Document:

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                                                                    EXHIBIT 10.7

                                 TAX AGREEMENT,

                                  BY AND AMONG

                           CONTINENTAL AIRLINES, INC.

                                       AND

                            EXPRESSJET HOLDINGS, INC.

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                                  TAX AGREEMENT

         TAX AGREEMENT (this "Agreement"), dated as of _______ __, 2001, by and
between Continental Airlines, Inc., a Delaware corporation ("Continental"), and
ExpressJet Holdings, Inc., a Delaware corporation ("Holdings").

                                    RECITALS

         WHEREAS, Continental is the common parent corporation of an affiliated
group of corporations within the meaning of Section 1504(a) of the Code and of
consolidated, combined, unitary and other similar groups as defined under
similar laws of other jurisdictions, and Holdings and certain Holdings
Affiliates are members of such groups;

         WHEREAS, the groups of which Continental is the common parent and
Holdings and the Holdings Affiliates are members file Consolidated Returns and
Combined Returns;

         WHEREAS, Continental and ExpressJet Airlines, Inc. (formerly known as
Continental Express, Inc.) entered into a Tax Agreement dated _____________ (the
"Original Tax Agreement") setting forth the principles and responsibilities
regarding the allocation of Taxes (as defined herein) and other related
liabilities and adjustments with respect to Taxes during the periods during
which members of the Holdings Group are members of the Continental Group.

         WHEREAS, Continental and Holdings have entered into an Initial Public
Offering and Distribution Agreement dated __________ __, 2001 (the "IPO
Agreement"), and as a result of the transactions contemplated by that agreement
Holdings will cease to be a member of the Continental Group.

         WHEREAS, Continental and Holdings now wish to terminate the Original
Tax Agreement effective as of the closing date of the Initial Public Offering
and to enter into this Agreement to set forth the principles and
responsibilities regarding Taxes.

         NOW, THEREFORE, in consideration of the premises and the
representations, covenants and agreements contained herein and intending to be
legally bound, the parties hereto hereby agree as follows:

                                   ARTICLE I
                                   Definitions

         SECTION 1.1 DEFINITIONS. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the IPO Agreement. As used in
this Agreement, capitalized terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).

         "Agreed Rate" means, LIBOR plus 200 basis points.

         "Agreement" has the meaning set forth in the Recitals.

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         "Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions located in the State of Texas are authorized or
obligated by law or executive order to close.

         "Code" means the United States Internal Revenue Code of 1986, as
amended.

         "Combined Group" means a group of corporations or other entities that
files a Combined Return.

         "Combined Return" means any Tax Return (other than for Federal Income
Taxes) filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein Holdings or one or more Holdings
Affiliates join in the filing of such Tax Return (for any taxable period or
portion thereof) with Continental or one or more Continental Affiliates.

         "Consolidated Group" means an affiliated group of corporations within
the meaning of Section 1504(a) of the Code that files a Consolidated Return.

         "Consolidated Return" means any Tax Return with respect to Federal
Income Taxes filed on a consolidated basis wherein Holdings or one or more
Holdings Affiliates join in the filing of such Tax Return (for any taxable
period or portion thereof) with Continental or one or more Continental
Affiliates.

         "Continental" has the meaning set forth in the Recitals.

         "Continental Group" means the affiliated group of corporations as
defined in Section 1504(a) of the Code, or similar group of entities as defined
under corresponding provisions of the laws of other jurisdictions, of which
Continental is the common parent, and any corporation or other entity which is a
member of such group for the relevant taxable period or portion thereof, but
excluding any member of the Holdings Group.

         "Deconsolidation" means with respect to each Tax Return (i) any event
pursuant to which Holdings and all Holdings Affiliates cease to be a subsidiary
corporations includable in the Consolidated Return, and (ii) any event pursuant
to which neither Holdings nor any Holdings Affiliate continues to be included in
a Combined Return. "Deconsolidation Date" means with respect to each Tax Return
the day on which a Deconsolidation occurs.

         "Deconsolidation Period" means any Pre-Deconsolidation Period that
includes a Deconsolidation Date.

         "Estimated Tax Installment Date" means the installments due dates
prescribed in Section 6655(c) of the Code (presently April 15, June 15,
September 15 and December 15).

         "Federal Income Tax" means any Tax imposed under Subtitle A of the Code
or any other provision of United States federal Income Tax law (including the
Taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code), and any
interest, additions to Tax or penalties applicable or related thereto.

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         "Fifty-Percent or Greater Interest" shall have the meaning ascribed to
such term for purposes of Sections 355(d) and (e) of the Code.

         "Final Determination" means the final resolution of any Tax (or other
matter) for a taxable period, including related interest or penalties, that,
under applicable law, is not subject to further appeal, review or modification
through proceedings or otherwise, including (1) by the expiration of a statute
of limitations or a period for the filing of claims for Refunds, amending Tax
Returns, appealing from adverse determinations, or recovering any Refund
(including by offset), (2) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable, (3) by
a closing agreement or an accepted offer in compromise under Section 7121 or
7122 of the Code, or comparable agreements under laws of other jurisdictions,
(4) by execution of an Internal Revenue Service Form 870AD, or by a comparable
form under the laws of other jurisdictions (excluding, however, with respect to
a particular Tax Item for a particular taxable period any such form that
reserves (whether by its terms or by operation of law) the right of the taxpayer
to file a claim for Refund and/or the right of the Tax Authority to assert a
further deficiency with respect to such Tax Item for such period), or (5) by any
allowance of a Refund or credit, but only after the expiration of all periods
during which such Refund may be adjusted.

         "Holdings" has the meaning set forth in the Recitals.

         "Holdings Group" means the affiliated group of corporations as defined
in Section 1504(a) of the Code, or similar group of entities as defined under
corresponding provisions of the laws of other jurisdictions, of which Holdings
(or ExpressJet Airlines, Inc.) would be the common parent if it were not a
subsidiary of Continental, and any corporation or other entity which would be a
member of such group for the relevant taxable period or portion thereof.

         "Holdings Group Combined Tax Liability" means, with respect to any
taxable period, the Holdings Group's liability for Non-Federal Combined Taxes as
determined under Section 4.3 of this Agreement.

         "Holdings Group Federal Income Tax Liability" means, with respect to
any taxable period, the Holdings Group's liability for Federal Income Taxes as
determined under Section 4.2 of this Agreement.

         "Income Tax" means (a) any Tax based upon, measured by, or calculated
with respect to (1) net income or profits (including, without limitation, any
capital gains Tax, minimum Tax and any Tax on items of Tax preference, but not
including sales, use, real or personal property, gross or net receipts, transfer
or similar Taxes) or (2) multiple bases if one or more of the bases upon which
such Tax may be based, measured by, or calculated with respect to, is described
in clause (1) above, or (b) any United States state or local franchise Tax.

         "LIBOR" means, for each month (or portion thereof) during any period,
an interest rate per annum equal to the rate per annum reported, on the date two
Business Days prior to the first day of such month, on the Telerate Page 3750
(of if such screen shall cease to be publicly available, as reported on Reuters
Screen page "LIBO" or by any other publicly available source of

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such market rate) for London interbank offered rates for United States dollar
deposits for such month (or portion thereof).

         "Person" means and includes any individual, partnership, joint venture,
limited liability company, corporation, association, joint stock company, trust,
unincorporated organization or similar entity or a governmental authority or any
department or agency or other unit thereof.

         "Pre-Deconsolidation Period" means any taxable period with respect to a
Consolidated Return or Combined Return, as the case may be, ending on or before
or that includes a Deconsolidation Date.

         "Pro Forma Holdings Group Combined Return" means a pro forma
Non-Federal Combined Tax return or other schedule prepared pursuant to Section
4.3 or Section 4.8 of this Agreement.

         "Pro Forma Holdings Group Consolidated Return" means a pro forma
consolidated Federal Income Tax return or other schedule prepared pursuant to
Section 4.2 or Section 4.8 of this Agreement.

         "Proceeding" means any assessment, audit, or other examination by any
Tax Authority, relating to Taxes (including Refunds), whether administrative or
judicial, and any appeal of the foregoing.

         "Refund" means any refund of Taxes, including any reduction in Tax
liabilities by means of a credit, offset or otherwise

         "Representatives" means with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.

         "Separate Return" means any Tax Return with respect to Holdings or any
Holdings Affiliate other than a Consolidated Return or a Combined Return.

         "Tax" means any charges, fees, levies, imposts, duties, or other
assessments of a similar nature, including income, alternative or add-on
minimum, gross receipts, profits, lease, service, service use, wage, wage
withholding, employment, workers compensation, business occupation, occupation,
premiums, environmental, estimated, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, highway use,
commercial rent, capital stock, paid up capital, recording, registration,
property, real property gains, value added, business license, custom duties, or
other tax or governmental fee of any kind whatsoever, imposed or required to be
withheld by any Tax Authority including any interest, or penalties applicable
or related thereto.

         "Tax Attribute" means a consolidated net operating loss, a consolidated
net capital loss, a consolidated unused investment credit, a consolidated unused
foreign tax credit, or a consolidated excess charitable contribution (as such
terms are used in Treasury Regulations 1.1502-79 and 1.1502-79A), or a U.S.
federal minimum tax credit or U.S. federal general business credit (but not tax
basis or earnings and profits) or any comparable Tax Item reflected on a
Combined

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Return that arises in a Pre-Deconsolidation Period (including the taxable period
in which a Deconsolidation Date occurs) and can be carried to a taxable period
ending after a Deconsolidation Date.

         "Tax Authority" means a governmental authority (foreign or domestic) or
any subdivision, agency, commission or authority thereof or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (including, without
limitation, the Internal Revenue Service).

         "Tax Item" means any item of income, gain, loss, deduction, credit
other item reflected on a Tax Return or any Tax Attribute.

         "Tax Return" means any return, report, certificate, form or similar
statement or document (including, any related or supporting information or
schedule attached thereto and any information return, amended Tax Return, claim
for Refund or declaration of estimated tax) required to be supplied to, or filed
with, a Tax Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.

         "Treasury Regulations" means the final, temporary and proposed income
tax regulations promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).

                                   ARTICLE II
                      FILING AND PREPARATION OF TAX RETURNS

         SECTION 2.1 IN GENERAL.

                  (a) Continental shall have the sole and exclusive
responsibility for the preparation and filing of, and shall prepare and file or
cause to be prepared and filed: (1) all Consolidated Returns and (2) all
Combined Returns. Holdings hereby consents to be included in all such Tax
returns.

                  (b) Except as otherwise provided in Section 2.1(a) of this
Agreement, Holdings shall have the sole and exclusive responsibility for the
preparation and filing of, and shall prepare and file or cause to be prepared
and filed, all Tax Returns of Holdings and any Holdings Affiliate; provided
that, if Continental owns (or at any time during the taxable period to which
such Tax Return relates owned) a Fifty-Percent or Greater Interest in the
outstanding stock of Holdings, Holdings shall, at the request of Continental,
submit such Tax Returns to Continental (no later than thirty (30) Business Days
prior to the due date for the filing of such Tax Returns (taking into account
applicable extensions)) for Continental's review and approval, which approval
shall not be unreasonably withheld.

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         SECTION 2.2 MANNER OF PREPARING AND FILING TAX RETURNS.

                  (a) Continental shall have the exclusive right, in its sole
discretion, with respect to any Tax Return described in Section 2.1(a) of this
Agreement to determine (1) the manner in which such Tax Return shall be prepared
and filed, including the elections, methods of accounting, positions,
conventions and principles of taxation to be used and the manner in which any
Tax Item shall be reported, (2) whether any extensions may be requested, (3) the
elections that will be made or revoked by Continental, each Continental
Affiliate, Holdings, and each Holdings Affiliate on such Tax Return, (4) whether
any amended Tax Returns shall be filed, (5) whether any claims for Refund shall
be made, (6) whether any Refunds shall be paid by way of refund or credited
against any liability for the related Tax, and (7) whether to retain outside
firms to prepare or review such Tax Return, whom to retain for such purpose and
the scope of any such retention.

                  (b) Holdings shall, at its expense, be responsible for
preparing (or causing to be prepared) and shall provide to Continental (or cause
to be so provided), all information that Continental shall reasonably request,
in such form as Continental shall reasonably request, relating to the rights and
obligations of Continental with respect to Taxes and Tax Returns hereunder,
including any such information so requested to enable Continental to prepare the
Tax Returns that it is required to prepare under Section 2.1 and allocate Taxes
as required by this Agreement (which information shall be provided by Holdings
no later than ten (10) Business Days prior to the due date (not taking into
account extensions) of such Tax Return).

         SECTION 2.3 In the event that a Tax Item affects a Tax Return described
in Section 2.1(a) of this Agreement and also affects a Tax Return described in
Section 2.1(b) of this Agreement that is filed after the date of this Agreement,
Holdings shall conform the treatment of such Tax Item in any Tax Return
described in Section 2.1(b) of this Agreement to the treatment of such Tax Item
in the applicable Tax Return described in Section 2.1(a) of this Agreement.

                                  ARTICLE III
                       Payment of Taxes to Tax Authorities

         SECTION 3.1 CONSOLIDATED AND COMBINED TAXES. Continental shall timely
pay (or cause to be paid) to the appropriate Tax Authority all Taxes with
respect to each Consolidated Return and each Combined Return due for all
Pre-Deconsolidation Periods.

         SECTION 3.2 SEPARATE TAXES. Holdings shall timely pay (or cause to be
paid) to the appropriate Tax Authorities all Taxes of Holdings or any Holdings
Affiliate reflected on a Separate Return and shall have no claim against
Continental or any Continental Affiliate for any such Taxes.

                                   ARTICLE IV
                               Allocation of Taxes

         SECTION 4.1 HOLDINGS LIABILITY FOR CONSOLIDATED AND COMBINED TAXES. For
each Deconsolidation Period, Holdings shall be liable for and shall pay to
Continental an amount equal to the sum of the Holdings Group Federal Income Tax
Liability and the Holdings Group Combined Tax Liability for such taxable period.

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         SECTION 4.2 HOLDINGS GROUP FEDERAL INCOME TAX LIABILITY. The Holdings
Group Federal Income Tax Liability for a period shall be the Federal Income
Taxes for such taxable period, as determined on a Pro Forma Holdings Group
Consolidated Return prepared:

         (a)      assuming that the members of the Holdings Group were not
                  included in the Continental Consolidated Group and by
                  including only Tax Items of members of the Holdings Group
                  which are included in the Consolidated Return;

         (b)      except as provided in section 4.2(f), using all elections,
                  accounting methods and conventions used on the Consolidated
                  Return for such period;

         (c)      applying the highest statutory marginal corporate income Tax
                  rate in effect for such taxable period (or portion thereof);

         (d)      excluding any Tax Attributes for which Holdings has been
                  compensated pursuant to section 4.7;

         (e)      assuming the exemption amount in section 55 of the Code for
                  such year equals zero and that the amount specified in section
                  59(a)(a) of the Code is zero;

         (f)      assuming that the Holdings Group elects not to carry back any
                  net operating losses; and

         (g)      assuming that the utilization of any Tax Attribute
                  carryforward by Holdings (including, but not limited to, the
                  Holdings Group's deduction for any net operating loss
                  carryforwards under section 172 of the Code, any capital loss
                  carryforwards, any charitable contribution carryforwards or
                  any Tax credits) is limited to the amount of such Tax
                  Attributes actually utilized on the Consolidated Return for
                  such period.

         SECTION 4.3 HOLDINGS GROUP COMBINED TAX LIABILITY. With respect to any
Deconsolidation Period, the Holdings Group Combined Tax Liability shall be the
sum for such taxable period of the Holdings Group's liability for each
Non-Federal Combined Tax, as determined on Pro Forma Holdings Group Combined
Returns prepared in a manner consistent with the principles and procedures set
forth in Section 4.2 hereof.

         SECTION 4.4 PREPARATION AND DELIVERY OF PRO FORMA TAX RETURNS. Not
later than thirty (30) Business Days following the date on which the related
Consolidated Return or Combined Return, as the case may be, is filed with the
appropriate Tax Authority, Continental shall prepare and deliver to Holdings a
pro forma Tax Return calculating the Holdings Group Federal Income Tax Liability
or the Holdings Group Combined Tax Liability which is attributable to the period
covered by such filed Tax Return.

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         SECTION 4.5 INSTALLMENT PAYMENTS.

                  (a) Consolidated Taxes. Not later than five (5) Business Days
prior to each Estimated Tax Installment Date with respect to any Consolidated
Return for the Deconsolidation Period, Continental may reasonably determine
under the principles of Section 6655 of the Code the estimated amount of the
related installment of the Holdings Group Federal Income Tax Liability and
provide Holdings with a written notice of such determination. Holdings shall pay
to Continental no later than the Estimated Tax Installment Date the amount thus
determined.

                  (b) Combined Taxes. Following the payment of any installment
payment with respect to any Combined Tax Return for any Deconsolidation Period,
Continental may reasonably determine the estimated amount of the Holdings Group
Combined Tax Liability and within the first twenty (20) Business Days following
such payment provide Holdings with a written notice of such determination.
Holdings shall pay to Continental the amount thus determined within five (5)
Business Days of the receipt of such notice.

         SECTION 4.6 TRUE-UP PAYMENTS.

                  (a) Consolidated Taxes. Not later than fifteen (15) Business
Days following the completion and delivery to Holdings of the Pro Forma Holdings
Group Consolidated Return for the Deconsolidation Period, Holdings shall pay to
Continental, or Continental shall pay to Holdings, as appropriate, an amount
equal to the difference, if any, between the Holdings Group Federal Income Tax
Liability for such period and the aggregate amount paid by Holdings with respect
to such period under Section 4.5(a) of this Agreement and Section 4.5(a) of the
Original Tax Agreement.

                  (b) Combined Taxes. Not later than fifteen (15) Business Days
following the completion and delivery to Holdings of any Pro Forma Holdings
Group Combined Return for any Deconsolidation Period, Holdings shall pay to
Continental, or Continental shall pay to Holdings, as appropriate, an amount
equal to the difference, if any, between the Holdings Group Combined Tax
Liability for the Deconsolidation Period and the amounts paid by Holdings with
respect to such period under Section 4.5(b) this Agreement and 4.5(b) of the
Original Tax Agreement.

         SECTION 4.7 PAYMENTS FOR USE OF ATTRIBUTES. Not later than 60 days
following the filing of the Consolidated Return for the Deconsolidation Period,
Continental shall determine the amount of the Tax Attributes of the Continental
Group that are allocable to the Holdings Group as of the end of such year based
upon the Consolidated Return as originally filed (the "Allocated Attributes")
and inform Holdings of such determination. If the amount of the Allocated
Attributes is less than the amount of Tax Attributes (as reasonably determined
by Continental) that would have been available to the Holdings Group at the end
of such year had the Holdings Group not been included in the Consolidated Return
(the "Stand-Alone Attributes"), Continental shall pay to Holdings the value of
such shortfall. If the amount of the Allocated Attributes is greater than the
Stand-Alone Attributes, Holdings shall pay to Continental the value of such
shortfall. Notwithstanding the foregoing, the Stand-Alone Attributes shall be
computed assuming that the utilization of any Tax Attribute carryforward by
Holdings is subject to the limitation described in Section 4.2(g).

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For purposes of this section, the value of any Tax Attribute shortfall or excess
shall be equal to the amount of Taxes (computed in accordance with section 4.2,
excluding section 4.2(g)) that would be avoided by the Holdings Group assuming
it had sufficient income to fully utilize such Tax Attributes in such year.
Notwithstanding any other provision of this section 4.7, in no event shall a
party to this Agreement be required to make any payment pursuant to this section
to the extent compensation was paid for the same Tax Attributes pursuant to
section 4.7 of the Original Tax Agreement.

         SECTION 4.8 SUBSEQUENT CHANGES IN TREATMENT OF TAX ITEMS. For any
Pre-Deconsolidation Period, in the event of a change in the treatment of any Tax
Item of any member of a Consolidated Group or Combined Group as a result of a
Final Determination, the filing of a claim for Refund, the filing of an amended
Tax Return for such period or the reflection of a change in treatment reflected
in a subsequently filed Tax Return, the following steps shall be taken:

                  (a) To the extent such change affects a Deconsolidation Period
(including a change in the Tax Attributes of the Holdings Group as of the end of
such period), Continental shall prepare a revised Pro Forma Holdings Group
Consolidated Returns and/or revised Pro Forma Holdings Group Combined Returns,
as appropriate, to reflect the change of such Tax Item. Following the
preparation of such revised pro forma Tax Returns, Continental shall prepare and
deliver to Holdings a recalculation of the payment obligations under Sections
4.1 and 4.6 no later than twenty (20) Business Days following the event that
triggers the change. If any additional payment is required to be made (or any
refund of amounts previously paid) as a result of the change, such payment (plus
interest at the Agreed Rate from the date the original payment was made under
section 4.6) shall be made no later than ten (10) Business Days following the
delivery of the relevant recalculation.

                  (b) To the extent such change affects one or more
Pre-Deconsolidation Periods other than a Deconsolidation Period, Continental
shall prepare Pro Forma Holdings Group Consolidated Returns and/or Pro Forma
Holdings Group Combined Returns, as appropriate, for each such period with and
without the changed Tax Items and determine the amount of change, if any, in the
amount of Holdings Group Federal Income Tax Liability and/or Holdings Group
Combined Tax Liability for each such period that results from the change. If the
change results in a net increase in the Holdings Group Federal Income Tax
Liability and Holdings Group Combined Tax Liability for all affected periods,
Holdings shall pay to Continental the amount of the increase (plus interest at
the Agreed Rate from the filing date of the original relevant Tax Returns) no
later than twenty (20) Business Days following the event that triggers the
change. If the change results in a net decrease in the Holdings Group Federal
Income Tax Liability and Holdings Group Combined Tax Liability for all affected
periods, Continental shall pay to Holdings the amount of the increase (plus
interest at the Agreed Rate from the filing date of the original relevant Tax
Returns) no later than twenty (20) Business Days following the event that
triggers the change.

                                   ARTICLE V
                                 Tax Attributes

         SECTION 5.1 ALLOCATION OF TAX ITEMS UPON DECONSOLIDATION.

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                  (a) In General. All Tax computations for any Deconsolidation
Period, shall be made pursuant to the principles of Section 1.1502-76(b) of the
Treasury Regulations or of a corresponding provision under the laws of other
jurisdictions.

                  (b) Reattribution. In the event of a Deconsolidation,
Continental may, at its option, elect to reattribute to itself certain Tax Items
of the Holdings Group pursuant to Section 1.1502-20(g) of the Treasury
Regulations. If Continental makes such election, Holdings shall comply with the
requirements of Section 1.1502-20(g)(4) of the Treasury Regulations.

         SECTION 5.2 ALLOCATION OF TAX ATTRIBUTES. To the extent permitted by
applicable law, the relevant Tax Attributes with respect to the Consolidated
Group or Combined Group, as the case may be, shall be allocated to the
corporation or entity that created or generated such Tax Attributes.

         SECTION 5.3 EARNINGS AND PROFITS. The Federal Income Tax liability of
the Consolidated Group shall, for purposes of determining the earnings and
profits of each member, be allocated in accordance with the methods prescribed
in Treasury Regulation section 1.1552-1(a)(2) and Treasury Regulation section
1.1502-33(d)(2)(ii) (using 100% as the fixed percentage).

                                   ARTICLE VI
                        Additional Rights and Obligations

         SECTION 6.1 PROVISION OF INFORMATION AND MUTUAL COOPERATION.

                  (a) Continental shall (and shall cause the Continental
Affiliates) and Holdings shall (and shall cause the Holdings Affiliates) to, (1)
furnish to the other in a timely manner such information, documents and other
materials as the other may reasonably request for purposes of (i) preparing any
Tax Return (or pro forma Tax return prepared in accordance with Section 4
hereof) or portion thereof for which the other has responsibility for preparing
under this Agreement, (ii) contesting or defending any Proceeding, and (iii)
making any determination or computation necessary or appropriate under this
Agreement, (2) make its employees available to the other to provide explanations
of documents and materials and such other information as the other may
reasonably request in connection with any of the matters described in subclauses
(i), (ii) and (iii) of clause (1) above, and (3) reasonably cooperate in
connection with any Proceeding.

                  (b) Continental shall (and shall cause the Continental
Affiliates to) and Holdings shall (and shall cause the Holdings Affiliates to)
retain and provide on reasonable demand books, records, documentation or other
information relating to any Tax Return or Proceeding, with respect to any
taxable period in which Continental owns a Fifty Percent or Greater Interest in
the outstanding stock of Holdings, until the later of (i) the expiration of the
applicable statute of limitations (after giving effect to any extension, waiver,
or mitigation thereof) and (ii) in the event any claim is made under this
Agreement or by any Tax Authority for which such information is relevant, until
a Final Determination is reached with respect to such claim. Notwithstanding
anything to the contrary included in this Agreement, the parties will comply in
all respects with the requirements of any applicable record retention agreement
with any Tax Authority.

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                  (c) Notwithstanding any other provision of this Agreement, no
member of the Continental Group shall be required to provide Holdings or any
Holdings Affiliate access to or copies of (1) any Tax information that relates
exclusively to any member of the Continental Group, (2) any Tax information as
to which any member of the Continental Group is entitled to assert the
protection of any privilege, or (3) any Tax information as to which any member
of the Continental Group is subject to an obligation to maintain the
confidentiality of such information. Continental shall use reasonable efforts to
separate any such information from any other information to which Holdings is
entitled to access or to which Holdings is entitled to copy under this
Agreement, to the extent consistent with preserving its rights under this
Section 6.1(c).

         SECTION 6.2 INDEMNIFICATION.

                  (a) Failure to Pay. Continental and each Continental Affiliate
shall jointly and severally indemnify Holdings and each Holdings Affiliate, and
hold them harmless from and against any Tax or Losses that are attributable to,
or results from the failure of Continental or any Continental Affiliate to make
any payment required to be made under this Agreement. Holdings and each Holdings
Affiliate shall jointly and severally indemnify Continental and each Continental
Affiliate, and hold them harmless from and against any Tax or Losses that are
attributable to, or results from, the failure of Holdings or any Holdings
Affiliate to make any payment required to be made under this Agreement.

         SECTION 6.3 INACCURATE OR INCOMPLETE INFORMATION. Continental and each
Continental Affiliate shall jointly and severally indemnify Holdings, each
Holdings Affiliate and each of their respective Representatives, and hold them
harmless from and against any net Taxes or net Losses attributable to
Continental or any Continental Affiliate supplying Holdings or any Holdings
Affiliate with inaccurate or incomplete information, in connection with the
preparation of any Tax Return or any Proceeding. Holdings and each Holdings
Affiliate shall jointly and severally indemnify Continental, each Continental
Affiliate and their respective Representatives, and hold them harmless from and
against any net Taxes or net Losses attributable to Holdings or any Holdings
Affiliate supplying Continental or any Continental Affiliate with inaccurate or
incomplete information, in connection with the preparation of any Tax Return or
any Proceeding.

         SECTION 6.4 INTEREST. Unless a different rate of interest is provided
for in this Agreement, payments pursuant to this Agreement that are not made
within the period prescribed in this Agreement or, if no period is prescribed,
within fifteen (15) Business Days after demand for payment is made, shall bear
interest through and including the date of payment at a per annum rate equal the
Agreed Rate or such lesser rate as may be required by applicable law. Such
interest will be payable at the same time as the payment to which it relates and
shall be calculated based on a year of 365 or 366 days, as appropriate, for the
actual number of days for which due.

         SECTION 6.5 CLOSING OF TAX PERIODS. For Federal Income Tax purposes,
the taxable year of the Holdings Group shall end as of the close of the
Deconsolidation Date and, with respect to all other Income Taxes, Continental
(or the appropriate member of the Continental Group) and Holdings (or the
appropriate member of the Holdings Group) shall, unless prohibited by applicable
law, take all action necessary or appropriate to close the taxable period of the
members of the Holdings Group as of the close of the Deconsolidation Date.
Neither any mem-

                                      -11-
<PAGE>   13

ber of the Continental Group nor any member of the Holdings Group shall take any
position inconsistent with the preceding sentence on any Income Tax Return.

                                  ARTICLE VII
                                  Proceedings

         SECTION 7.1 IN GENERAL.

                  (a) Subject to Section 7.1(b) of this Agreement, Continental
shall have the exclusive right, in its sole discretion, to control, contest, and
represent the interests of Continental, any Continental Affiliate, Holdings or
any Holdings Affiliate in any Proceeding relating to any Tax Return described in
Section 2.1(a) of this Agreement and to resolve, settle or agree to any
deficiency, claim or adjustment proposed, asserted or assessed in connection
with or as a result of any such Proceeding. Continental's rights shall extend to
any matter pertaining to the management and control of any Proceeding,
including, without limitation, execution of waivers, choice of forum, scheduling
of conferences and the resolution of any Tax Item.

                  (b) Holdings shall have the exclusive right, in its sole
discretion, to control, contest, and represent the interests of Holdings or any
Holdings Affiliate in any Proceeding relating to any Tax Return described in
Section 2.1(b) of this Agreement and to resolve, settle, or agree to any
deficiency, claim or adjustment proposed, asserted or assessed in connection
with or as a result of any such Proceeding; provided that, so long, as
Continental owns a Fifty-Percent or Greater Interest in the outstanding stock of
Holdings, the entering into of (or rejection of) any such resolution, settlement
or agreement or any decision in connection with (including the entering into of
or rejection of) any judicial or administrative proceeding relating to Taxes
shall be subject to Continental's review and approval, which approval shall not
be unreasonably withheld.

                  (c) In addition to the parties' obligations under Section 6.1
of this Agreement, (i) Holdings shall, and shall cause its Affiliates to,
cooperate fully with Continental in contesting or defending any Proceeding
described in Section 7.1(a), including, without limitation, by furnishing to
Continental in a timely manner such information, documents or other materials as
Continental may reasonably request and (ii) Continental shall, and shall cause
its Affiliates to, cooperate with Holdings in contesting or defending any
Proceeding described in 7.1(b).

         SECTION 7.2 NOTICE. If Continental or any member of the Continental
Group receives written notice of or relating to, any Proceeding from a Tax
Authority that asserts, proposes or recommends a deficiency, claim or adjustment
that, if sustained, would result in the redetermination of a Tax Item of a
member of the Holdings Group, Continental shall promptly provide a copy of such
notice to Holdings (but in no event later than fifteen (15) Business Days
following the receipt of such notice). If Holdings or any member of the Holdings
Group receives written notice of, or relating to, any Proceeding from a Tax
Authority with respect to a Tax Return described in Section 2.l(a) of this
Agreement, Holdings shall promptly provide a copy of such notice to Continental
(but in no event later than fifteen (15) Business Days following the receipt of
such notice).

                                      -12-
<PAGE>   14

         SECTION 7.3 FAILURE TO NOTIFY. The failure of Continental or Holdings
to notify the other of any matter relating to a particular Tax for a taxable
period or to take any action specified in this Agreement shall not relieve such
other party of any liability and/or obligation which it may have under this
Agreement with respect to such Tax for such taxable period except to the extent
that such other party's rights hereunder are actually prejudiced by such
failure.

                                  ARTICLE VIII
                               Dispute Resolution

         SECTION 8.1 DISPUTE RESOLUTION. In the event that Continental or any
Continental Affiliate, as the case may be, on the one hand, and Holdings or any
Holdings Affiliate, as the case may be, on the other hand, disagree as to the
amount or calculation of any payment to be made under this Agreement, or the
interpretation or application of any provision under this Agreement, the parties
shall attempt in good faith to resolve such dispute. If such dispute is not
resolved within sixty (60) Business Days following the commencement of the
dispute, Continental and Holdings shall jointly retain a nationally recognized
law firm or independent public accounting firm, which firm is independent of
both parties (the "Independent Entity"), to resolve the dispute. The Independent
Entity shall act as an arbitrator to resolve all points of disagreement and its
decision shall be final and binding upon all parties involved. Following the
decision of the Independent Entity, Continental, the Continental Affiliates,
Holdings and the Holdings Affiliates shall each take or cause to be taken any
action necessary to implement the decision of the Independent Entity. The fees
and expenses relating to the Independent Entity shall be borne equally by
Continental and Holdings.

                                   ARTICLE IX
                                  Miscellaneous

         SECTION 9.1 EFFECTIVENESS. This Agreement shall be effective on closing
date of the Initial Public Offering.

         SECTION 9.2 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and, unless otherwise
provided herein, shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is given, (ii) on the
day of transmission if sent via facsimile transmission to the facsimile number
given below; provided, telephonic confirmation of receipt is obtained promptly
after completion of transmission, (iii) on the business day after delivery to an
overnight courier service or the Holdings mail service maintained by the United
States Postal Service, provided, receipt of delivery has been confirmed, or (iv)
on the fifth day after mailing, provided, receipt of delivery is confirmed, if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, properly addressed and return-receipt
requested, to the party as follows:

         If to Continental or any Continental Affiliate, to:

         Continental Airlines, Inc.
         1600 Smith Street, HQSTY
         Houston, Texas  77002
         Attention: Senior Vice President-Finance
         Telecopy No.: (713) 324-2448

                                      -13-
<PAGE>   15

with a copy to:

         Continental Airlines, Inc.
         1600 Smith Street, HQSLG
         Houston, Texas  77002
         Attention: General Counsel
         Telecopy No.: (713) 324-5161

if to Holdings, to:

         ExpressJet Holdings, Inc.
         1600 Smith Street, HQSCE
         Houston, Texas  77002
         Attention:  Chief Financial Officer
         Telecopy No.: (713) 324-4420

Any party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.

         SECTION 9.3 CHANGES IN LAW. Any reference to a provision of the Code or
a law of another jurisdiction shall include a reference to any applicable
successor provision or law.

         SECTION 9.4 SUCCESSORS AND ASSIGNS. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.

         SECTION 9.5 AUTHORIZATION, ETC. Each of the parties hereto hereby
represents and warrants that it has the power and authority to execute, deliver
and perform this Agreement, that this Agreement has been duly authorized by all
necessary corporate action on the part of such party, that this Agreement
constitutes a legal, valid and binding obligation of such party (subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equity principles) and
that the execution, delivery and performance of this Agreement by such party
does not contravene or conflict with any provision of law or of its charter or
bylaws or any agreement, instrument or order binding on such party.

         SECTION 9.6 COMPLETE AGREEMENT. This Agreement shall constitute the
entire agreement between Continental or any Continental Affiliate and Holdings
or any Holdings Affiliate with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter. Unless the context indicates otherwise, any reference to
Holdings in this Agreement shall refer to Holdings and the Holdings Affiliates
and any reference to Continental in this Agreement shall refer to Continental
and the Continental Affiliates. Notwithstanding anything to the contrary herein,
nothing in this Agreement shall modify the rights and obligations of the parties
as set forth in the IPO Agreement.

                                      -14-
<PAGE>   16

         SECTION 9.7 ORIGINAL TAX AGREEMENT TERMINATED. The Original Tax
Agreement is hereby terminated and no party thereto shall be entitled to pursue
any rights or remedies thereunder after the effective date of this Agreement.

         SECTION 9.8 INTERPRETATION. The Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. Whenever any words are used herein in the masculine gender, they
shall be construed as though they were also used in the feminine gender in all
cases where they would so apply. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

         SECTION 9.9 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
(regardless of the laws that might otherwise govern under applicable principles
of conflicts law) as to all matters, including, without limitation, matters of
validity, construction, effect, performance and remedies.

         SECTION 9.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         SECTION 9.11 LEGAL ENFORCEABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         SECTION 9.12 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of Continental, the Continental Affiliates, Holdings and the
Holdings Affiliates, and is not intended to confer upon any other person any
rights or remedies hereunder.

         SECTION 9.13 JURISDICTION; FORUM.

                  (a) By the execution and delivery of this Agreement,
Continental and Holdings submit and agree to cause the Continental Affiliates
and Holdings Affiliates, respectively, to submit to the personal jurisdiction of
any state or federal court in the State of Texas in any suit or proceeding
arising out of or relating to this Agreement.

                  (b) To the extent that Continental, Holdings, any Continental
Affiliate or any Holdings Affiliate has or hereafter may acquire any immunity
from jurisdiction of any Delaware court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Continental or Holdings, as the case may be, hereby irrevocably waives, and
agrees to cause the Continental Affiliates and the Holdings Affiliates,
respectively, to waive such immunity in respect of its obligations with respect
to this Agreement.

                                      -15-
<PAGE>   17

                  (c) The parties hereto agree that an appropriate and
convenient, non-exclusive forum for any disputes between any of the parties
hereto or the Continental Affiliates and the Holdings Affiliates arising out of
this Agreement shall be in any state or federal court in the State of Delaware.

         SECTION 9.14 CONFIDENTIALITY. Each party shall hold and cause its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such party) concerning the other parties
hereto furnished it by such other party or its Representatives pursuant to this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the party to which it was furnished, (b) in the public
domain through no fault of such party, or (c) later lawfully acquired from other
sources by the party to which it was furnished), and each party shall not
release or disclose such information to any other person, except its
Representatives who shall be advised of the provisions of this Section. Each
party shall be deemed to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.

         SECTION 9.15 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of the parties.

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer as of the date first above
written.

                                        Continental Airlines, Inc.,
                                        on behalf of itself and each
                                        of the Continental Affiliates

                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________

                                        ExpressJet Holdings, Inc.
                                        on behalf of itself and each of
                                        the Holdings Affiliates

                                        By:_____________________________________

                                        Name:___________________________________

                                        Title:__________________________________

                                      -16-<PAGE>   1
                                                                    EXHIBIT 10.8

                            EXPRESSJET HOLDINGS, INC.

                            2001 STOCK INCENTIVE PLAN

                                   I. PURPOSE

         The purpose of the EXPRESSJET HOLDINGS, INC. 2001 STOCK INCENTIVE PLAN
is to provide a means through which ExpressJet Holdings, Inc., a Delaware
corporation, and its subsidiaries may attract able persons to serve as
directors, or to enter or remain in the employ of the Company (as defined below)
or its subsidiaries, and to provide a means whereby those individuals upon whom
the responsibilities of the successful administration and management of the
Company and its subsidiaries rest, and whose present and potential contributions
to the welfare of the Company and its subsidiaries are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company and its subsidiaries. A further purpose of the Plan
is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its
subsidiaries. Accordingly, the Plan provides that the Company may grant to
certain employees or directors Restricted Stock Awards, Options, or any
combination of the foregoing, as hereinafter set forth.

                                II. DEFINITIONS

         The following definitions (including any plural thereof) shall be
applicable throughout the Plan unless specifically modified by any Section:

         (a) "ADMINISTRATOR" means (i) in the context of Awards made to, or the
administration (or interpretation of any provision) of the Plan as it relates
to, any person who is subject to Section 16 of the Exchange Act (including any
successor section to the same or similar effect, "Section 16"), the Committee,
or (ii) in the context of Awards made to, or the administration (or
interpretation of any provision) of the Plan as it relates to, any person who is
not subject to Section 16, the Chief Executive Officer of the Company (or, if
the Chief Executive Officer is not a Director of the Company, the Committee),
unless the Plan specifies that the Committee shall take specific action (in
which case such action may only be taken by the Committee) or the Committee (as
to any Award described in this clause (ii) or the administration or
interpretation of any specific provision of the Plan) specifies that it shall
serve as the Administrator.

         (b) "AWARD" means, individually or collectively, an Option or
Restricted Stock Award.

         (c) "BOARD" means the Board of Directors of the Company.

         (d) "CODE" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations
promulgated under such section.

<PAGE>   2

         (e) "COMMITTEE" means a committee of, and appointed by, the Board
comprised solely of two or more "Non-Employee Directors" (within the meaning
assigned to such term in Rule 16b-3); provided, however, that in the absence of
the Board's appointment of such a committee, the Board shall serve as the
Committee.

         (f) "COMMON STOCK" means the Class A common stock, $.01 par value, of
the Company, or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Section IX(b).

         (g) "COMPANY" shall mean ExpressJet Holdings, Inc., a Delaware
corporation, or any successor thereto.

         (h) "DIRECTOR" means an individual elected to the Board by the
stockholders of the Company or by the Board under applicable corporate law who
is serving on the Board on the date the Plan is adopted by the Board or is
elected to the Board after such date.

         (i) "EMPLOYEE" means any person (which may include a Director) in an
employment relationship with the Company or any subsidiary.

         (j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

         (k) "GRANT DOCUMENT" means the document or documents evidencing an
Award under the Plan, which may be either an agreement between the Company and
the Holder as to the Award (with any amendments thereto) or a notice of grant of
the Award from the Company to the Holder (including any attached statement of
the terms and conditions of the Award and any modifications thereto made in
accordance with the Plan).

         (l) "HOLDER" means an employee or a non-employee Director who has been
granted an Award.

         (m) "MARKET VALUE PER SHARE" means, as of any specified date, the
closing sale price of the Common Stock on that date (or, if there are no sales
on that date, the last preceding date on which there was a sale) in the
principal securities market in which the Common Stock is then traded. If the
Common Stock is not publicly traded at the time a determination of "Market Value
per Share" is required to be made hereunder, the determination of such amount
shall be made by the Administrator in such manner as it deems appropriate.
Notwithstanding the foregoing, the "Market Value per Share" on the date of an
initial public offering of Common Stock shall be the offering price under such
initial public offering.

         (n) "OPTION" means an Award granted under Section VII.

         (o) "PLAN" means the ExpressJet Holdings, Inc. 2001 Stock Incentive
Plan, as amended from time to time.

         (p) "RESTRICTED STOCK" means shares of Common Stock granted pursuant to
a Restricted Stock Award as to which neither the substantial risk of forfeiture
nor the restriction on transfers referred to in Section VIII has expired.

                                      -2-
<PAGE>   3

         (q) "RESTRICTED STOCK AWARD" means an Award granted under Section VIII.

         (r) "RULE 16b-3" means Rule 16b-3 under the Exchange Act, as such rule
may be amended from time to time, and any successor rule, regulation or statute
fulfilling the same or similar function.

         (s) "SUBSIDIARY" means any entity (other than the Company) with respect
to which the Company, directly or indirectly through one or more other entities,
owns equity interests possessing 50 percent or more of the total combined voting
power of all equity interests of such entity (excluding voting power that arises
only upon the occurrence of one or more specified events).

                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

         The Plan shall become effective upon the date of its adoption by the
Board; provided, that the Plan is approved by the stockholders of the Company
within 12 months thereafter. Notwithstanding any provision of the Plan or in any
Grant Document, no Option shall be exercisable, and no Restricted Stock Award
shall vest, prior to such stockholder approval. No further Awards may be granted
under the Plan after 10 years from the date the Plan is adopted by the Board.
The Plan shall remain in effect until all Options granted under the Plan have
been satisfied or expired, and all restrictions imposed upon Restricted Stock
Awards granted under the Plan have been eliminated or the Restricted Stock
Awards have been forfeited.

                               IV. ADMINISTRATION

         (a) ADMINISTRATOR. The Plan shall be administered by the Administrator,
so that (i) Awards made to, and the administration (or interpretation of any
provision) of the Plan as it relates to, any person who is subject to Section
16, shall be made or effected by the Committee, and (ii) Awards made to, and the
administration (or interpretation of any provision) of the Plan as it relates
to, any person who is not subject to Section 16, shall be made or effected by
the Chief Executive Officer of the Company (or, if the Chief Executive Officer
is not a Director of the Company, the Committee), unless the Plan specifies that
the Committee shall take specific action (in which case such action may only be
taken by the Committee) or the Committee (as to any Award described in this
clause (ii) or the administration or interpretation of any specific provision of
the Plan) specifies that it shall serve as the Administrator.

         (b) POWERS. Subject to the express provisions of the Plan, the
Administrator shall have authority, in its discretion, to determine which
employees or Directors shall receive an Award, the time or times when such Award
shall be granted, and the number of shares to be subject to each Award. In
making such determinations, the Administrator shall take into account the nature
of the services rendered by the respective employees or Directors, their present
and potential contribution to the Company's success and such other factors as
the Administrator in its discretion shall deem relevant. Subject to the express
provisions of the Plan, the Administrator shall also have the power to construe
the Plan and the respective agreements executed hereunder, to prescribe rules
and regulations relating to the Plan, and to determine the terms, restrictions
and provisions of the Grant Documents, and to make all other determinations
necessary or advisable for administering the Plan. The Administrator may correct
any defect or supply any omission or

                                      -3-
<PAGE>   4

reconcile any inconsistency in the Plan or in any Grant Document relating to an
Award in the manner and to the extent it shall deem expedient to carry it into
effect. The determination of the Administrator on the matters referred to in
this Section IV shall be conclusive; provided, however, that in the event of any
conflict in any such determination as between the Committee and the Chief
Executive Officer of the Company, each acting in capacity as Administrator of
the Plan, the determination of the Committee shall be conclusive.

               V. SHARES SUBJECT TO THE PLAN, AWARD LIMITATIONS,
                              AND GRANT OF AWARDS

         (a) SHARES SUBJECT TO THE PLAN; AWARD LIMITATIONS. Subject to
adjustment as provided in Section IX(b), the aggregate number of shares of
Common Stock that may be issued under the Plan shall not exceed 3,200,000
shares. Shares shall be deemed to have been issued under the Plan only to the
extent actually issued and delivered pursuant to an Award. To the extent that an
Award lapses, the rights of its Holder terminate, or an Award is paid in cash or
is settled in a manner such that all or some of the shares of Common Stock
covered by the Award are not issued to the Holder, any shares of Common Stock
then subject to such Award shall again be available for the grant of an Award
under the Plan. Notwithstanding any provision in the Plan to the contrary, the
maximum number of shares of Common Stock that may be granted as Restricted Stock
Awards may not exceed 250,000 (subject to adjustment as provided in Section
IX(b)).

         (b) GRANT OF AWARDS. The Administrator may from time to time grant
Awards to one or more employees or Directors determined by it to be eligible for
participation in the Plan in accordance with the provisions of Section VI.

         (c) STOCK OFFERED. Subject to the limitations set forth in Section V(a)
above, the stock to be offered pursuant to an Award may be authorized but
unissued Common Stock or Common Stock previously issued and outstanding and
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Awards at the termination of the Plan shall cease
to be subject to the Plan but, until termination of the Plan, the Company shall
at all times make available a sufficient number of shares to meet the
requirements of the Plan.

                                VI. ELIGIBILITY

         Awards may be granted only to persons who, at the time of grant, are
employees or Directors. An Award may be granted on more than one occasion to the
same person and, subject to the limitations set forth in the Plan, Awards may
consist of any combination of Options and Restricted Stock Awards.

                               VII. STOCK OPTIONS

         (a) OPTION PERIOD. The term of each Option shall be as specified by the
Administrator at the date of grant.

         (b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable
in whole or in such installments and at such times as determined by the
Administrator.

                                      -4-
<PAGE>   5

         (c) NO INCENTIVE STOCK OPTIONS. Options granted under the Plan shall
not constitute incentive stock options within the meaning of section 422 of the
Code.

         (d) OPTION GRANT DOCUMENT. Each Option shall be evidenced by an Option
Grant Document in such form and containing such provisions not inconsistent with
the provisions of the Plan as the Administrator from time to time shall approve.
An Option Grant Document may provide for the payment of the option price, in
whole or in part, by delivery of a number of shares of Common Stock (plus cash
if necessary) having a Market Value per Share equal to such option price.
Moreover, an Option Grant Document may provide for a "cashless exercise" of the
Option by establishing procedures satisfactory to the Administrator with respect
thereto. The terms and conditions of the respective Option Grant Documents need
not be identical.

         (e) OPTION PRICE AND PAYMENT. The price at which a share of Common
Stock may be purchased upon exercise of an Option shall be set forth in the
Option Grant Document and shall be determined by the Administrator but, subject
to adjustment as provided in Section IX(b), such purchase price shall not be
less than the Market Value per Share of a share of Common Stock on the date such
Option is granted. The Option or portion thereof may be exercised by delivery of
an irrevocable notice of exercise to the Company, as specified by the
Administrator. The purchase price of the Option or portion thereof shall be paid
in full in the manner specified by the Administrator.

         (f) STOCKHOLDER RIGHTS AND PRIVILEGES. The Holder of an Option shall be
entitled to all the privileges and rights of a stockholder only with respect to
such shares of Common Stock as have been purchased under the Option and credited
to the Holder's account or for which certificates representing such Common Stock
have been registered in the Holder's name.

         (g) OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
ENTITIES. Options may be granted under the Plan from time to time in
substitution for options held by individuals employed by corporations or other
entities who become employees or Directors as a result of a merger or
consolidation or other business transaction with the Company or any subsidiary.

                         VIII. RESTRICTED STOCK AWARDS

         (a) OWNERSHIP OF RESTRICTED STOCK. Each grant of Restricted Stock
pursuant to a Restricted Stock Award will constitute an immediate transfer of
record and beneficial ownership of the shares of Restricted Stock to the
recipient of the grant in consideration of the performance of services by such
recipient (or other consideration determined by the Administrator), entitling
the recipient to all voting and other ownership rights, but subject to the
restrictions hereinafter referred to or contained in the related Grant Document.
Each grant may, in the discretion of the Administrator, limit the recipient's
dividend rights during the period in which the shares of Restricted Stock are
subject to a substantial risk of forfeiture and restrictions on transfer.

         (b) SUBSTANTIAL RISK OF FORFEITURE AND RESTRICTIONS ON TRANSFER. Each
grant of Restricted Stock will provide that (i) the shares covered thereby will
be subject, for a period or periods determined by the Administrator at the date
of grant, to one or more restrictions, including, without limitation, a
restriction that constitutes a "substantial risk of forfeiture" within the
meaning of section 83 of the Code and applicable interpretive authority
thereunder, and (ii)

                                      -5-
<PAGE>   6

during such period or periods during which such restrictions are to continue,
the transferability of the Restricted Stock subject to such restrictions will be
prohibited or restricted in a manner and to the extent prescribed by the
Administrator at the date of grant.

         (c) RESTRICTED STOCK HELD IN TRUST. Shares of Common Stock awarded
pursuant to each Restricted Stock Award will be held in trust by the Company for
the benefit of the recipient until such time as the applicable restriction on
transfer thereof shall have expired or otherwise lapsed, at which time
certificates representing such Common Stock will be delivered to the recipient
or such Common Stock will be otherwise credited to the recipient's account.

         (d) RESTRICTED STOCK GRANT DOCUMENT; CONSIDERATION. Each grant of
Restricted Stock shall be evidenced by a Grant Document in such form and
containing such provisions not inconsistent with the provisions of the Plan as
the Administrator from time to time shall approve. The terms and conditions of
the respective Restricted Stock Grant Documents need not be identical. Each
grant of Restricted Stock may be made without additional consideration or in
consideration of a payment by the recipient that is less than the Market Value
per Share on the date of grant, as determined by the Administrator.

           IX. RECAPITALIZATION, REORGANIZATION AND CHANGE IN CONTROL

         (a) NO EFFECT ON RIGHT OR POWER. The existence of the Plan and the
Awards granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company or any subsidiary to make or authorize
any adjustment, recapitalization, reorganization or other change in the
Company's or any subsidiary's capital structure or its business, any merger or
consolidation of the Company or any subsidiary, any issue of debt or equity
securities ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any subsidiary or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

         (b) CHANGES IN COMMON STOCK. The provisions of Section V(a) imposing
limits on the numbers of shares of Common Stock covered by Awards granted under
the Plan, as well as the number or type of shares or other property subject to
outstanding Awards and the applicable option prices per share, shall be adjusted
appropriately by the Committee in the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events.

         (c) CHANGE IN CONTROL. As used in the Plan (except as otherwise
provided in an applicable Grant Document), the term "Change in Control" shall
mean (i) a merger of the Company with another entity, a consolidation involving
the Company, or the sale of all or substantially all of the assets of the
Company to another entity if, in any such case, the holders of equity securities
of the Company (and their respective affiliates) immediately prior to such
transaction or event do not beneficially own immediately after such transaction
or event equity securities of the resulting entity entitled to greater than 50%
of the votes then eligible to be cast in the election of directors generally (or
comparable governing body) of the resulting entity, (ii) the dissolution or
liquidation of the Company, (iii) when any person or entity, including a "group"
as contemplated by Section 13(d)(3) of the Exchange Act, acquires or gains
ownership

                                      -6-
<PAGE>   7

or control (including, without limitation, power to vote) of more than 50% of
the combined voting power of the Company's outstanding securities, or (iv) as a
result of or in connection with a contested election of Directors, the persons
who were Directors of the Company before such election shall cease to constitute
a majority of the Board; provided, however, that the term "Change in Control"
shall not include (A) the distribution to the stockholders of Continental
Airlines, Inc. ("Continental") of the Company's common stock owned by
Continental (the "Spin-Off") and (B) any equity security ownership or action
taken prior to the Spin-Off by Continental, an affiliate of Continental, or the
trustees of any employee benefit plan maintained by Continental. For purposes of
the preceding sentence, (1) "resulting entity" in the context of a transaction
or event that is a merger or consolidation shall mean the surviving entity
unless the surviving entity is a subsidiary of another entity and the holders of
common stock of the Company receive capital stock of such another entity in such
transaction or event, in which event the resulting entity shall be such other
entity, and (2) the term "affiliate" shall mean, with respect to an entity (the
"first entity"), an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or other entity that, directly or indirectly, is controlled by, or
is under common control with, the first entity (and the term "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the individual or entity, whether
through the ownership of voting securities, by contract or otherwise).

         Upon the occurrence of a Change in Control, with respect to each
recipient of an Award hereunder, (x) all Options granted to such recipient and
outstanding at such time shall immediately vest and become exercisable in full
and, except as required by law, all restrictions on the transfer of shares
acquired pursuant to such Options shall terminate, and (y) all restrictions
applicable to such recipient's Restricted Stock Awards that are outstanding at
such time shall be deemed to have been satisfied and such Restricted Stock
Awards shall immediately vest in full.

         In addition, except as otherwise provided in the applicable Grant
Document, if a recipient of an Award hereunder becomes entitled to one or more
payments (with a "payment" including, without limitation, the vesting of an
Award) pursuant to the terms of the Plan (the "Total Payments"), which are or
become subject to the tax imposed by section 4999 of the Code (or any similar
tax that may hereafter be imposed) (the "Excise Tax"), the Company or subsidiary
for whom the recipient is then performing services shall pay to the recipient an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the recipient, after reduction for any Excise Tax on the Total Payments and any
federal, state and local income or employment tax and Excise Tax on the Gross-Up
Payment, shall equal the Total Payments. For purposes of determining the amount
of the Gross-Up Payment, the recipient shall be deemed (aa) to pay federal
income taxes at the highest stated rate of federal income taxation (including
surtaxes, if any) for the calendar year in which the Gross-Up Payment is to be
made, and (bb) to pay any applicable state and local income taxes at the highest
stated rate of taxation (including surtaxes, if any) for the calendar year in
which the Gross-Up Payment is to be made. Any Gross-Up Payment required
hereunder shall be made to the recipient at the same time any Total Payment
subject to the Excise Tax is paid or deemed received by the recipient.

                                      -7-
<PAGE>   8

                    X. AMENDMENT AND TERMINATION OF THE PLAN

         The Board in its discretion may terminate the Plan at any time with
respect to any shares of Common Stock for which Awards have not theretofore been
granted. The Board shall have the right to alter or amend the Plan or any part
thereof from time to time, and the Administrator may amend any Award (and its
related Grant Document) at any time, except as otherwise specifically provided
in such Grant Document; provided that no change in the Plan or any Award
theretofore granted may be made that would impair the rights of a Holder with
respect to an Award theretofore granted without the consent of such Holder.

                               XI. MISCELLANEOUS

         (a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any
action of the Board or the Administrator shall be deemed to give an employee or
Director any right to be granted an Award or any other rights hereunder except
as may be evidenced by a Grant Document from the Company reflecting a grant by
the Company of an Award to such person and setting forth the terms and
conditions thereof. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of funds or assets to assure the performance of its obligations
under any Award.

         (b) NO EMPLOYMENT OR MEMBERSHIP RIGHTS CONFERRED. Nothing contained in
the Plan shall (i) confer upon any employee any right with respect to
continuation of employment with the Company or any subsidiary or (ii) interfere
in any way with the right of the Company or any subsidiary to terminate his or
her employment at any time. Nothing contained in the Plan shall confer upon any
Director any right with respect to continuation of membership on the Board.

         (c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to
issue any Common Stock pursuant to any Award granted under the Plan until there
has been compliance with applicable laws and regulations with respect thereto.
No fractional shares of Common Stock shall be delivered, nor shall any cash in
lieu of fractional shares be paid. The Company shall have the right to (i) make
deductions from any settlement or exercise of an Award made under the Plan,
including the delivery of shares, or require shares or cash or both be withheld
from any Award, in each case in an amount sufficient to satisfy withholding of
any federal, state or local taxes required by law, or (ii) take such other
action as may be necessary or appropriate to satisfy any such tax withholding
obligations. The Administrator may determine the manner in which such tax
withholding may be satisfied, and may permit shares of Common Stock (together
with cash, as appropriate) to be used to satisfy required tax withholding based
on the Market Value per Share of any such shares of Common Stock.

         (d) NO RESTRICTION ON CORPORATE ACTION. Subject to the restrictions
contained in Section X, nothing contained in the Plan shall be construed to
prevent the Company or any subsidiary from taking any corporate action, whether
or not such action would have an adverse effect on the Plan or any Award granted
hereunder. No employee, Director, beneficiary or other person shall have any
claim against the Company or any subsidiary as a result of any such action.

                                      -8-
<PAGE>   9

         (e) RESTRICTIONS ON TRANSFER. An Award shall not be transferable
otherwise than (i) by will or the laws of descent and distribution, (ii)
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder, or (iii) with the consent of the Administrator. In the
discretion of the Administrator, a percentage (determined by the Administrator
and set forth in the applicable Option Grant Document) of the aggregate shares
of Common Stock obtained from exercises of an Option (which percentage may be
satisfied out of particular exercises as determined by the Administrator and set
forth in the applicable Option Grant Document) shall not be transferable prior
to the earliest to occur of (x) the termination of the relevant Option term (or
such shorter period as may be determined by the Administrator and set forth in
the Option Grant Document), (y) the Holder's retirement, death or disability, or
(z) termination of the Holder's employment with the Company and its
subsidiaries.

         (f) GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflicts
of law principles thereof.

                                      -9-

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