location of the Aircraft in such jurisdiction
by a Lessee Person when such Tax Indemnitee was not incorporated or doing
business or otherwise subject to Taxes of such type in such jurisdiction, if in
a subsequent taxable period such Indemnitee becomes subject to Taxes of such
type as a result of activities or transactions other than those contemplated by
the Operative Agreements, to the extent that such taxes (and in an amount no
more than the amount of such Taxes that) would have continued to be imposed
solely as a result of the usage or location of the Aircraft by a Lessee Person
in such jurisdiction in the absence of any additional nexus between such Tax
Indemnitee and such jurisdiction);

      (b) imposed as a result of the replacement of the existing financing
agreements with the Operative Agreements and the Express Sublease or the
issuance of the Equipment Notes;

      (c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by Owner Trustee, Pass Through Trustee, Subordination
Agent or Mortgagee;

      (d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;

      (e) that are being contested as provided in Section 9.3.4 hereof, for so
long as such contest is continuing;

      (f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee, a
related Tax Indemnitee or any Affiliate thereof;

      (g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee

<PAGE>

(unless requested by the Lessee), or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the Airframe,
any Engine or any Part, the Rent (other than the assignment of Rent to the
Mortgagee pursuant to the Trust Indenture), the Trust, the Trust Estate, the
Trust Indenture Estate, the Lease or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(A) a substitution or replacement of the Aircraft, the Airframe, any Engine or
any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a Lease
Event of Default that shall have occurred and have been continuing, or (C) a
transfer to Lessee pursuant to Section 17.3 of the Lease);

      (h) except with respect to gross-ups, imposed subsequent to (and not in
respect of) a transfer or other disposition described in paragraph (g) above and
not described in the last parenthetical of such paragraph (g) and in excess of
those that would have been imposed had there not been a transfer or other
disposition by or to such Tax Indemnitee or a related Tax Indemnitee described
in paragraph (g) above;

      (i) imposed on the Owner Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;

      (j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of events
occurring prior to such expiration or earlier termination);

      (k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee resulting from a failure of such Tax Indemnitee or a related Tax
Indemnitee to file any return properly and timely, unless such failure shall be
caused by the failure of Lessee to fulfill its obligations, if any, under
Section 9.3.6 with respect to such return, PROVIDED that if any such return is
required to be filed in a jurisdiction outside the United States, which return
would not have been required to be filed in the absence of the transactions
contemplated under the Operative Agreements or Lessee's transactions or
activities in such jurisdiction, this exclusion shall not apply if (A) Lessee
has not informed the Tax Indemnitee in writing of the need to file such return
at least 30 days prior to the due date thereof (or such shorter period as would
reasonably allow the Tax Indemnitee to file such return if, under the
circumstances, the Lessee could not have reasonably informed the Tax Indemnitee
of the need to file at least 30 days prior to the due date thereof), or (B) the
Tax Indemnitee had determined in good faith that such filing would subject it or
any Affiliate to adverse consequences in such jurisdiction for which it had not
been (and would not have been) indemnified;

      (l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;

      (m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or

<PAGE>

any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;

      (n) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of Loan Participant or any Note
Holder in any Equipment Note or the loan evidenced thereby or (ii) upon or with
respect to the value of the interest of the Owner Participant in the Trust
Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;

      (o) that are included in Lessor's Cost and paid to the appropriate Taxing
Authority;

      (p) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States within which such Tax Indemnitee is incorporated or
maintains its principal place of business or to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the
transactions contemplated by the Operative Agreements; or

      (q) Taxes relating to ERISA or Section 4975 of the Code.

      For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.

               9.3.3       PAYMENT

      (a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3. The loss, disallowance or
recapture of such tax benefits taken into account by such Tax Indemnitee shall
be treated as a Tax subject to indemnity under this Section 9.3.1 without regard
to the provisions of Section 9.3.2 (other than Section 9.3.2(f)).

      (b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification shall result in an adjustment in Lessee's favor of 5%
or more of the net present value (computed using a discount rate equal to the
Debt Rate, compounded semiannually) of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.

<PAGE>

      (c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.

      (d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than two Business Days
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable (by law or by Lessee
hereunder), (ii) a closing agreement or settlement agreement entered into in
accordance with Section 9.3.4 that has become binding and is not subject to
further review or appeal (absent fraud, misrepresentation, etc.), or (iii) the
termination of administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.

      (e) If any Tax Indemnitee shall actually realize a tax savings by reason
of any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity, such Tax Indemnitee shall pay to
Lessee (within 30 days after the realization of such tax savings) an amount
equal to the lesser of (i) the amount of such tax savings, plus any additional
tax savings recognized as the result of any payment made pursuant to this
sentence, when, as, if, and to the extent, realized or (ii) the amount of all
payments (other than in respect of contest costs) pursuant to this Section 9.3
by Lessee to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Lessee pursuant to this Section 9.3.3 (e)) (and the excess, if
any, of the amount described in clause (i) over the amount described in clause
(ii) shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 9.3.1 without regard to the provisions of Section
9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee shall in good

<PAGE>

faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.

      (f) For purposes of this Section 9.3, items of foreign Tax of any Tax
Indemnitee shall be deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following priorities:

            (x) First, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) other than those described in clause
(y) below;

            (y) Second, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) arising out of the transactions
contemplated by the Operative Agreements and other equipment leasing
transactions to the extent such Tax Indemnitee is indemnified or held harmless
for such Taxes by the Lessee or a lessee on a pari passu basis.

               9.3.4       CONTEST

      (a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder, or
if a Tax Indemnitee makes a determination that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity obligations hereunder unless
such failure to notify forecloses Lessee's rights to require a contest of such
claim) and shall take no action with respect to such claim without the prior
written consent of Lessee for 30 days following the receipt of such notice by
Lessee; provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the end of
such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so
inform Lessee, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and sue for a refund if (i)(A) the failure to so
pay the Tax would result in substantial penalties (unless immediately reimbursed
by Lessee) and the act of paying the Tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in criminal penalties
and (ii) such Tax Indemnitee shall take any action so required in connection
with so paying the Tax in a manner that, in its good faith opinion, is the least
prejudicial to the pursuit of the contest). In addition, such Tax Indemnitee
shall (provided, that Lessee shall have agreed to keep such information
confidential other than to the extent necessary in order to contest the claim)
furnish Lessee with copies of any requests for information from any Taxing
Authority relating to such Taxes with respect to which Lessee may be required to
indemnify hereunder. If requested by Lessee in writing within 30 days after its
receipt of such notice, such Tax Indemnitee shall, at the expense of Lessee
(including, without limitation, all reasonable costs, expenses and reasonable
attorneys' and accountants' fees and disbursements), in good faith contest (or,
if permitted by applicable law to be contested by the Lessee in its own name,
allow Lessee to contest) through appropriate administrative and judicial
proceedings the validity, applicability or amount of such Taxes by (I) resisting
payment thereof, (II) not paying the same except under protest if protest is
necessary and proper or (III) if the payment is made, using reasonable efforts
to obtain a refund thereof in an appropriate administrative and/or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee

<PAGE>

shall not be required to pursue any appeals to the United States Supreme Court.
If and to the extent the Tax Indemnitee is able to separate the contested issue
or issues from other issues arising in the same administrative or judicial
proceeding that are unrelated to the transactions contemplated by the Operative
Agreements without, in the good faith judgment of such Tax Indemnitee, adversely
affecting such Tax Indemnitee, such Tax Indemnitee shall permit Lessee to
contest such matter in its own name, if permitted by applicable law, and shall
provide to Lessee (at Lessee's cost and expense) such information or data that
is in such Tax Indemnitee's control or possession that is reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income tax
returns), and Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest and shall provide such Tax Indemnitee
with copies of all submissions and judicial and administrative proceedings. In
the case of a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall
consult with Lessee in good faith regarding the manner of contesting such claim
and shall keep Lessee reasonably informed regarding the progress of such
contest. A Tax Indemnitee shall not fail to take any action expressly required
by this Section 9.3.4 (including, without limitation, any action regarding any
appeal of an adverse determination with respect to any claim) or settle or
compromise any claim without the prior written consent of the Lessee (except as
contemplated by Section 9.3.4(b) or (c)).

      (b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free and after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Lessee any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Lessee shall have made provisions to protect the
interests of any such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing promptly
after it becomes aware of any such risk), (iv) no Lease Event of Default shall
have occurred and be continuing unless Lessee has provided adequate security for
its obligations hereunder by advancing to such Tax Indemnitee before proceeding
or continuing with such contest, the amount of the Tax being contested, plus any
interest and penalties and an amount estimated in good faith by such Tax
Indemnitee for expenses, and (v) prior to commencing any judicial action
controlled by Lessee, Lessee shall have acknowledged its liability for such
claim hereunder, provided that Lessee shall not be bound by its acknowledgment
if the Final Determination articulates conclusions of law and fact that
demonstrate that Lessee has no liability for the contested amounts hereunder.
Notwithstanding the foregoing, if any Tax Indemnitee shall release, waive,
compromise or settle any claim which may be indemnifiable by Lessee pursuant to
this Section 9.3 without the written permission of Lessee, Lessee's obligation
to indemnify such Tax Indemnitee with respect to such claim (and all directly
related claims and claims based on the outcome of such claim) shall terminate,

<PAGE>

subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim (other then contest costs), plus
interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.

      (c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Lessee's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 9.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount previously paid or advanced by Lessee pursuant to this
Section 9.3 (other than contest costs) with respect to such Tax, plus interest
at the rate that would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss with Lessee
the views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax.

               9.3.5       REFUND

      If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Lessee to
such Tax Indemnitee theretofore made pursuant to this Section 9.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant
to this Section 9.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Lessee prior to the receipt of such refund or realization of such
credit. If any such refund or credit or any interest thereon for which a Tax
Indemnitee shall have paid Lessee is later recaptured, denied, disallowed or
reduced, such recapture, denial, disallowance or reduction shall be treated as a
Tax indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2(f)).

               9.3.6       TAX FILING

      If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file or which a Tax Indemnitee is required by law to file
in its own name); provided, that the relevant Tax Indemnitee shall furnish
Lessee with any information in such Tax Indemnitee's possession or control that

<PAGE>

is reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Lessee (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained therein).
Lessee shall either file such report, return or statement and send a copy of
such report, return or statement to such Tax Indemnitee, and Owner Trustee if
the Tax Indemnitee is not Owner Trustee, or, where Lessee is not permitted to
file such report, return or statement, or if the same is required by law to be
filed in the Tax Indemnitee's own name, it shall notify such Tax Indemnitee in
writing of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.

               9.3.7       FORMS

      Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Mortgagee or to such other person as Lessee or Mortgagee may designate, at
Lessee's or Mortgagee's request, such duly executed and properly completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee, (y) Lessee
has provided such Tax Indemnitee with any information necessary to complete such
form not otherwise reasonably available to such Tax Indemnitee, and (z) if such
return is required to be filed in a jurisdiction outside the United States, the
Tax Indemnitee has not made a good faith determination that such filing would
subject it or any Affiliate to any adverse consequences in such jurisdiction for
which it has not been (and would not have been) indemnified.

               9.3.8       NON-PARTIES

      If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.

               9.3.9       SUBROGATION

      Upon payment of any Tax by Lessee pursuant to this Section 9.3 to or on
behalf of a Tax Indemnitee, Lessee, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Lessee (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.

               9.3.10      FOREIGN TAX ON LOAN PAYMENTS

      If an Owner Participant is incorporated or organized, or maintains a place
of business or conducts activities (other than any activities of the Owner
Participant resulting from its participation in the transactions contemplated by
the Operative Agreements or resulting from any activities of Lessee in such
jurisdiction) in a country other than the United States or in a territory,
possession or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on Pass Through Trustee, Pass Through
Trust, or any Note Holder, then Owner Participant shall reimburse Lessee for any

<PAGE>

payments Lessee is required to make to or on behalf of Pass Through Trustee,
Pass Through Trust, or any Note Holder under this Section 9.3 as a result of the
imposition of such Taxes. The amount payable by Owner Participant to Lessee
shall be an amount which, after taking into account any such Taxes, any Tax
imposed upon the receipt or accrual by Lessee of such payment by Owner
Participant and any tax benefits or tax savings realized by Lessee with respect
to the payment of such withholding Tax or the payment hereunder, shall equal the
amount of Lessee's payment to or on behalf of such Pass Through Trustee, Pass
Through Trust or Note Holder.

      9.4      PAYMENTS

      Any payments made pursuant to Section 9.1 and Section 9.3 shall be due on
the 60th day after demand is made to the indemnifying party therefor (other than
any payments for which a different time is provided under Section 9.3.3 hereof)
and shall be made directly to the relevant Indemnitee or Tax Indemnitee or to
Lessee, in immediately available funds at such bank or to such account as
specified by such Indemnitee or Tax Indemnitee or Lessee, as the case may be, in
written directives to the payor, or, if no such direction shall have been given,
by check of the payor payable to the order of, and mailed to, such Indemnitee or
Tax Indemnitee or Lessee, as the case may be, by certified mail, postage
prepaid, at its address as set forth in this Agreement.

      9.5      INTEREST

      If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.

      9.6      BENEFIT OF INDEMNITIES

      The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.

SECTION 10.    ASSIGNMENT OR TRANSFER OF INTERESTS

      10.1     PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS

               10.1.1      OWNER PARTICIPANT

      (a) Owner Participant shall not Transfer any or all of its right, title or
interest in the Trust Estate or the Trust Agreement and to this Agreement
unless:

            (i) The Transferee shall have full power, authority and legal right
      to execute and deliver and to perform the obligations of Owner Participant

<PAGE>

      under this Agreement and the other Owner Participant Agreements and shall
      provide reasonably satisfactory evidence of such power and authority to
      Lessee, Owner Trustee and Mortgagee;

            (ii) The Transferee shall enter into one or more legal, valid,
      binding and enforceable agreements effective to confirm that such
      Transferee agrees to be bound by all the terms of, and to undertake all of
      the obligations arising after such transfer of, the transferring Owner
      Participant contained in the Owner Participant Agreements and in which it
      makes representations and warranties substantially the same as those
      contained in Section 6.2 of this Participation Agreement;

            (iii) Lessee shall not be obligated to pay any greater amount or
      incur any greater obligation than that which it would have been obliged to
      pay or incur under the Lease or other Lessee Operative Agreement if no
      transfer or assignment had taken place, and the terms and conditions of
      the Lease and the other Lessee Operative Agreements insofar as they relate
      to the rights and obligations of Lessee or the Loan Participants shall not
      be altered;

            (iv) Owner Participant shall deliver to Lessee, Owner Trustee and
      Mortgagee an opinion of counsel reasonably satisfactory to each of them
      (which, if the Transferee is an Affiliate of the Owner Participant, may be
      in-house counsel to such Owner Participant) to the effect that such
      agreement or agreements referred to in Section 10.1.1(a)(ii) and, if
      applicable, 10.1.1(a)(vi) are legal, binding and enforceable in accordance
      with its or their terms and that such transfer will not violate applicable
      securities laws, the Act or any other applicable Law and is in accordance
      with this Section 10.1.1;

            (v) The Transferee is a Citizen of the United States (it being
      understood that the existence of any such requirement is to be determined
      without giving consideration to Section 47.9 of the FAA Regulations or any
      other provision that would restrict Lessee's use or operation of the
      Aircraft), or shall use a voting powers trust or similar arrangement in
      order to hold an interest in the Trust Estate such that the Aircraft can
      be registered in the United States (without giving consideration to
      Section 47.9 of the FAA Regulations or any other provision that would
      restrict Lessee's use or operation of the Aircraft);

            (vi) The Transferee shall be one person and shall be either (A) a
      Permitted Institution or (B) any other person (other than, without
      Lessee's consent, a commercial air carrier, a commercial aircraft
      operator, a freight forwarder or an Affiliate of any of the foregoing) the
      obligations of which under the Owner Participant Agreements are guaranteed
      by a Permitted Institution in any case, pursuant to a written guaranty, in
      form and substance reasonably satisfactory to Lessee, Owner Trustee and
      Mortgagee; and

            (vii) The Transferee shall be a "U.S. Person" as defined in Section
      7701(a)(30) of the Code (or any successor provision thereto).

      (b) Owner Participant shall give written notice to Lessee, Mortgagee and
Owner Trustee at least 10 days prior to any such Transfer, specifying the name

<PAGE>

and address of the proposed Transferee, and providing financial statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.

      (c) Any fees, charges and expenses, including the reasonable legal fees,
charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note
Holder or Owner Trustee in connection with any Transfer by Owner Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.

               10.1.2      OWNER TRUSTEE

      Owner Trustee may transfer its interests in the Trust Agreement pursuant
to Section 9 thereof.

               10.1.3      NOTE HOLDERS

      Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by the Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
neither Lessee, Lessor, nor Owner Participant shall have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.

      10.2     EFFECT OF TRANSFER

      Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; PROVIDED, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors

<PAGE>

and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.

SECTION 11.    [RESERVED]

SECTION 12.    SECTION 1110

      It is the intention of each of Lessee, Owner Participant, Loan
Participant, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor. Lessee shall at all times be certificated and registered to the extent
necessary to entitle Owner Trustee to the rights afforded to lessors of aircraft
equipment under Section 1110 of the Bankruptcy Code.

SECTION 13.    CHANGE OF CITIZENSHIP

      13.1     GENERALLY

      Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States:

      (a) Each of Lessee, Wells Fargo and WTC agrees that it will, immediately
upon obtaining knowledge of any facts that would cast doubt upon its continuing
status as a Citizen of the United States and promptly upon public disclosure of
negotiations in respect of any transaction which would or might adversely affect
such status, notify in writing all parties hereto of all relevant matters in
connection therewith; and

      (b) Owner Participant agrees that, in the event its status is to change or
has changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(i) such change in status promptly after obtaining Actual Knowledge thereof or
(ii) such belief as soon as practicable after such public disclosure but in any
event within ten Business Days after such public disclosure.

      13.2     OWNER PARTICIPANT

      Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement

<PAGE>

shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.

      13.3     OWNER TRUSTEE

      Upon Wells Fargo giving any notice in accordance with Section 13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as
Owner Trustee. Upon its receipt of such notice, Owner Participant shall as
promptly as practicable appoint a Citizen of the United States as successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement.

      13.4     MORTGAGEE

      Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizenship is necessary under the Act as in
effect at such time or, if it is not necessary, if and so long as Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder), subject to Section 8.02 of the Trust Indenture, resign as Mortgagee
promptly upon its ceasing to be such a citizen.

SECTION 14.    CONCERNING OWNER TRUSTEE

      It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of Wells Fargo (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
Wells Fargo expressly made as such herein or in any other Operative Agreement to
which it is a party, and (c) for the consequences of its own gross negligence,
willful misconduct, and, in receiving, handling or remitting of funds only, its
willful misconduct or simple negligence as a trustee.

SECTION 15.    MISCELLANEOUS

      15.1     AMENDMENTS

      No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral

<PAGE>

communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.

      15.2     SEVERABILITY

      If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.

      15.3     SURVIVAL

      The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.

      15.4     REPRODUCTION OF DOCUMENTS

      This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.

      15.5     COUNTERPARTS

      This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.

      15.6     NO WAIVER

      No failure on the part of any party hereto to exercise, and no delay by
any party hereto in exercising, any of its respective rights, powers, remedies
or privileges under this Agreement or provided at Law, in equity or otherwise
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach hereof or default

<PAGE>

hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right, power, remedy or privilege preclude any other or further
exercise thereof by it or the exercise of any other right, power, remedy or
privilege by it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.

      15.7     NOTICES

      Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile or telecommunication transmission (which in either
case provides written confirmation to the sender of its delivery), sent by
registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service, in each case to the respective address, or
facsimile number set forth for such party in Schedule 1, or to such other
address, facsimile or other number as each party hereto may hereafter specify by
notice to the other parties hereto. Each such notice, request, demand,
authorization, direction, consent, waiver or other communication shall be
effective when received or, if made, given, furnished or filed (a) by facsimile
or telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.

      15.8     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

      (a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

      (b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.

      (c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT

<PAGE>

SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

      (d) TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY LEGAL
PROCESS THEREIN, SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, SUCH IMMUNITY, AND EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING
BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, (I) THE DEFENSE OF SOVEREIGN
IMMUNITY, (II) THAT IT OR ANY OF ITS PROPERTY IS IMMUNE FROM THE ABOVE DESCRIBED
LEGAL PROCESS AND (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.

      (e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

      15.9     THIRD-PARTY BENEFICIARY

      This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than each Indemnitee, which is an intended third party
beneficiary with respect to the provisions of Section 9.1 as provided in Section
9.1.3, and the other persons referred to in Section 7.6.13, who are intended
third party beneficiaries of such Section) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than each Indemnitee, with respect to the provisions of Section 9.1 as
provided in Section 9.1.3, and the other persons referred to in Section 7.6.13,
with respect to such Section) shall have any right, power or privilege in
respect of any party hereto, or have any benefit or interest, arising out of
this Agreement.

      15.10    ENTIRE AGREEMENT

      This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties

<PAGE>

hereto with respect to such subject matter are hereby superseded in their
entireties (except that the Indemnity Agreement shall not be superseded).

      15.11    FURTHER ASSURANCES

      Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectively the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.

                    [This space intentionally left blank]

<PAGE>

      IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.

                                    CONTINENTAL AIRLINES, INC.,
                                     Lessee

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

                                    REFINE, INC.,
                                      Owner Participant

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

                                    WELLS FARGO BANK NORTHWEST,
                                    NATIONAL ASSOCIATION,
                                       not in its individual capacity, except
                                       as expressly provided herein, but
                                       solely as Owner Trustee

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

<PAGE>
                                    WILMINGTON TRUST COMPANY,
                                       not in its individual capacity, except
                                       as expressly provided herein, but
                                       solely as Mortgagee

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

                                    WILMINGTON TRUST COMPANY, not in its
                                       individual capacity, except as expressly
                                       provided herein, but solely as Pass
                                       Through Trustee under the Pass Through
                                       Trust Agreement for the Continental
                                       Airlines Pass Through Trust, 2003-ERJ1

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

                                    WILMINGTON TRUST COMPANY, not in its
                                       individual capacity, except as expressly
                                       provided herein, but solely as
                                       Subordination Agent

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

                                    EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA
                                      S.A.,
                                       Airframe Manufacturer

                                    By
                                      ----------------------------------------
                                      Name:
                                      Title:
<PAGE>
                                              ---------------------------------
                                             |     ANNEX A-DEFINITIONS [TN]    |
                                              ---------------------------------

                                     ANNEX A

DEFINITIONS

GENERAL PROVISIONS

      (a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:

            (i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee,"
      "Owner Participant," "Mortgagee," "Note Holder" or any other person
      includes, without prejudice to the provisions of any Operative Agreement,
      any successor in interest to it and any permitted transferee, permitted
      purchaser or permitted assignee of it;

           (ii) words importing the plural include the singular and words
      importing the singular include the plural;

          (iii) any agreement, instrument or document, or any annex, schedule or
      exhibit thereto, or any other part thereof, includes, without prejudice to
      the provisions of any Operative Agreement, that agreement, instrument or
      document, or annex, schedule or exhibit, or part, respectively, as
      amended, modified or supplemented from time to time in accordance with its
      terms and in accordance with the Operative Agreements, and any agreement,
      instrument or document entered into in substitution or replacement
      therefor;

           (iv) any provision of any Law includes any such provision as amended,
      modified, supplemented, substituted, reissued or reenacted prior to the
      Closing Date, and thereafter from time to time;

            (v) the words "Agreement," "this Agreement," "hereby," "herein,"
      "hereto," "hereof" and "hereunder" and words of similar import when used
      in any Operative Agreement refer to such Operative Agreement as a whole
      and not to any particular provision of such Operative Agreement;

           (vi) the words "including," "including, without limitation,"
      "including, but not limited to," and terms or phrases of similar import
      when used in any Operative Agreement, with respect to any matter or thing,
      mean including, without limitation, such matter or thing; and

          (vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
      Operative Agreement, or in any annex thereto, is a reference to a section
      of, or an exhibit, an annex or a schedule to, such Operative Agreement or
      such annex, respectively.

      (b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.

      (c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.

<PAGE>

      (d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.

      (e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 of the Lease shall not be deemed to prohibit the Lessee from taking any
action or exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.

DEFINED TERMS

      "ACT" means part A of subtitle VII of title 49, United States Code.

      "ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department (in the case of Owner Trustee) or the Corporate Trust Office
(in the case of Mortgagee) and (b) as it applies to Owner Participant, Airframe
Manufacturer or Lessee, actual knowledge of a Vice President or more senior
officer of Owner Participant, Airframe Manufacturer or Lessee, respectively, or
any other officer of Owner Participant, Airframe Manufacturer or Lessee,
respectively, having responsibility for the transactions contemplated by the
Operative Agreements; PROVIDED that each of Lessee, Owner Participant, Owner
Trustee, Mortgagee and Airframe Manufacturer shall be deemed to have "Actual
Knowledge" of any matter as to which it has received notice from Lessee, Owner
Participant, any Note Holder, Owner Trustee or Mortgagee, such notice having
been given pursuant to Section 15.7 of the Participation Agreement.

      "ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.

      "AFFILIATE" means, with respect to any person, any other person directly
or indirectly controlling, controlled by or under common control with such
person. For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.

      "AIRCRAFT" means, collectively, the Airframe and Engines.

      "AIRCRAFT BILL OF SALE" means the full warranty bill of sale covering the
Aircraft delivered by Seller to Owner Trustee on the Delivery Date.

      "AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained

<PAGE>

or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).

      "AIRFRAME" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
any Replacement Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a
Replacement Airframe under and in accordance with the Lease, such Replacement
Airframe shall become subject to the Lease and shall be the "Airframe" for all
purposes of the Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."

      "AIRFRAME MANUFACTURER" means Embraer-Empresa Brasileira de Aeronautica
S.A., a Brazilian corporation.

      "AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the Participation
Agreement, the Purchase Agreement, the Consent and Agreement and the OP
Guaranty.

      "AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date, the amount determined by multiplying the percentage set forth
opposite such Date on the Amortization Schedule by the Original Amount of such
Equipment Note.

      "AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.

      "APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.

      "AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.

      "AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.

      "BANKRUPTCY  CODE" means the United States  Bankruptcy Code, 11 U.S.C.
Sec. 101 ET SEQ.

      "BANKRUPTCY DEFAULT" means a Lease Event of Default under Section 14.5 of
the Lease.

<PAGE>

      "BASE LEASE TERM" means the period beginning on and including the Closing
Date and ending on the Scheduled Expiration Date, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.

      "BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated September 25, 1997, between Lessee and Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.

      "BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1 of the Lease.

      "BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.

      "BILLS OF SALE" means the FAA Bill of Sale and the Aircraft Bill of Sale.

      "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.

      "CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the Laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or Moody's Investors Service, Inc. equal to A1 or higher.

      "CHANGE IN TAX LAW" means any change or proposed change in the Code or the
regulations promulgated thereunder or any change in the interpretation of the
Code or such regulations in a decision by the United States Supreme Court, the
United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.

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

      "CLOSING" means the occurrence of the following concurrent events: (i)
execution, authentication and delivery of the Equipment Notes in accordance with

<PAGE>

the Participation Agreement; (ii) payment of the Commitments of the Loan
Participants to Owner Trustee; (iii) lease of the Aircraft by Owner Trustee to
Lessee pursuant to the Lease; and (iv) completion of the other events
contemplated by the Participation Agreement to occur at the Closing.

      "CLOSING DATE" means the Business Day specified in Lease Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.

      "CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED, that
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.

      "COMMITMENT" means, for any Loan Participant, the amount of its commitment
set forth in Schedule 2 to the Participation Agreement.

      "COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.

      "CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement [TN],
dated as of even date with the Participation Agreement, of Airframe
Manufacturer.

      "CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.

      "CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.

      "CORPORATE TRUST OFFICE" means the principal office of Mortgagee located
at Mortgagee's address for notices under the Participation Agreement or such
other office at which Mortgagee's corporate trust business shall be administered
which Mortgagee shall have specified by notice in writing to Lessee, Owner
Trustee and each Note Holder.

      "CRAF" means the Civil Reserve Air Fleet Program established pursuant to
10 U.S.C. ss. 9511-13 or any similar substitute program.

      "DEBT" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.

      "DEBT RATE" means the rate per annum specified under the heading "Interest
Rate" in Schedule I to the Trust Indenture.

      "DEFAULT" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.

      "DELAYED CLOSING DATE" means a delayed Closing Date notified to Lessee,
each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer pursuant

<PAGE>

to Section 4.3 of the Participation Agreement, which delayed Closing Date shall
be a Business Day not later than the Commitment Termination Date.

      "DELIVERY DATE" means the date on which the Aircraft was leased to Lessee
by Lessor, as lessor, under the Existing Lease.

      "DEPOSIT AGREEMENT" means the Deposit Agreement between the Depositary and
the Escrow Agent, dated as of the Issuance Date, which relates to the Pass
Through Trust, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Deposit Agreement shall be effective unless consented to by Lessee.

      "DEPOSITARY" means Citibank, N.A., as Depositary under the Deposit
Agreement.

      "DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.

      "DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.

      "ELIGIBLE ACCOUNT" means an account established by and with an Eligible
Institution at the request of the Mortgagee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account, (d) it will comply with all entitlement orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner Trustee, and (e)
the "securities intermediary jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.

      "ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A-3 or its equivalent.

      "ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.

      "ENGINE" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in Lease Supplement No. 1, and any Replacement Engine,
in any case whether or not from time to time installed on such Airframe or
installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and

<PAGE>

thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."

      "ENGINE MANUFACTURER" means Rolls-Royce Company, formerly known as Allison
Engine Company, Inc., a Delaware corporation.

      "EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.

      "EQUIPMENT NOTES" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.

      "EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.

      "ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.

      "ESCROW AGENT" means Wells Fargo Bank Northwest, National Association, as
Escrow Agent under the Escrow Agreement.

      "ESCROW AGREEMENT" means the Escrow and Paying Agent Agreement, among the
Escrow Agent, the Paying Agent, certain initial purchasers of the Pass Through
Certificates named therein and the Pass Through Trustee, dated as of the
Issuance Date, which relates to the Pass Through Trust, PROVIDED that, for
purposes of any obligation of Lessee, no amendment, modification or supplement
to, or substitution or replacement of, such Escrow Agreement shall be effective
unless consented to by Lessee.

      "EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.

      "EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:

      (a)   the destruction of such property, damage to such property beyond
            economic repair or rendition of such property permanently unfit for
            normal use by Lessee;

      (b)   the actual or constructive total loss of such property or any damage
            to such property, or requisition of title or use of such property,
            which results in an insurance settlement with respect to such
            property on the basis of a total loss or constructive or compromised
            total loss;

      (c)   any theft, hijacking or disappearance of such property for a period
            of 180 consecutive days or more or, if earlier, the end of the Term;

      (d)   any seizure, condemnation, confiscation, taking or requisition
            (including loss of title) of such property by any Government Entity
            or purported Government Entity (other than a requisition of use by

<PAGE>

            the U.S. Government) for a period exceeding 180 consecutive days or,
            if earlier, at the end of the Term;

      (e)   any seizure, condemnation, confiscation, taking or requisition of
            use of such property by the U.S. Government that continues until the
            last day of the Term, PROVIDED that no such Event of Loss shall
            exist if Lessor shall have elected not to treat such event as an
            Event of Loss pursuant to Section 10.6 of the Lease; and

      (f)   as a result of any law, rule, regulation, order or other action by
            the Aviation Authority or by any Government Entity of the government
            of registry of the Aircraft or by any Government Entity otherwise
            having jurisdiction over the operation or use of the Aircraft, the
            use of such property in the normal course of Lessee's business of
            passenger air transportation is prohibited for a period of 180
            consecutive days, unless Lessee, prior to the expiration of such 180
            day period, shall have undertaken and shall be diligently carrying
            forward such steps as may be necessary or desirable to permit the
            normal use of such property by Lessee, but in any event if such use
            shall have been prohibited for a period of 720 days, provided that
            no Event of Loss shall be deemed to have occurred if such
            prohibition has been applicable to Lessee's (or a Permitted
            Sublessee's) entire U.S. fleet of such property and Lessee (or a
            Permitted Sublessee), prior to the expiration of such 720-day
            period, shall have conformed at least one unit of such property in
            its fleet to the requirements of any such law, rule, regulation,
            order or other action and commenced regular commercial use of the
            same in such jurisdiction and shall be diligently carrying forward,
            in a manner which does not discriminate against such property in so
            conforming such property, steps which are necessary or desirable to
            permit the normal use of such property by Lessee, but in any event
            if such use shall have been prohibited for a period of three years
            or such use shall be prohibited at the expiration of the Term.

      "EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
amount payable to the Owner Participant by any transferee as the purchase price
of the Owner Participant's interest in the Trust Estate, (vi) any interest that
pursuant to the Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (v) above, (vii) proceeds of
any right to enforce the payment of any amount described in clauses (i) through
(vi) above (PROVIDED, that the rights referred to in this clause (vii) shall not
be deemed to include the exercise of any remedies provided for in the Lease
other than the right to sue for specific performance of any covenant to make

<PAGE>

such payment or to sue for damages in respect of the breach of any such
covenant) and (viii) any right to exercise any election or option or make any
decision or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case, only to
the extent relating to, any Excluded Payments.

      "EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.

      "EXISTING PARTICIPATION AGREEMENT" has the meaning provided in Schedule 3
to the Participation Agreement.

      "EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the date
of the Existing Participation Agreement, between Lessee and Express relating to
the Aircraft.

      "EXPENSE LIMIT" has the meaning provided in Schedule 3 to the
Participation Agreement.

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

      "EXPRESS" means ExpressJet Airlines, Inc., a Delaware corporation.

      "EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date of
the Participation Agreement, between Lessee and Express relating to the
Aircraft.

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

      "FAA BILL OF SALE" means a bill of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Delivery Date by Seller.

      "FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Express
Sublease, the Trust Indenture, the Trust Agreement, the initial Trust Indenture
Supplement, the FAA Bill of Sale, the Termination Agreements and an application
for registration of the Aircraft with the FAA in the name of Owner Trustee.

      "FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.

      "FAIR MARKET RENTAL VALUE" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any
such Renewal Term on the same terms and conditions as are set forth in the Lease
with respect to the Base Lease Term.

<PAGE>

      "FAIR MARKET SALES VALUE" means the fair market sales value in Dollars for
the Aircraft that would apply in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, the Aircraft, in a transaction that would close on
or about the relevant time of determination, assuming (except as otherwise
provided in Section 15.4 of the Lease) that (a) the Aircraft has been maintained
in accordance with, and is in the condition required by, the Lease and (b) the
Aircraft would be delivered to such informed and willing buyer in the return
condition required by the Lease.

      "FINANCING STATEMENTS" means, collectively, (a) UCC-1 financing statements
(i) covering the Trust Indenture Estate, by Owner Trustee, as debtor, showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction that,
in the opinion of Mortgagee, is necessary to perfect its Lien on the Trust
Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (b) UCC-3 financing statements evidencing the termination of the
Existing Lease and the Existing Sublease, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable.

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

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

      "INDEMNITEE" means (i) Wells Fargo and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons
described in clauses (i) through (iv), inclusive, (vii) the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (iv) inclusive and in clause (vi), (viii) the
successors and permitted assigns of the persons described in clauses (i) through
(iv), inclusive, and in clauses (vi) and (vii) and (ix) the Pass Through
Indemnitees; provided that the Pass Through Indemnitees are Indemnitees only for
purposes of Section 9.1 of the Participation Agreement. If any Indemnitee is
Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of
either thereof, such Person shall be an Indemnitee only in its capacity as Owner
Participant, Loan Participant or Note Holder.

<PAGE>

      "INDEMNITY AGREEMENT" means the agreement, dated as of December 3, 2003,
between Lessee and Airframe Manufacturer, which states that it is the Indemnity
Agreement for purposes of the Pass Through Certificates.

      "INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.

      "INDENTURE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.

      "INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.

      "INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) the Pass Through Trustee,
(vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vii) inclusive above.

      "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent,
dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.

      "IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.

      "ISSUANCE DATE" means [ID].

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

      "LEASE" or "LEASE AGREEMENT" means the Lease Agreement [TN], dated as of
even date with the Participation Agreement, between Owner Trustee and Lessee.

      "LEASE DEFAULT" means any condition, circumstance, act or event that, with
the giving of notice, the lapse of time or both, would constitute a Lease Event
of Default.

      "LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.

      "LEASE SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit
A to the Lease.

<PAGE>

      "LEASE  SUPPLEMENT  NO. 1" means the initial  Lease  Supplement,  dated
the Closing Date.

      "LESSEE" means Continental Airlines, Inc., a Delaware corporation.

      "LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Express Sublease, the Termination Agreement
with respect to the Existing Sublease and the Tax Indemnity Agreement.

      "LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine during the
Term with or without color of right, or any Affiliate of any of the foregoing
(excluding any Tax Indemnitee or any related Tax Indemnitee with respect
thereto, or any person using or claiming any rights with respect to the
Aircraft, Airframe or an Engine directly by or through any of the persons in
this parenthetical, but not excluding any Person claiming directly or indirectly
through or under the Lease).

      "LESSOR" means Owner Trustee in its capacity as lessor under the Lease.

      "LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.

      "LESSOR'S COST" means the amount paid by Owner Trustee to Airframe
Manufacturer to purchase the Aircraft pursuant to the Purchase Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.

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

      "LIQUIDITY FACILITY" means the Revolving Credit Agreement between the
Subordination Agent, as borrower, and the Liquidity Provider, dated as of the
Issuance Date, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Liquidity Facility shall be effective unless consented to by Lessee.

      "LIQUIDITY PROVIDER" means Citibank, N.A., as Liquidity Provider (as such
term is defined in the Intercreditor Agreement) under the Liquidity Facility, or
any successor thereto.

<PAGE>

      "LOAN PARTICIPANT" mean, until the Closing shall have been consummated,
the Pass Through Trustee, and after the Closing shall have been consummated,
each Note Holder.

      "LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.

      "MAINTENANCE PROGRAM" is defined in Annex C to the Lease.

      "MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.

      "MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the sum of (i) 50 basis points
and (ii) the interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be
the per annum rate equal to the semi-annual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment Note and
trading in the public securities markets either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Equipment Note and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Equipment Note, in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note is reported on the most recent H.15(519), such weekly average
yield to maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day prior to
the applicable payment or redemption date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable payment or redemption date.

<PAGE>

      "MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under, or affect the
validity or enforceability of the Operative Agreements.

      "MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.

      "MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.

      "MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and any Trust Indenture Supplement.

      "MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform such obligations, such trustee or the Lessee
ceasing to perform such obligations with the result that the Continuous Stay
Period comes to an end or (ii) either the Equipment Notes shall have become due
and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee has
taken action or notified Owner Trustee that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy in accordance with Section 4.04(a) of the Trust
Indenture.

      "NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Stipulated Loss Value percentages and Termination Value percentages, as of the
Closing Date.

      "NET WORTH" means, for any person, the excess of its total assets over its
total liabilities in accordance with GAAP.

      "NON-U.S. PERSON" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.

      "NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.

      "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement, dated as of
the Issuance Date, among Continental Airlines, Inc., the Subordination Agent,
the Escrow Agent, the Paying Agent and the Pass Through Trustee under the Pass
Through Trust Agreement providing for, among other things, the issuance and sale
of certain equipment notes, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Agreement shall be effective unless consented to by Lessee.

      "OBSOLETE PART" is defined in Section D of Annex C to the Lease.

<PAGE>

      "OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.

      "OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the initial
Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement, the
Termination Agreements and the Equipment Notes.

      "OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustee.

      "OP GUARANTOR" means the Airframe Manufacturer.

      "OP GUARANTY" means the Guaranty, dated as of the date of the
Participation Agreement, providing, among other things, for the guaranty by the
OP Guarantor of Owner Participant's obligations under the Operative Agreements.

      "OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.

      "ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.

      "OWNER PARTICIPANT" means the person executing the Participation Agreement
as "Owner Participant" or, if a second person becomes an "Owner Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant shall
thereafter no longer be considered an "Owner Participant."

      "OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement.

      "OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.

      "OWNER TRUSTEE" means Wells Fargo Bank Northwest, National Association, a
national banking association, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.

      "OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes and the
Purchase Agreement Assignment.

      "PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.

<PAGE>

      "PARTICIPATION AGREEMENT" means the Participation Agreement [TN] dated as
of [ID] among Lessee, Owner Participant, Owner Trustee, the Pass Through
Trustee, Subordination Agent, Mortgagee and Airframe Manufacturer.

      "PARTS" means all appliances, parts, components, avionics, landing gear,
instruments, appurtenances, accessories, furnishings, seats and other equipment
of whatever nature (other than (a) Engines or engines, and (b) any items leased
by Lessee from a third party other than Lessor)), that may from time to time be
installed or incorporated in or attached or appurtenant to the Airframe or any
Engine.

      "PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreement, the Note
Purchase Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Liquidity Facility and the Fee Letter (as defined
in the Intercreditor Agreement), provided, that no amendment, modification or
supplement to, or substitution or replacement of, any such Fee Letter shall be
effective for purposes of any obligation of Lessee, unless consented to by
Lessee.

      "PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trust (and any other pass through certificates for which such
pass through certificates may be exchanged).

      "PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Paying
Agent, the Escrow Agent, the Liquidity Provider and the Pass Through Trustee,
(ii) each Affiliate of a person described in the preceding clause (i), (iii) the
respective directors, trustees, officers, employees, agents and servants of each
of the persons described in the preceding clauses (i) and (ii) and (iv) the
successors and permitted assigns of the persons described in the preceding
clauses (i), (ii) and (iii).

      "PASS THROUGH TRUST" means the pass through trust created under the Pass
Through Trust Agreement.

      "PASS THROUGH TRUST AGREEMENT" means the Trust Supplement, dated as of the
Issuance Date, by and between the Lessee and Pass Through Trustee, together with
the Basic Pass Through Trust Agreement.

      "PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under the Pass Through Trust Agreement.

      "PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreement, the Note Purchase Agreement, the Deposit
Agreement, the Escrow Agreement and the Intercreditor Agreement.

      "PAYING AGENT" means Wilmington Trust Company, as Paying Agent under the
Escrow Agreement.

      "PAYMENT DATE" means each January 2 and July 2 during the Term, commencing
with July 2, 2004.

<PAGE>

      "PAYMENT DEFAULT" means the failure by Lessee to pay any amount of Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.

      "PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.

      "PAYMENT PERIOD" means each of the consecutive semiannual periods during
the Term ending on a Payment Date, the first such period commencing on and
including the Closing Date and being longer than semiannual.

      "PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier, (ii)
any person approved in writing by Lessor or (iii) any U.S. Air Carrier.

      "PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.

      "PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.

      "PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the Laws of the
country of such Government Entity.

      "PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution, partnership, limited liability company or corporation
(other than, without Lessee's consent, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or Affiliate of any of the foregoing), in
each case with a combined capital and surplus or net worth of at least
$25,000,000.

      "PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.

      "PERMITTED SUBLEASE" means a sublease or sub-sublease permitted under
Section 7.2.7 of the Lease.

      "PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.

      "PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, limited liability companies, government agencies, committees,
departments, authorities and other bodies, corporate or incorporate, whether
having distinct legal status or not, or any member of any of the same.

      "PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.

      "PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.

      "PREMIUM TERMINATION DATE" means January 13, 2012.

<PAGE>

      "PTT PERCENTAGE" means, with respect to the Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.

      "PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.

      "PURCHASE AGREEMENT ASSIGNMENT" means the Amended and Restated Purchase
Agreement Assignment [TN], dated as of even date with the Participation
Agreement, among Express, Seller (if Seller is not Airframe Manufacturer) and
Owner Trustee.

      "PURCHASE DATE" means the last Business Day of the Base Lease Term or any
Renewal Lease Term, as specified in any Purchase Notice.

      "PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.

      "QIB" is defined in Section 2.08 of the Trust Indenture.

      "REMOVABLE PARTS" is defined in Section D of Annex C to the Lease.

      "RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.

      "RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.

      "RENEWAL RENT" for the Aircraft means the rent payable therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.

      "RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental
Rent.

      "REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe
pursuant to Section 10 of the Lease.

      "REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant to
the Lease.

      "RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the
Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.

      "SCHEDULED CLOSING DATE" means the expected Closing Date notified to
Lessee, each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer
pursuant to Section 4.1 of the Participation Agreement, which expected Closing
Date shall be a Business Day not later than the Commitment Termination Date.

      "SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.

<PAGE>

      "SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Renewal Lease Term, the second anniversary of the Scheduled Expiration Date, and
in the case of the second Renewal Lease Term, the fourth anniversary of the
Scheduled Expiration Date.

      "SEC" means the Securities and Exchange Commission of the United States,
or any Government Entity succeeding to the functions of such Securities and
Exchange Commission.

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

      "SECTION 1110 EVENT" means the institution of reorganization proceedings
with respect to Lessee under Chapter 11 of the Bankruptcy Code and thereafter so
long as the Section 1110 Period continues.

      "SECTION 1110 PERIOD" means the continuous period of 60 days specified in
Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period, if any,
agreed to under Section 1110(b) of the Bankruptcy Code), plus an additional
period, if any, commencing with the trustee or debtor-in-possession in such
proceeding agreeing to perform its obligations under the Lease with the approval
of the applicable court and continuing until such time as such trustee or
debtor-in-possession ceases to fully perform its obligations thereunder with the
result that the period during which the Owner Trustee is prohibited from
repossessing the Aircraft under the Lease comes to an end.

      "SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.

      "SECURITIES ACT" means the Securities Act of 1933, as amended.

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

      "SELLER" is defined in Schedule 3 to the Participation Agreement.

      "SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.

      "SLV RATE" is defined in Schedule 1 to the Lease.

      "STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during
the Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.3 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost, (b) during any Renewal Lease Term, the amount determined pursuant
to Section 17.2.3 of the Lease and (c) during any extension of the Term pursuant
to the proviso to the definition of "Term", the Stipulated Loss Value
immediately prior to the commencement of such extension. Notwithstanding
anything to the contrary in any Operative Agreement, Stipulated Loss Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.

<PAGE>

      "STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.

      "SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.

      "SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facility and the Intercreditor Agreement.

      "SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) to the extent not payable (whether or not in fact paid)
under Section 6(a) of the Note Purchase Agreement (as originally in effect or
amended with the consent of the Owner Participant), an amount or amounts equal
to the fees payable to the Liquidity Provider under Section 2.03 of the
Liquidity Facility and the related Fee Letter (as defined in the Intercreditor
Agreement) multiplied by a fraction the numerator of which shall be the then
outstanding aggregate principal amount of the Equipment Notes and the
denominator of which shall be the then outstanding aggregate principal amount of
all "Equipment Notes" (as defined in the Intercreditor Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07 of the Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iii) (x) the amount equal to interest on
any Non-Extension Advance (other than any Applied Non-Extension Advance) payable
under Section 3.07 of the Liquidity Facility minus Investment Earnings from such
Non-Extension Advance multiplied by (y) the fraction specified in the forgoing
clause (i); (iv) if any payment default shall have occurred and be continuing
with respect to interest on any Equipment Notes, (x) the excess, if any, of (1)
an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance or
Applied Non-Extension Advance payable under Section 3.07 of the Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by Owner Trustee on the overdue scheduled interest on the Equipment
Notes in respect of which such Unpaid Advance, Applied Downgrade Advance or
Applied Non-Extension Advance was made multiplied by (y) a fraction the
numerator of which shall be the then aggregate overdue amounts of interest on
the Equipment Notes (other than interest becoming due and payable solely as a
result of acceleration of any such Equipment Notes) and the denominator of which
shall be the then aggregate overdue amounts of interest on all "Equipment Notes"
(as defined in the Intercreditor Agreement) (other than interest becoming due
and payable solely as a result of acceleration of any such "Equipment Notes");
and (v) Lessee's pro rata share of any other amounts owed to the Liquidity
Provider by the Subordination Agent as borrower under the Liquidity Facility
(other than amounts due as repayment of advances thereunder or as interest on
such advances), except to the extent payable pursuant to clause (i), (ii), (iii)
or (iv) above, in each case, to the extent not paid when due by the Airframe
Manufacturer pursuant to the Fee Letter (as defined in the Intercreditor

<PAGE>

Agreement), (c) Lessee's pro rata share of all compensation and reimbursement of
expenses, disbursements and advances payable by Lessee under the Pass Through
Trust Agreement, (d) Lessee's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement, (e) Lessee's pro rata share of any
amount payable under Section 9.1 (and, if attributable thereto, Section 9.5) of
the Participation Agreement to any Pass Through Indemnitee to the extent such
amount relates to, results from or arises out of or in connection with (i) the
Pass Through Agreements or the enforcement of any of the terms of any of the
Pass Through Agreements, (ii) the offer, sale, or delivery of the Pass Through
Certificates or any interest therein or represented thereby or (iii) any breach
of or failure to perform or observe, or any other noncompliance with, any
covenant or agreement or other obligation to be performed by Lessee under any
Pass Through Agreement or the falsity of any representation or warranty of
Lessee in any Pass Through Agreement and (f) in the event Lessee requests any
amendment to any Operative Agreement or Pass Through Agreement, Lessee's pro
rata share of all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustee under the Escrow
Agreement. As used herein, "Lessee's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in each of
the Operative Indentures). For purposes of this definition, the terms "Applied
Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral Account",
"Downgrade Advance", "Final Advance", "Investment Earnings", "Non-Extension
Advance" and "Unpaid Advance" shall have the meanings specified in the Liquidity
Facility.

      "TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.

      "TAX INDEMNITEE" means (a) Wells Fargo and Owner Trustee, (b) WTC and
Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.

      "TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as of
even date with the Participation Agreement, between Lessee and Owner
Participant.

      "TAXES" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.

<PAGE>

      "TAXING AUTHORITY" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.

      "TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.

      "TERMINATION AGREEMENTS" means, collectively, the termination agreement
with respect to the Existing Lease and the termination agreement with respect to
the Existing Sublease, in each case delivered pursuant to Section 5.1.2(xiii) of
the Participation Agreement.

      "TERMINATION DATE" means any Payment Date on which the Lease shall
terminate in accordance with Section 9 of the Lease.

      "TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.3 of the
Lease) opposite the applicable Payment Date by (b) Lessor's Cost.
Notwithstanding anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date of payment
thereof (assuming timely payment of the Equipment Notes prior to such date), the
aggregate unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date.

      "THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.

      "TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements to occur on the Closing Date.

      "TRANSACTION EXPENSES" means (a) all costs and expenses incurred by Owner
Participant, the Pass Through Trustee, the Subordination Agent, Owner Trustee
and Mortgagee in connection with the preparation, execution and delivery of the
Operative Agreements (including, without limitation, the reasonable fees and
expenses of counsel for such parties), (b) all costs and expenses for the
recording or filing of any documents, certificates or instruments in accordance
with any Operative Agreement, including, without limitation, the FAA Filed
Documents and the Financing Statements, (c) the OP Pro Rata Share of (i) the
placement fees and expenses attributable to the offering and sale of the Pass
Through Certificates and (ii) all costs and expenses incurred by the Pass
Through Trustee, the Subordination Agent, Owner Trustee and Mortgagee in
connection with the preparation, execution and delivery of the Pass Through
Agreements (including, without limitation, the reasonable fees and expenses of

<PAGE>

counsel for such parties), (d) the reasonable fees and disbursements of special
counsel in Oklahoma City, Oklahoma, in connection with the Closing, and (e) all
initial and ongoing fees, disbursements and expenses of Owner Trustee and
Mortgagee. For purposes of the foregoing, "OP PRO RATA SHARE" shall mean a
fraction, the numerator of which shall be one and the denominator of which shall
be the number of aircraft financed under the Note Purchase Agreement.

      "TRANSFER" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.

      "TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.

      "TRUST" means the trust created by the Trust Agreement.

      "TRUST AGREEMENT" means the Amended and Restated Trust Agreement [TN],
dated as of even date with the Participation Agreement, between Owner
Participant and Owner Trustee.

      "TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 9 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.

      "TRUST INDENTURE" means the Trust Indenture and Mortgage [TN], dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.

      "TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.

      "TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage [TN]
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.

      "TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates, (ii) the issuance
of the Pass Through Certificates representing fractional undivided interests in
such trust is authorized and (iii) the terms of the Pass Through Certificates
are established.

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

<PAGE>

      "UNITED STATES" or "U.S." means the United States of America; PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.

      "U.S. AIR CARRIER" means any Person holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
title 49 of the United States Code for aircraft capable of carrying 10 or more
individuals or 6000 pounds or more of cargo, and as to which there is in force
an air carrier operating certificate issued pursuant to Part 121 of the FAA
Regulations, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or in the
absence thereof.

      "U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.

      "U.S. GOVERNMENT" means the federal government of the United States, or
any instrumentality or agency thereof the obligations of which are guaranteed by
the full faith and credit of the federal government of the United States.

      "WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.

      "WELLS FARGO" means Wells Fargo Bank Northwest, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.

      "WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.

      "WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.

<PAGE>

                                              ---------------------------------
                                             |           SCHEDULE 1            |
                                             |               TO                |
                                             | Participation Agreement [TN]    |
                                              ---------------------------------

                               ACCOUNTS; ADDRESSES

                         ACCOUNT FOR PAYMENTS           ADDRESS FOR NOTICES

CONTINENTAL        JPMorgan Chase                    Continental Airlines, Inc.
AIRLINES, INC.     New York, New York 10081          1600 Smith Street
                   Account No.: 910-2-499291         Dept. HQS-FN
                   ABA#: 021-000021                  Houston, Texas 77002
                   Attention: Darlene Cafferata      Attention:  Treasurer
                   Voice: 312-807-4084               Facsimile: (713) 324-2447
                   Facsimile: 312-807-4501
                   Reference: Continental
                    Lease [TN]

OWNER PARTICIPANT  Banco do Brasil S.A.              Refine, Inc.
                   New York Branch                   c/o CT Corporation
                   ABA# 026003557                    1209 Orange St.
                   Account No.: 75592-011            Wilmington, DE  19801
                   Reference: Continental Lease [TN] Facsimile: 202-298-7570

WELLS FARGO BANK   Wells Fargo Bank Northwest,       Wells Fargo Bank Northwest,
NORTHWEST,         National Association              National Association
NATIONAL           ABA: 121000248                    MAC: U1228-120
ASSOCIATION        Cr: Corporate Trust Services      299 South Main Street,
                   A/C: 051-09221-15                 12th Floor
                   Ref: Continental Lease [TN]       Salt Lake City, Utah  84111
                                                     Attention: Corporate Trust
                                                     Services
                                                     Facsimile: (801) 246-5053

WILMINGTON TRUST   Wilmington Trust Company          Wilmington Trust Company
COMPANY, AS        Wilmington, Delaware  19890       Rodney Square North
MORTGAGEE          Account No.: [AC]                 1100 North Market Street
                   ABA #: 031-100092                 Wilmington, Delaware  19890
                   Attention: Corporate Capital      Attention: Corporate Trust
                   Market Services/                    Administration
                     Monica M. Henry                 Facsimile: (302) 636-4141
                   Reference: Continental
                     Lease [TN]

WILMINGTON TRUST   Wilmington Trust Company          Wilmington Trust Company
COMPANY, AS        Wilmington, Delaware  19890       Rodney Square North
SUBORDINATION      Account No.: 64060-0              1100 North Market Street
AGENT              ABA #: 031-100092                 Wilmington, Delaware  19890
                   Attention: Corporate Capital      Attention: Corporate Trust
                   Market Services/                    Administration
                     Monica M. Henry                 Facsimile: (302) 636-4141
                   Reference: Continental
                     Lease [TN]

WILMINGTON TRUST   Wilmington Trust Company          Wilmington Trust Company
COMPANY, AS PASS   Wilmington, Delaware  19890       Rodney Square North
THROUGH TRUSTEE    Account No.: 64021-0              1100 North Market Street
FOR THE 2003-ERJ1  ABA #: 031-100092                 Wilmington, Delaware  19890
PASS THROUGH TRUST Attention: Corporate Capital      Attention: Corporate Trust
                   Market Services/                   Administration
                     Monica M. Henry                 Facsimile: (302) 636-4141
                   Reference: Continental
                     Lease [TN]

EMBRAER-EMPRESA    Banco do Brasil S.A.              EMBRAER-Empresa
BRASILEIRA DE      Av. Nelson D'Avila, 149           Brasileira de Aeronautica
AERONAUTICA S.A.   12245-030, Sao Jose dos           S.A.
                   Campos-SP          Brazil         Av. Brigadeiro Faria
                   Swift Code: BRASBRRJSJC           Lima, 2170
                   Account No.: 9405-6               12227-901 Sao Jose dos
                   Reference: COEX Lease [TN]            Campos -SP Brazil
                                                     Attention: General Counsel
                                                     Facsimile: (55-123)927-1257

<PAGE>
                                              ---------------------------------
                                             |           SCHEDULE 2            |
                                             |               TO                |
                                             | Participation Agreement [TN]    |
                                              ---------------------------------

                                   COMMITMENTS

         PARTICIPANT         PERCENTAGE OF LESSOR'S         DOLLAR AMOUNT
         -----------                  COST                  -------------
                             ----------------------

PASS THROUGH TRUSTEE           LOAN PARTICIPANT'S
                                PTT PERCENTAGE

2003-ERJ1                          [PTT]%                        $[DA]

TOTAL                                                            $[TDA]

<PAGE>

                                              ---------------------------------
                                             |           SCHEDULE 3            |
                                             |               TO                |
                                             | Participation Agreement [TN]    |
                                              ---------------------------------

                                  CERTAIN TERMS

             DEFINED TERM                       DEFINITION

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]------------------------------------------------------------------
      |    CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 2A, 3    |
      |   AND 4 OF THIS LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON   |
      |     DISSEMINATION SET FORTH IN SECTION 8 OF THE PARTICIPATION    |
      |                   AGREEMENT (AS DEFINED HEREIN)                  |
       ------------------------------------------------------------------

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

                              LEASE AGREEMENT [TN]

                                Dated as of [ID]

                                     Between

                WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

                         Not in its Individual Capacity,
                      except as expressly provided herein,
                          but solely as Owner Trustee,

                                     Lessor

                                       and

                           CONTINENTAL AIRLINES, INC.,

                                     Lessee
            --------------------------------------------------------

                      One Embraer Model EMB-145 XR Aircraft
                Bearing United States Registration No. N[REG] and
                Bearing Manufacturer's Serial No. [MSN] with two
                            Allison AE3007A1E Engines
          Bearing Engine Manufacturer's Serial Nos. CAE[E1] and CAE[E2]

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

The right, title and interest of Lessor in and to, among other things, this
Lease Agreement has been assigned to and is subject to a security interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage [TN], dated as of [ID], for the benefit
of the holders of the Equipment Notes referred to in such Trust Indenture, all
to the extent provided in such Trust Indenture. This Lease Agreement has been
executed in multiple counterparts; to the extent, if any, that this Lease
Agreement constitutes chattel paper (as defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction), no security interest in Lessor's
right, title and interest in and to this Lease Agreement may be perfected
through the delivery or possession of any counterpart of this Lease Agreement
other than the counterpart of this Lease Agreement that contains the original
receipt executed by Wilmington Trust Company, as Mortgagee.

<PAGE>
                                    CONTENTS

SECTION 1.  DEFINITIONS AND CONSTRUCTION...............................1

SECTION 2.  DELIVERY AND ACCEPTANCE....................................1
            2.1  Delivery and Lease of Aircraft........................1
            2.2  Acceptance by Lessee..................................1

SECTION 3.  TERM AND RENT..............................................2
            3.1  Term..................................................2
            3.2  Rent..................................................2
            3.3  Payments..............................................4

SECTION 4.  DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION
            1110 MATTERS...............................................4
            4.1  Disclaimer............................................4
            4.2  Certain Agreements of Lessor..........................5
            4.3  Quiet Enjoyment.......................................5
            4.4  Investment of Funds Held as Security..................5
            4.5  Title Transfers by Lessor.............................6
            4.6  Lessor's Interest in Certain Engines..................6
            4.7  Lease For U.S. Federal Income Tax Law Purposes;
                  Section 1110 of Bankruptcy Code......................7

SECTION 5.  RETURN OF AIRCRAFT.........................................7
            5.1  Compliance with Annex B...............................7
            5.2  Storage and Related Matters...........................7
            5.3  Return of Other Engines...............................7

SECTION 6.  LIENS......................................................8

SECTION 7.  REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND
            RECORDS....................................................8
            7.1  Registration and Operation............................8
            7.2  Possession...........................................10
            7.3  Certain Limitations on Subleasing or Other
                  Relinquishment of Possession........................13

SECTION 8.  MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
            ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
            LESSEE COVENANTS..........................................14
            8.1  Maintenance; Replacement and Pooling of Parts;
                  Alterations, Modifications and Additions............14
            8.2  Information, Certificates, Notices and Reports.......14

SECTION 9.  VOLUNTARY TERMINATION UPON OBSOLESCENCE...................15
            9.1  Right of Termination.................................15

<PAGE>

            9.2  Election by Lessor to Sell...........................16
            9.3  Retention of Aircraft by Lessor......................18

SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................19
            10.1  Event of Loss With Respect to Aircraft..............19
            10.2  Event of Loss With Respect to an Engine.............20
            10.3  Conditions to any Replacement.......................21
            10.4  Conveyance to Lessee................................23
            10.5  Application of Payments.............................23
            10.6  Requisition of Aircraft for Use.....................24
            10.7  Requisition of an Engine for Use....................24
            10.8  Application of Payments.............................24
            10.9  Application of Payments During Existence of a
                  Lease Event of Default..............................24

SECTION 11. INSURANCE.................................................25
            11.1  Lessee's Obligation to Insure.......................25
            11.2  Insurance for Own Account...........................25
            11.3  Indemnification by Government in Lieu of
                   Insurance..........................................25
            11.4  Application of Insurance Proceeds...................25
            11.5  Application of Payments During Existence of
                   Default............................................26

SECTION 12. INSPECTION................................................26

SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............27
            13.1  In General..........................................27
            13.2  Merger of Lessee....................................27
            13.3  Assignment Security for Lessor's Obligations........28
            13.4  Successor Owner Trustee.............................28

SECTION 14. LEASE EVENTS OF DEFAULT...................................28
            14.1  Payments............................................29
            14.2  Insurance...........................................29
            14.3  Other Covenants.....................................29
            14.4  Representations and Warranties......................29
            14.5  Bankruptcy and Insolvency...........................29

SECTION 15. REMEDIES AND WAIVERS......................................30
            15.1  Remedies............................................30
            15.2  Limitations Under CRAF..............................32
            15.3  Right to Perform for Lessee.........................33
            15.4  Determination of Fair Market Sales Value............33
            15.5  Remedies Cumulative.................................33

<PAGE>

SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........34

SECTION 17. RENEWAL AND PURCHASE OPTIONS..............................34
            17.1  Notices Generally...................................34
            17.2  Renewal Options.....................................35
            17.3  Purchase Option.....................................36
            17.4  Appraisals..........................................37

SECTION 18. MISCELLANEOUS.............................................38
            18.1  Amendments..........................................38
            18.2  Severability........................................38
            18.3  Third-Party Beneficiary.............................38
            18.4  Reproduction of Documents...........................38
            18.5  Counterparts........................................39
            18.6  Notices.............................................39
            18.7  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE....39
            18.8  No Waiver...........................................40
            18.9  Entire Agreement....................................40

ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A        Definitions
ANNEX B        Return Conditions
ANNEX C        Maintenance
ANNEX D        Insurance
EXHIBIT A      Form of Lease Supplement
EXHIBIT B      Form of Return Acceptance Supplement
SCHEDULE 1     Certain Terms
SCHEDULE 2     Basic Rent
SCHEDULE 2A    Allocation Schedule
SCHEDULE 3     Stipulated Loss Value
SCHEDULE 4     Termination Value
SCHEDULE 5     Permitted Countries
SCHEDULE 6     Placards

<PAGE>

                              LEASE AGREEMENT [TN]

            LEASE AGREEMENT [TN], dated as of [ID] (this "Agreement" or
"Lease"), between (a) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee (this and all other
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b)
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee").

                                    RECITALS

            A. Lessor and Lessee are parties to the Participation Agreement,
pursuant to which, among other things, Lessor and Lessee have agreed to enter
into this Agreement.

            B. Pursuant to the Trust Agreement, Owner Participant has authorized
Lessor to enter into this Agreement.

            NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements contained herein and for other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.      DEFINITIONS AND CONSTRUCTION

            Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in Annex A.

SECTION 2.      DELIVERY AND ACCEPTANCE

      2.1      DELIVERY AND LEASE OF AIRCRAFT

            Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commencing immediately upon
acquisition of the Aircraft by Lessor pursuant to the Participation Agreement.

      2.2      ACCEPTANCE BY LESSEE

            By executing and delivering Lease Supplement No. 1, Lessee confirms
to Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
for all purposes of this Agreement.

<PAGE>

SECTION 3.      TERM AND RENT

      3.1      TERM

            The Aircraft shall be leased hereunder for the Term, unless this
Agreement or the leasing of the Aircraft is earlier terminated in accordance
with any provision of this Agreement. Lessee shall have the option to renew the
leasing of the Aircraft hereunder pursuant to, and subject to the terms and
conditions of, Section 17, for the Renewal Lease Term.

      3.2      RENT

               3.2.1       BASIC RENT

            (a) During the Base Lease Term, Lessee shall pay to Lessor, on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Basic Rent in the amount specified in the column with the heading "Total
Basic Rent" in Schedule 2 for such Payment Date. For the avoidance of doubt, and
notwithstanding anything to the contrary herein, the parties hereto agree that,
irrespective of Lessee's payment obligations as shown on Schedule 2 hereto,
Lessee's liability on account of the use of the Aircraft shall be that stated in
the column with the heading "Basic Rent Allocation Amount" on Schedule 2A
hereto.

            (b) Notwithstanding anything to the contrary in any Operative
Agreement (including any "Basic Rent Allocation Amount" referred to on Schedule
2A), the amount of the payment of Basic Rent due and payable on each Payment
Date shall be at least sufficient to pay in full, as of such Payment Date
(assuming timely payment of the Equipment Notes prior to such Date), the
aggregate principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens attributable to Lessor or Owner Participant, (ii) any
modification of the payment terms of the Equipment Notes, or (iii) the
acceleration of any Equipment Note or Equipment Notes due solely to the
occurrence of an Indenture Event of Default that does not constitute a Lease
Event of Default.

               3.2.2       SUPPLEMENTAL RENT

            Lessee shall pay to Lessor, or to whomever shall be entitled
thereto, any and all Supplemental Rent when and as the same shall become due and
owing. Lessee will also pay to Lessor, or to whomever shall be entitled thereto
as Supplemental Rent, to the extent permitted by applicable Law, interest at the
Payment Due Rate on any part of any amount of Rent (including, without
limitation, Supplemental Rent) not paid by 12:30 p.m., New York time, on the
date when due (so long as, in the case of any Person not a party to the
Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to, but excluding, the date of payment in
full.

<PAGE>

               3.2.3       ADJUSTMENTS TO STIPULATED LOSS VALUES AND
                           TERMINATION VALUES

            (a) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, the Stipulated Loss Value
percentages set forth in Schedule 3 and the Termination Value percentages set
forth in Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss or Foreign Tax Credit
Loss (as each such term is defined in the Tax Indemnity Agreement) that is the
subject of such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Stipulated Loss Value percentages and the
Termination Value percentages on the Closing Date, in order to maintain the
Owner Participant's Net Economic Return.

            (b) All adjustments pursuant to Section 3.2.3(a) shall be made as
promptly as practicable after either Owner Participant or Lessee gives notice to
the other that an event has occurred that requires an adjustment. Owner
Participant and Lessee shall give prompt notice to the other of any event
requiring an adjustment. Any recalculation of the percentages of Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with Section 3.2.3(c), on
the basis of the same methodology and assumptions used by Owner Participant in
determining the percentages of Stipulated Loss Value and Termination Value as of
the Closing Date, except as such assumptions have been modified to reflect the
events giving rise to adjustments hereunder. Promptly after an adjustment is
made hereunder, Owner Participant shall deliver to Lessee a description of such
adjustment, setting forth in reasonable detail the calculation thereof. All
adjustments required pursuant to Section 3.2.3(a) shall be set forth in a Lease
Supplement or in an amendment to this Lease, and, promptly after execution
thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee.

            (c) If Lessee believes that any calculations by Owner Participant
pursuant to Section 3.2.3(b) are in error, and if, after consultation, Lessee
and Owner Participant are unable to agree on an adjustment, then a nationally
recognized firm of accountants selected by Lessee and reasonably satisfactory to
Owner Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.3(b) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final absent manifest
error. Lessee will pay the reasonable costs and expenses of such further
verification by such accountants, provided that if it results in a decrease in
the present value (discounted at the Debt Rate) of any Stipulated Loss Value or
Termination Value by ten or more basis points from such Stipulated Loss Value or
Termination Value as recalculated by the Owner Participant, then the Owner
Participant will pay such costs and expenses.

<PAGE>

      3.3      PAYMENTS

            (a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.

            (b) Except as otherwise expressly provided herein, whenever any
payment of Rent shall be due on a day that is not a Business Day, such payment
shall be made on the next day that is a Business Day, and, if such payment is
made on such next Business Day, no interest shall accrue on the amount of such
payment during such extension.

            (c) So long as Lessee has not received written notice from the
Mortgagee that the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby irrevocably directs, and Lessee agrees, that all
payments of Rent and all other amounts payable by Lessee hereunder, other than
Excluded Payments, shall be paid directly to Mortgagee on behalf of Lessor by
wire transfer of immediately available Dollars to the account of Mortgagee
specified in Schedule 1 to the Participation Agreement, or to such other account
in the United States as Mortgagee may specify by written notice to Lessor and
Lessee at least 10 Business Days prior to the date such payment of Rent is due.

            (d) Excluded Payments shall be paid by wire transfer of immediately
available Dollars to the account of the person specified in the Participation
Agreement or, if not so specified, to such account in the United States as may
be specified by such person by written notice to Lessor and Lessee from time to
time at least 10 Business Days prior to the date such payment is required to be
made.

            (e) All computations of interest under this Agreement shall be made
on the basis of a year of 360 days comprised of twelve 30-day months.

SECTION 4.      DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS

      4.1      DISCLAIMER

            LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS."
LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR,
MORTGAGEE AND ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND
MANUFACTURER THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT
MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:

<PAGE>

      (v)   THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
            WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
            PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

      (w)   THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
            AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

      (x)   THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
            ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;

      (y)   THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
            COPYRIGHT OR THE LIKE; OR

      (z)   THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
            OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
            WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.

      4.2      CERTAIN AGREEMENTS OF LESSOR

            Unless a Lease Event of Default shall have occurred and be
continuing, Lessor agrees to make available to Lessee such rights as Lessor may
have under any warranty with respect to the Aircraft made, or made available, by
Airframe Manufacturer or any of its subcontractors or suppliers, as the case may
be, pursuant to and in accordance with the terms of the Purchase Agreement
Assignment.

      4.3      QUIET ENJOYMENT

            So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term. The foregoing, however, shall not be construed or deemed to
modify or condition in any respect the obligations of the Lessee pursuant to
Section 16, which obligations are absolute and unconditional.

      4.4      INVESTMENT OF FUNDS HELD AS SECURITY

               4.4.1       INVESTMENT

            Any moneys required to be paid to or retained by Lessor that are
required to be paid to Lessee or applied as provided herein shall, until paid to
Lessee as provided herein or applied as provided herein, be invested by Lessor
from time to time as directed in writing by Lessee (or, if Lessee fails to so
direct, by or as directed by Lessor in its sole discretion) and at the expense
and risk of Lessee in Cash Equivalents so long as such Cash Equivalents
specified by Lessee or Lessor, as the case may be, can be acquired by Lessor
using its best efforts; provided, that so long as the Lien of the Trust
Indenture shall not have been discharged, such moneys shall be invested and held
by Mortgagee, as assignee of Lessor, in accordance with this Lease and upon

<PAGE>

discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor
to be held and invested in accordance with this Section.

               4.4.2       PAYMENT OF GAIN OR LOSS

            Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held and
applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.

               4.4.3       LIMITATION OF LIABILITY

            All investments under this Section 4.4 shall be at the expense and
risk of Lessee, and Lessor and Mortgagee shall not be liable for any loss
resulting from any investment made under this Section 4.4 other than by reason
of its willful misconduct or gross negligence. Any such investment may be sold
(without regard to its maturity) by Lessor without instructions whenever such
sale is necessary to make a distribution required by this Lease.

      4.5      TITLE TRANSFERS BY LESSOR

            If Lessor shall be required to transfer title to the Aircraft,
Airframe or any Engine to Lessee or any other person pursuant to this Lease,
then (a) Lessor shall (1) transfer to Lessee or such other person, as the case
may be, all of Lessor's right, title and interest in and to the Aircraft,
Airframe or such Engine, as the case may be, free and clear of all Lessor Liens
but otherwise on an "as-is", "where is" basis, (2) so long as the Lien of the
Trust Indenture has not been discharged, comply with the Trust Indenture
relating to the release of the Aircraft, Airframe or such Engine, (3) assign to
Lessee or such other person, as the case may be, if and to the extent permitted
under the Purchase Agreement, all warranties of Airframe Manufacturer with
respect to the Aircraft, Airframe or such Engine, and (4) assign to Lessee or
such other person, as the case may be, if and to the extent permitted, all
claims, if any, for damage to the Aircraft, Airframe or such Engine, in each
case free of Lessor Liens, and without recourse or warranty of any kind
whatsoever (except as to the transfer described in clause (1) above and as to
the absence of such Lessor Liens, as aforesaid), and (b) Lessor shall promptly
deliver to Lessee or such other person, as the case may be, a bill of sale and
agreements of assignment, evidencing such transfer and assignment, and such
other instruments of transfer, all in form and substance reasonably satisfactory
to Lessee (or such other person, as the case may be), as Lessee (or such other
person, as the case may be) may reasonably request.

      4.6      LESSOR'S INTEREST IN CERTAIN ENGINES

            Lessor hereby agrees for the benefit of each lessor, conditional
seller, indenture trustee or secured party of any engine leased to, or purchased
by, Lessee or any Permitted Sublessee subject to a lease, conditional sale,
trust indenture or other security agreement that Lessor, its successors and
assigns will not acquire or claim, as against such lessor, conditional seller,

<PAGE>

indenture trustee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.

      4.7      LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110
               OF BANKRUPTCY CODE

            (a) Lessee and Lessor agree that this Lease is, and shall be treated
as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe,
Engines and Parts.

            (b) It is the intention of each of Lessee and Lessor that Lessor
(and Mortgagee as assignee of Lessor under the Trust Indenture) shall be
entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts and to enforce any of
its other rights or remedies as provided in this Lease.

SECTION 5.      RETURN OF AIRCRAFT

      5.1      COMPLIANCE WITH ANNEX B

            Lessee shall comply with each of the provisions of Annex B hereto,
which provisions are hereby incorporated by this reference as if set forth in
full herein.

      5.2      STORAGE AND RELATED MATTERS

            If Lessor gives written notice to Lessee not less than 60 days nor
more than 120 days prior to the end of the Term requesting storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with outdoor parking facilities for the Aircraft for a period up
to 30 days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 120 day period commencing upon expiration of such initial period,
at such storage facility in the 48 contiguous states of the United States on
Lessee's route system for Similar Aircraft as Lessor may select as the site for
such return of the Aircraft. Such storage shall be at Lessor's risk, and Lessor
shall pay all applicable storage fees, except that Lessee shall pay the parking
fees for the initial 30 day storage period; PROVIDED that Lessee's obligation to
provide parking shall be subject to Lessor entering into an agreement prior to
the commencement of the storage period with the storage facility providing,
among other things, that Lessor shall bear all maintenance charges and other
costs (other than parking fees for the initial 30 day period) incurred.

      5.3      RETURN OF OTHER ENGINES

            In the event that any Engine owned by Lessor shall not be installed
on the Airframe at the time of return hereunder, Lessee shall be required to
return the Airframe hereunder with a Replacement Engine meeting the requirements
of, and in accordance with, Section 10 hereof and Annex B hereto. Thereupon,

<PAGE>

Lessor will transfer to Lessee the Engine constituting part of such Aircraft but
not installed on such Airframe at the time of the return of the Airframe.

SECTION 6.      LIENS

            Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part, title to any of the foregoing or any interest of Lessee
therein, or the Lessee's rights in and to this Lease or any Permitted Sublease,
except (a) the respective rights of Lessor, Mortgagee, the Participants or
Lessee under the Operative Agreements, or of any Permitted Sublessee under any
Permitted Sublease; (b) Lessor Liens with respect to any Participant, Lessor or
Mortgagee; (c) the rights of others under agreements or arrangements to the
extent permitted by the terms of Sections 7.2 and 7.3 or Annex C; (d) Liens for
Taxes of Lessee (and its U.S. federal tax law consolidated group), or Liens for
Taxes of any Tax Indemnitee (and its U.S. federal tax law consolidated group)
for which Lessee is obligated to indemnify such Tax Indemnitee under any of the
Lessee Operative Agreements, in any such case either not yet due or being
contested in good faith by appropriate proceedings so long as such Liens and
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Aircraft, the Airframe, any Engine or any Part thereof; (e)
materialmen's, mechanics', workers', repairers', employees' or other like Liens
arising in the ordinary course of business for amounts the payment of which is
either not yet delinquent for more than 35 days or is being contested in good
faith by appropriate proceedings, so long as such Liens and such proceedings do
not involve any material danger of the sale, forfeiture or loss of the Aircraft,
the Airframe, any Engine or any Part thereof; and (f) Liens arising out of any
judgment or award against Lessee (or against any Permitted Sublessee), so long
as such judgment shall, within 30 days after the entry thereof, have been
discharged or vacated, or execution thereof stayed pending appeal or shall have
been discharged, vacated or reversed within 30 days after the expiration of such
stay, and so long as during any such 30-day period there is not, or any such
judgment or award does not involve, any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe or any Engine. Lessee shall promptly (and in
any case, by the end of the Term), at its own expense, take (or cause to be
taken) such action as may be necessary to duly discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part during the Term.

SECTION 7.      REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS

      7.1      REGISTRATION AND OPERATION

               7.1.1       REGISTRATION AND RECORDATION

            Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to

<PAGE>

comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute any and all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent that such perfection or priority
cannot be maintained as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).

               7.1.2       REREGISTRATION

            So long as no Lease Event of Default shall have occurred and be
continuing, Lessee may, by written notice to Lessor, request to change the
country of registration of the Aircraft. Any such change in registration shall
be effected only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.

               7.1.3       MARKINGS

            If permitted by applicable Law, on or reasonably promptly after the
Closing, Lessee will cause to be affixed to, and maintained in, the cockpit of
the Airframe and on each Engine, in each case, in a clearly visible location (it
being understood that the location of such placards, as identified to the Owner
Participant prior to the Closing, shall be deemed to be in compliance with this
requirement), a placard of a reasonable size and shape bearing the legend, in
English, set forth in Schedule 6. Such placards may be removed temporarily, if
necessary, in the course of maintenance of the Airframe or Engines. If any such
placard is damaged or becomes illegible, Lessee shall promptly replace it with a
placard complying with the requirements of this Section 7.1.3.

               7.1.4       COMPLIANCE WITH LAWS

            Lessee shall not, and shall not allow any other person to, operate,
use, maintain, service, repair or overhaul the Aircraft (a) in violation of any
Law binding on or applicable to the Aircraft, the Airframe or any Engine, or (b)
in violation of any airworthiness certificate, license or registration of any
Government Entity relating to Lessee or the Aircraft, the Airframe or any
Engine, except (1) immaterial or non-recurring violations with respect to which
corrective measures are taken promptly by Lessee or a Permitted Sublessee, as
the case may be, upon discovery thereof, and (2) to the extent Lessee or any
Permitted Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner that does not involve a material danger of the
sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine, any risk
of criminal liability or a greater than de minimis risk of material civil
penalties being imposed against Lessor, Mortgagee or any Participant or impair
the Lien of the Trust Indenture.

               7.1.5       OPERATION

            Lessee agrees not to operate, use or locate the Aircraft, the
Airframe or any Engine, or allow the Aircraft, the Airframe or any Engine to be
operated, used or located (a) in any area excluded from coverage by any
insurance required by the terms of Section 11, except in the case of a

<PAGE>

requisition by the U.S. Government where Lessee obtains an indemnity in lieu of
such insurance from the U.S. Government, or insurance from the U.S. Government,
covering such area, in accordance with Section 11.3 or (b) in any recognized
area of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of Section 11 (including, without limitation,
Section 11.3), unless in any case referred to in this Section 7.1.5 the Aircraft
is only temporarily operated, used or located in such area as a result of an
emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstances, so long as Lessee
diligently and in good faith proceeds to remove the Aircraft from such area.

      7.2      POSSESSION

            Lessee will not, without the prior written consent of Lessor and
Owner Participant (which consent shall not be unreasonably withheld), sublease
or otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:

               7.2.1       INTERCHANGE AND POOLING

            Subject or permit any Permitted Sublessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in each
case customary in the commercial airline industry and entered into by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; PROVIDED, HOWEVER, that if Lessor's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with, Section
10.

               7.2.2       TESTING AND SERVICE

            Deliver or permit any Permitted Sublessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof
or to any third-party maintenance provider, for testing, service, repair,
maintenance or overhaul work on the Aircraft, Airframe, any Engine or any Part,
or, to the extent required or permitted by the terms of Annex C, for alterations
or modifications in or additions to the Aircraft, Airframe or any Engine or (ii)
to any Person for the purpose of transport to a Person referred to in the
preceding clause (i).

               7.2.3       TRANSFER TO U.S. GOVERNMENT

            Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Lessee shall promptly notify Lessor and Mortgagee in writing of any such
transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift

<PAGE>

Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF.

               7.2.4       INSTALLATION OF ENGINES ON OWNED AIRCRAFT

            Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.

               7.2.5       INSTALLATION OF ENGINES ON OTHER AIRFRAMES

            Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.

               7.2.6       INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

            So long as no Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, install or permit any Permitted
Sublessee to install an Engine on an airframe owned by Lessee or such Permitted
Sublessee, leased to Lessee or such Permitted Sublessee, or purchased by Lessee
or such Permitted Sublessee subject to a conditional sale or other security
agreement under circumstances where neither Section 7.2.4 or 7.2.5 is
applicable; PROVIDED, HOWEVER, that any such installation shall be deemed an
Event of Loss with respect to such Engine, and Lessee shall comply with Section
10.2 hereof in respect thereof.

               7.2.7       SUBLEASING

            With respect to the Aircraft, Airframe or any Engine, so long as no
Payment Default, Bankruptcy Default or Lease Event of Default has occurred and
is continuing, enter into a sublease with any Permitted Air Carrier, but only
if:

            (a) Lessee shall provide written notice to Lessor of Lessee's intent
to enter into a Permitted Sublease (except if the Permitted Sublessee is
Express) and of any permitted sub-sublease, such notice in the event of a
sublease to a U.S. Air Carrier to be given promptly after entering into any such
sublease or, in the case of a sublease to any other Permitted Air Carrier, 20
days in advance of entering into such sublease;

<PAGE>

            (b) At the time that Lessee enters into such Permitted Sublease or a
sublessee enters into a permitted sub-sublease, such Permitted Sublessee shall
not be subject to any bankruptcy, insolvency, liquidation, reorganization,
dissolution or similar proceeding, shall not be seeking any reorganization or
any readjustment of its debts and shall not be, or shall not have substantially
all of its property, in the possession of any liquidator, trustee, receiver or
similar person and, if such Permitted Sublessee is a Permitted Foreign Air
Carrier, the United States then maintains normal diplomatic relations with the
country in which such Permitted Sublessee has its principal executive offices;

            (c) Any such Permitted Sublease (including any permitted
sub-sublease) (i) shall include provisions for the maintenance, operation,
possession, inspection and insurance of the Aircraft that are the same in all
material respects as the applicable provisions of this Lease, (ii) shall provide
that, except if Express or any subsidiary of Lessee is the Permitted Sublessee,
such Permitted Sublessee may not further sublease or transfer its interests
(except transfers of the type permitted in Sections 7.2.1 through 7.2.6,
inclusive) in the Aircraft, Airframe or Engines, (iii) shall not extend beyond
the end of the Term and (iv) shall be expressly subject and subordinate to all
the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder;

            (d) In connection with a sublease (including any permitted
sub-sublease) to a Permitted Foreign Air Carrier, Lessee shall have furnished
Lessor and Mortgagee an opinion of counsel, reasonably satisfactory to Lessor
and Mortgagee, in the country of domicile of such Permitted Foreign Air Carrier,
that (i) the terms of such sublease are the legal, valid and binding obligations
of the parties thereto enforceable under the Laws of such jurisdiction, (ii) it
is not necessary for Owner Participant, Lessor or Mortgagee to register or
qualify to do business in such jurisdiction, if not already so registered or
qualified, as a result, in whole or in part, of the proposed sublease, (iii)
Lessor's title to, and Mortgagee's Lien in respect of, the Aircraft, Airframe
and Engines will be recognized in such jurisdiction, (iv) the Laws of such
jurisdiction of domicile require fair compensation by the government of such
jurisdiction, payable in a currency freely convertible into Dollars, for the
loss of title to the Aircraft, Airframe or Engines in the event of the
requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease), (v) the agreement of such Permitted Foreign Air
Carrier that its rights under the sublease are subject and subordinate to all
the terms of this Lease is enforceable against such Permitted Foreign Air
Carrier under applicable Law, and (vi) there is no tort liability of the owner
or Lessor of an aircraft not in possession thereof under the Laws of such
country (it being agreed that, in the event such latter opinion cannot be given
in a form satisfactory to the Owner Participant and Mortgagee, such opinion
shall be waived if insurance reasonably satisfactory to the Owner Participant
and Mortgagee is provided to cover such risk);

            (e) No such sublease shall be made to a "tax exempt entity" as
defined in Section 168(h)(2) of the Code (including any Permitted Foreign Air
Carrier) prior to the close of the Tax Attribute Period, unless Lessee prepays
on a lump-sum basis any liability due under the Tax Indemnity Agreement as a
result of such sublease based upon the assumption that such sublease were to
continue for the remainder of the term of such sublease, PROVIDED, that

<PAGE>

notwithstanding the foregoing, such sublease may be made without requiring such
prepayment during the taxable year in which the seventh anniversary of the
Closing Date occurs so long as the Aircraft is not "used predominantly outside
the United States" within the meaning of Section 168(g) of the Code during such
taxable year;

            (f) Lessee shall furnish to Lessor and Mortgagee evidence reasonably
satisfactory to Lessor and Mortgagee that the insurance required by Section 11
remains in effect at the time such sublease (including any permitted
sub-sublease) is entered into;

            (g) All necessary documents shall have been duly filed, registered
or recorded in such public offices as may be required fully to preserve the
title of Lessor, and the first priority perfected security interest (subject to
Permitted Liens) of Mortgagee, in the Aircraft, Airframe and Engines;

            (h) Except for the initial sublease to Express, Lessee shall
reimburse Lessor and Mortgagee for all of its reasonable out-of-pocket fees and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by Lessor and Mortgagee in connection with any such sublease;
and

            (i) For all purposes of this Section 7.2.7, the term "sublease"
shall be deemed to include interchange agreements with respect to the Aircraft
or Airframe.

      7.3      CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF
               POSSESSION

            Notwithstanding anything to the contrary in Section 7.2:

            (a) The rights of any person that receives possession of the
Aircraft in accordance with Section 7.2 shall be subject and subordinate to all
the terms of this Lease, and to Lessor's rights, powers and remedies hereunder,
including, without limitation (i) Lessor's right to repossess the Aircraft
pursuant to Section 15, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon the occurrence
of a Lease Event of Default and (iii) the right to require such person to
forthwith deliver the Aircraft, the Airframe and Engines subject to such
transfer upon the occurrence of a Lease Event of Default;

            (b) Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if such
transfer had not occurred, and no transfer of possession of the Aircraft, the
Airframe, any Engine or any Part shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative Agreement;

            (c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2;

            (d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and

<PAGE>

            (e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.

SECTION 8.      MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
                MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS

      8.1      MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
               MODIFICATIONS AND ADDITIONS

            At all times during the Term, Lessee shall comply with, or cause to
be complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.

      8.2      INFORMATION, CERTIFICATES, NOTICES AND REPORTS

               8.2.1       FINANCIAL INFORMATION

            Lessee will furnish to Lessor and Mortgagee:

            (a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee
as of the end of such quarter and related statements of income and cash flows
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
prepared in accordance with GAAP; PROVIDED THAT so long as Lessee is subject to
the reporting requirements of the Securities Exchange Act of 1934, a copy of
Lessee's report on Form 10-Q for such fiscal quarter (excluding exhibits) or an
e-mail notice that such report has been filed with the SEC and providing a
website address at which such report may be accessed will satisfy this paragraph
(a).

            (b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal year and
related statements of income and cash flows of Lessee for such fiscal year, in
comparative form with the preceding fiscal year, prepared in accordance with
GAAP, together with a report of Lessee's independent certified public
accountants with respect to their audit of such financial statements; PROVIDED
THAT so long as Lessee is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-K for such
fiscal year (excluding exhibits) or an e-mail notice that such report has been
filed with the SEC and providing a website address at which such report may be
accessed will satisfy this paragraph (b).

               8.2.2       ANNUAL CERTIFICATE

            Within 120 days after the close of each fiscal year of Lessee,
Lessee shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee
(which, in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail
and, in such case, need not include a manual signature of a required officer but
instead shall set forth a typed signature of such officer) to the effect that
such officer is familiar with or has reviewed or caused to be reviewed the

<PAGE>

relevant terms of this Lease and the other Lessee Operative Agreements and that
such officer does not have knowledge of the existence as at the date of such
certificate of any Lease Event of Default or if there is knowledge of a Lease
Event of Default, the steps that are being taken with respect thereto.

               8.2.3       INFORMATION FOR FILINGS

            Lessee shall promptly furnish to Owner Participant, Mortgagee or
Lessor such information (other than with respect to the citizenship of Owner
Participant and Lessor) within Lessee's or any Permitted Sublessee's possession,
or reasonably available to or obtainable by Lessee or such Permitted Sublessee,
as may be required to enable Lessor timely to file any reports required to be
filed by it as lessor under the Lease, to enable Mortgagee timely to file any
reports required to be filed by it as Mortgagee under the Trust Indenture or to
enable Owner Participant to timely file any reports required to be filed by it,
as the beneficiary of the Trust Estate, in any such case, with any Government
Entity because of, or in connection with, the interest of Owner Participant,
Mortgagee or Lessor in the Aircraft, Airframe or Engines, this Lease or any
other part of the Trust Estate; provided, however, that with respect to any such
information which Lessee reasonably deems commercially sensitive or
confidential, Owner Participant, Mortgagee or Lessor, as the case may be, shall
afford Lessee a reasonable opportunity to seek from any such Government Entity a
waiver of the obligation of Owner Participant, Mortgagee or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant, Mortgagee or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant, Mortgagee or Lessor, as the case may be, then Lessee shall not be
required to furnish such information to Owner Participant, Mortgagee or Lessor.

SECTION 9.      VOLUNTARY TERMINATION UPON OBSOLESCENCE

      9.1      RIGHT OF TERMINATION

            (a) Unless a Lease Event of Default, Payment Default or Bankruptcy
      Default shall have occurred and be continuing, Lessee shall have the right
      at its option to terminate this Lease during the Base Lease Term,
      effective only on a Termination Date occurring after the end of the Tax
      Attribute Period, if:

            (i) Lessee makes a good faith determination that the Aircraft either
      has become economically obsolete or is surplus to Lessee's requirements
      and the Chief Financial Officer or Treasurer of Lessee so certifies in
      writing to Lessor; and

            (ii) written notice of Lessee's exercise of its option to terminate
      this Agreement shall be given to Lessor not less than 90 days prior to the
      proposed Termination Date specified in such notice.

            (b) Lessor shall notify Lessee and Mortgagee of Lessor's intention
      to sell or retain the Aircraft, as provided in this Section 9, no later
      than 45 days after Lessee gives Lessor written notice pursuant to Section
      9.1(a)(ii). Any failure by Lessor to give such notice of its election
      shall be deemed to be an election to sell the Aircraft, as provided in
      this Section 9.

<PAGE>

            (c) Any termination pursuant to this Section 9 shall become
      effective on the date of the sale, if any, pursuant to Section 9.2 or upon
      the date of termination and payment by Lessee and Lessor in accordance
      with Section 9.3 if Lessor elects to retain the Aircraft.

      9.2      ELECTION BY LESSOR TO SELL

               9.2.1       BIDS; CLOSING OF SALE

            Unless Lessor has given Lessee notice of Lessor's election to retain
the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business
Days prior to the proposed Termination Date, use commercially reasonable efforts
to obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires
to do so, also seek to obtain such bids. In the event Lessee receives any bid,
Lessee shall promptly, and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person (who
shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or
any such Affiliate has an arrangement for the future use of the Aircraft by
Lessee or any such Affiliate) submitting such bid. In the event Lessor receives
any bid on or prior to the date ten Business Days prior to the proposed
Termination Date, Lessor shall, at least ten Business Days prior to the proposed
date of sale, certify to Lessee in writing the amount and terms of such bid, the
proposed date of such sale and the name and address of the person submitting
such bid.

               9.2.2       CLOSING OF SALE

            (a) On the proposed Termination Date (i) Lessee shall deliver the
      Airframe and Engines or engines constituting part of the Aircraft to the
      bidder, if any, which shall have submitted the highest cash bid (net of
      applicable brokerage commissions) on or before the date ten Business Days
      prior to such Termination Date, in the same manner as if delivery were
      made to Lessor pursuant to Section 5 and Annex B and in full compliance
      with the terms thereof, and shall duly transfer to Lessor title to any
      such engines not owned by Lessor, all in accordance with the terms of
      Section 5 and Annex B, and (ii) Lessor shall simultaneously therewith
      transfer the Airframe and Engines or engines to such bidder, in the manner
      described in Section 4.5, against cash paid to Lessor in the amount of
      such highest bid (net of applicable brokerage commissions and all
      reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee
      and Owner Participant in connection with such sale and the related
      termination of this Lease (collectively, the "Expenses of Sale") and in
      the manner and in funds of the type specified in Section 3.3.

            (b) All proceeds of any sale described in Section 9.2.2(a), net of
      Expenses of Sale, shall be paid to and retained by Lessor and, on such
      Termination Date, and as a condition precedent to such sale and the
      delivery of the Aircraft and Engines or engines to such bidder, Lessee
      shall pay to Lessor, in the manner and in funds of the type specified in
      Section 3.3:

            (i) all unpaid Basic Rent due at any time prior to such Termination
      Date, but excluding Basic Rent due on such Termination Date; plus

            (ii) an amount equal to the excess, if any, of the Termination Value
      for the Aircraft, computed as of such Termination Date, over the proceeds
      of such sale, net of Expenses of Sale; plus

<PAGE>

            (iii) as provided in Section 3.2.2, interest on the amounts
      specified in the foregoing clause (i) at the Payment Due Rate from and
      including the date on which any such amount was due to the date of payment
      of such amount in full.

            As a further condition precedent to such sale and delivery, Lessee
shall pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the
Participants under this Lease (including, without limitation, (A) Supplemental
Rent in respect of Make-Whole Amount, if any, payable pursuant to Section
2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment
Notes upon such sale, (B) all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment of any
amounts so payable, (C) the Expenses of Sale).

            (c) Upon and subject to any such sale and receipt of proceeds by
      Lessor, and full and final payment of all amounts described in Section
      9.2.2(b), and compliance by Lessee with all the other provisions of this
      Section 9.2,

            (i) Lessor will transfer to Lessee, in accordance with Section 4.5,
      any Engines constituting part of the Aircraft but which were not then
      installed on the Airframe and sold therewith; and

            (ii) the obligation of Lessee to pay Basic Rent, on or after the
      Payment Date with reference to which Termination Value is computed, shall
      cease, and the Term for the Aircraft shall end effective as of the date of
      such sale.

            (d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take
      place only on a Termination Date. Subject to Section 9.3, if no sale shall
      have occurred on or as of the proposed Termination Date, this Agreement
      shall continue in full force and effect, and all of Lessee's obligations
      shall continue, including, without limitation, its obligation to pay Rent,
      in each case, as if the notice under Section 9.1 shall not have been given
      and, subject to Section 9.2.3, Lessee may give another notice pursuant to
      Section 9.1.

               9.2.3       WITHDRAWAL OF NOTICE OF TERMINATION

            (a) Lessee may withdraw any notice given pursuant to Section 9.1 at
any time on or before the date 20 days prior to the proposed Termination Date,
whereupon this Agreement shall continue in full force and effect and all of
Lessee's obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than three notices
pursuant to Section 9.1.

            (b) Lessee shall pay all reasonable out-of-pocket fees and expenses
of Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.

<PAGE>

      9.3      RETENTION OF AIRCRAFT BY LESSOR

            (a) If Lessor shall elect to retain the Aircraft in accordance with
      Section 9.1, on the proposed Termination Date:

            (i) Lessor shall pay, or cause to be paid, in the manner and in
      funds of the type specified in Section 3.3, to the Mortgagee an amount
      sufficient to prepay all outstanding Equipment Notes pursuant to Section
      2.10(b) of the Trust Indenture;

            (ii) subject to receipt by Mortgagee of the funds described in
      paragraph (i) above, Lessee shall deliver the Airframe and Engines or
      engines constituting part of the Aircraft to Lessor pursuant to Section 5
      and Annex B and in full compliance with the terms thereof, and shall duly
      transfer to Lessor title to any such engines not owned by Lessor, all in
      accordance with the terms of Section 5 and Annex B;

            (iii) Lessee shall pay to Lessor, in the manner and in funds of the
      type specified in Section 3.3:

            (1) all unpaid Basic Rent due at any time prior to such Termination
      Date, but excluding Basic Rent due on such Termination Date; plus

            (2) as provided in Section 3.2.2, interest on the amounts specified
      in the foregoing clause (1) at the Payment Due Rate from and including the
      date on which any such amount was due to the date of payment of such
      amount in full; and

            (iv) Lessee shall also pay all Supplemental Rent due and payable by
      Lessee to Lessor, Mortgagee or the Participants under this Lease
      (including without limitation (A) Supplemental Rent in respect of
      Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the
      Trust Indenture in connection with a prepayment of the Equipment Notes,
      (B) all interest charges provided for hereunder or under any other Lessee
      Operative Agreement with respect to the late payment of any amounts so
      payable, and (C) the reasonable out-of-pocket fees and expenses incurred
      by Lessor and Owner Participant in connection with such termination and
      sale).

            (b) Upon full and final payment to Lessor, Mortgagee and the
      Participants of the amounts described in Section 9.3(a), and compliance by
      Lessee with all the other applicable provisions of this Section 9.3,

            (i) Lessor will transfer to Lessee, in accordance with Section 4.5,
      any Engines constituting part of the Aircraft but which were not then
      installed on the Airframe and returned therewith; and

            (ii) The obligation of Lessee to pay Basic Rent otherwise due on or
      after the Termination Date shall cease, and the Term for the Aircraft
      shall end effective as of such Termination Date.

<PAGE>

SECTION 10.     LOSS, DESTRUCTION, REQUISITION, ETC.

      10.1     EVENT OF LOSS WITH RESPECT TO AIRCRAFT

               10.1.1      NOTICE AND ELECTION

            (a) Upon the occurrence of an Event of Loss with respect to the
Airframe, and any Engine or Engines installed thereon at the time of such Event
of Loss, Lessee shall promptly (and in any event within 10 Business Days after
such occurrence) give Lessor and Mortgagee written notice of such Event of Loss.
Within 45 days after such occurrence, Lessee shall give Lessor and Mortgagee
written notice of Lessee's election to make payment in respect of such Event of
Loss, as provided in Section 10.1.2, or to replace the Airframe, and any such
Engines, as provided in Section 10.1.3.

            (b) Any failure by Lessee to give such notice of its election shall
be deemed to be an election of the option set forth in Section 10.1.2. In
addition, Lessee shall not be entitled to elect the option set forth in Section
10.1.3 if, at the time Lessor receives such notice from Lessee, there shall have
occurred and be continuing a Payment Default, a Bankruptcy Default or a Lease
Event of Default.

            (c) For purposes of Section 10.1.2, an Event of Loss with respect to
the Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft. For purposes of Section 10.1.3, any Engine not actually suffering an
Event of Loss shall not be required to be replaced.

               10.1.2      PAYMENT OF LOSS AND TERMINATION OF LEASE

            (a) If Lessee elects, in accordance with Section 10.1.1, to make
payment in respect of any such Event of Loss, then Lessee shall pay, in the
manner and in funds of the type specified in Section 3.3, the following amounts:

            (i) on the Stipulated Loss Value Date next following the earlier of
      (x) the 120th day following the date of the occurrence of such Event of
      Loss, and (y) the twentieth day following the receipt of insurance
      proceeds with respect to such occurrence (but in any event not earlier
      than the date of Lessee's election under Section 10.1.1 to make payment
      under this Section 10.1.2), Lessee shall pay to Lessor:

            (1)   all unpaid Basic Rent or Renewal Rent, as the case may be, due
                  at any time prior to such Stipulated Loss Value Date; plus

            (2)   the Stipulated Loss Value of the Aircraft computed as of such
                  Stipulated Loss Value Date; plus

            (3)   as provided in Section 3.2.2, interest on the amount specified
                  in the foregoing clause (1) at the Payment Due Rate from and
                  including the date on which any such amount was due to the
                  date of payment of such amount in full;

<PAGE>

      PROVIDED, that if such Stipulated Loss Value Date is a Payment Date,
      Lessee shall not be obligated to pay the Basic Rent or Renewal Rent
      otherwise required to be paid on such date; and

            (ii) on or before the date required for payment of the amounts
      specified in paragraph (i) above, Lessee shall also pay to Lessor,
      Mortgagee and the Participants all other amounts due and payable by Lessee
      to Lessor, Mortgagee and the Participants under this Lease, the
      Participation Agreement or any other Lessee Operative Agreement.

            (b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal Rent
hereunder with respect to the Aircraft shall terminate, (ii) the Term for the
Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is
and where-is, and subject to any insurer's salvage rights, but otherwise in the
manner described in Section 4.5.

               10.1.3      REPLACEMENT OF AIRFRAME AND ENGINES

            (a) If Lessee elects, in accordance with Section 10.1.1, to replace
the Airframe, and any Engine actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in Section 10.3,
then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts required under,
and in accordance with, Section 10.1.2.

            (b) Any such Replacement Airframe shall be an airframe that is the
same model as the Airframe to be replaced thereby, or an improved model, and
that has a value, utility and remaining useful life (without regard to hours or
cycles remaining until the next regular maintenance check), at least equal to
the Airframe to be replaced thereby (assuming that such Airframe had been
maintained in accordance with the Lease). Any such Replacement Engine shall meet
the requirements of, and be conveyed by Lessee to Lessor in accordance with,
Section 10.2 (other than the notice requirement set forth in Section 10.2.1).

      10.2     EVENT OF LOSS WITH RESPECT TO AN ENGINE

               10.2.1      NOTICE

            Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which an Event of Loss with respect to the Airframe has
not occurred, Lessee shall promptly (and in any event within 10 Business Days
after such occurrence) give Lessor written notice of such Event of Loss.

<PAGE>

               10.2.2      REPLACEMENT OF ENGINE

            Lessee shall, promptly and in any event within 90 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear
of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).

               10.2.3      ENGINE EXCHANGE

            Unless a Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, upon not less than five (5)
Business Days' prior written notice to Lessor, Lessee may replace any Engine
leased hereunder with another engine (the "Exchanged Engine") meeting the
requirements of Section 10.2.2. Such Exchanged Engine shall be deemed to be a
"Replacement Engine" and Lessor and Lessee shall comply with the provisions of
Section 10.3 with regard to the Exchanged Engine and the Engine so replaced.

      10.3     CONDITIONS TO ANY REPLACEMENT

               10.3.1      DOCUMENTS

            Prior to or at the time of conveyance of title to any Replacement
Airframe or Replacement Engine to Lessor, Lessee shall take each of the
following actions:

            (a) furnish Lessor with a full warranty bill of sale duly conveying
to Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;

            (b) cause (i) a Lease Supplement subjecting such Replacement
Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution and, upon such execution, to be filed for
recordation with the FAA pursuant to the Act, (ii) a Trust Indenture Supplement,
subjecting such Replacement Airframe or Replacement Engine to the Trust
Indenture, to be delivered to Lessor for execution and, upon execution, to be
filed for recordation with the FAA pursuant to the Act and (iii) such Financing
Statements and other filings, as Lessor or Mortgagee may reasonably request,
duly executed by Lessee and, to the extent applicable, Lessor and Mortgagee (and
Lessor and Mortgagee shall execute and deliver the same), to be filed in such
locations as any such party may reasonably request;

            (c) furnish such evidence of compliance with the insurance
provisions of Section 11 with respect to such Replacement Airframe or
Replacement Engine as Lessor may reasonably request;

<PAGE>

            (d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and Mortgagee and
addressed to Lessor and Mortgagee to the effect that (i) such full warranty bill
of sale referred to in Section 10.3.1(a) constitutes an effective instrument for
the conveyance of title to the Replacement Airframe or Replacement Engine and
(ii) in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;

            (e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and Mortgagee and addressed to Lessor and Mortgagee as to
the due registration of any such Replacement Airframe, the ownership of title to
such Replacement Airframe by Owner Trustee and the absence of Liens of record
with respect to such Replacement Airframe (other than Permitted Liens) and the
due filing for recordation of each Lease Supplement and Trust Indenture
Supplement with respect to such Replacement Airframe or Replacement Engine under
the Act;

            (f) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessee's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.1.3(b); and

            (g) furnish a certificate of a qualified aircraft engineer (who may
be an employee of Lessee) certifying that such Replacement Engine complies with
the value, utility and remaining useful life requirements set forth in Section
10.2.2.

            Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.

               10.3.2      OTHER OBLIGATIONS

            (a) Lessor and Lessee agree that, upon any Replacement Airframe
becoming the Airframe hereunder, and upon any Replacement Engine becoming an
Engine hereunder, this Lease shall continue to be, and shall be treated as, a
lease for U.S. federal income tax purposes of, among other things, such
Replacement Airframe and such Replacement Engine. Without limiting the
foregoing, Lessee and Lessor intend that Lessor shall, in all events, be
entitled to the benefits of Section 1110 with respect to any Replacement
Airframe or Replacement Engine and Lessee and Lessor shall cooperate and take
such action as the other may reasonably request so as to ensure that Lessor
shall be entitled to such benefits.

<PAGE>

            (b) No Event of Loss with respect to an Engine, or with respect to
an Airframe, shall result in, or otherwise allow or permit (other than as
provided in Section 10.1.2(b)), any reduction, deferral, discharge or other
change in the timing or amount of any Rent payable by Lessee hereunder, and
(subject to such Section 10.1.2(b)) Lessee shall pay all such Rent and other
amounts as though such Event of Loss had not occurred.

      10.4     CONVEYANCE TO LESSEE

            Upon compliance by Lessee with the applicable terms of Sections
10.1.3, 10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine,
as the case may be, with respect to which such Event of Loss occurred, in
accordance with Section 4.5.

      10.5     APPLICATION OF PAYMENTS

            Any amounts, other than insurance proceeds in respect of damage or
loss not constituting an Event of Loss (the application of which is provided for
in Section 11), received at any time by Lessor, Lessee or any Permitted
Sublessee from any Government Entity or any other Person in respect of any Event
of Loss will be applied as follows:

               10.5.1      REPLACEMENT OF AIRFRAME AND ENGINES

            If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance by
Lessee with the applicable terms of Section 10.1.3 with respect to the Event of
Loss for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.

               10.5.2      LOSS OF ENGINE

            If such amounts are received with respect to an Engine (other than
an Engine installed on the Airframe at the time such Airframe suffers an Event
of Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.

               10.5.3      PAYMENT OF LOSS

            If such amounts are received, in whole or in part, with respect to
the Airframe, and Lessee makes, has made or is deemed to have made the election
set forth in Section 10.1.2, such amounts shall be applied as follows:

            (a) FIRST, if the sum described in Section 10.1.2 has not then been
paid in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so
long as Mortgagee has not given notice to Lessee that the Lien of the Trust
Indenture has been duly discharged, except with respect to Excluded Payments) to
the extent necessary to pay in full such sum;

            (b) SECOND, the remainder, if any, shall be paid to Lessee.

<PAGE>

      10.6     REQUISITION OF AIRCRAFT FOR USE

            If any Government Entity shall requisition for use the Airframe and
the Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term, unless Lessor shall have elected,
upon notice given not less than 30 days nor more than 120 days before the end of
the Term, not to treat such event as constituting an Event of Loss with respect
to the Aircraft, Lessee shall be obligated to pay the Stipulated Loss Value and
all other amounts payable pursuant to Section 10.1.2 with respect to the
Aircraft. If Lessor shall have elected not to treat such event as an Event of
Loss, Lessee shall be obligated to return the Airframe and Engines or engines to
Lessor pursuant to, and in all other respects to comply with the provisions of,
Section 5 promptly upon their return by such Government Entity, and Lessee shall
pay to Lessor upon such return an amount equal to the average daily Basic Rent
payable by Lessee during the Term for each day after the end of the Term to but
excluding the day of such return, up to a maximum of 30 days.

      10.7     REQUISITION OF AN ENGINE FOR USE

            If any Government Entity shall requisition for use any Engine but
not the Airframe, Lessee will replace such Engine by complying with the
applicable terms of Sections 10.2 and 10.3 to the same extent as if an Event of
Loss had occurred with respect to such Engine, and any payments received by
Lessor or Lessee from such Government Entity with respect to such requisition
shall be paid or retained in accordance with Section 10.5.2.

      10.8     APPLICATION OF PAYMENTS

            All payments received by Lessor or Lessee, or any Permitted
Sublessee, from any Government Entity for the use of the Airframe and Engines or
engines installed thereon during the Term shall be paid over to, or retained by,
Lessee and all payments received by Lessor or Lessee from any Government Entity
for the use of the Airframe and Engines or engines installed thereon after the
Term shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, then all such payments shall be paid
over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to
Lessee that the Trust Indenture has been duly discharged), and held as provided
in Section 10.5.

      10.9     APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE EVENT OF
               DEFAULT

            Any amount described in this Section 10 that is payable or
creditable to, or retainable by, Lessee shall not be paid or credited to, or
retained by, Lessee if at the time such payment, credit or retention would
otherwise occur a Lease Event of Default, Payment Default or Bankruptcy Default
shall have occurred and be continuing, but shall instead be held by or paid over
to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee
that the Trust Indenture has been duly discharged) as security for the
obligations of Lessee under this Lease and the other Lessee Operative Agreements
and shall be invested pursuant to Section 4.4 hereof unless and until Lessor
shall have demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and

<PAGE>

such amount is applied, at the option of Lessor, or upon the written request of
Lessee to Lessor, from time to time during the continuance of a Lease Event of
Default, to Lessee's obligations under this Lease as and when due, it being
understood that any such application shall be made to such obligations of Lessee
as Lessor may determine in its sole discretion. At such time as there shall not
be continuing any Lease Event of Default, Payment Default or Bankruptcy Default,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 10.9.

SECTION 11.     INSURANCE

      11.1     LESSEE'S OBLIGATION TO INSURE

            Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.

      11.2     INSURANCE FOR OWN ACCOUNT

            Nothing in Section 11 shall limit or prohibit (a) Lessee from
maintaining the policies of insurance required under Annex D with higher limits
than those specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); PROVIDED, HOWEVER, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to this Section 11 and
Annex D.

      11.3     INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE

            Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor and
Mortgagee, other Government Entity, against such risk in an amount that, when
added to the amount of insurance (including permitted self-insurance), if any,
against such risk that Lessee (or any Permitted Sublessee) may continue to
maintain, in accordance with this Section 11, during the period of such
requisition or transfer, shall be at least equal to the amount of insurance
against such risk otherwise required by this Section 11.

      11.4     APPLICATION OF INSURANCE PROCEEDS

            As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss with respect to the Aircraft or any
Engine under policies required to be maintained by Lessee pursuant to this
Section 11 will be applied in accordance with Section 10.5. All proceeds of
insurance required to be maintained by Lessee, in accordance with Section 11 and
Section B of Annex D, in respect of any property damage or loss not constituting
an Event of Loss with respect to the Aircraft, Airframe or any Engine will be
applied in payment (or to reimburse Lessee) for repairs or for replacement
property, and any balance remaining after such repairs or replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.

<PAGE>

      11.5     APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT

            Any amount described in this Section 11 that is payable or
creditable to, or retainable by, Lessee shall not be paid or credited to, or
retained by, Lessee if at the time such payment, credit or retention would
otherwise occur a Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and shall
be invested pursuant to Section 4.4 hereof unless and until Lessor shall have
demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and such amount
is applied, at the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event of Default, to
Lessee's obligations under this Lease and the other Lessee Operative Agreements
as and when due, it being understood that any such application shall be made to
such obligations of Lessee as Lessor may determine in its sole discretion. At
such time as there shall not be continuing any Lease Event of Default, such
amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 11.5.

SECTION 12.     INSPECTION

            (a) Lessor, Mortgagee or their respective authorized representatives
(the "Inspecting Parties") may, upon reasonable notice to Lessee, inspect the
Aircraft, Airframe and Engines (including, without limitation, the Aircraft
Documents) and Lessee shall cooperate, and shall cause any Permitted Sublessee
to cooperate, with the Inspecting Parties in connection with any such inspection
(including, without limitation, permitting any such Inspecting Party to make
copies of such Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee).

            (b) Except during the continuance of any Lease Event of Default
while the Section 1110 Period shall not be in effect, 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, Airframe or Engines. Any inspection permitted hereunder, including any
inspection conducted during the continuance of a Lease Event of Default, shall
be conducted in a manner which does not interfere with Lessee's or a Permitted
Sublessee's operation, use and maintenance of such Aircraft, which determination
of interference shall be made by Lessee in its reasonable sole discretion.

            (c) With respect to such rights of inspection, neither Lessor nor
Mortgagee shall have any duty or liability to make, or any duty or liability by
reason of not making, any such visit, inspection or survey.

            (d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 12(a)); PROVIDED, that if a Lease Event of Default shall have
occurred and be continuing, Lessee shall bear all such reasonable expenses,
except, in the case of a Chapter 11 reorganization, during the Section 1110
Period.

<PAGE>

            (e) If requested by Lessor or Mortgagee, Lessee shall promptly
advise, or shall cause any Permitted Sublessee to advise, Lessor of the date
upon which the Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit or next major check, and with respect to any Engine, the next
off-the-wing maintenance, and shall advise Lessor of the name and location of
the relevant maintenance performer. An Inspecting Party shall have the
opportunity to attend such scheduled maintenance visit or major check, subject
to the other provisions of this Section 12.

SECTION 13.     ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

      13.1     IN GENERAL

            This Lease and the other Lessee Operative Agreements shall be
binding upon and inure to the benefit of Lessor and Lessee and their respective
successors and permitted assigns. Except as otherwise expressly permitted by the
terms of the Lease or any other Lessee Operative Agreement, Lessee will not,
without the prior written consent of Lessor and Mortgagee, assign any of its
rights under this Lease. Except as otherwise provided herein (including, without
limitation, under the provisions of Section 15 hereof) or in the Trust
Indenture, Lessor and Mortgagee may not assign or convey any of its right, title
and interest in and to this Lease or the Aircraft without the prior written
consent of Lessee, such consent not to be unreasonably withheld.

      13.2     MERGER OF LESSEE

               13.2.1      IN GENERAL

            Lessee shall not consolidate with or merge into any other person
under circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:

            (a) such person is organized, existing and in good standing under
the Laws of the United States, any State of the United States or the District
Columbia and, upon consummation of such transaction, such person will be a U.S.
Air Carrier;

            (b) such person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lessor and Mortgagee, containing an
effective assumption by such person of the due and punctual performance and
observance of each covenant, agreement and condition in the Lessee Operative
Agreements to be performed or observed by Lessee;

            (c) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and

            (d) immediately after giving effect to such consolidation or merger
no Lease Event of Default shall have occurred and be continuing.

<PAGE>

               13.2.2      EFFECT OF MERGER

            Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.

      13.3     ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS

            In order to secure the indebtedness evidenced by the Equipment
Notes, Lessor has agreed in the Trust Indenture, among other things, to assign
to Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in
favor of Mortgagee, subject to the reservations and conditions therein set
forth. Lessee hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the terms of the
Trust Indenture. In accordance with Section 3.3(c), Lessee agrees to pay
directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of
the discharge of the Trust Indenture, to Lessor), all amounts of Rent (other
than Excluded Payments) due or to become due hereunder and assigned to Mortgagee
and Lessee agrees that Mortgagee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessee to Lessor to perform the terms and conditions of this Lease shall remain
in full force and effect.

      13.4     SUCCESSOR OWNER TRUSTEE

            Lessee agrees that in the case of the appointment of any successor
Owner Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.

SECTION 14.     LEASE EVENTS OF DEFAULT

            The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:

<PAGE>

      14.1     PAYMENTS

            Lessee shall fail to pay any amount of Basic Rent, Renewal Rent,
Stipulated Loss Value or Termination Value within five (5) Business Days after
the same shall have become due; or Lessee shall fail to pay any Supplemental
Rent (other than Stipulated Loss Value or Termination Value) when due and such
failure shall continue for a period in excess of ten (10) Business Days from and
after the date of any written notice to Lessee from Lessor, Mortgagee or Owner
Participant of the failure to make such payment when due; provided that any such
failure to pay any Excluded Payment shall not constitute a Lease Event of
Default until written notice is given by the Owner Participant to Lessee and
Mortgagee that such failure constitutes a Lease Event of Default and such
failure shall have continued for a period in excess of ten (10) Business Days
after such notice.

      14.2     INSURANCE

            Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.

      14.3     OTHER COVENANTS

            Lessee shall fail to observe or perform (or cause to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor, Owner
Participant or Mortgagee, unless such failure is capable of being corrected and
Lessee shall be diligently proceeding to correct such failure, in which case
there shall be no Lease Event of Default unless and until such failure shall
continue unremedied for a period of 90 days after receipt of such notice.

      14.4     REPRESENTATIONS AND WARRANTIES

            Any representation or warranty made by Lessee herein, in the
Participation Agreement or in any other Lessee Operative Agreement (other than
the representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor, Owner Participant or Mortgagee to Lessee (except
that this clause (c) shall be inapplicable in the case of Section 6.1.7 of the
Participation Agreement).

      14.5     BANKRUPTCY AND INSOLVENCY

            (a) Lessee shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of substantially
all of its property, or Lessee shall admit in writing its inability to pay its
debts generally as they come due, or does not pay its debts generally as they

<PAGE>

become due or shall make a general assignment for the benefit of creditors, or
Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or
an answer seeking reorganization, liquidation or other relief in a case under
any bankruptcy Laws or other insolvency Laws (as in effect at such time), or
Lessee shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time) or
Lessee's board of directors shall adopt a resolution authorizing any of the
foregoing; or

            (b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee or of substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 days after the date of
entry thereof; or

            (c) a petition against Lessee in a case under any bankruptcy Laws or
other insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any Law
providing for reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.

SECTION 15.     REMEDIES AND WAIVERS

      15.1     REMEDIES

            If any Lease Event of Default shall occur and be continuing, Lessor
may, at its option and at any time and from time to time, exercise any one or
more of the following remedies as Lessor in its sole discretion shall elect:

               15.1.1      RETURN AND REPOSSESSION

            Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the Airframe and Engines as
Lessor may so demand, to Lessor or its order in the manner and condition
required by, and otherwise in accordance with, all the provisions of Section 5
as if the Airframe or Engine were being returned at the end of the Base Lease
Term or any Renewal Lease Term or Lessor, at its option, may enter upon the
premises where the Airframe or any Engine, or any Part thereof, are located and
take immediate possession of and remove the same by summary proceedings or
otherwise, all without liability accruing to Lessor for or by reason of such
entry or taking of possession, whether for the restoration of damage to property
caused by such taking or otherwise, and Lessee expressly waives any right it may
have to a hearing prior to repossession of the Aircraft.

               15.1.2      SALE AND USE

            Lessor may sell the Airframe and/or any Engine at public or private
sale, at such times and places, and to such Persons (including Lessor, Mortgagee

<PAGE>

or any Participant), as Lessor may determine; or Lessor may otherwise dispose
of, hold, use, operate, lease to others or keep idle the Airframe and/or any
Engine, as Lessor, in its sole discretion, may determine, all free and clear of
any rights of Lessee and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.

               15.1.3      CERTAIN LIQUIDATED DAMAGES

            Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect
to the Airframe and/or any Engine, or any Part thereof, Lessor, by written
notice to Lessee specifying a payment date (which shall be the Stipulated Loss
Value Date next occurring not less than 10 days after the date of such notice),
may demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the
payment date so specified and in the manner and in funds of the type specified
in Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date specified for payment
in such notice), the following amounts:

            (a) all unpaid Basic Rent or Renewal Rent, as the case may be, due
at any time prior to the Stipulated Loss Value Date specified in such notice,
but excluding Basic Rent or Renewal Rent due on such Stipulated Loss Date; plus

            (b) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value Date specified
in such notice, over the Fair Market Sales Value of the Aircraft, as of the
Stipulated Loss Value Date specified in such notice; plus

            (c) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus

            (d) interest on the amount specified in the foregoing clause (b) at
the Payment Due Rate from and including the Stipulated Loss Value Date specified
in such notice to the date of payment of such amount.

               15.1.4      LIQUIDATED DAMAGES UPON SALE

            If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have
sold the Aircraft, Lessor, in lieu of exercising its rights under Section 15.1.3
with respect to the Aircraft, may, if Lessor shall so elect, upon giving written
notice to Lessee, demand Lessee to pay Lessor, and Lessee shall pay to Lessor,
on the date of such sale and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date of such sale), the
following amounts:

<PAGE>

            (a) all unpaid Basic Rent or Renewal Rent, as the case may be, due
at any time prior to the Stipulated Loss Value Date on or immediately preceding
the date of such sale, but excluding Basic Rent or Renewal Rent due on such
Stipulated Loss Value Date; plus

            (b) an amount equal to the excess, if any, of (i) the Stipulated
Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date used
in the foregoing clause (a) for the computation of unpaid Rent, over (ii) the
proceeds of such sale, minus all reasonable costs of Lessor in connection with
the sale; plus

            (c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the Equipment
Notes at the rate per annum borne thereby from and including the Stipulated Loss
Value Date used in the foregoing clause (a) for the computation of unpaid Rent
to the date of such sale; plus

            (d) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus

            (e) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of such sale to
the date of payment of such amounts.

               15.1.5      RESCISSION

            Lessor may (i) at its option, rescind or terminate this Lease as to
the Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof, including without limitation Lessee's agreement
to lease the Aircraft for the Term and to pay Rent.

               15.1.6      OTHER REMEDIES

            In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this Section 15), Lessee shall be liable for any
and all unpaid Rent due hereunder before, during or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, including,
without limitation, interest on overdue Rent at the rate as herein provided,
incurred by reason of the occurrence of any Lease Event of Default or the
exercise of Lessor's remedies with respect thereto, including all reasonable
costs and expenses of Lessor incurred in connection with the return of the
Airframe or any Engine, in accordance with the terms of Section 5 or in placing
the Airframe or any Engine, in the condition and airworthiness required by
Section 5.

      15.2     LIMITATIONS UNDER CRAF

            Notwithstanding the provisions of Section 15.1, during any period
that the Aircraft, Airframe or any Engine is subject to CRAF in accordance with
the provisions of Section 7.2.3 and in the possession of the U.S. Government,
Lessor shall not, as a result of any Lease Event of Default, exercise its
remedies hereunder in such manner as to limit Lessee's control under this Lease

<PAGE>

(or any Permitted Sublessee's control under any Permitted Sublease) of the
Aircraft, Airframe or such Engine, unless at least 30 days' (or such other
period as may then be applicable under CRAF) written notice of default hereunder
shall have been given by Lessor or Mortgagee by registered or certified mail to
Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer
Representative or Representatives for the Military Airlift Command of the United
States Air Force to whom notices must be given under the contract governing
Lessee's (or any Permitted Sublessee's) participation in CRAF with respect to
the Aircraft, Airframe or any Engine.

      15.3     RIGHT TO PERFORM FOR LESSEE

            If Lessee (i) fails to make any payment of Rent required to be made
by it hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor, Mortgagee or Owner Participant to
Lessee, Lessor may (but shall not be obligated to) make such payment or perform
or comply with such agreement, and the amount of such payment and the amount of
the expenses of Lessor or Mortgagee incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Payment Due Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand by Lessor or Mortgagee,
whichever is entitled thereto. No such payment, performance or compliance shall
be deemed to cure any Lease Default or Lease Event of Default or otherwise
relieve Lessee of its obligations with respect thereto.

      15.4     DETERMINATION OF FAIR MARKET SALES VALUE

            For the purpose of this Section 15, the "Fair Market Sales Value" of
the Aircraft shall be determined on an "as is, where is" basis and shall take
into account customary brokerage and other out-of-pocket fees and expenses which
typically would be incurred in connection with a sale of the Aircraft. Any such
determination shall be made by an Appraiser selected by Lessor and the costs and
expenses associated therewith shall be borne by Lessee, unless Lessor does not
obtain possession of the Aircraft, Airframe and Engines pursuant to this Section
15, in which case an Appraiser shall not be appointed and Fair Market Sales
Value for purposes of this Section 15 shall be zero.

      15.5     REMEDIES CUMULATIVE

            Nothing contained in this Lease shall be construed to limit in any
way any right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
one shall not be deemed a waiver of the right to exercise any other. Lessee

<PAGE>

hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.

SECTION 16.     LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

            (a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.

            (b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Agreement not been terminated in whole or in
part. Lessee hereby waives, to the extent permitted by applicable Law, any and
all rights that it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Agreement, except in accordance with the express terms hereof.

            (c) Nothing set forth in this Section 16 shall be construed to
prohibit Lessee from separately pursuing any claim that it may have from time to
time against Lessor or any other Person with respect to any matter (other than
the absolute and unconditional nature of Lessee's obligations hereunder to pay
Rent, and other than the matters specified in paragraphs (a) and (b) above).
Without limiting the foregoing, nothing in this Section 16 shall be construed as
a waiver by Lessee, or otherwise limit Lessee in pursuing any claim by Lessee,
of any breach by Lessor, Owner Participant or any other Person of any covenant
or obligation contained in any Operative Agreement.

SECTION 17.     RENEWAL AND PURCHASE OPTIONS

      17.1     NOTICES GENERALLY

            (a) At least 225 days but not more than 375 days prior to the
Scheduled Expiration Date or, if a Renewal Lease Term is then in effect, prior
to the Scheduled Renewal Term Expiration Date of such Renewal Lease Term, Lessee
may provide notice to Lessor that Lessee may exercise either the option to
extend the leasing of the Aircraft for a Renewal Lease Term pursuant to Section
17.2 or the option to purchase the Aircraft on the Scheduled Expiration Date or
Scheduled Renewal Term Expiration Date of such Renewal Lease Term, as the case
may be, pursuant to Section 17.3 (a "Preliminary Notice").

<PAGE>

            (b) If any such Preliminary Notice is given by Lessee, then Lessee
may provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be.

      17.2     RENEWAL OPTIONS

               17.2.1      RENEWAL NOTICE

            (a) If Lessee has given a Preliminary Notice, as specified in
      Section 17.1, and subject to the terms and conditions of this Section
      17.2, Lessee may exercise its option to extend the leasing of the Aircraft
      hereunder on two occasions, in each case until the next Scheduled Renewal
      Term Expiration Date, on the same terms, provisions and conditions (except
      as contemplated by this Section 17) set forth herein and in the other
      Lessee Operative Agreements with respect to the Base Lease Term, by
      delivery of a notice (a "Renewal Notice") to Lessor not less than 180 days
      but not more than 375 days prior to (i) if the Base Lease Term is then in
      effect, the Scheduled Expiration Date, or (ii) if a Renewal Lease Term is
      then in effect, the Scheduled Renewal Term Expiration Date for such
      Renewal Lease Term.

            (b) Notwithstanding anything to the contrary in this Agreement or
      any other Operative Agreement:

            (i) No Preliminary Notice or Renewal Notice shall be binding on
      Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder
      for a Renewal Lease Term if any Payment Default, Bankruptcy Default or
      Lease Event of Default shall have occurred and be continuing on and as of
      the date that such Renewal Lease Term would otherwise commence.

            (ii) Any Renewal Notice shall be revocable by Lessee until 10
      Business Days after the Renewal Rent is determined in accordance with
      Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
      shall thereafter become irrevocable and shall constitute an unconditional
      obligation of Lessee to extend the leasing of the Aircraft hereunder for
      the Renewal Lease Term to which such Renewal Notice relates.

            (iii) Lessee shall not be entitled to give any Renewal Notice if it
      has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
      Notice to Lessor.

               17.2.2      RENEWAL RENT

            (a) During the Renewal Lease Term, Lessee shall pay to Lessor on
each Payment Date, in the manner and in the funds of the type specified in
Section 3.3, Renewal Rent in advance.

            (b) The Renewal Rent payable by Lessee on each Payment Date during
any Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.

<PAGE>

               17.2.3      STIPULATED LOSS AND TERMINATION VALUES

            (a) For any Renewal Lease Term, Stipulated Loss Value dates and
Termination Value dates shall be extended throughout such Renewal Lease Term on
the same days and for the same months as during the Base Lease Term.

            (b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Lease Term shall be determined at the same time
that the Renewal Rent for such Renewal Lease Term is determined under Section
17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Lease
Term shall, commencing on the first day of such Renewal Lease Term, be equal to
the Fair Market Sales Value of the Aircraft, computed as of the first day of
such Renewal Lease Term, and shall decline ratably on a monthly basis to the
Fair Market Sales Value of the Aircraft as of the last day of such Renewal Lease
Term, but shall be adjusted to credit Lessee for any Renewal Rent paid in
advance attributable to any subsequent period.

            (c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.

      17.3     PURCHASE OPTION

               17.3.1      PURCHASE NOTICE

            (a) Subject to Section 17.1 and the terms and conditions of this
      Section 17.3, Lessee may elect to purchase the Aircraft, on any Purchase
      Date, at a purchase price equal to the lesser of (i) the Purchase Price
      Cap (as defined in Schedule 1 to the Lease) and (ii) the Fair Market Sales
      Value of the Aircraft computed as of the Purchase Date.

            (b) Lessee may exercise such option to purchase the Aircraft, by
      delivery of a notice (a "Purchase Notice") to Lessor not less than 180 and
      not more than 375 days prior to the Purchase Date specified in such
      Purchase Notice.

            (c) Notwithstanding anything to the contrary in this Agreement or
      any other Operative Agreement:

            (i) Any Purchase Notice (whether delivered or deemed to have been
      delivered) shall be revocable until 10 Business Days after the
      determination of the Fair Market Sales Value in accordance with Section
      17.3.2 and unless revoked by written notice by Lessee to Lessor shall
      thereafter become irrevocable and shall constitute an unconditional
      obligation of Lessee to purchase the Aircraft under this Section 17.3.

            (ii) No Preliminary Notice or Purchase Notice shall be binding on
      Lessor or oblige Lessor to sell the Aircraft hereunder if any Payment
      Default, Bankruptcy Default or Lease Event of Default shall have occurred
      and be continuing on and as of such Purchase Date.

<PAGE>

            (iii) Lessee shall not be entitled to give any Purchase Notice in
      respect of any Purchase Date if it has (x) not delivered a Preliminary
      Notice or (y) delivered a Renewal Notice for a Renewal Lease Term that
      would commence immediately following such Purchase Date.

               17.3.2      DETERMINATION OF FAIR MARKET SALES VALUE

            The Fair Market Sales Value of the Aircraft shall be determined not
more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.

               17.3.3      TITLE

            Upon full and final payment by Lessee of (a) the applicable purchase
price of the Aircraft, (b) all unpaid Rent due and payable through and including
the Purchase Date and (c) all other amounts due and payable by Lessee under this
Agreement, Lessor will transfer to Lessee title to the Aircraft in accordance
with Section 4.5.

      17.4     APPRAISALS

            Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this Section 17,
Lessee and Lessor shall appoint a mutually satisfactory Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate Appraiser and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor fails to so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within 7 days after the appointment of the
latter of such two Appraisers, they cannot agree upon such amount, such two
Appraisers shall, within 8 days after such latter appointment, appoint a third
Appraiser and such amount shall be determined by such three Appraisers, who
shall make their separate appraisals within 7 days following the appointment of
the third Appraiser, and any determination so made shall be conclusive and
binding upon Lessor and Lessee. If no such third Appraiser is appointed within
such 8-day period, either Lessor or Lessee may apply to the American Arbitration
Association to make such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event be completed
no less than 190 days before the end of the Base Lease Term or the current
Renewal Lease Term, as the case may be. If three Appraisers are appointed and
the difference between the determination which is farther from the middle
determination and the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such farther
determination shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon Lessor and Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon Lessor and Lessee. The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne equally by Lessee and Lessor, PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.

<PAGE>

SECTION 18.     MISCELLANEOUS

      18.1     AMENDMENTS

            No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee with the written
consent of the Mortgagee if required by the Trust Indenture. Each such
amendment, supplement, waiver, modification, discharge, termination or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Agreement shall be varied or
contradicted by oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in writing and
signed by Lessor and Lessee.

      18.2     SEVERABILITY

            If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such provisions are
held invalid, illegal or unenforceable may be waived, such Law is hereby waived
by the parties hereto to the full extent permitted, to the end that this
Agreement shall be deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.

      18.3     THIRD-PARTY BENEFICIARY

            This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than Mortgagee, the Participants, the Indenture
Indemnitees and the Persons referred to in Section 4.6, with respect to matters
expressly for their benefit in this Lease) with any rights of any nature
whatsoever against either of the parties hereto, and no person not a party
hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and
the Persons referred to in Section 4.6, with respect to matters expressly for
their benefit in this Lease) shall have any right, power or privilege in respect
of, or have any benefit or interest arising out of, this Agreement.

      18.4     REPRODUCTION OF DOCUMENTS

            This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made

<PAGE>

by such party in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction likewise is admissible in evidence.

      18.5     COUNTERPARTS

            This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.

      18.6     NOTICES

            Unless otherwise expressly permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers and
other communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such
other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.

      18.7     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

            (a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

            (b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.

            (c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY

<PAGE>

MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

            (d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.

            (e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.

      18.8     NO WAIVER

            No failure on the part of Lessor to exercise, and no delay by Lessor
in exercising, any of its rights, powers, remedies or privileges under this
Agreement or provided at Law, in equity or otherwise shall impair, prejudice or
constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
by Lessor or the exercise of any other right, power, remedy or privilege by
Lessor. No notice to or demand on Lessee in any case shall, unless otherwise
required under this Agreement, entitle Lessee to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
Lessor to any other further action in any circumstances without notice or
demand.

      18.9     ENTIRE AGREEMENT

            This Agreement, together with the other Operative Agreements, on and
as of the date hereof constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.

                    [This space intentionally left blank.]

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

                                    WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

            Receipt of this original counterpart of the foregoing Lease
Agreement is hereby acknowledged on this ____ day of _________, _______.
                                    WILMINGTON TRUST COMPANY,
                                       as Mortgagee

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

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

                                    WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>
                                              ---------------------------------
                                             |     ANNEX A-DEFINITIONS [TN]    |
                                              ---------------------------------

                                     ANNEX A

                     [SEE PARTICIPATION AGREEMENT ANNEX A]

<PAGE>

                                     ANNEX B
                                RETURN CONDITIONS

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                     ANNEX C
                                   MAINTENANCE

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                     ANNEX D

                                    INSURANCE

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>
                                          -------------------------------------
                                         |     EXHIBIT A - LEASE SUPPLEMENT    |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                             LEASE SUPPLEMENT NO.__

            LEASE SUPPLEMENT No. __, dated ________, 200_, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Amended and Restated
Trust Agreement [TN], dated as of [ID], with the Owner Participant named therein
(such Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").

            Lessor and Lessee have heretofore entered into that certain Lease
Agreement [TN], dated as of [ID], relating to one Embraer Model EMB-145 XR
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery of this Lease Supplement for the purpose of leasing the Airframe
and Engines under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.

            The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.

            NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

            1. Lessee has been duly authorized by Lessor to accept, and does
      hereby irrevocably accept on behalf of Lessor delivery of the Aircraft
      under, and for all purposes of, the Aircraft Bill of Sale, the
      Participation Agreement and the Purchase Agreement Assignment.

            2. Lessor hereby delivers and leases to Lessee under the Lease and
      Lessee hereby accepts and leases from Lessor under the Lease the following
      described Embraer EMB-145XR aircraft (the "Aircraft"), which Aircraft as
      of the date hereof consists of the following components:

            (i)     Airframe:  U.S. Registration No. ___________;
      manufacturer's serial no. ___________; and

            (ii) Engines: two (2) Allison AE3007A1E engines bearing,
      respectively, manufacturer's serial nos. ___________ and ____________(each
      of which engines has 750 or more rated takeoff horsepower or the
      equivalent of such horsepower).

            3. The Closing Date for the Aircraft is the date of this Lease
      Supplement set forth in the opening paragraph hereof.

            4. Lessee hereby confirms to Lessor that Lessee has duly and
      irrevocably accepted the Aircraft under and for all purposes hereof, of
      the Lease and of the other Lessee Operative Agreements.

<PAGE>

            5. All of the terms and provisions of this Lease Supplement are
      hereby incorporated by reference in the Lease to the same extent as if
      fully set forth therein.

            6. This Lease Supplement may be executed by the parties hereto in
      separate counterparts, each of which when so executed and delivered shall
      be an original, but all such counterparts shall together constitute but
      one and the same instrument.

            7. To the extent, if any, that this Lease Supplement constitutes
      chattel paper (as such term is defined in the Uniform Commercial Code as
      in effect in any applicable jurisdiction), no security interest in this
      Lease Supplement may be created through the transfer or possession of any
      counterpart other than the original executed counterpart, which shall be
      identified as the counterpart containing the receipt therefor executed by
      the Mortgagee on the signature page thereof.

                    [This space intentionally left blank.]

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

                                    WELLS FARGO BANK NORTHWEST, NATIONAL
                                    ASSOCIATION, not in its
                                       individual capacity, except
                                       as expressly provided herein,
                                       but solely as Owner Trustee
                                       under the Trust Agreement, as
                                       Lessor

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

                                    WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

            Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _________, __________.

                                    WILMINGTON TRUST COMPANY,
                                       as Mortgagee

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

<PAGE>
                                          -------------------------------------
                                         |     EXHIBIT B - LEASE SUPPLEMENT    |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                          RETURN ACCEPTANCE SUPPLEMENT

            RETURN ACCEPTANCE SUPPLEMENT dated ________, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Amended and Restated
Trust Agreement [TN], dated as of [ID], with the Owner Participant named therein
(such Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").

            Lessor and Lessee have heretofore entered into that certain Lease
Agreement [TN], dated as of [ID], relating to one Embraer Model EMB-145 XR
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease relates to the Airframe and
Engines described below.

            NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

            1. This Return Acceptance Supplement is executed by Lessor and
      Lessee to confirm that on the date hereof the following described Airframe
      and Engines were returned by Lessee to Lessor:

            (i) Airframe: U.S. Registration No. ______________; manufacturer's
      serial no. __________________; and

            (ii)    Engines:  two (2) Allison AE3007A1E engines bearing,
      respectively, manufacturer's serial nos. ____________________________
      and _________________________.

            2. This Return Acceptance Supplement is intended to be delivered in
      _____________________.

            3. Lessor and Lessee agree that the return of the Aircraft is in
      compliance with Section 5 and Annex B of the Lease, except as set forth
      below:

            4. Lessor and Lessee agree that the Lease is terminated, except for
      the provisions thereof that expressly survive termination.

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.

                                    WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>

                                          -------------------------------------
                                         |      SCHEDULE 1 - CERTAIN TERMS     |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                                  CERTAIN TERMS

               DEFINED TERM                          DEFINITION
               ------------                          ----------

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                          -------------------------------------
                                         |       SCHEDULE 2 - BASIC RENT       |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                                   BASIC RENT

      PAYMENT DATE                              TOTAL BASIC RENT
      ------------                              ----------------

      [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                          -------------------------------------
                                         |  SCHEDULE 2A - ALLOCATION SCHEDULE  |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                               ALLOCATION SCHEDULE

                       (AS A PERCENTAGE OF LESSOR'S COST)

 FROM (BUT NOT INCLUDING)        THROUGH         BASIC RENT ALLOCATION AMOUNT
---------------------------  ---------------  ----------------------------------

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>
                                          -------------------------------------
                                         |  SCHEDULE 3 - STIPULATED LOSS VALUE |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                              STIPULATED LOSS VALUE

                      STIPULATED LOSS
        DATE            VALUE AMOUNT
-------------------- -----------------

[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>
                                          -------------------------------------
                                         |    SCHEDULE 4 - TERMINATION VALUE   |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                                TERMINATION VALUE

        DATE         TERMINATION VALUE
------------------- -------------------

[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>
                                          -------------------------------------
                                         |   SCHEDULE 5 - PERMITTED COUNTRIES  |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                               PERMITTED COUNTRIES

Argentina                                   Luxembourg
Australia                                   Malaysia
Austria                                     Malta
Bahamas                                     Mexico
Belgium                                     Netherlands
Brazil                                      New Zealand
Canada                                      Norway
Chile                                       Philippines
Denmark                                     Portugal
Ecuador                                     Republic of China (Taiwan)
Egypt                                       Singapore
Finland                                     South Africa
France                                      South Korea
Germany                                     Spain
Greece                                      Sweden
Hungary                                     Switzerland
Iceland                                     Thailand
India                                       Tobago
Indonesia                                   Trinidad
Ireland                                     United Kingdom
Italy                                       Venezuela
Japan

<PAGE>
                                          -------------------------------------
                                         |        SCHEDULE 6 - PLACARDS        |
                                         |         LEASE AGREEMENT [TN]        |
                                          -------------------------------------

                                    PLACARDS

                                   Leased from

                Wells Fargo Bank Northwest, National Association,
                  not in its individual capacity but solely as
                         Owner Trustee, Owner and Lessor
                                       and
                                  Mortgaged to
                            Wilmington Trust Company,
             not in its individual capacity but solely as Mortgagee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]