Document:

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        |   CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION    |
        |            SET FORTH IN SECTION 7 OF THIS AGREEMENT         |
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                        PARTICIPATION AGREEMENT [   ]

                                 Dated as of [ ]

                                    Among

                         CONTINENTAL AIRLINES, INC.,
                                     Owner,

                                     and

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

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

                          ONE BOEING MODEL [ ] AIRCRAFT
                      Bearing Manufacturer's Serial No. [ ]
                          and U.S. Registration No. [ ]

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<PAGE>
                                    CONTENTS

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

SECTION 2.     SECURED LOANS; CLOSING...................................     2
               2.1     Making of Loans and Issuance of Equipment
                       Notes............................................     2
               2.2     Closing..........................................     3

SECTION 3.     [Intentionally omitted]..................................     3

SECTION 4.     CONDITIONS PRECEDENT.....................................     3
               4.1     Conditions Precedent to the Obligations of
                       the Pass Through Trustees........................     3
               4.2     Conditions Precedent to Obligations of
                       Mortgagee........................................     7
               4.3     Conditions Precedent to Obligations of
                       Owner............................................     7
               4.4     Post-Registration Opinion........................     8

SECTION 5.     REPRESENTATIONS AND WARRANTIES...........................     8
               5.1     Owner's Representations and Warranties...........     8
               5.2     WTC's Representations and Warranties.............    11

SECTION 6.     COVENANTS, UNDERTAKINGS AND AGREEMENTS...................    15
               6.1     Covenants of Owner...............................    15
               6.2     Covenants of WTC.................................    16
               6.3     Covenants of Note Holders........................    18
               6.4     Agreements.......................................    19

SECTION 7.     CONFIDENTIALITY..........................................    22

SECTION 8.     INDEMNIFICATION AND EXPENSES.............................    23
               8.1     General Indemnity................................    23
               8.2     Expenses.........................................    29
               8.3     General Tax Indemnity............................    30
               8.4     Payments.........................................    39
               8.5     Interest.........................................    40
               8.6     Benefit of Indemnities...........................    40

SECTION 9.     ASSIGNMENT OR TRANSFER OF INTEREST.......................    40
               9.1     Note Holders.....................................    40
               9.2     Effect of Transfer...............................    40

SECTION 10.    SECTION 1110.............................................    41

<PAGE>

SECTION 11.    CHANGE OF CITIZENSHIP....................................    41
               11.1    Generally........................................    41
               11.2    Mortgagee........................................    41

SECTION 12.    MISCELLANEOUS............................................    42
               12.1    Amendments.......................................    42
               12.2    Severability.....................................    42
               12.3    Survival.........................................    42
               12.4    Reproduction of Documents........................    42
               12.5    Counterparts.....................................    43
               12.6    No Waiver........................................    43
               12.7    Notices..........................................    43
               12.8    GOVERNING LAW; SUBMISSION TO JURISDICTION;
                       VENUE............................................    44
               12.9    Third-Party Beneficiary..........................    45
               12.10   Entire Agreement.................................    45
               12.11   Further Assurances...............................    45

SCHEDULES AND EXHIBITS

SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries

EXHIBIT A -  Opinion of special counsel to Owner
EXHIBIT B -  Opinion of corporate counsel to Owner
EXHIBIT C -  Opinion of special counsel to Mortgagee
             and to the Applicable Pass Through Trustees
EXHIBIT D -  Opinion of special counsel in Oklahoma City, Oklahoma

<PAGE>
                           PARTICIPATION AGREEMENT [ ]

      PARTICIPATION  AGREEMENT [___],  dated as of  [___________________]  (this
"Agreement"),  among (a)  CONTINENTAL  AIRLINES,  INC.,  a Delaware  corporation
("Owner"), (b) WILMINGTON TRUST COMPANY, a Delaware banking corporation,  not in
its individual  capacity,  except as expressly  provided  herein,  but solely as
Mortgagee  (in its  capacity as  Mortgagee,  "Mortgagee"  and in its  individual
capacity,  "WTC"), (c) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly  provided  herein,  but solely as Pass Through Trustee under
each of the Applicable Pass Through Trust Agreements  (each, an "Applicable Pass
Through  Trustee")  and (d)  WILMINGTON  TRUST  COMPANY,  not in its  individual
capacity, except as expressly provided herein, but solely as Subordination Agent
under the Intercreditor Agreement ("Subordination Agent").

                                    RECITALS

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

      B. Pursuant to each of the Pass Through Trust Agreements, the Pass Through
Trusts were created and the Pass Through Certificates were issued and sold.

      C. Each Applicable Pass Through Trustee has agreed to use a portion of the
proceeds from the issuance and sale of the Pass Through  Certificates  issued by
each  Applicable  Pass Through  Trust to purchase  from Owner,  on behalf of the
related  Applicable  Pass Through  Trust,  the  Equipment  Note bearing the same
interest  rate as the Pass  Through  Certificates  issued by such  Pass  Through
Trust.

      D. Owner and  Mortgagee,  concurrently  with the  execution  and  delivery
hereof,  have  entered  into the Trust  Indenture  for the  benefit  of the Note
Holders,  pursuant  to which,  among  other  things,  Owner  agrees (1) to issue
Equipment  Notes,  in the  amounts  and  otherwise  as  provided  in  the  Trust
Indenture,  and (2) to mortgage,  pledge and assign to Mortgagee  all of Owner's
right,  title and interest in the Collateral to secure the Secured  Obligations,
including, without limitation, Owner's obligations under the Equipment Notes.

<PAGE>

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

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

SECTION 1.     DEFINITIONS AND CONSTRUCTION

      Capitalized  terms used but not defined  herein  (including in the initial
paragraph and Recitals  above) shall have the  respective  meanings set forth or
incorporated by reference,  and shall be construed and interpreted in the manner
described, in Annex A to the Trust Indenture.

SECTION 2.     SECURED LOANS; CLOSING

      2.1      MAKING OF LOANS AND ISSUANCE OF EQUIPMENT NOTES

      Subject to the terms and conditions of this Agreement,  on the date hereof
or on such other date agreed to by the parties hereto (the "Closing Date"):

      (a)   Each Applicable Pass Through Trustee listed on Schedule 2 shall make
            a secured loan to the Owner in the amount in Dollars  opposite  such
            Trustee's name on Schedule 2; and

      (b)   The  Owner  shall  issue,  pursuant  to and in  accordance  with the
            provisions   of   Article  II  of  the  Trust   Indenture,   to  the
            Subordination  Agent as the registered holder on behalf of each such
            Applicable Pass Through Trustee,  one or more Equipment Notes, dated
            the Closing  Date, of the Series set forth  opposite such  Trustee's
            name on Schedule 2, in an  aggregate  principal  amount equal to the
            secured loan made by each such Applicable Pass Through Trustee.

      In  addition,  the Owner  shall  have the  option  to issue  the  Series D
Equipment  Notes on or after the Closing Date,  subject to the terms of the Note
Purchase  Agreement.  If Series D Equipment  Notes are issued  after the Closing
Date,  the Note  Holder of such  Equipment  Notes shall be entitled to execute a
counterpart to this Agreement and become a party hereto.

<PAGE>

      2.2      CLOSING

      (a) The Closing of the transactions  contemplated  hereby shall take place
at the offices of Hughes  Hubbard & Reed LLP, One Battery Park Plaza,  New York,
New York 10004, or at such other place as the parties shall agree.

      (b) All payments  pursuant to this Section 2 shall be made in  immediately
available funds to such accounts set forth in Schedule 1 hereto.

SECTION 3.     [INTENTIONALLY OMITTED]

SECTION 4.     CONDITIONS PRECEDENT

      4.1      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PASS THROUGH
               TRUSTEES

      The obligation of each  Applicable Pass Through Trustee listed on Schedule
2 to make the secured loan described in Section 2.1(a) and to participate in the
transactions  contemplated  by this  Agreement on the Closing Date is subject to
the  fulfillment,  prior to or on the Closing Date, of the following  conditions
precedent:

               4.1.1       EQUIPMENT NOTES

      The Owner shall have  tendered  the  Equipment  Notes to be issued to such
Applicable  Pass Through  Trustees to the Mortgagee for  authentication  and the
Mortgagee  shall have  authenticated  such Equipment  Notes to be issued to such
Applicable Pass Through  Trustees and shall have tendered the Equipment Notes to
the Subordination Agent on behalf of such Pass Through Trustee,  against receipt
of the loan proceeds, in accordance with Section 2.1.

               4.1.2       DELIVERY OF DOCUMENTS

      The  Subordination  Agent on behalf of each such  Applicable  Pass Through
Trustee shall have received  executed  counterparts  or conformed  copies of the
following documents:

            (i) this Agreement;

            (ii) the Trust Indenture;

            (iii) the initial Trust Indenture Supplement;

            (iv) the  broker's  report and  insurance  certificates  required by
      Section 4.06 of the Trust Indenture;

<PAGE>

            (v) the Consent and Agreement and the Engine Consent and Agreement;

            (vi) the Bills of Sale;

            (vii) (A) a copy of the Certificate of Incorporation  and By-Laws of
      Owner  and  resolutions  of the board of  directors  of Owner  and/or  the
      executive  committee  thereof,  in each case  certified  as of the Closing
      Date,  by  the  Secretary  or  an  Assistant   Secretary  of  Owner,  duly
      authorizing  the  execution,  delivery  and  performance  by  Owner of the
      Operative  Agreements  to which it is party  required to be  executed  and
      delivered by Owner on or prior to the Closing Date in accordance  with the
      provisions hereof and thereof; and (B) an incumbency  certificate of Owner
      as to the  person  or  persons  authorized  to  execute  and  deliver  the
      Operative Agreements on behalf of Owner;

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

            (ix) the Financing Statements;

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

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

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

                  (C) an opinion of Richards,  Layton & Finger,  special counsel
            to  Mortgagee  and  to  the   Applicable   Pass  Through   Trustees,
            substantially in the form of Exhibit C;

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

            (xi)  a  copy  of  a  current,   valid   Standard   Certificate   of
      Airworthiness  for the Aircraft  duly issued by the FAA,  together  with a
      copy of a duly executed  application for registration of the Aircraft with
      the FAA in the name of the Owner.

<PAGE>

               4.1.3       PERFECTED SECURITY INTEREST

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

               4.1.4       VIOLATION OF LAW

      No change  shall have  occurred  after the date of this  Agreement  in any
applicable  Law that makes it a violation of Law for (a) Owner,  any  Applicable
Pass Through Trustee,  Subordination Agent or Mortgagee to execute,  deliver and
perform  the  Operative  Agreements  to which  any of them is a party or (b) any
Applicable Pass Through Trustee to make the loan contemplated by Section 2.1, to
acquire an Equipment Note or to realize the benefits of the security afforded by
the Trust Indenture.

               4.1.5       REPRESENTATIONS, WARRANTIES AND COVENANTS

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

               4.1.6       NO EVENT OF DEFAULT

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

               4.1.7       NO EVENT OF LOSS

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

<PAGE>

               4.1.8       TITLE

      Owner shall have good title (subject to filing and  recordation of the FAA
Bill of Sale with the FAA) to the Aircraft,  free and clear of all Liens, except
Permitted Liens.

               4.1.9       CERTIFICATION

      The Aircraft shall have been duly  certificated  by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.

               4.1.10      SECTION 1110

      Mortgagee  shall be entitled to the benefits of Section 1110 (as currently
in effect)  with  respect to the right to take  possession  of the  Airframe and
Engines as provided in the Trust  Indenture in the event of a case under Chapter
11 of the Bankruptcy Code in which Owner is a debtor.

               4.1.11      FILING

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

               4.1.12      NO PROCEEDINGS

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

               4.1.13      GOVERNMENTAL ACTION

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

<PAGE>

               4.1.14      NOTE PURCHASE AGREEMENT

      The conditions precedent to the obligations of the Applicable Pass Through
Trustees and the other  requirements  relating to the Aircraft and the Equipment
Notes set forth in the Note Purchase Agreement shall have been satisfied.

      4.2      CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE

      The  obligation of Mortgagee to  authenticate  the Equipment  Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee,  on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.

               4.2.1       DOCUMENTS

      Executed  originals  of  the  agreements,  instruments,   certificates  or
documents  described  in Section  4.1.2 shall have been  received by  Mortgagee,
except as specifically provided therein,  unless the failure to receive any such
agreement,  instrument,  certificate  or document is the result of any action or
inaction by Mortgagee.

               4.2.2       OTHER CONDITIONS PRECEDENT

      Each of the  conditions  set forth in  Sections  4.1.4,  4.1.5,  4.1.6 and
4.1.10 shall have been satisfied  unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.

      4.3      CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER

      The  obligation of Owner to participate  in the  transaction  contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing  Date,  of the  conditions  precedent set forth below in
this Section 4.3.

               4.3.1       DOCUMENTS

      Executed  originals  of  the  agreements,  instruments,   certificates  or
documents  described in Section 4.1.2 shall have been received by Owner,  except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such  agreement,  instrument,  certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:

            (i) (A) an incumbency certificate of WTC as to the person or persons
      authorized  to execute and deliver the  Operative  Agreements on behalf of

<PAGE>

      WTC and (B) a copy of the  Certificate  of  Incorporation  and By-Laws and
      general  authorizing  resolution  of the board of directors  (or executive
      committee)  or  other  satisfactory  evidence  of  authorization  of  WTC,
      certified  as of  the  Closing  Date  by the  Secretary  or  Assistant  or
      Attesting  Secretary of WTC, which  authorize the execution,  delivery and
      performance by WTC of the Operative Agreements to which it is a party; and

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

               4.3.2       OTHER CONDITIONS PRECEDENT

      Each of the conditions set forth in Sections 4.1.4,  4.1.5,  4.1.6, 4.1.7,
4.1.8,  4.1.9,  4.1.10,  4.1.11,  4.1.12 and 4.1.13 shall have been satisfied or
waived by Owner, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner.

      4.4      POST-REGISTRATION OPINION

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

SECTION 5.     REPRESENTATIONS AND WARRANTIES

      5.1      OWNER'S REPRESENTATIONS AND WARRANTIES

      Owner represents and warrants to each Pass Through Trustee,  Subordination
Agent and Mortgagee that:

               5.1.1       ORGANIZATION; QUALIFICATION

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

<PAGE>

do business as a foreign  corporation in good standing in each  jurisdiction  in
which the nature and extent of the business conducted by it, or the ownership of
its properties,  requires such qualification,  except where the failure to be so
qualified would not give rise to a Material Adverse Change to Owner.

               5.1.2       CORPORATE AUTHORIZATION

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

               5.1.3       NO VIOLATION

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

               5.1.4       APPROVALS

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

<PAGE>

               5.1.5       VALID AND BINDING AGREEMENTS

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

               5.1.6       REGISTRATION AND RECORDATION

      Except for (a) the  registration  of the Aircraft with the FAA pursuant to
the Act in the name of Owner, (b) the filing for recordation  (and  recordation)
of the FAA Filed  Documents,  (c) the filing of the  Financing  Statements  (and
continuation  statements  relating thereto at periodic  intervals),  and (d) the
affixation  of the  nameplates  referred  to in  Section  4.02(f)  of the  Trust
Indenture, no further action,  including any filing or recording of any document
(including  any  financing  statement in respect  thereof under Article 9 of the
UCC) is  necessary  in order  to  establish  and  perfect  Mortgagee's  security
interest in the Aircraft as against Owner and any other Person, in each case, in
any applicable jurisdictions in the United States.

               5.1.7       CHIEF EXECUTIVE OFFICE

      The chief  executive  office  (as such term is defined in Article 9 of the
UCC) of Owner is located at 2929 Allen Parkway, Houston, Texas 77019.

               5.1.8       NO EVENT OF LOSS

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

               5.1.9       COMPLIANCE WITH LAWS

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

<PAGE>

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

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

               5.1.10      SECURITIES LAWS

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

               5.1.11      BROKER'S FEES

      No Person acting on behalf of Owner is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions,  other than
the fees and expenses  payable by Owner in connection  with the sale of the Pass
Through Certificates.

               5.1.12      SECTION 1110

      Mortgagee  is entitled to the  benefits of Section  1110 (as  currently in
effect) with respect to the right to take possession of the Airframe and Engines
as provided in the Trust  Indenture  in the event of a case under  Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.

      5.2      WTC'S REPRESENTATIONS AND WARRANTIES

      WTC represents and warrants (with respect to Section 5.2.10, solely in its
capacity as Subordination Agent) to Owner that:

               5.2.1       ORGANIZATION, ETC.

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

<PAGE>

Applicable Pass Through Trustee Agreements and the Operative Agreements to which
it is a party.

               5.2.2       CORPORATE AUTHORIZATION

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

               5.2.3       NO VIOLATION

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

               5.2.4       APPROVALS

      The  execution  and  delivery  by WTC,  in its  individual  capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Pass Through Trustee Agreements and the Operative  Agreements to which it is

<PAGE>

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

               5.2.5       VALID AND BINDING AGREEMENTS

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

               5.2.6       CITIZENSHIP

      WTC is a Citizen of the United States.

               5.2.7       NO LIENS

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

               5.2.8       LITIGATION

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

<PAGE>

individual  capacity or as Mortgagee,  a Pass Through  Trustee or  Subordination
Agent, as the case may be, to perform its obligations under any of the Mortgagee
Agreements,  the Pass Through  Trustee  Agreements  or the  Subordination  Agent
Agreements.

               5.2.9       SECURITIES LAWS

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

               5.2.10      INVESTMENT

      The Equipment  Notes to be acquired by the  Subordination  Agent are being
acquired by it for the account of the  Applicable  Pass  Through  Trustees,  for
investment  and not with a view to any resale or  distribution  thereof,  except
that,  subject  to the  restrictions  on  transfer  set forth in  Section 9, the
disposition  by it of its  Equipment  Notes  shall at all  times be  within  its
control.

               5.2.11      TAXES

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

<PAGE>

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

               5.2.12      BROKER'S FEES

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

SECTION 6.     COVENANTS, UNDERTAKINGS AND AGREEMENTS

      6.1      COVENANTS OF OWNER

      Owner covenants and agrees, at its own cost and expense,  with Note Holder
and Mortgagee as follows:

               6.1.1       CORPORATE EXISTENCE; U.S. AIR CARRIER

      Owner  shall at all times  maintain  its  corporate  existence,  except as
permitted by Section 4.07 of the Trust Indenture,  and shall at all times remain
a U.S. Air Carrier.

               6.1.2       NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

      Owner will give  Mortgagee  timely written notice (but in any event within
30 days prior to the expiration of the period of time specified under applicable
Law to prevent lapse of  perfection)  of any  relocation of its chief  executive
office (as such term is  defined in Article 9 of the UCC) from its then  present
location and will  promptly  take any action  required by Section  6.1.3(c) as a
result of such relocation.

               6.1.3       CERTAIN ASSURANCES

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

<PAGE>

      (b) Owner shall  promptly take such action with respect to the  recording,
filing,  re-recording  and refiling of the Trust  Indenture and any  supplements
thereto, including,  without limitation, the initial Trust Indenture Supplement,
as shall be  necessary  to  continue  the  perfection  and  priority of the Lien
created by the Trust Indenture.

      (c)  Owner,  at its sole  cost  and  expense,  will  cause  the FAA  Filed
Documents,  the Financing  Statements and all  continuation  statements (and any
amendments  necessitated  by any  combination,  consolidation  or  merger of the
Owner,  or any  relocation  of its chief  executive  office)  in  respect of the
Financing  Statements  to be prepared  and,  subject only to the  execution  and
delivery thereof by Mortgagee,  duly and timely filed and recorded, or filed for
recordation,  to the  extent  permitted  under the Act (with  respect to the FAA
Filed Documents) or the UCC or similar law of any other applicable  jurisdiction
(with respect to such other documents).

      (d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 4.02(e) of the Trust Indenture, Owner will furnish to
Mortgagee  annually after such  registration,  commencing with the calendar year
after such  registration is effected,  an opinion of special counsel  reasonably
satisfactory to Mortgagee  stating that, in the opinion of such counsel,  either
that (i) such  action  has been taken with  respect  to the  recording,  filing,
rerecording  and refiling of the Operative  Agreements and any  supplements  and
amendments  thereto as is necessary to  establish,  perfect and protect the Lien
created by the Trust Indenture, reciting the details of such actions, or (ii) no
such action is necessary to maintain the perfection of such Lien.

               6.1.4       SECURITIES LAWS

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

      6.2      COVENANTS OF WTC

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

<PAGE>

               6.2.1       LIENS

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

               6.2.2       SECURITIES ACT

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

               6.2.3       PERFORMANCE OF AGREEMENTS

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

               6.2.4       WITHHOLDING TAXES

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

<PAGE>

      6.3      COVENANTS OF NOTE HOLDERS

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

               6.3.1       WITHHOLDING TAXES

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

               6.3.2       TRANSFER; COMPLIANCE

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

      (b) Except for the  transfer  of the  interests  of each  Applicable  Pass
Through  Trustee in the Equipment  Notes to the trustee of the Related Trust (as
defined in each Applicable Pass Through Trust  Agreement) in accordance with the
related Applicable Pass Through Trust Agreement, each Note Holder will not sell,
assign,  convey,  exchange  or  otherwise  transfer  any  Equipment  Note or any
interest in, or  represented  by, any Equipment Note (it being  understood  that
this  provision is not applicable to the Pass Through  Certificates)  unless the
proposed transferee thereof first provides Owner with both of the following:

            (i) a written representation and covenant that either (a) no portion
      of the funds it uses to purchase,  acquire and hold such Equipment Note or
      interest  directly or indirectly  constitutes,  or may be deemed under the
      Code or ERISA or any rulings, regulations or court decisions thereunder to
      constitute,  the assets of any Plan or (b) the  transfer,  and  subsequent
      holding, of such Equipment Note or interest shall not involve or give rise

<PAGE>

      to a  transaction  that  constitutes a prohibited  transaction  within the
      meaning  of  Section  406 of  ERISA  or  Section  4975(c)(1)  of the  Code
      involving Owner, a Pass Through Trustee,  the  Subordination  Agent or the
      proposed  transferee  (other than a transaction  that is exempted from the
      prohibitions  of such  sections by  applicable  provisions of ERISA or the
      Code or administrative exemptions or regulations issued thereunder); and

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

      6.4      AGREEMENTS

               6.4.1       QUIET ENJOYMENT

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

               6.4.2       CONSENTS

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

               6.4.3       INSURANCE

      Each Pass Through Trustee,  Subordination  Agent,  Mortgagee and each Note
Holder  agrees  not to obtain  or  maintain  insurance  for its own  account  as
permitted by Section 4.06 of the Trust  Indenture if such insurance  would limit
or  otherwise  adversely  affect the  coverage of any  insurance  required to be
obtained or maintained by Owner pursuant to Section 4.06 of the Trust Indenture.

               6.4.4       EXTENT OF INTEREST OF NOTE HOLDERS

      A Note Holder shall not, as such,  have any further  interest in, or other
right with respect to, the  Collateral  when and if the principal and Make-Whole

<PAGE>

Amount,  if any, of and interest on the Equipment Note held by such Holder,  and
all other  sums,  then due and payable to such  Holder  hereunder  and under any
other Operative Agreement, shall have been paid in full.

               6.4.5       FOREIGN REGISTRATION

      Each Note Holder and Mortgagee  hereby agree, for the benefit of Owner but
subject to the provisions of Section 4.02(b) of the Trust Indenture:

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

            (i)   each of the following requirements is satisfied:

            (A)   no Special Default or Event of Default shall have occurred and
                  be continuing at the time of such registration;

            (B)   such  proposed  change of  registration  is made in connection
                  with a Permitted Lease to a Permitted Air Carrier;

            (C)   such  country is a country  with which the United  States then
                  maintains  normal  diplomatic  relations  or, if  Taiwan,  the
                  United States then maintains  diplomatic relations at least as
                  good as those in effect on the Closing Date;

           (ii) the Mortgagee shall have received an opinion of counsel (subject
      to  customary  exceptions)   reasonably   satisfactory  to  the  Mortgagee
      addressed to Mortgagee as to the effect that:

                  (A)  such  country  would  recognize  the  Owner's   ownership
            interest in the Aircraft;

                  (B) after giving  effect to such change in  registration,  the
            Lien of the Trust Indenture on the Owner's right, title and interest
            in and to the Aircraft  shall continue as a valid and duly perfected
            first priority security interest and all filing,  recording or other
            action  necessary  to protect the same shall have been  accomplished
            (or, if such  opinion  cannot be given at the time of such  proposed
            change in  registration  because such change in  registration is not
            yet effective,  (1) the opinion shall detail what filing,  recording
            or other  action  is  necessary  and (2) the  Mortgagee  shall  have
            received a certificate from Owner that all possible  preparations to

<PAGE>

            accomplish  such filing,  recording and other action shall have been
            done,  and  such  filing,   recording  and  other  action  shall  be
            accomplished  and a  supplemental  opinion to that  effect  shall be
            delivered to the Mortgagee on or prior to the effective date of such
            change in registration;

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

                  (D) it is not  necessary,  solely  as a  consequence  of  such
            change  in  registration  and  without  giving  effect  to any other
            activity of the Mortgagee (or any Affiliate of the  Mortgagee),  for
            the  Mortgagee to qualify to do business in such  jurisdiction  as a
            result of such  reregistration  in order to  exercise  any rights or
            remedies with respect to the Aircraft.

      (b) In addition,  as a condition  precedent to any change in  registration
Owner  shall have  given to  Mortgagee  assurances  reasonably  satisfactory  to
Mortgagee:

            (i)   to the effect that the provisions of Section 4.06 of the Trust
                  Indenture  have been complied with after giving effect to such
                  change of registration;

            (ii)  of  the  payment  by  Owner  of all  reasonable  out-of-pocket
                  expenses of each Note Holder and Mortgagee in connection  with
                  such change of registry, including, without limitation (1) the
                  reasonable fees and disbursements of counsel to Mortgagee, (2)
                  any  filing  or  recording  fees,  Taxes or  similar  payments
                  incurred in connection  with the change of registration of the
                  Aircraft  and the  creation  and  perfection  of the  security

<PAGE>

                  interest therein in favor of Mortgagee for the benefit of Note
                  Holders, and (3) all costs and expenses incurred in connection
                  with any filings  necessary  to continue in the United  States
                  the  perfection  of the  security  interest in the Aircraft in
                  favor of Mortgagee for the benefit of Note Holders; and

            (iii) to the effect that the tax and other  indemnities  in favor of
                  each person named as an indemnitee  under any other  Operative
                  Agreement  afford  each  such  person  substantially  the same
                  protection  as provided  prior to such change of  registration
                  (or Owner shall have agreed upon additional  indemnities that,
                  together with such  original  indemnities,  in the  reasonable
                  judgment of Mortgagee, afford such protection).

               6.4.6       INTEREST IN CERTAIN ENGINES

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

SECTION 7.     CONFIDENTIALITY

      Owner, Note Holders and Mortgagee shall keep the  Participation  Agreement
and Annex B to the Trust Indenture confidential and shall not disclose, or cause
to be disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner's, a Note Holder's,  the Liquidity Provider's,  Mortgagee's
or other Indenture  Indemnitee's interest or their respective counsel or special
counsel,  independent insurance brokers,  auditors, or other agents who agree to
hold  such  information  confidential,  (B) to  Owner's,  a Note  Holder's,  the
Liquidity Provider's,  a Pass Through Trustee's,  Mortgagee's or other Indenture
Indemnitee's  counsel  or  special  counsel,   independent   insurance  brokers,
auditors,  or other  agents,  Affiliates  or  investors  who  agree to hold such
information  confidential,  (C) as may be  required  by any  statute,  court  or
administrative  order  or  decree,  legal  process  or  governmental  ruling  or
regulation,  including  those  of any  applicable  insurance  regulatory  bodies
(including,   without   limitation,   the  National   Association  of  Insurance
Commissioners),  federal or state banking  examiners,  Internal  Revenue Service

<PAGE>

auditors or any stock  exchange,  (D) with  respect to a Note Holder or any Pass
Through  Trustee,  to a nationally  recognized  rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Certificates or to
support an NAIC rating for the Equipment  Notes or (E) such other Persons as are
reasonably  deemed  necessary  by the  disclosing  party in order to protect the
interests of such party or for the purposes of enforcing  such documents by such
party; provided,  that any and all disclosures permitted by clauses (C), (D), or
(E)  above  shall be made  only to the  extent  necessary  to meet the  specific
requirements or needs of the Persons making such disclosures.

SECTION 8.     INDEMNIFICATION AND EXPENSES

      8.1      GENERAL INDEMNITY

               8.1.1       INDEMNITY

      Whether  or  not  any  of  the   transactions   contemplated   hereby  are
consummated,  Owner shall  indemnify,  protect,  defend and hold  harmless  each
Indemnitee  from,  against and in respect  of, and shall pay on a net  after-tax
basis, any and all Expenses of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against any Indemnitee, relating to, resulting from,
or arising out of or in connection with, any one or more of the following:

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

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

<PAGE>

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

      (d)  Any  breach  of or  failure  to  perform  or  observe,  or any  other
noncompliance  with,  any  covenant  or  agreement  or  other  obligation  to be
performed  by Owner under any  Operative  Agreement  to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.

               8.1.2       EXCEPTIONS

      Notwithstanding  anything  contained in Section 8.1.1,  Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:

      (a) For any  Taxes  or a loss of Tax  benefit,  whether  or not  Owner  is
required to indemnify therefor pursuant to Section 8.3;

      (b) Except to the extent  attributable  to acts or events  occurring prior
thereto, acts or events (other than acts or events related to the performance by
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust  Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture;  PROVIDED, that nothing in this clause (b)
shall be deemed to exclude or limit any claim that any Indemnitee may have under
applicable  Law by reason of an Event of Default or for  damages  from Owner for
breach of Owner's covenants contained in the Operative  Agreements or to release
Owner from any of its obligations under the Operative  Agreements that expressly
provide for performance after termination of the Trust Indenture;

      (c) To the extent  attributable to any Transfer (voluntary or involuntary)
by or on behalf of such  Indemnitee of any Equipment  Note or interest  therein,
except for  out-of-pocket  costs and  expenses  incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement;

      (d)   [Intentionally Omitted]

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

<PAGE>

      (f)   [Intentionally Omitted]

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

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

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

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

<PAGE>

Through Trustee in the distribution of funds received and distributable by it in
accordance  with the Pass  Through  Trust  Agreements,  (x) with  respect to the
Escrow Agent, to the extent attributable to the negligence or willful misconduct
of the  Escrow  Agent in the  payment  of funds  received  and  payable by it in
accordance with any Escrow Agreement, and (xi) with respect to the Paying Agent,
to the extent attributable to the negligence or willful misconduct of the Paying
Agent  in  the  distribution  of  funds  received  and  distributable  by  it in
accordance with any Escrow Agreement;

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

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

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

      (n)   [Intentionally Omitted]

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

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

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

      For purposes of this Section 8.1, a Person shall be considered a "related"
Indemnitee  with  respect to an  Indemnitee  if such Person is an  Affiliate  or
employer of such Indemnitee, a director, officer, employee, agent, or servant of

<PAGE>

such  Indemnitee or any such  Affiliate or a successor or permitted  assignee of
any of the foregoing.

               8.1.3       SEPARATE AGREEMENT

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

               8.1.4       NOTICE

      If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 8.1 is made, such Indemnitee shall give prompt written notice
thereof to Owner.  Notwithstanding the foregoing,  the failure of any Indemnitee
to notify Owner as provided in this Section 8.1.4,  or in Section  8.1.5,  shall
not release  Owner from any of its  obligations  to  indemnify  such  Indemnitee
hereunder,  except to the extent  that such  failure  results  in an  additional
Expense  to Owner (in  which  event  Owner  shall  not be  responsible  for such
additional expense) or materially impairs Owner's ability to contest such claim.

               8.1.5       NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS;
                           LIMITATIONS

      (a) In case any action,  suit or proceeding  shall be brought  against any
Indemnitee  for  which  Owner  is  responsible  under  this  Section  8.1,  such
Indemnitee shall notify Owner of the commencement  thereof and Owner may, at its
expense,  participate  in and to the extent  that it shall wish  (subject to the
provisions of the following  paragraph),  assume and control the defense thereof
and, subject to Section 8.1.5(c), settle or compromise the same.

      (b) Owner or its insurer(s) shall have the right, at its or their expense,
to  investigate  or,  if Owner or its  insurer(s)  shall  agree  not to  dispute
liability to the  Indemnitee  giving  notice of such action,  suit or proceeding
under this Section  8.1.5 for  indemnification  hereunder or under any insurance
policies  pursuant  to which  coverage  is sought,  control  the defense of, any
action, suit or proceeding, relating to any Expense for which indemnification is
sought  pursuant to this Section 8.1, and each  Indemnitee  shall cooperate with
Owner or its insurer(s) with respect thereto;  PROVIDED, that Owner shall not be
entitled  to  control  the  defense  of any such  action,  suit,  proceeding  or
compromise any such Expense during the  continuance of any Event of Default.  In
connection with any such action,  suit or proceeding  being controlled by Owner,
such Indemnitee  shall have the right to participate  therein,  at its sole cost
and expense, with counsel reasonably  satisfactory to Owner; PROVIDED, that such

<PAGE>

Indemnitee's   participation   does  not,  in  the  reasonable  opinion  of  the
independent  counsel  appointed  by the Owner or its  insurers  to conduct  such
proceedings, interfere with the defense of such case.

      (c) In no event  shall any  Indemnitee  enter into a  settlement  or other
compromise  with  respect to any Expense  without the prior  written  consent of
Owner, which consent shall not be unreasonably withheld or delayed,  unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 8.1.

      (d) In the case of any Expense indemnified by the Owner hereunder which is
covered by a policy of insurance maintained by Owner pursuant to Section 4.06 of
the Indenture,  at Owner's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to  investigate,  defend or  compromise
such  Expense as may be required to retain the benefits of such  insurance  with
respect to such Expense.

      (e) If an Indemnitee is not a party to this  Agreement,  Owner may require
such  Indemnitee  to agree in writing to the terms of this Section 8 and Section
12.8 prior to making any payment to such Indemnitee under this Section 8.

      (f) Nothing  contained in this Section 8.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume  responsibility for or control of
any judicial proceeding with respect thereto.

               8.1.6       INFORMATION

      Owner will  provide the  relevant  Indemnitee  with such  information  not
within the control of such Indemnitee, as is in Owner's control or is reasonably
available  to Owner,  which such  Indemnitee  may  reasonably  request  and will
otherwise  cooperate  with such  Indemnitee  so as to enable such  Indemnitee to
fulfill its obligations  under Section 8.1.5.  The Indemnitee shall supply Owner
with  such  information  not  within  the  control  of  Owner,  as  is  in  such
Indemnitee's control or is reasonably available to such Indemnitee,  which Owner
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 8.1.5.

               8.1.7       EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
                           ASSURANCES

      Upon the payment in full by Owner of any indemnity provided for under this
Agreement, Owner, without any further action and to the full extent permitted by
Law,  will be  subrogated  to all rights and remedies of the person  indemnified

<PAGE>

(other than with respect to any of such  Indemnitee's  insurance  policies or in
connection  with any indemnity claim such Indemnitee may have under Section 6.03
or 8.01 of the Trust  Indenture)  in  respect  of the  matter  as to which  such
indemnity  was  paid.  Each  Indemnitee  will give such  further  assurances  or
agreements  and cooperate  with Owner to permit Owner to pursue such claims,  if
any, to the extent reasonably requested by Owner and at Owner's expense.

               8.1.8       REFUNDS

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

      8.2      EXPENSES

               8.2.1       INVOICES AND PAYMENT

      The Mortgagee,  the Applicable Pass Through Trustees and the Subordination
Agent shall promptly submit to Owner for its prompt approval (which shall not be
unreasonably   withheld)  copies  of  invoices  in  reasonable   detail  of  the
Transaction  Expenses for which it is responsible  for providing  information as
they are  received  (but in no event  later than the 90th day after the  Closing
Date). If so submitted and approved, the Owner agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.

               8.2.2       PAYMENT OF OTHER EXPENSES

      Owner shall pay (i) the ongoing fees and expenses of  Mortgagee,  and (ii)
all reasonable  out-of-pocket  costs and expenses (including the reasonable fees
and  disbursements  of  counsel)  incurred  by  Mortgagee  or  any  Note  Holder
attributable to any waiver, amendment or modification of any Operative Agreement
to the extent requested by Owner.

<PAGE>

      8.3      GENERAL TAX INDEMNITY

               8.3.1       GENERAL

      Except as provided in Section  8.3.2,  Owner agrees that each payment paid
by Owner under the Equipment  Notes,  and any other payment or indemnity paid by
Owner to a Tax Indemnitee  under any Operative  Agreement,  shall be free of all
withholdings  or deductions with respect to Taxes of any nature (other than U.S.
federal,  state or local  withholding taxes on, based on or measured by gross or
net income),  and in the event that Owner shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Owner shall make
all such  withholdings  or deductions,  (y) the amount payable by Owner shall be
increased so that after making all required  withholdings or deductions such Tax
Indemnitee  receives  the same  amount that it would have  received  had no such
withholdings  or deductions  been made,  and (z) Owner shall pay the full amount
withheld  or  deducted to the  relevant  Taxing  Authority  in  accordance  with
applicable  law.  Except as provided in Section  8.3.2 and whether or not any of
the  transactions   contemplated  hereby  are  consummated,   Owner  shall  pay,
indemnify,  protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed  by any  Taxing  Authority  that may from time to time be  imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any  interest in any of the  foregoing  (whether or not  indemnified
against by any other Person),  upon or with respect to the Operative  Agreements
or the transactions or payments contemplated thereby,  including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft,  the Airframe,  any
Engine,  any Part, any Operative  Agreement  (including  without  limitation any
Equipment  Notes) or any data or any other thing  delivered  or to be  delivered
under  an  Operative  Agreement,  (y)  the  purchase,  manufacture,  acceptance,
rejection,  sale, transfer of title, return,  ownership,  mortgaging,  delivery,
transport, charter, rental, lease, re-lease, sublease,  assignment,  possession,
repossession,  presence,  use,  condition,  storage,  preparation,  maintenance,
modification,  alteration,  improvement,  operation,  registration,  transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control,  the imposition of any Lien,  financing,  refinancing  requested by the
Owner,  abandonment  or other  disposition  of the Aircraft,  the Airframe,  any
Engine, any Part, any data or any other thing delivered or to be delivered under
an Operative  Agreement or (z)  interest,  fees or any other  income,  proceeds,
receipts or earnings,  whether  actual or deemed,  arising  upon,  in connection

<PAGE>

with, or in respect of, any of the Operative Agreements  (including the property
or  income  or other  proceeds  with  respect  to  property  held as part of the
Collateral) or the transactions contemplated thereby.

               8.3.2       CERTAIN EXCEPTIONS

      The  provisions  of Section 8.3.1 shall not apply to, and Owner shall have
no liability hereunder for, Taxes:

      (a) imposed on a Tax  Indemnitee  by the federal  government of the United
States or any Taxing Authority or governmental  subdivision of the United States
or therein  (including any state or local Taxing Authority) (i) on, based on, or
measured by,  gross or net income or gross or net  receipts,  including  capital
gains  taxes,  excess  profits  taxes,   minimum  taxes  from  tax  preferences,
alternative  minimum taxes,  branch profits taxes,  accumulated  earnings taxes,
personal  holding  company  taxes,  succession  taxes and estate taxes,  and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with  respect  to, or  measured  by,  capital or net worth or in the
nature of a franchise  tax or a tax for the privilege of doing  business  (other
than, in the case of clause (i) or (ii), sales, use, license or property Taxes);

      (b) imposed on a Tax  Indemnitee by any Taxing  Authority or  governmental
subdivision  thereof or therein  outside of the  United  States  (including  any
Taxing Authority in or of a territory,  possession or commonwealth of the United
States) (i) on,  based on, or measured  by,  gross or net income or gross or net
receipts,  including  capital gains taxes,  excess profits taxes,  minimum taxes
from  tax  preferences,   alternative   minimum  taxes,  branch  profits  taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with  respect to, or measured  by,  capital or
net worth or in the  nature of a  franchise  tax or a tax for the  privilege  of
doing business  (other than, in the case of clause (i) or (ii), (A) sales,  use,
license or  property  Taxes,  or (B) any Taxes  imposed by any Taxing  Authority
(other than a Taxing Authority within whose  jurisdiction such Tax Indemnitee is
incorporated  or organized or maintains its principal place of business) if such
Tax  Indemnitee  would  not have  been  subject  to  Taxes of such  type by such
jurisdiction  but for (I) the location,  use or operation of the  Aircraft,  the
Airframe,  any  Engine  or any  Part  thereof  by an  Owner  Person  within  the
jurisdiction of the Taxing  Authority  imposing such Tax, or (II) the activities
of any Owner Person in such jurisdiction,  including, but not limited to, use of
any other aircraft by Owner in such jurisdiction,  (III) the status of any Owner
Person as a foreign  entity or as an entity owned in whole or in part by foreign

<PAGE>

persons, (IV) Owner having made (or having been deemed to have made) payments to
such Tax  Indemnitee  from the relevant  jurisdiction  or (V) in the case of the
Pass Through Trustees, the Note Holders or any related Tax Indemnitee, the Owner
being incorporated or organized or maintaining a place of business or conducting
activities in such jurisdiction);

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

      (d) that are being contested as provided in Section 8.3.4 hereof;

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

      (f)  imposed  on or  with  respect  to a  Tax  Indemnitee  (including  the
transferee  in those  cases in which the Tax on  transfer  is imposed  on, or is
collected from, the  transferee) as a result of a transfer or other  disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee of any interest in the Aircraft,  the Airframe, any Engine or any
Part, any interest arising under the Operative  Agreements or any Equipment Note
or as a result of a transfer  or  disposition  (including  a deemed  transfer or
disposition) of any interest in a Tax Indemnitee  (other than (A) a substitution
or replacement of the Aircraft, the Airframe, any Engine or any Part by an Owner
Person that is treated for Tax purposes as a transfer or  disposition,  or (B) a
transfer pursuant to an exercise of remedies upon an Event of Default that shall
have occurred and have been continuing);

      (g) Taxes in excess of those that would  have been  imposed  had there not
been a transfer or other  disposition  by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (f) above;

      (h) consisting of any interest, penalties or additions to tax imposed on a
Tax  Indemnitee  as a  result  of (in  whole  or in  part)  failure  of such Tax
Indemnitee or a related Tax  Indemnitee to file any return  properly and timely,
unless  such  failure  shall be caused by the  failure of Owner to  fulfill  its
obligations, if any, under Section 8.3.6 with respect to such return;

      (i) resulting from, or that would not have been imposed but for, any Liens
arising as a result of claims  against,  or acts or  omissions  of, or otherwise

<PAGE>

attributable  to such Tax Indemnitee or a related Tax Indemnitee  that the Owner
is not obligated to discharge under the Operative Agreements;

      (j)  imposed on any Tax  Indemnitee  as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative  Agreement or the inaccuracy of
any  representation  or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;

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

      (l) imposed on a Tax  Indemnitee by a Taxing  Authority of a  jurisdiction
outside  the  United  States to the extent  that such Taxes  would not have been
imposed  but for a  connection  between  the Tax  Indemnitee  or a  related  Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or

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

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

               8.3.3       PAYMENT

      (a) Owner's  indemnity  obligation to a Tax Indemnitee  under this Section
8.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 8.3 and any tax
benefits  actually  recognized  by  such  Tax  Indemnitee  as a  result  of  the
indemnifiable Tax (including,  without limitation,  any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable  under this Section 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.

      (b) At Owner's  request,  the  computation  of the amount of any indemnity
payment owed by Owner or any amount owed by a Tax  Indemnitee to Owner  pursuant
to this Section 8.3 shall be verified and  certified  by an  independent  public

<PAGE>

accounting  firm selected by such Tax Indemnitee and reasonably  satisfactory to
Owner.  Such  verification  shall be  binding.  The  costs of such  verification
(including  the fee of such  public  accounting  firm)  shall  be borne by Owner
unless such verification shall result in an adjustment in Owner's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.

      (c) Each Tax  Indemnitee  shall  provide  Owner with such  certifications,
information and  documentation as shall be in such Tax  Indemnitee's  possession
and as shall be reasonably  requested by Owner to minimize any indemnity payment
pursuant to this Section 8.3;  provided,  that  notwithstanding  anything to the
contrary  contained herein, no Tax Indemnitee shall be required to provide Owner
with any Tax returns.

      (d) Each Tax  Indemnitee  shall  promptly  forward  to Owner  any  written
notice,  bill or advice received by it from any Taxing Authority  concerning any
Tax for which it seeks  indemnification  under this Section 8.3. Owner shall pay
any amount for which it is liable  pursuant to this  Section 8.3 directly to the
appropriate  Taxing  Authority  if legally  permissible  or upon demand of a Tax
Indemnitee,  to such Tax  Indemnitee  within 30 days of such  demand  (or,  if a
contest occurs in accordance  with Section  8.3.4,  within 30 days after a Final
Determination  (as defined  below)),  but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If  requested  by a Tax  Indemnitee  in  writing,  Owner  shall  furnish  to the
appropriate  Tax  Indemnitee  the original or a certified  copy of a receipt for
Owner's  payment of any Tax paid by Owner or such other  evidence  of payment of
such Tax as is  acceptable  to such Tax  Indemnitee.  Owner  shall also  furnish
promptly upon written  request such data as any Tax  Indemnitee  may  reasonably
require to enable such Tax  Indemnitee  to comply with the  requirements  of any
taxing  jurisdiction  unless such data is not reasonably  available to Owner or,
unless  such  data is  specifically  requested  by a  Taxing  Authority,  is not
customarily furnished by domestic air carriers under similar circumstances.  For
purposes of this Section 8.3, a "Final Determination" shall mean (i) a
decision, judgment, decree or other order by any court of competent jurisdiction
that  occurs  pursuant  to the  provisions  of Section  8.3.4,  which  decision,
judgment,  decree or other  order has  become  final  and  unappealable,  (ii) a
closing  agreement  or  settlement  agreement  entered into in  accordance  with
Section  8.3.4 that has become  binding and is not subject to further  review or
appeal  (absent fraud,  misrepresentation,  etc.),  or (iii) the  termination of
administrative  proceedings  and the  expiration  of the time for  instituting a
claim in a court proceeding.

<PAGE>

      (e) If any Tax Indemnitee  shall actually  realize a tax savings by reason
of any Tax paid or  indemnified  by Owner  pursuant to this Section 8.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery  deduction or otherwise)  and such savings is not otherwise  taken into
account in computing such payment or indemnity such Tax Indemnitee  shall pay to
Owner an amount equal to the lesser of (i) the amount of such tax savings,  plus
any additional tax savings recognized as the result of any payment made pursuant
to this sentence,  when, as, if, and to the extent,  realized or (ii) the amount
of all  payments  pursuant to this  Section 8.3 by Owner to such Tax  Indemnitee
(less any payments  previously  made by such Tax Indemnitee to Owner pursuant to
this  Section  8.3.3 (e)) (and the excess,  if any, of the amount  described  in
clause (i) over the amount described in clause (ii) shall be carried forward and
applied to reduce pro tanto any subsequent obligations of Owner to make payments
to such Tax Indemnitee  pursuant to this Section 8.3);  provided,  that such Tax
Indemnitee  shall not be required to make any payment  pursuant to this sentence
so long as a Lease  Event of Default of a monetary  nature has  occurred  and is
continuing.  If a tax benefit is later disallowed or denied, the disallowance or
denial  shall be treated as a Tax  indemnifiable  under  Section  8.3.1  without
regard to the  provisions of Section 8.3.2 (other than Section 8.3.2 (f)).  Each
such Tax Indemnitee shall in good faith use reasonable efforts in filing its tax
returns and in dealing  with Taxing  Authorities  to seek and claim any such tax
benefit.

               8.3.4       CONTEST

      (a) If a written  claim is made  against a Tax  Indemnitee  for Taxes with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee  makes a determination  that a Tax is due for which Owner could
have an indemnity obligation hereunder,  such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not  relieve  Owner of its  indemnity  obligations  hereunder  unless such
failure to notify effectively  forecloses Owner's rights to require a contest of
such  claim) and shall take no action  with  respect to such claim  without  the
prior written  consent of Owner for 30 days following the receipt of such notice
by Owner; provided,  that, in the case of a claim made against a Tax Indemnitee,
if such Tax Indemnitee  shall be required by law to take action prior to the end
of such 30-day period,  such Tax Indemnitee  shall,  in such notice to Owner, so
inform Owner,  and such Tax Indemnitee shall take no action for as long as it is
legally  able to do so (it  being  understood  that a Tax  Indemnitee  shall  be
entitled to pay the Tax  claimed  and sue for a refund  prior to the end of such
30-day  period  if  (i)(A)  the  failure  to so pay  the  Tax  would  result  in
substantial  penalties (unless  immediately  reimbursed by Owner) and the act of

<PAGE>

paying the Tax would not  materially  prejudice  the right to contest or (B) the
failure  to so pay  would  result  in  criminal  penalties  and  (ii)  such  Tax
Indemnitee  shall take any action so required in  connection  with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition,  such Tax Indemnitee shall (provided,  that Owner shall have agreed to
keep such information  confidential  other than to the extent necessary in order
to contest the claim) furnish Owner with copies of any requests for  information
from any Taxing Authority relating to such Taxes with respect to which Owner may
be required to indemnify  hereunder.  If requested by Owner in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at the expense
of Owner (including,  without  limitation,  all reasonable  costs,  expenses and
reasonable  attorneys' and accountants' fees and  disbursements),  in good faith
contest (or, if permitted by  applicable  law,  allow Owner to contest)  through
appropriate administrative and judicial proceedings the validity,  applicability
or amount of such Taxes by (I) resisting  payment  thereof,  (II) not paying the
same except  under  protest if protest is  necessary  and proper or (III) if the
payment  is made,  using  reasonable  efforts  to obtain a refund  thereof in an
appropriate  administrative and/or judicial proceeding. If requested to do so by
Owner,  the Tax Indemnitee shall appeal any adverse  administrative  or judicial
decision,  except  that the Tax  Indemnitee  shall not be required to pursue any
appeals  to the  United  States  Supreme  Court.  If and to the  extent  the Tax
Indemnitee is able to separate the  contested  issue or issues from other issues
arising in the same  administrative or judicial proceeding that are unrelated to
the transactions  contemplated by the Operative  Agreements without, in the good
faith judgment of such Tax Indemnitee,  adversely affecting such Tax Indemnitee,
such Tax  Indemnitee  shall  permit  Owner to  control  the  conduct of any such
proceeding  and shall  provide to Owner (at Owner's cost and expense)  with such
information or data that is in such Tax Indemnitee's  control or possession that
is  reasonably  necessary  to  conduct  such  contest.  In the case of a contest
controlled by a Tax Indemnitee,  such Tax Indemnitee shall consult with Owner in
good faith  regarding the manner of  contesting  such claim and shall keep Owner
reasonably  informed  regarding the progress of such contest.  A Tax  Indemnitee
shall not fail to take any  action  expressly  required  by this  Section  8.3.4
(including,  without  limitation,  any action regarding any appeal of an adverse
determination  with  respect  to any  claim) or settle or  compromise  any claim
without  the prior  written  consent  of the Owner  (except as  contemplated  by
Section 8.3.4(b) or (c)).

      (b) Notwithstanding  the foregoing,  in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Owner to pursue any contest) unless

<PAGE>

(i) Owner shall have agreed to pay such Tax  Indemnitee on demand all reasonable
costs and expenses incurred by such Tax Indemnitee in connection with contesting
such Taxes,  including,  without limitation,  all reasonable out of pocket costs
and expenses and reasonable  attorneys' and accountants' fees and disbursements,
(ii) if such contest shall involve the payment of the claim, Owner shall advance
the  amount  thereof  (to  the  extent  indemnified  hereunder)  plus  interest,
penalties and additions to tax with respect thereto that are required to be paid
prior to the commencement of such contest on an interest-free after-Tax basis to
such Tax Indemnitee (and such Tax Indemnitee shall promptly pay to the Owner any
net realized tax benefits resulting from such advance including any tax benefits
resulting  from  making  such  payment),  (iii) such Tax  Indemnitee  shall have
reasonably  determined  that the  action  to be taken  will  not  result  in any
material risk of  forfeiture,  sale or loss of the Aircraft  (unless Owner shall
have made  provisions to protect the  interests of any such Tax  Indemnitee in a
manner reasonably satisfactory to such Tax Indemnitee) (provided,  that such Tax
Indemnitee  agrees to notify Owner in writing promptly after it becomes aware of
any such  risk),  (iv) no Lease  Event of  Default  shall have  occurred  and be
continuing unless Owner has provided  security for its obligations  hereunder by
advancing to such Tax  Indemnitee  before  proceeding  or  continuing  with such
contest, the amount of the Tax being contested,  plus any interest and penalties
and an amount  estimated in good faith by such Tax Indemnitee for expenses,  and
(v) prior to commencing  any judicial  action  controlled by Owner,  Owner shall
have  acknowledged its liability for such claim  hereunder,  provided that Owner
shall not be bound by its acknowledgment if the Final Determination  articulates
conclusions of law and fact that demonstrate that Owner has no liability for the
contested  amounts  hereunder.   Notwithstanding  the  foregoing,   if  any  Tax
Indemnitee  shall  release,  waive,  compromise or settle any claim which may be
indemnifiable  by  Owner  pursuant  to this  Section  8.3  without  the  written
permission of Owner,  Owner's  obligation to indemnify such Tax Indemnitee  with
respect to such claim (and all directly  related  claims and claims based on the
outcome of such claim) shall terminate, subject to Section 8.3.4(c), and subject
to  Section  8.3.4(c),  such Tax  Indemnitee  shall  repay to Owner  any  amount
previously  paid or advanced to such Tax Indemnitee  with respect to such claim,
plus  interest at the rate that would have been payable by the  relevant  Taxing
Authority with respect to a refund of such Tax.

      (c)  Notwithstanding  anything  contained  in  this  Section  8.3,  a  Tax
Indemnitee  will not be required to contest the  imposition of any Tax and shall
be permitted to settle or compromise any claim without  Owner's  consent if such
Tax  Indemnitee  (i) shall waive its right to  indemnity  under this Section 8.3
with  respect  to such Tax (and any  directly  related  claim  and any claim the

<PAGE>

outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Owner any amount  previously  paid or advanced by Owner  pursuant to this
Section 8.3 with respect to such Tax,  plus interest at the rate that would have
been payable by the relevant  Taxing  Authority with respect to a refund of such
Tax,  and (iii) shall agree to discuss  with Owner the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.

               8.3.5       REFUND

      If any Tax  Indemnitee  shall  receive a refund  of, or be  entitled  to a
credit  against  other  liability  for,  all or any  part  of  any  Taxes  paid,
reimbursed or advanced by Owner,  such Tax Indemnitee  shall pay to Owner within
30 days of such  receipt an amount equal to the lesser of (a) the amount of such
refund  or  credit  plus any net tax  benefit  (taking  into  account  any Taxes
incurred  by such Tax  Indemnitee  by reason of the  receipt  of such  refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence  (including
this clause (a)) and (b) such tax payment,  reimbursement or advance by Owner to
such Tax  Indemnitee  theretofore  made  pursuant  to this  Section 8.3 (and the
excess,  if any, of the amount described in clause (a) over the amount described
in clause  (b) shall be  carried  forward  and  applied  to reduce pro tanto any
subsequent  obligation of Owner to make payments to such Tax Indemnitee pursuant
to this  Section  8.3).  If, in  addition  to such  refund or  credit,  such Tax
Indemnitee shall receive (or be credited with) an amount  representing  interest
on the amount of such refund or credit,  such Tax Indemnitee  shall pay to Owner
within 30 days of such receipt or realization of such credit that  proportion of
such interest  that shall be fairly  attributable  to Taxes paid,  reimbursed or
advanced by Owner prior to the  receipt of such  refund or  realization  of such
credit.

               8.3.6       TAX FILING

      If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification  under this Section 8.3, Owner shall
timely file the same  (except for any such report,  return or statement  which a
Tax Indemnitee has timely notified the Owner in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name);  provided,  that the relevant Tax Indemnitee  shall furnish Owner
with any  information  in such Tax  Indemnitee's  possession  or control that is
reasonably  necessary  to file any  such  return,  report  or  statement  and is
reasonably  requested  in  writing  by Owner (it being  understood  that the Tax
Indemnitee  shall not be required to furnish  copies of its actual tax  returns,

<PAGE>

although it may be required to furnish relevant information  contained therein).
Owner shall either file such report, return or statement and send a copy of such
report,  return or  statement  to such Tax  Indemnitee,  or,  where Owner is not
permitted to file such  report,  return or  statement,  it shall notify such Tax
Indemnitee of such  requirement  and prepare and deliver such report,  return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable  time prior to the time such report,  return or statement is
to be filed.

               8.3.7       FORMS

      Each  Tax  Indemnitee  agrees  to  furnish  from  time to time to Owner or
Mortgagee  or to such  other  person as Owner or  Mortgagee  may  designate,  at
Owner's or Mortgagee's request,  such duly executed and properly completed forms
as may be  necessary  or  appropriate  in  order to claim  any  reduction  of or
exemption from any withholding or other Tax imposed by any Taxing Authority,  if
(x) such  reduction or exemption  is  available to such Tax  Indemnitee  and (y)
Owner  has  provided  such Tax  Indemnitee  with any  information  necessary  to
complete such form not otherwise reasonably available to such Tax Indemnitee.

               8.3.8       NON-PARTIES

      If a Tax  Indemnitee is not a party to this  Agreement,  Owner may require
the Tax  Indemnitee  to agree in writing,  in a form  reasonably  acceptable  to
Owner,  to the terms of this  Section 8.3 and  Section  15.8 prior to making any
payment to such Tax Indemnitee under this Section 8.3.

               8.3.9       SUBROGATION

      Upon  payment of any Tax by Owner  pursuant  to this  Section 8.3 to or on
behalf  of a Tax  Indemnitee,  Owner,  without  any  further  action,  shall  be
subrogated to any claims that such Tax  Indemnitee  may have  relating  thereto.
Such Tax Indemnitee  shall cooperate with Owner (to the extent such  cooperation
does not  result in any  unreimbursed  cost,  expense or  liability  to such Tax
Indemnitee) to permit Owner to pursue such claims.

      8.4      PAYMENTS

      Any payments  made pursuant to Section 8.1 or 8.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant  Indemnitee
or Tax Indemnitee or to Owner, in immediately available funds at such bank or to
such account as specified by such  Indemnitee or Tax Indemnitee or Owner, as the
case may be, in written  directives to the payor, or, if no such direction shall

<PAGE>

have been given,  by check of the payor  payable to the order of, and mailed to,
such  Indemnitee or Tax  Indemnitee  or Owner,  as the case may be, by certified
mail, postage prepaid, at its address as set forth in this Agreement.

      8.5      INTEREST

      If any amount,  payable by Owner,  any  Indemnitee  or any Tax  Indemnitee
under Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment  shall pay on demand,  to the  extent  permitted  by Law,  to the person
entitled thereto,  interest on any such amount for the period from and including
the due date for such amount to but  excluding the date the same is paid, at the
Payment Due Rate.  Such interest  shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.

      8.6      BENEFIT OF INDEMNITIES

      The  obligations  of Owner in  respect  of all  indemnities,  obligations,
adjustments  and  payments  in  Section  8.1 or 8.3 are  expressly  made for the
benefit  of, and shall be  enforceable  by,  the  Indemnitee  or Tax  Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture.

SECTION 9.     ASSIGNMENT OR TRANSFER OF INTEREST

      9.1      NOTE HOLDERS

      Subject to Section  6.3.2 hereof and Section 2.07 of the Trust  Indenture,
any Note  Holder  may,  at any time and  from  time to time,  Transfer  or grant
participations  in all or any portion of the  Equipment  Notes and/or all or any
portion of its  beneficial  interest  in its  Equipment  Notes to any person (it
being  understood  that the sale or issuance of Pass Through  Certificates  by a
Pass  Through  Trustee  shall not be  considered  a Transfer or  participation);
PROVIDED,  that any  participant in any such  participations  shall not have any
direct rights under the  Operative  Agreements or any Lien on all or any part of
the Aircraft or the Collateral and Owner shall not have any increased  liability
or  obligations as a result of any such  participation.  In the case of any such
Transfer,  the  Transferee,  by acceptance of Equipment Notes in connection with
such  Transfer,  shall be  deemed  to be bound by all of the  covenants  of Note
Holders contained in the Operative Agreements.

      9.2      EFFECT OF TRANSFER

      Upon any Transfer in accordance  with Section 9.1 (other than any Transfer
by any Note  Holder,  to the extent it only grants  participations  in Equipment

<PAGE>

Notes or in its beneficial interest therein), Transferee shall be deemed a "Note
Holder," for all purposes of this Agreement and the other Operative  Agreements,
and the  transferring  Note Holder shall be released from all of its liabilities
and obligations  under this Agreement and any other Operative  Agreements to the
extent such  liabilities and obligations  arise after such Transfer and, in each
case,  to the  extent  such  liabilities  and  obligations  are  assumed  by the
Transferee;  PROVIDED,  that such  transferring  Note Holder (and its respective
Affiliates,  successors, assigns, agents, servants,  representatives,  directors
and  officers)  will  continue to have the benefit of any rights or  indemnities
under any Operative  Agreement vested or relating to circumstances,  conditions,
acts or events prior to such Transfer.

SECTION 10.    SECTION 1110

      It is the intention of each of the Owner, the Note Holders (such intention
being evidenced by each of their acceptance of an Equipment Note), and Mortgagee
that Mortgagee shall be entitled to the benefits of Section 1110 in the event of
a case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.

SECTION 11.    CHANGE OF CITIZENSHIP

      11.1     GENERALLY

      Without  prejudice  to  the   representations,   warranties  or  covenants
regarding the status of any party hereto as a Citizen of the United States, each
of Owner,  WTC and Mortgagee  agrees that it will,  immediately  upon  obtaining
knowledge  of any facts that would  cast doubt upon its  continuing  status as a
Citizen of the United States and promptly upon public disclosure of negotiations
in respect of any transaction which would or might adversely affect such status,
notify in writing  all  parties  hereto of all  relevant  matters in  connection
therewith.

      11.2     MORTGAGEE

      Upon WTC giving any notice in  accordance  with  Section  11.1,  Mortgagee
shall  (if and so long as such  citizenship  is  necessary  under  the Act as in
effect at such time or, if it is not  necessary,  if and so long as  Mortgagee's
citizenship could have any adverse effect on Owner, or any Note Holder), subject
to Section 9.02 of the Trust  Indenture,  resign as Mortgagee  promptly upon its
ceasing to be such a citizen.

<PAGE>

SECTION 12.    MISCELLANEOUS

      12.1     AMENDMENTS

      No  provision  of this  Agreement  may be amended,  supplemented,  waived,
modified,  discharged,  terminated or otherwise  varied  orally,  but only by an
instrument  in  writing  that  specifically  identifies  the  provision  of this
Agreement  that it  purports to amend,  supplement,  waive,  modify,  discharge,
terminate  or  otherwise  vary and is  signed  by the  party  against  which the
enforcement  of the  amendment,  supplement,  waiver,  modification,  discharge,
termination  or variance is sought.  Each such  amendment,  supplement,  waiver,
modification,  discharge, termination or variance shall be effective only in the
specific  instance  and for the  specific  purpose  for  which it is  given.  No
provision  of  this  Agreement   shall  be  varied  or   contradicted   by  oral
communication, course of dealing or performance or other manner not set forth in
an agreement,  document or instrument in writing and signed by the party against
which enforcement of the same is sought.

      12.2     SEVERABILITY

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

      12.3     SURVIVAL

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

      12.4     REPRODUCTION OF DOCUMENTS

      This  Agreement,  all  schedules and exhibits  hereto and all  agreements,
instruments and documents relating hereto,  including,  without limitation,  (a)
consents,  waivers and  modifications  that may  hereafter  be executed  and (b)
financial statements, certificates and other information previously or hereafter

<PAGE>

furnished  to  any  party  hereto,  may  be  reproduced  by  such  party  by any
photographic,  photostatic,  microfilm,  micro-card,  miniature  photographic or
other  similar  process,  and such party may destroy any  original  documents so
reproduced.  Any such  reproduction  shall be as  admissible  in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such  reproduction  was made by such
party in the regular  course of  business)  and any  enlargement,  facsimile  or
further reproduction of such reproduction likewise is admissible in evidence.

      12.5     COUNTERPARTS

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

      12.6     NO WAIVER

      No failure on the part of any party  hereto to  exercise,  and no delay by
any party hereto in exercising,  any of its respective rights, powers,  remedies
or  privileges  under this  Agreement or provided at Law, in equity or otherwise
shall impair,  prejudice or constitute a waiver of any such right, power, remedy
or  privilege  or be  construed  as a waiver of any  breach  hereof  or  default
hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right,  power,  remedy or  privilege  preclude  any other or further
exercise  thereof by it or the  exercise of any other  right,  power,  remedy or
privilege  by it. No notice to or demand on any party  hereto in any case shall,
unless otherwise required under this Agreement,  entitle such party to any other
or further  notice or demand in similar or other  circumstances  or constitute a
waiver of the rights of any party  hereto to any other or further  action in any
circumstances without notice or demand.

      12.7     NOTICES

      Unless  otherwise  expressly  permitted by the terms hereof,  all notices,
requests,  demands,  authorizations,  directions,  consents,  waivers  and other
communications  required or  permitted  to be made,  given,  furnished  or filed
hereunder shall be in writing (it being  understood that the  specification of a
writing in certain  instances and not in others does not imply an intention that
a writing is not required as to the latter),  shall refer  specifically  to this
Agreement  or other  applicable  Operative  Agreement,  and shall be  personally
delivered, sent by facsimile or telecommunication  transmission (which in either
case  provides  written  confirmation  to the sender of its  delivery),  sent by

<PAGE>

registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service,  in each case to the respective  address,  or
facsimile  number  set  forth for such  party in  Schedule  1, or to such  other
address, facsimile or other number as each party hereto may hereafter specify by
notice  to  the  other  parties  hereto.  Each  such  notice,  request,  demand,
authorization,  direction,  consent,  waiver  or  other  communication  shall be
effective when received or, if made, given,  furnished or filed (a) by facsimile
or  telecommunication  transmission,  when  confirmed,  or (b) by  registered or
certified mail, three Business Days after being deposited,  properly  addressed,
with the U.S. Postal Service.

      12.8     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

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

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

      (C) EACH  PARTY  HERETO  HEREBY  IRREVOCABLY  CONSENTS  AND  AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS,  SUMMONS,  NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED  COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,  AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE  UPON IT, OR ANY OF ITS  AGENTS,  IN EACH CASE IN  ACCORDANCE  WITH THIS
SECTION 12.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH  SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH  SERVICE ON SUCH PARTY OR ANY JUDGMENT  RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

      (D) EACH PARTY HERETO HEREBY  IRREVOCABLY  WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE,  OR
OTHERWISE,  IN ANY LEGAL ACTION OR  PROCEEDING  BROUGHT  HEREUNDER IN ANY OF THE

<PAGE>

ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM,  THAT  VENUE  FOR THE  ACTION  OR  PROCEEDING  IS  IMPROPER  OR THAT THIS
AGREEMENT  OR ANY OTHER  OPERATIVE  AGREEMENT  MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.

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

      12.9     THIRD-PARTY BENEFICIARY

      This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Indenture Indemnitees, each of which is an intended
third party  beneficiary  with respect to the  provisions of Section 8.1 and the
persons   referred  to  in  Section  6.4.6,   which  are  intended  third  party
beneficiaries  with  respect  to such  Section)  with any  rights of any  nature
whatsoever  against any of the parties  hereto and no person not a party  hereto
(other than the Indenture Indemnitees, with respect to the provisions of Section
8.1, and the persons referred to in Section 6.4.6 with respect to the provisions
of such  Section)  shall have any right,  power or  privilege  in respect of any
party hereto, or have any benefit or interest, arising out of this Agreement.

      12.10    ENTIRE AGREEMENT

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

      12.11    FURTHER ASSURANCES

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

                    [This space intentionally left blank]

<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.,
                                      Owner

                                    By_________________________________________
                                      Name:
                                      Title:

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

                                    By_________________________________________
                                      Name:
                                      Title:

                                    WILMINGTON   TRUST   COMPANY,   not  in  its
                                       individual capacity,  except as expressly
                                       provided  herein,   but  solely  as  Pass
                                       Through  Trustee  under the Pass  Through
                                       Trust   Agreement  for  the   Continental
                                       Airlines Pass Through Trust, 2000-1A-1-0

                                    By_________________________________________
                                      Name:
                                      Title:

<PAGE>

                                    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, 2000-1A-2-0

                                    By_________________________________________
                                      Name:
                                      Title:

                                    WILMINGTON   TRUST   COMPANY,   not  in  its
                                       individual capacity,  except as expressly
                                       provided  herein,   but  solely  as  Pass
                                       Through  Trustee  under the Pass  Through
                                       Trust   Agreement  for  the   Continental
                                       Airlines Pass Through Trust, 2000-1B-0

                                    By_________________________________________
                                      Name:
                                      Title:

                                    WILMINGTON   TRUST   COMPANY,   not  in  its
                                       individual capacity,  except as expressly
                                       provided  herein,   but  solely  as  Pass
                                       Through  Trustee  under the Pass  Through
                                       Trust   Agreement  for  the   Continental
                                       Airlines Pass Through Trust, 2000-1C-1-0

                                    By_________________________________________
                                      Name:
                                      Title:

<PAGE>

                                    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, 2000-1C-2-0

                                    By_________________________________________
                                      Name:
                                      Title:

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

                                    By_________________________________________
                                      Name:
                                      Title:

<PAGE>

                                                --------------------------------
                                                |           SCHEDULE 1         |
                                                |               TO             |
                                                |     PARTICIPATION AGREEMENT  |
                                                --------------------------------

                               ACCOUNTS; ADDRESSES

                       ACCOUNT FOR PAYMENTS            ADDRESS FOR NOTICES
                       --------------------            -------------------

CONTINENTAL          The Chase Manhattan Bank        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: Senior Vice
                     Voice: 312-807-4084               President - Finance
                     Facsimile: 312-807-4501         Facsimile: (713) 324-2447
                     Reference: Continental [___]

WILMINGTON TRUST     The Chase Manhattan Bank        Wilmington Trust Company
COMPANY, MORTGAGEE   New York, New York 10081        Rodney Square North
                     Account No.: 920-1-014363       1100 North Market Street
                     ABA#: 021-000021                Wilmington, Delaware 19890
                     Attention: Corporate Trust      Attention: Corporate Trust
                      Administration                  Administration
                     Reference: Continental [___]    Facsimile: (302) 651-8882

WILMINGTON TRUST     The Chase Manhattan Bank        Wilmington Trust Company
COMPANY, AS          New York, New York 10081        Rodney Square North
SUBORDINATION AGENT  Account No.: 920-1-014363       1100 North Market Street
                     ABA#: 021-000021                Wilmington, Delaware 19890
                     Attention: Corporate Trust      Attention: Corporate Trust
                      Administration                  Administration
                     Reference: Continental [___]    Facsimile:  (302) 651-8882

WILMINGTON TRUST     The Chase Manhattan Bank        Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081       Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363       1100 North Market Street
FOR THE 2000-1A-1    ABA#: 021-000021                Wilmington, Delaware  19890
PASS THROUGH TRUST   Attention: Corporate Trust      Attention:  Corporate Trust
                      Administration                  Administration
                     Reference: Continental [__]     Facsimile:  (302) 651-8882

WILMINGTON TRUST     The Chase Manhattan Bank        Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081       Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363       1100 North Market Street
FOR THE 2000-1A-2    ABA#: 021-000021                Wilmington, Delaware  19890
PASS THROUGH TRUST   Attention: Corporate Trust      Attention:  Corporate Trust
                      Administration                  Administration
                     Reference: Continental [__]     Facsimile:  (302) 651-8882

<PAGE>

                       ACCOUNT FOR PAYMENTS            ADDRESS FOR NOTICES
                       --------------------            -------------------

WILMINGTON TRUST     The Chase Manhattan Bank        Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081       Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363       1100 North Market Street
FOR THE 2000-1B      ABA#:  021-000021               Wilmington, Delaware  19890
PASS THROUGH TRUST   Attention:  Corporate Trust     Attention:  Corporate Trust
                      Administration                  Administration
                     Reference:  Continental [__]    Facsimile:  (302) 651-8882

WILMINGTON TRUST     The Chase Manhattan Bank         Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081        Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363        1100 North Market Street
FOR THE 2000-1C-1    ABA#:  021-000021                Wilmington, Delaware 19890
PASS THROUGH TRUST   Attention:  Corporate Trust      Attention: Corporate Trust
                      Administration                   Administration
                     Reference:  Continental [__]     Facsimile:  (302) 651-8882

WILMINGTON TRUST     The Chase Manhattan Bank         Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081        Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363        1100 North Market Street
FOR THE 2000-1C-2    ABA#:  021-000021                Wilmington, Delaware 19890
PASS THROUGH TRUST   Attention:  Corporate Trust      Attention: Corporate Trust
                      Administration                   Administration
                     Reference:  Continental [__]     Facsimile:  (302) 651-8882

[WILMINGTON TRUST    The Chase Manhattan Bank         Wilmington Trust Company
COMPANY, AS PASS     New York, New York  10081        Rodney Square North
THROUGH TRUSTEE      Account No.: 920-1-014363        1100 North Market Street
FOR THE 2000-1D      ABA#:  021-000021                Wilmington, Delaware 19890
PASS THROUGH TRUST]  Attention:  Corporate Trust      Attention: Corporate Trust
                      Administration                   Administration
                     Reference:  Continental [__]     Facsimile:  (302) 651-8882

<PAGE>

                                                --------------------------------
                                                |    SCHEDULE 2 - COMMITMENTS  |
                                                |               TO             |
                                                |     PARTICIPATION AGREEMENT  |
                                                --------------------------------

                                   COMMITMENTS

       PASS THROUGH                SERIES OF                DOLLAR AMOUNT
         TRUSTEE                EQUIPMENT NOTES                OF LOAN
       ------------             ---------------             -------------

<PAGE>

                                                --------------------------------
                                                |  SCHEDULE 3 - CERTAIN TERMS  |
                                                |               TO             |
                                                |    PARTICIPATION AGREEMENT   |
                                                --------------------------------

                                  CERTAIN TERMS

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                                --------------------------------
                                                |    SCHEDULE 4 - PERMITTED    |
                                                |           COUNTRIES          |
                                                |    PARTICIPATION AGREEMENT   |
                                                --------------------------------

                             PERMITTED COUNTRIES

          Argentina                          Malta

          Australia                          Mexico

          Austria                            Morocco

          Bahamas                            Netherlands

          Belgium                            New Zealand

          Brazil                             Norway

          Canada                             Paraguay

          Chile                              People's Republic of China

          Denmark                            Philippines

          Egypt                              Portugal

          Ecuador                            Republic of China (Taiwan)

          Finland                            Singapore

          France                             South Africa

          Germany                            South Korea

          Greece                             Spain

          Hungary                            Sweden

          Iceland                            Switzerland

          India                              Thailand

          Indonesia                          Tobago

          Ireland                            Trinidad

          Italy                              United Kingdom

          Japan                              Uruguay

          Luxembourg                         Venezuela

          Malaysia--------------------------------------------------------------------------------

                     TRUST INDENTURE AND MORTGAGE [_______]

                         Dated as of [_______ __, 20__]

                                     Between

                           CONTINENTAL AIRLINES, INC.,

                                      Owner

                                       and

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       except as expressly stated herein,
                            but solely as Mortgagee,

                                    Mortgagee

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

                            EQUIPMENT NOTES COVERING
                          ONE BOEING [_______] AIRCRAFT
                     BEARING U.S. REGISTRATION MARK N[_____]
                      AND MANUFACTURER'S SERIAL NO. [_____]

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

GRANTING CLAUSE.......................................................       1

ARTICLE I     DEFINITIONS.............................................       4

ARTICLE II    THE EQUIPMENT NOTES.....................................       4

      SECTION 2.01.  Form of Equipment Notes..........................       4
      SECTION 2.02.  Issuance and Terms of Equipment Notes............      10
      SECTION 2.03.  [Intentionally Omitted]..........................      12
      SECTION 2.04.  Method of Payment................................      12
      SECTION 2.05.  Application of Payments..........................      14
      SECTION 2.06.  Termination of Interest in Collateral............      15
      SECTION 2.07.  Registration Transfer and Exchange of
                     Equipment Notes..................................      15
      SECTION 2.08.  Mutilated, Destroyed, Lost or Stolen
                     Equipment Notes..................................      16
      SECTION 2.09.  Payment of Expenses on Transfer; Cancellation....      17
      SECTION 2.10.  Mandatory Redemptions of Equipment Notes.........      17
      SECTION 2.11.  Voluntary Redemptions of Equipment Notes.........      17
      SECTION 2.12.  Redemptions; Notice of Redemption................      17
      SECTION 2.13.  Subordination....................................      18

ARTICLE III   RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS.......      19

      SECTION 3.01.  Basic Distributions..............................      19
      SECTION 3.02.  Event of Loss; Replacement; Optional
                     Redemption.......................................      20
      SECTION 3.03.  Payments After Event of Default..................      21
      SECTION 3.04.  Certain Payments.................................      23
      SECTION 3.05.  Other Payments...................................      23

ARTICLE IV    COVENANTS OF THE OWNER..................................      24

      SECTION 4.01.  Liens............................................      24
      SECTION 4.02.  Possession, Operation and Use, Maintenance,
                     Registration and Markings........................      24
      SECTION 4.03.  Inspection.......................................      29
      SECTION 4.04.  Replacement and Pooling of Parts,
                     Alterations, Modifications and Additions;
                     Substitution of Engines..........................      29
      SECTION 4.05.  Loss, Destruction or Requisition.................      33
      SECTION 4.06.  Insurance........................................      37
      SECTION 4.07.  Merger of Owner..................................      38

<PAGE>

                                TABLE OF CONTENTS
                                  (Continued)
                                                                          PAGE
                                                                          ----
ARTICLE V     EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE................      38

      SECTION 5.01.  Event of Default.................................      38
      SECTION 5.02.  Remedies.........................................      40
      SECTION 5.03.  Return of Aircraft, Etc..........................      41
      SECTION 5.04.  Remedies Cumulative..............................      42
      SECTION 5.05.  Discontinuance of Proceedings....................      42
      SECTION 5.06.  Waiver of Past Defaults..........................      43
      SECTION 5.07.  Appointment of Receiver..........................      43
      SECTION 5.08.  Mortgagee Authorized to Execute Bills of
                     Sale, Etc........................................      43
      SECTION 5.09.  Rights of Note Holders to Receive Payment........      43

ARTICLE VI    DUTIES OF THE MORTGAGEE.................................      44

      SECTION 6.01.  Notice of Event of Default.......................      44
      SECTION 6.02.  Action Upon Instructions; Certain Rights and
                     Limitations......................................      44
      SECTION 6.03.  Indemnification..................................      45
      SECTION 6.04.  No Duties Except as Specified in Trust
                     Indenture or Instructions........................      45
      SECTION 6.05.  No Action Except Under Trust Indenture
                     or Instructions..................................      45
      SECTION 6.06.  Investment of Amounts Held by Mortgagee..........      46

ARTICLE VII   THE MORTGAGEE...........................................      46

      SECTION 7.01.  Acceptance of Trusts and Duties..................      46
      SECTION 7.02.  Absence of Duties................................      46
      SECTION 7.03.  No Representations or Warranties as to
                     Aircraft or Documents............................      47
      SECTION 7.04.  No Segregation of Monies; No Interest............      47
      SECTION 7.05.  Reliance; Agreements; Advice of Counsel..........      47
      SECTION 7.06.  Compensation.....................................      48
      SECTION 7.07.  Instructions from Note Holders...................      48

ARTICLE VIII  INDEMNIFICATION.........................................      48

      SECTION 8.01.  Scope of Indemnification.........................      48

ARTICLE IX    SUCCESSOR AND SEPARATE TRUSTEES.........................      49

      SECTION 9.01.  Resignation of Mortgagee; Appointment of
                     Successor........................................      49
      SECTION 9.02.  Appointment of Additional and Separate
                     Trustees.........................................      50

<PAGE>

                                TABLE OF CONTENTS
                                  (Continued)
                                                                          PAGE
                                                                          ----
ARTICLE X     SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND
              OTHER DOCUMENTS.........................................      51

      SECTION 10.01. Instructions of Majority; Limitations............      51
      SECTION 10.02. Mortgagee Protected..............................      52
      SECTION 10.03. Documents Mailed to Note Holders.................      53
      SECTION 10.04. No Request Necessary for Trust Indenture
                     Supplement.......................................      53

ARTICLE XI    MISCELLANEOUS...........................................      53

      SECTION 11.01. Termination of Trust Indenture...................      53
      SECTION 11.02. No Legal Title to Collateral in Note Holders.....      53
      SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding.........      54
      SECTION 11.04. Trust Indenture for Benefit of Owner,
                     Mortgagee, Note Holders and the other
                     Indenture Indemnitees............................      54
      SECTION 11.05. Notices..........................................      54
      SECTION 11.06. Severability.....................................      54
      SECTION 11.07. No Oral Modification or Continuing Waivers.......      55
      SECTION 11.08. Successors and Assigns...........................      55
      SECTION 11.09. Headings.........................................      55
      SECTION 11.10. Normal Commercial Relations......................      55
      SECTION 11.11. Governing Law; Counterpart Form..................      55
      SECTION 11.12. Voting By Note Holders...........................      56
      SECTION 11.13. Bankruptcy.......................................      56

ANNEX A        Definitions
ANNEX B        Insurance
EXHIBIT A      Form of Trust Indenture and Mortgage Supplement
SCHEDULE I     Equipment Notes Amortization and Interest Rates

<PAGE>

                       TRUST INDENTURE AND MORTGAGE [___]

            TRUST INDENTURE AND MORTGAGE [___], dated as of [______________  __,
20__]  ("Trust  Indenture"),  between  CONTINENTAL  AIRLINES,  INC.,  a Delaware
corporation  ("Owner"),   and  WILMINGTON  TRUST  COMPANY,  a  Delaware  banking
corporation,  not in its individual capacity, except as expressly stated herein,
but solely as Mortgagee hereunder (together with its successors  hereunder,  the
"Mortgagee").

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

            WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;

            WHEREAS,  the parties hereto desire by this Trust  Indenture,  among
other  things,  (i) to provide  for the  issuance  by the Owner of the Series of
Equipment Notes specified on Schedule I hereto (it being understood that not all
Series may be issued, in which case references in this Trust Indenture to Series
not  issued  shall be  disregarded)  and  (ii) to  provide  for the  assignment,
mortgage  and pledge by the Owner to the  Mortgagee,  as part of the  Collateral
hereunder,  among other things, of all of the Owner's right,  title and interest
in and to the  Aircraft  and,  except as  hereinafter  expressly  provided,  all
payments  and other  amounts  received  hereunder in  accordance  with the terms
hereof, as security for, among other things, the Owner's obligations to the Note
Holders and the Indenture Indemnitees;

            WHEREAS, all things have been done to make the Equipment Notes, when
executed  by  the  Owner  and  authenticated  and  delivered  by  the  Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and

            WHEREAS,  all  things  necessary  to make this Trust  Indenture  the
valid,  binding  and legal  obligation  of the  Owner for the uses and  purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;

                                 GRANTING CLAUSE

            NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH,  that,
to secure the prompt payment of the Original Amount of, interest on,  Make-Whole
Amount,  if any, and all other amounts due with respect to, all Equipment  Notes
from time to time outstanding  hereunder according to their tenor and effect and
to secure the  performance  and  observance by the Owner of all the  agreements,
covenants and provisions contained herein and in the Participation Agreement and
in the  Equipment  Notes,  for the  benefit of the Note  Holders and each of the
Indenture Indemnitees, and in consideration of the premises and of the covenants
herein  contained,  and of the acceptance of the Equipment  Notes by the holders
thereof, and for other good and valuable  consideration the receipt and adequacy
whereof  are  hereby  acknowledged,  the Owner  has  granted,  bargained,  sold,
assigned,  transferred,  conveyed,  mortgaged,  pledged and confirmed,  and does
hereby grant, bargain,  sell, assign,  transfer,  convey,  mortgage,  pledge and
confirm,  unto the  Mortgagee,  its  successors  in trust and  assigns,  for the
security and benefit of, the Note Holders and each of the Indenture Indemnitees,

<PAGE>

a first priority security interest in and mortgage lien on all right,  title and
interest of the Owner in, to and under the following described property,  rights
and privileges, whether now or hereafter acquired (which, collectively, together
with all  property  hereafter  specifically  subject  to the Lien of this  Trust
Indenture by the terms hereof or any supplement hereto, are included within, and
are referred to as, the "Collateral"), to wit:

            (1) The Airframe which is one Boeing [_______] aircraft with the FAA
Registration number of N[_____] and the manufacturer's  serial number of [_____]
and Engines,  each of which Engines is a  [____________________________]  engine
with the  manufacturer's  serial numbers of [_____ and _____,] is of 750 or more
rated takeoff horsepower or the equivalent of such horsepower (such Airframe and
Engines more particularly  described in the Trust Indenture  Supplement executed
and  delivered  as  provided  herein) as the same is now and will  hereafter  be
constituted,  whether now owned by the Owner or hereafter  acquired,  and in the
case of such  Engines,  whether or not any such Engine  shall be installed in or
attached to the Airframe or any other  airframe,  together with (a) all Parts of
whatever nature,  which are from time to time included within the definitions of
"Airframe" or "Engines",  whether now owned or hereafter acquired, including all
substitutions,   renewals  and  replacements  of  and  additions,  improvements,
accessions and  accumulations to the Airframe and Engines (other than additions,
improvements,  accessions and accumulations which constitute appliances,  parts,
instruments, appurtenances, accessories, furnishings or other equipment excluded
from the definition of Parts) and (b) all Aircraft Documents;

            (2) The Purchase  Agreement  and the Bills of Sale to the extent the
same  relate  to  continuing  rights of the Owner in  respect  of any  warranty,
indemnity or agreement, express or implied, as to title, materials, workmanship,
design or patent infringement or related matters with respect to the Airframe or
the Engines  (reserving to the Owner,  however,  all of the Owner's other rights
and interest in and to the Purchase Agreement) together with all rights, powers,
privileges,  options and other benefits of the Owner thereunder (subject to such
reservation)  with respect to the Airframe or the  Engines,  including,  without
limitation,  the right to make all waivers and  agreements,  to give and receive
all notices and other  instruments or  communications,  to take such action upon
the occurrence of a default thereunder, including the commencement,  conduct and
consummation  of  legal,  administrative  or  other  proceedings,  as  shall  be
permitted  thereby or by law, and to do any and all other things which the Owner
is or may be entitled to do thereunder  (subject to such reservation),  subject,
with  respect to the  Purchase  Agreement,  to the terms and  conditions  of the
Consent and Agreement and the Engine Consent and Agreement;

            (3) All proceeds with respect to the  requisition of title to or use
of the Aircraft or any Engine by any Government Entity or from the sale or other
disposition  of the  Aircraft,  the  Airframe,  any  Engine  or  other  property
described  in any of these  Granting  Clauses by the  Mortgagee  pursuant to the
terms of this Trust  Indenture,  and all insurance  proceeds with respect to the
Aircraft,  the  Airframe,  any Engine or any part  thereof,  but  excluding  any
insurance maintained by the Owner and not required under Section 4.06;

            (4)  All  rents,  revenues  and  other  proceeds  collected  by  the
Mortgagee pursuant to Section 5.03(b) and all monies and securities from time to

<PAGE>

time  deposited  or required to be  deposited  with the  Mortgagee by or for the
account  of the Owner  pursuant  to any terms of this  Trust  Indenture  held or
required to be held by the Mortgagee hereunder; and

            (5) All proceeds of the foregoing.

            PROVIDED,   HOWEVER,  that  notwithstanding  any  of  the  foregoing
provisions,  so  long  as no  Event  of  Default  shall  have  occurred  and  be
continuing,  (a) the  Mortgagee  shall not take or cause to be taken any  action
contrary to the Owner's right  hereunder to quiet  enjoyment of the Airframe and
Engines,  and to possess,  use,  retain and control the Airframe and Engines and
all revenues, income and profits derived therefrom, and (b) the Owner shall have
the right,  to the  exclusion  of the  Mortgagee,  with  respect to the Purchase
Agreement,  to exercise  in the Owner's  name all rights and powers of the buyer
under the Purchase  Agreement  (other than to amend,  modify or waive any of the
warranties  or  indemnities  contained  therein,  except in the  exercise of the
Owner's  reasonable  business  judgment)  and to retain any  recovery or benefit
resulting from the  enforcement of any warranty or indemnity  under the Purchase
Agreement;  and  PROVIDED  FURTHER  THAT,   notwithstanding  the  occurrence  or
continuation  of an Event of  Default,  the  Mortgagee  shall not enter into any
amendment of the Purchase  Agreement which would increase the obligations of the
Owner thereunder.

            TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee,  and  its  successors  and  assigns,  in  trust  for  the  equal  and
proportionate  benefit  and  security  of the  Note  Holders  and the  Indenture
Indemnitees,  except as provided in Section 2.13 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of  priority  of time of issue,  sale,  negotiation,  date of maturity
thereof or otherwise  for any reason  whatsoever,  and for the uses and purposes
and in all cases and as to all  property  specified  in clauses  (1) through (5)
inclusive  above,  subject to the terms and  provisions  set forth in this Trust
Indenture.

            It is  expressly  agreed  that  anything  herein  contained  to  the
contrary  notwithstanding,  the Owner shall remain  liable  under the  Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the  extent  prohibited  or  excluded  from doing so  pursuant  to the terms and
provisions  thereof,  and the  Mortgagee,  the Note  Holders  and the  Indenture
Indemnitees shall have no obligation or liability under the Indenture Agreements
by  reason  of or  arising  out of  the  assignment  hereunder,  nor  shall  the
Mortgagee,  the  Note  Holders  or the  Indenture  Indemnitees  be  required  or
obligated in any manner to perform or fulfill any obligations of the Owner under
or  pursuant  to the  Indenture  Agreements,  or,  except  as  herein  expressly
provided,  to make any  payment,  or to make any  inquiry  as to the  nature  or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts  which may have been
assigned to it or to which it may be entitled at any time or times.

            The Owner does hereby  constitute  the Mortgagee the true and lawful
attorney of the Owner, irrevocably,  granted for good and valuable consideration
and coupled with an interest and with full power of substitution,  and with full
power  (in the name of the  Owner or  otherwise)  to ask for,  require,  demand,
receive,  compound  and give  acquittance  for any and all monies and claims for
monies (in each case including  insurance and  requisition  proceeds) due and to

<PAGE>

become  due under or  arising  out of the  Indenture  Agreements,  and all other
property which now or hereafter  constitutes part of the Collateral,  to endorse
any checks or other  instruments  or orders in connection  therewith and to file
any  claims or to take any  action or to  institute  any  proceedings  which the
Mortgagee may deem to be necessary or advisable in the  premises;  PROVIDED that
the Mortgagee  shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.

            The Owner  agrees  that at any time and from time to time,  upon the
written  request of the Mortgagee,  the Owner will promptly and duly execute and
deliver or cause to be duly  executed  and  delivered  any and all such  further
instruments  and  documents   (including  without  limitation  UCC  continuation
statements) as the Mortgagee may reasonably deem necessary to perfect,  preserve
or protect the mortgage,  security interests and assignments created or intended
to be created  hereby or to obtain for the  Mortgagee  the full  benefits of the
assignment hereunder and of the rights and powers herein granted.

            IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
                                    ARTICLE I

                                   DEFINITIONS

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

                                   ARTICLE II

                               THE EQUIPMENT NOTES

            SECTION 2.01.  FORM OF EQUIPMENT NOTES

            The  Equipment  Notes shall be  substantially  in the form set forth
below:

 THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
     1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
      STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER
  REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
                        SUCH REGISTRATIONS IS AVAILABLE.

<PAGE>

                           CONTINENTAL AIRLINES, INC.

 SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE BOEING
  MODEL [_______] AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N[_____].

No. ____                                  Date: [__________, ____]

______________

INTEREST RATE                                         MATURITY DATE

[___________]                                         [___________]

            CONTINENTAL AIRLINES, INC., a Delaware corporation ("Owner"), hereby
promises to pay to  __________________,  or the registered assignee thereof, the
principal sum of $____________ (the "Original  Amount"),  together with interest
on the  amount  of the  Original  Amount  remaining  unpaid  from  time  to time
(calculated  on the  basis  of a year of 360 days  comprised  of  twelve  30-day
months) from the date hereof until paid in full at a rate per annum equal to the
Debt Rate.  The  Original  Amount of this  Equipment  Note shall be  [payable in
installments  on  the  dates  set  forth  in  Schedule  I  hereto  equal  to the
corresponding percentage of the Original Amount of this Equipment Note set forth
in  Schedule  I  hereto.]<F1>  [paid in full on  ____]<F2>  Accrued  but  unpaid
interest  shall be due and  payable in  semiannual  installments  commencing  on
[______,  __ 20__,] and thereafter on [______] and [______] of each year, to and
including  [_______________.]  Notwithstanding the foregoing,  the final payment
made on this  Equipment  Note shall be in an amount  sufficient  to discharge in
full the unpaid  Original Amount and all accrued and unpaid interest on, and any
other amounts due under,  this Equipment Note.  Notwithstanding  anything to the
contrary  contained  herein, if any date on which a payment under this Equipment
Note becomes due and payable is not a Business  Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

            For  purposes  hereof,  the term "Trust  Indenture"  means the Trust
Indenture and Mortgage  [________],  dated as of [_______ __, 20__,] between the
Owner and Wilmington Trust Company (the "Mortgagee"), as the same may be amended
or  supplemented  from time to time.  All other  capitalized  terms used in this
Equipment  Note  and not  defined  herein  shall  have the  respective  meanings
assigned in the Trust Indenture.

            This Equipment Note shall bear interest,  payable on demand,  at the
Payment Due Rate  (calculated  on the basis of a year of 360 days  comprised  of
twelve 30-day months) on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any,  and (to the extent  permitted by  applicable  Law) any overdue

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

<F1>
Not included in Series A-2 or Series C-2 Equipment Notes.

<F2>
To be inserted in the case of a Series A-2 or Series C-2 Equipment Note.

<PAGE>

interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is  overdue.  Amounts  shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).

            There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.

            The Original  Amount and interest  and other  amounts due  hereunder
shall be  payable in Dollars in  immediately  available  funds at the  Corporate
Trust Office of the Mortgagee,  or as otherwise provided in the Trust Indenture.
Each such payment  shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note,  except that in the case of any
final payment with respect to this  Equipment  Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.

            The holder hereof,  by its acceptance of this Equipment Note, agrees
that,  except as provided in the Trust  Indenture,  each payment of the Original
Amount,  Make-Whole  Amount, if any, and interest received by it hereunder shall
be applied, FIRST, to the payment of accrued interest on this Equipment Note (as
well as any  interest on any overdue  Original  Amount,  any overdue  Make-Whole
Amount,  if any, or, to the extent  permitted  by Law, any overdue  interest and
other amounts hereunder) to the date of such payment,  SECOND, to the payment of
the Original  Amount of this Equipment Note then due,  THIRD,  to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and FOURTH, the balance, if any, remaining thereafter, to the payment
of installments  of the Original Amount of this Equipment Note remaining  unpaid
in the inverse order of their maturity.

            This Equipment Note is one of the Equipment Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner pursuant to the
terms  of the  Trust  Indenture.  The  Collateral  is held by the  Mortgagee  as
security,  in part,  for the Equipment  Notes.  The provisions of this Equipment
Note are subject to the Trust  Indenture.  Reference is hereby made to the Trust
Indenture for a complete  statement of the rights and  obligations of the holder
of, and the nature and extent of the security for, this  Equipment  Note and the
rights  and  obligations  of the  holders  of,  and the nature and extent of the
security for, any other  Equipment  Notes executed and delivered under the Trust
Indenture,  as well as for a statement of the terms and  conditions of the Trust
created by the Trust  Indenture,  to all of which  terms and  conditions  in the
Trust  Indenture  each holder hereof agrees by its  acceptance of this Equipment
Note.

            As  provided  in  the  Trust   Indenture   and  subject  to  certain
limitations  therein set forth,  this Equipment Note is exchangeable  for a like
aggregate   Original   Amount  of  Equipment   Notes  of  different   authorized
denominations, as requested by the holder surrendering the same.

            Prior  to due  presentment  for  registration  of  transfer  of this
Equipment Note, the Owner and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes,  whether
or not this Equipment  Note be overdue,  and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.

<PAGE>

            This Equipment Note is subject to redemption as provided in Sections
2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise.  In addition, this
Equipment  Note may be  accelerated  as  provided  in Section  5.02 of the Trust
Indenture.

            [The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner  provided in the Trust  Indenture,  subordinate and subject in
right of payment to the prior  payment in full of the  Secured  Obligations  (as
defined  in the Trust  Indenture)  in  respect  of  [Series  A-1 and  Series A-2
Equipment  Notes]<F3> [Series A-1, Series A-2 and Series B Equipment  Notes]<F4>
[Series  A-1,  Series  A-2,  Series  B,  Series  C-1 and  Series  C-2  Equipment
Notes]<F5> and this Equipment  Note is issued  subject to such  provisions.  The
Note Holder of this  Equipment  Note, by accepting  the same,  (a) agrees to and
shall be bound by such  provisions,  (b) authorizes and directs the Mortgagee on
his behalf to take such action as may be necessary or  appropriate to effectuate
the  subordination  as  provided in the Trust  Indenture  and (c)  appoints  the
Mortgagee his attorney-in-fact for such purpose.]<F6>

            Unless the certificate of authentication hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit  under the Trust  Indenture or be valid or obligatory
for any purpose.

            THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                      * * *

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

<F3>
To be inserted in the case of a Series B Equipment Note.

<F4>
To be inserted in the case of a Series C-1 and Series C-2 Equipment Note.

<F5>
To be inserted in the case of Series D Equipment Notes.

<F6>
To be inserted for each  Equipment  Note other than any Series A-1 and Series
A-2 Equipment Note.

<PAGE>

            IN WITNESS  WHEREOF,  the Owner has caused this Equipment Note to be
executed in its corporate name by its officer  thereunto duly  authorized on the
date hereof.

                                         CONTINENTAL AIRLINES, INC.

                                         By:___________________________________
                                            Name:
                                            Title:

<PAGE>

                    MORTGAGEE'S CERTIFICATE OF AUTHENTICATION

            This   is  one  of  the   Equipment   Notes   referred   to  in  the
within-mentioned Trust Indenture.
                                         WILMINGTON TRUST COMPANY, as Mortgagee

                                         By:___________________________________
                                            Name:
                                            Title:

                                  SCHEDULE I<F7>

                           EQUIPMENT NOTE AMORTIZATION

PAYMENT DATE                            PERCENTAGE OF ORIGINAL AMOUNT TO BE PAID
------------                            ----------------------------------------

                       [SEE SCHEDULE I TO TRUST INDENTURE
                        WHICH IS INSERTED UPON ISSUANCE]
                                      * * *

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

<F7>
Not included in Series A-2 or Series C-2 Equipment Notes.

<PAGE>

            SECTION 2.02.  ISSUANCE AND TERMS OF EQUIPMENT NOTES

            The  Equipment  Notes shall be dated the date of  issuance  thereof,
shall be issued in up to six separate  series  consisting of Series A-1,  Series
A-2,  Series B, Series C-1,  Series C-2 and Series D and in the  maturities  and
principal amounts and shall bear interest as specified in Schedule I hereto (or,
in the case of the Series D if issued after the Closing Date, as specified in an
amendment to this Trust Indenture).  On the date thereof,  each Series specified
in  Schedule  I shall be  issued  to the  Subordination  Agent on  behalf of the
Applicable  Pass  Through  Trustee  under  the  Applicable  Pass  Through  Trust
Agreement.  Owner shall have the option to issue the Series D Equipment Notes at
or after the Closing.  The Equipment  Notes shall be issued in  registered  form
only.  The  Equipment  Notes  shall be issued  in  denominations  of $1,000  and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.

            Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days  comprised  of twelve  30-day  months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on [____ __, 20__], and on each [______] and [______] thereafter until maturity.
The Original  Amount of each Equipment  Note (i) in the case of Equipment  Notes
other than Series A-2 and Series  C-2,  shall be payable on the dates and in the
installments equal to the corresponding percentage of the Original Amount as set
forth in  Schedule  I hereto  which  shall be  attached  as  Schedule  I to such
Equipment Notes (or, in the case of the Series D Equipment Notes if issued after
the Closing  Date, as set forth in an amendment to this Trust  Indenture,  which
payment  schedule  shall be  attached  as  Schedule I to the Series D  Equipment
Notes),  (ii) in the case of the Series A-2  Equipment  Notes,  shall be paid in
full on May 1, 2010 and (iii) in the case of the  Series  C-2  Equipment  Notes,
shall be paid in full on May 1, 2005.  Notwithstanding the foregoing,  the final
payment  made under each  Equipment  Note  shall be in an amount  sufficient  to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under,  such Equipment  Note.  Each Equipment Note
shall bear interest at the Payment Due Rate  (calculated  on the basis of a year
of 360 days  comprised  of twelve  30-day  months)  on any part of the  Original
Amount,  Make-Whole  Amount,  if any, and, to the extent permitted by applicable
Law, interest and any other amounts payable thereunder not paid when due for any
period  during which the same shall be overdue,  in each case for the period the
same is  overdue.  Amounts  shall be  overdue if not paid when due  (whether  at
stated maturity, by acceleration or otherwise).  Notwithstanding anything to the
contrary  contained  herein,  if any date on which a payment under any Equipment
Note becomes due and payable is not a Business  Day then such payment  shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day  and if such  payment  is made on such  next  succeeding  Business  Day,  no
interest shall accrue on the amount of such payment during such extension.

            The  Owner  agrees  to pay  to the  Mortgagee  for  distribution  in
accordance with Section 3.04 hereof:  (i) to the extent not payable  (whether or
not in fact paid) under Section 6(a) of the Note Purchase  Agreement,  an amount
equal to the fees payable to the Liquidity  Provider  under Section 2.03 of each
Liquidity  Facility and the related Fee Letter (as defined in the  Intercreditor
Agreement)  multiplied  by a fraction  the  numerator of which shall be the then

<PAGE>

outstanding aggregate principal amount of the Series A-1 Equipment Notes, Series
A-2 Equipment Notes,  Series B Equipment  Notes,  Series C-1 Equipment Notes and
Series  C-2  Equipment  Notes  and the  denominator  of which  shall be the then
outstanding  aggregate  principal  amount of all "Series A-1  Equipment  Notes,"
"Series A-2 Equipment  Notes," "Series B Equipment Notes," "Series C-1 Equipment
Notes" and "Series C-2  Equipment  Notes" (each as defined in the Note  Purchase
Agreement);  (ii) (x) the amount  equal to  interest  on any  Downgrade  Advance
(other than any Applied  Downgrade  Advance)  payable under Section 3.07 of each
Liquidity  Facility  minus  Investment  Earnings  from  such  Downgrade  Advance
multiplied by (y) the fraction  specified in the foregoing clause (i); (iii) (x)
the amount  equal to  interest  on any  Non-Extension  Advance  (other  than any
Applied  Non-Extension  Advance)  payable under  Section 3.07 of each  Liquidity
Facility minus Investment Earnings from such Non-Extension Advance multiplied by
(y) the fraction  specified  in the  foregoing  clause (i);  (iv) if any payment
default shall have  occurred and be  continuing  with respect to interest on any
Series A-1  Equipment  Notes,  Series A-2  Equipment  Notes,  Series B Equipment
Notes, Series C-1 Equipment Notes or Series C-2 Equipment Notes, (x) the excess,
if any,  of (1) an amount  equal to  interest  on any  Unpaid  Advance,  Applied
Downgrade Advance or Applied Non-Extension Advance payable under Section 3.07 of
each Liquidity  Facility over (2) the sum of Investment  Earnings from any Final
Advance  plus any amount of interest at the  Payment Due Rate  actually  payable
(whether or not in fact paid) by Owner on the overdue scheduled  interest on the
Equipment  Notes in respect  of which such  Unpaid  Advance,  Applied  Downgrade
Advance or Applied  Non-Extension  Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate  overdue  amounts of interest
on the  Series  A-1  Equipment  Notes,  Series  A-2  Equipment  Notes,  Series B
Equipment  Notes,  Series C-1  Equipment  Notes and Series C-2  Equipment  Notes
(other than interest becoming due and payable solely as a result of acceleration
of any such  Equipment  Notes) and the  denominator  of which  shall be the then
aggregate  overdue  amounts of interest on all  "Series  A-1  Equipment  Notes,"
"Series A-2 Equipment  Notes," "Series B Equipment Notes," "Series C-1 Equipment
Notes" and "Series C-2  Equipment  Notes" (each as defined in the Note  Purchase
Agreement)  (other than interest  becoming due and payable solely as a result of
acceleration of any such "Equipment  Notes");  and (v) Owner's pro rata share of
any other amounts owed to the Liquidity  Provider by the Subordination  Agent as
borrower  under each  Liquidity  Facility other than amounts due as repayment of
advances  thereunder  or as  interest  on such  advances,  except to the  extent
payable pursuant to clause (ii), (iii) or (iv) above, (c) Owner's pro rata share
of all compensation and  reimbursement of expenses,  disbursements  and advances
payable by Owner under the Pass Through Trust  Agreements,  (d) Owner's pro rata
share of all  compensation  and  reimbursement  of  expenses  and  disbursements
payable to the Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the Subordination  Agent in
connection with the transactions contemplated by the Intercreditor Agreement and
(e) in the event Owner requests any amendment to any Operative Agreement or Pass
Through  Agreement,  Owner's pro rata share of all reasonable  fees and expenses
(including, without limitation, fees and disbursements of counsel) of the Escrow
Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustees under the Escrow Agreements.  As used herein,  "Owner's pro rata share"
means as of any time a fraction, the numerator of which is the principal balance
then outstanding of Equipment Notes (excluding the Series D Equipment Notes) and
the denominator of which is the aggregate  principal balance then outstanding of
all "Equipment  Notes"  (excluding the "Series D Equipment Notes") (as each such

<PAGE>

term is defined  in each of the  Operative  Indentures).  For  purposes  of this
paragraph,  the  terms  "Applied  Downgrade  Advance",   "Applied  Non-Extension
Advance",  "Cash  Collateral  Account",  "Downgrade  Advance",  "Final Advance",
"Investment Earnings",  "Non-Extension  Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity Facility.

            The Equipment  Notes shall be executed on behalf of the Owner by one
of  its  authorized   officers.   Equipment  Notes  bearing  the  signatures  of
individuals who were at any time the proper officers of the Owner shall bind the
Owner,  notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Equipment Notes or
did not hold such offices at the respective  dates of such Equipment  Notes. The
Owner may from time to time execute and deliver  Equipment Notes with respect to
the Aircraft to the Mortgagee for  authentication  upon original  issue and such
Equipment Notes shall thereupon be authenticated  and delivered by the Mortgagee
upon the written  request of the Owner  signed by an  authorized  officer of the
Owner.  No Equipment  Note shall be secured by or entitled to any benefit  under
this Trust  Indenture or be valid or obligatory  for any purposes,  unless there
appears on such  Equipment  Note a  certificate  of  authentication  in the form
provided for herein executed by the Mortgagee by the manual  signature of one of
its  authorized  officers  and  such  certificate  upon any  Equipment  Notes be
conclusive  evidence,  and the only evidence,  that such Equipment Note has been
duly authenticated and delivered hereunder.

            The  aggregate   Original  Amount  of  the  Equipment  Notes  issued
hereunder  shall not  exceed the amount  set forth as the  maximum  therefor  on
Schedule I hereto.

            SECTION 2.03.  [INTENTIONALLY OMITTED]

            SECTION 2.04.  METHOD OF PAYMENT

                  (a) The Original Amount of, interest on, Make-Whole Amount, if
any,  and other  amounts  due under each  Equipment  Note or  hereunder  will be
payable in Dollars by wire  transfer of  immediately  available  funds not later
than 12:30 PM, New York time, on the due date of payment to the Mortgagee at the
Corporate  Trust  Office for  distribution  among the Note Holders in the manner
provided  herein.   The  Owner  shall  not  have  any   responsibility  for  the
distribution of such payment to any Note Holder.  Notwithstanding  the foregoing
or any provision in any Equipment  Note to the contrary,  the Mortgagee will use
reasonable  efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner),  all amounts paid by the Owner hereunder
and under such holder's  Equipment  Note or Equipment  Notes to such holder or a
nominee therefor (including all amounts  distributed  pursuant to Article III of
this Trust  Indenture) by  transferring,  or causing to be transferred,  by wire
transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York
City time, on the due date of payment,  to an account  maintained by such holder
with  a  bank  located  in  the  continental  United  States  the  amount  to be
distributed to such holder,  for credit to the account of such holder maintained
at such bank. If the  Mortgagee  shall fail to make any such payment as provided
in the  immediately  foregoing  sentence after its receipt of funds at the place
and prior to the time specified above, the Mortgagee, in its individual capacity
and not as trustee,  agrees to compensate  such holders for loss of use of funds
at Debt Rate until such payment is made and the  Mortgagee  shall be entitled to

<PAGE>

any interest  earned on such funds until such payment is made.  Any payment made
hereunder  shall be made without any  presentment  or surrender of any Equipment
Note,  except that, in the case of the final payment in respect of any Equipment
Note, such Equipment Note shall be surrendered to the Mortgagee for cancellation
promptly after such payment.  Notwithstanding  any other provision of this Trust
Indenture to the contrary, the Mortgagee shall not be required to make, or cause
to be made, wire transfers as aforesaid prior to the first Business Day on which
it is practicable for the Mortgagee to do so in view of the time of day when the
funds to be so transferred were received by it if such funds were received after
12:30 PM, New York time, at the place of payment.  Prior to the due  presentment
for  registration of transfer of any Equipment Note, the Owner and the Mortgagee
shall deem and treat the Person in whose name any  Equipment  Note is registered
on the  Equipment  Note  Register  as the  absolute  owner  and  holder  of such
Equipment Note for the purpose of receiving  payment of all amounts payable with
respect to such Equipment Note and for all other purposes, and none of the Owner
or the Mortgagee shall be affected by any notice to the contrary. So long as any
signatory  to  the  Participation  Agreement  or  nominee  thereof  shall  be  a
registered Note Holder,  all payments to it shall be made to the account of such
Note Holder specified in Schedule I thereto and otherwise in the manner provided
in or pursuant to the  Participation  Agreement  unless it shall have  specified
some other  account or manner of payment by notice to the  Mortgagee  consistent
with this Section 2.04.

                  (b) The Mortgagee,  as agent for the Owner,  shall exclude and
withhold  at the  appropriate  rate from each  payment  of  Original  Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States  withholding  taxes
applicable  thereto as  required  by Law.  The  Mortgagee  agrees to act as such
withholding agent and, in connection  therewith,  whenever any present or future
United States taxes or similar  charges are required to be withheld with respect
to any  amounts  payable  hereunder  or in respect of the  Equipment  Notes,  to
withhold  such amounts and timely pay the same to the  appropriate  authority in
the name of and on behalf of the Note  Holders,  that it will file any necessary
United  States  withholding  tax  returns or  statements  when due,  and that as
promptly as  possible  after the  payment  thereof it will  deliver to each Note
Holder  (with a copy to the Owner)  appropriate  receipts  showing  the  payment
thereof,  together with such  additional  documentary  evidence as any such Note
Holder may reasonably request from time to time.

            If a Note Holder  which is a Non-U.S.  Person has  furnished  to the
Mortgagee a properly  completed,  accurate and currently effective U.S. Internal
Revenue  Service  Form  1001 or W-8 (or such  successor  form or forms as may be
required by the United States Treasury  Department)  during the calendar year in
which the payment  hereunder or under the Equipment  Note(s) held by such holder
is made  (but  prior to the  making  of such  payment),  or in either of the two
preceding  calendar years,  and has not notified the Mortgagee of the withdrawal
or  inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no  reason  to  believe  that any  information  set  forth  in such  form is
inaccurate),  the Mortgagee shall withhold only the amount,  if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United  States  federal  income tax. If a Note
Holder (x) which is a Non-U.S.  Person has furnished to the Mortgagee a properly

<PAGE>

completed,  accurate and currently  effective U.S. Internal Revenue Service Form
W-8ECI in  duplicate  (or such  successor  certificate,  form or forms as may be
required by the United  States  Treasury  Department  as  necessary  in order to
properly  avoid  withholding  of United  States  federal  income tax),  for each
calendar year in which a payment is made (but prior to the making of any payment
for  such  year),  and has not  notified  the  Mortgagee  of the  withdrawal  or
inaccuracy  of such  certificate  or form prior to the date of such payment (and
the  Mortgagee has no reason to believe that any  information  set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly  completed,  accurate and currently  effective U.S.  Internal Revenue
Service  Form W-9,  if  applicable,  prior to a payment  hereunder  or under the
Equipment  Notes held by such holder,  no amount shall be withheld from payments
in respect of United States  federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing  forms or  certificates  is withdrawn or
inaccurate,  or if such holder has not filed a form  claiming an exemption  from
United States  withholding tax or if the Code or the  regulations  thereunder or
the administrative  interpretation  thereof is at any time after the date hereof
amended to require such  withholding  of United States federal income taxes from
payments under the Equipment Notes held by such holder,  the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder  withholding taxes at
the  appropriate  rate  under  Law and  will,  on a timely  basis as more  fully
provided above, deposit such amounts with an authorized depository and make such
returns,  statements,  receipts  and other  documentary  evidence in  connection
therewith as required by Law.

            Owner shall not have any  liability for the failure of the Mortgagee
to withhold taxes in the manner provided for herein or for any false, inaccurate
or untrue evidence provided by any Note Holder hereunder.

            SECTION 2.05.  APPLICATION OF PAYMENTS

            In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:

            First: to the payment of accrued interest on such Equipment Note (as
      well  as  any  interest  on  any  overdue  Original  Amount,  any  overdue
      Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
      interest and any other  overdue  amounts  thereunder)  to the date of such
      payment;

            Second: to the payment of the Original Amount of such Equipment Note
      (or a portion thereof) then due thereunder;

            Third:  to the payment of Make-Whole  Amount,  if any, and any other
      amount due hereunder or under such Equipment Note; and

            Fourth: the balance, if any, remaining thereafter, to the payment of
      the Original Amount of such Equipment Note remaining unpaid (provided that
      such Equipment Note shall not be subject to redemption  except as provided
      in Sections 2.10, 2.11 and 2.12 hereof).

<PAGE>

The  amounts  paid  pursuant  to clause  "Fourth"  above shall be applied to the
installments  of Original  Amount of such Equipment Note in the inverse order of
their maturity.

            SECTION 2.06.  TERMINATION OF INTEREST IN COLLATERAL

            No Note Holder nor any other  Indenture  Indemnitee  shall, as such,
have any further  interest  in, or other right with  respect to, the  Collateral
when and if the Original Amount of,  Make-Whole  Amount, if any, and interest on
and other amounts due under all Equipment Notes held by such Note Holder and all
other sums then due and payable to such Note Holder,  such Indenture  Indemnitee
or the  Mortgagee  hereunder  (including,  without  limitation,  under the third
paragraph of Section 2.02 hereof) and under the other  Operative  Agreements  by
the Owner  (collectively,  the  "Secured  Obligations")  shall have been paid in
full.

            SECTION 2.07.  REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT
NOTES

            The Mortgagee  shall keep a register (the "Equipment Note Register")
in which the Mortgagee shall provide for the registration of Equipment Notes and
the  registration  of transfers of Equipment  Notes.  No such transfer  shall be
given effect unless and until  registration  hereunder shall have occurred.  The
Equipment  Note  Register  shall be kept at the  Corporate  Trust  Office of the
Mortgagee.  The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of  registering  Equipment  Notes and  transfers of  Equipment  Notes as
herein  provided.  A holder of any  Equipment  Note  intending to exchange  such
Equipment  Note shall  surrender  such  Equipment  Note to the  Mortgagee at the
Corporate  Trust  Office,  together with a written  request from the  registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer,  the name and address of the new holder or holders.
Upon  surrender for  registration  of transfer of any Equipment  Note, the Owner
shall execute,  and the Mortgagee shall authenticate and deliver, in the name of
the designated  transferee or transferees,  one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the option of the Note
Holder,  Equipment  Notes  may be  exchanged  for other  Equipment  Notes of any
authorized  denominations of a like aggregate Original Amount, upon surrender of
the  Equipment  Notes to be exchanged to the  Mortgagee at the  Corporate  Trust
Office.  Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute,  and the Mortgagee shall authenticate and deliver,  the Equipment
Notes which the Note  Holder  making the  exchange  is entitled to receive.  All
Equipment  Notes  issued  upon any  registration  of  transfer  or  exchange  of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise  under this Trust  Indenture)  shall be the valid  obligations  of the
Owner  evidencing  the same  respective  obligations,  and  entitled to the same
security  and  benefits  under  this Trust  Indenture,  as the  Equipment  Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer,  shall (if so required by
the  Mortgagee) be duly endorsed,  or be accompanied by a written  instrument of
transfer in form  satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's  attorney duly  authorized in writing,  and the Mortgagee shall
require  evidence  satisfactory  to it as to the compliance of any such transfer
with the Securities  Act, and the securities Laws of any applicable  state.  The
Mortgagee  shall make a notation on each new Equipment Note of the amount of all
payments  of  Original  Amount  previously  made  on the old  Equipment  Note or
Equipment  Notes with respect to which such new Equipment Note is issued and the

<PAGE>

date to which  interest on such old Equipment  Note or Equipment  Notes has been
paid.  Interest  shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment  Note, and
all  payments of the  Original  Amount  marked on such new  Equipment  Note,  as
provided above,  shall be deemed to have been made thereon.  The Owner shall not
be required to exchange any surrendered Equipment Notes as provided above during
the ten-day period preceding the due date of any payment on such Equipment Note.
The Owner  shall in all cases deem the Person in whose name any  Equipment  Note
shall have been issued and  registered as the absolute  owner and holder of such
Equipment  Note for the purpose of receiving  payment of all amounts  payable by
the Owner  with  respect to such  Equipment  Note and for all  purposes  until a
notice  stating  otherwise  is received  from the  Mortgagee  and such change is
reflected on the Equipment Note Register. The Mortgagee will promptly notify the
Owner  of each  registration  of a  transfer  of an  Equipment  Note.  Any  such
transferee of an Equipment Note, by its acceptance of an Equipment Note,  agrees
to the  provisions  of this  Trust  Indenture  and the  Participation  Agreement
applicable  to Note  Holders,  including  Sections  6.3, 6.4 and 9.1 thereof and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters  covenanted by the original  Note Holder in the  Participation
Agreement.  Subject to compliance by the Note Holder and its transferee (if any)
of the  requirements  set forth in this Section 2.07,  Mortgagee and Owner shall
use all  reasonable  efforts  to issue new  Equipment  Notes  upon  transfer  or
exchange  within 10 Business Days of the date an Equipment  Note is  surrendered
for transfer or exchange.

            SECTION 2.08.  MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES

            If any Equipment  Note shall become  mutilated,  destroyed,  lost or
stolen,  the  Owner  shall,  upon the  written  request  of the  holder  of such
Equipment  Note,  execute and the Mortgagee  shall  authenticate  and deliver in
replacement  thereof a new Equipment  Note,  payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft.  If
the Equipment  Note being  replaced has become  mutilated,  such  Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been  destroyed,  lost or
stolen,  the holder of such  Equipment  Note shall  furnish to the Owner and the
Mortgagee  such  security  or  indemnity  as may be required by them to save the
Owner and the Mortgagee harmless and evidence  satisfactory to the Owner and the
Mortgagee of the  destruction,  loss or theft of such  Equipment Note and of the
ownership thereof. If a "qualified  institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such  destroyed,  lost or stolen  Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of,  delivered to and in form  reasonably  satisfactory  Owner shall be
accepted as  satisfactory  indemnity  and security  and no further  indemnity or
security  shall be required as a condition to the execution and delivery of such
new  Equipment  Note.  Subject  to  compliance  by  the  Note  Holder  with  the
requirements  set forth in this Section 2.08,  Mortgagee and Owner shall use all
reasonable  efforts to issue new Equipment  Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.

<PAGE>

            SECTION 2.09.  PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION

                  (a) No service  charge  shall be made to a Note Holder for any
registration of transfer or exchange of Equipment Notes,  but the Mortgagee,  as
Equipment Note  Registrar,  may require payment of a sum sufficient to cover any
tax or other  governmental  charge  that may be imposed in  connection  with any
registration of transfer or exchange of Equipment Notes.

                  (b) The Mortgagee shall cancel all Equipment Notes surrendered
for replacement,  redemption,  transfer,  exchange,  payment or cancellation and
shall destroy the canceled Equipment Notes.

            SECTION 2.10.  MANDATORY REDEMPTIONS OF EQUIPMENT NOTES

                  On the date on which the Owner is required pursuant to Section
4.05 hereof to make payment for an Event of Loss with  respect to the  Airframe,
all of the  Equipment  Notes shall be redeemed  in whole at a  redemption  price
equal to 100% of the unpaid Original  Amount thereof,  together with all accrued
interest  thereon to the date of redemption  and all other  Secured  Obligations
owed or then due and payable to the Note Holders but without Make-Whole Amount.

            SECTION 2.11.  VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES

            All (but not less than all) of the  Equipment  Notes may be redeemed
by the  Owner  upon at least 30 days'  revocable  prior  written  notice  to the
Mortgagee and the Note Holders,  and such  Equipment  Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued  interest  thereon to the date of redemption and all other
Secured  Obligations  owed or then  due and  payable  to the Note  Holders  plus
Make-Whole Amount, if any.

            SECTION 2.12.  REDEMPTIONS; NOTICE OF REDEMPTION

                  (a) No redemption of any Equipment  Note may be made except to
the extent and in the manner  expressly  permitted by this Trust  Indenture.  No
purchase of any Equipment Note may be made by the Mortgagee.

                  (b) Notice of redemption  with respect to the Equipment  Notes
shall be given by the Mortgagee by first-class mail, postage prepaid, mailed not
less than 20 nor more than 60 days prior to the applicable  redemption  date, to
each Note Holder of such Equipment  Notes to be redeemed,  at such Note Holder's
address  appearing in the  Equipment  Note  Register;  provided that such notice
shall be revocable by written notice from the Owner to Mortgagee given not later
than three days prior to the redemption  date.  All notices of redemption  shall
state:  (1) the redemption  date, (2) the applicable  basis for  determining the
redemption  price,  (3) that on the redemption  date, the redemption  price will
become due and payable  upon each such  Equipment  Note,  and that,  if any such
Equipment  Notes are then  outstanding,  interest on such Equipment  Notes shall
cease to accrue on and after such  redemption  date, and (4) the place or places
where such Equipment  Notes are to be surrendered  for payment of the redemption
price.

<PAGE>

                  (c) On or before the redemption date, the Owner (or any person
on behalf of the Owner) shall,  to the extent an amount equal to the  redemption
price for the Equipment  Notes to be redeemed on the  redemption  date shall not
then be held by the  Mortgagee,  deposit  or  cause  to be  deposited  with  the
Mortgagee  by 12:30  PM New  York  time on the  redemption  date in  immediately
available funds the redemption price of the Equipment Notes to be redeemed.

                  (d) Notice of redemption  having been given as aforesaid,  the
Equipment  Notes to be redeemed shall,  on the redemption  date,  become due and
payable  at the  Corporate  Trust  Office of the  Mortgagee  or at any office or
agency maintained for such purposes pursuant to Section 2.07, and from and after
such  redemption  date  (unless  there  shall be a default in the payment of the
redemption  price) any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption in accordance
with said notice, such Equipment Note shall be redeemed at the redemption price.
If any Equipment Note called for redemption  shall not be so paid upon surrender
thereof for redemption, the principal amount thereof shall, until paid, continue
to bear interest  from the  applicable  redemption  date at the interest rate in
effect for such Equipment Note as of such redemption date.

            SECTION 2.13.  SUBORDINATION

                  (a) The Owner and, by acceptance of its Equipment Notes of any
Series,  each Note  Holder of such  Series,  hereby  agree  that no  payment  or
distribution  shall be made on or in respect of the Secured  Obligations owed to
such Note Holder of such Series,  including any payment or distribution of cash,
property  or  securities  after the  commencement  of a  proceeding  of the type
referred  to in  Section  5.01(v),  (vi) or (vii)  hereof,  except as  expressly
provided in Article III hereof.

                  (b) By the  acceptance  of its  Equipment  Notes of any Series
(other than Series A-1 or Series  A-2),  each Note Holder of such Series  agrees
that in the event that such Note Holder, in its capacity as a Note Holder, shall
receive any payment or  distribution  on any Secured  Obligations  in respect of
such Series  which it is not  entitled  to receive  under this  Section  2.13 or
Article III hereof,  it will hold any amount so received in trust for the Senior
Holder (as defined in Section  2.13(c) hereof) and will forthwith turn over such
payment to the  Mortgagee  in the form  received  to be applied as  provided  in
Article III hereof.

                  (c) As used in this Section  2.13,  the term  "Senior  Holder"
shall mean,  (i) the Note  Holders of Series A-1 or Series A-2 until the Secured
Obligations  in respect of Series  A-1 or Series A-2  Equipment  Notes have been
paid in full,  (ii) after the  Secured  Obligations  in respect of Series A-1 or
Series A-2 Equipment  Notes have been paid in full, the Note Holders of Series B
until the Secured  Obligations in respect of Series B Equipment  Notes have been
paid in full and (iii)  after the  Secured  Obligations  in  respect of Series B
Equipment  Notes  have been paid in full,  the Note  Holders  of Series  C-1 and
Series C-2 until the Secured Obligations in respect of Series C-1 and Series C-2
Equipment Notes have been paid in full.

<PAGE>

                                   ARTICLE III

              RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS

            SECTION 3.01.  BASIC DISTRIBUTIONS

            Except as otherwise provided in Sections 3.02 and 3.03 hereof,  each
periodic payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:

         (i)   so much of such  payment as shall be  required to pay in full the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series A-1 and Series A-2 Equipment
               Notes shall be  distributed to the Note Holders of Series A-1 and
               Series A-2 ratably,  without  priority of one over the other,  in
               the  proportion  that the amount of such payment or payments then
               due under each Series A-1 and Series A-2 Equipment  Note bears to
               the  aggregate  amount of the payments  then due under all Series
               A-1 and Series A-2 Equipment Notes;

         (ii)  after  giving  effect to  paragraph  (i)  above,  so much of such
               payment  remaining  as  shall  be  required  to pay in  full  the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series B  Equipment  Notes shall be
               distributed  to the Note  Holders  of Series B  ratably,  without
               priority of one over the other, in the proportion that the amount
               of such  payment  or  payments  then  due  under  each  Series  B
               Equipment Note bears to the aggregate amount of the payments then
               due under all Series B Equipment Notes;

         (iii) after  giving  effect to  paragraph  (ii) above,  so much of such
               payment  remaining  as  shall  be  required  to pay in  full  the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series C-1 and Series C-2 Equipment
               Notes shall be  distributed to the Note Holders of Series C-1 and
               Series C-2 ratably,  without  priority of one over the other,  in
               the  proportion  that the amount of such payment or payments then
               due under each Series C-1 and Series C-2 Equipment  Note bears to
               the  aggregate  amount of the payments  then due under all Series
               C-1 and Series C-2 Equipment Notes; and

         (iv)  after  giving  effect to paragraph  (iii) above,  so much of such
               payment  remaining  as  shall  be  required  to pay in  full  the
               aggregate  amount of the payment or  payments of Original  Amount
               and  interest  (as well as any  interest on any overdue  Original
               Amount  and,  to the  extent  permitted  by Law,  on any  overdue
               interest)  then due under all Series D  Equipment  Notes shall be

<PAGE>

               distributed  to the Note  Holders  of Series D  ratably,  without
               priority of one over the other, in the proportion that the amount
               of such  payment  or  payments  then  due  under  each  Series  D
               Equipment Note bears to the aggregate amount of the payments then
               due under all Series D Equipment Notes.

            SECTION 3.02.  EVENT OF LOSS; REPLACEMENT; OPTIONAL REDEMPTION

            Except as otherwise  provided in Section  3.03 hereof,  any payments
received by the  Mortgagee  (i) with respect to the Airframe or the Airframe and
one or more  Engines  as the result of an Event of Loss or (ii)  pursuant  to an
optional redemption of the Equipment Notes pursuant to Section 2.11 hereof shall
be  applied  to  redemption  of the  Equipment  Notes and to all  other  Secured
Obligations by applying such funds in the following order of priority:

First,         (a) to  reimburse  the  Mortgagee  and the Note  Holders  for any
               reasonable  costs or expenses  incurred in  connection  with such
               redemption  for which  they are  entitled  to  reimbursement,  or
               indemnity by Owner,  under the Operative  Agreements and then (b)
               to pay any other Secured Obligations then due (except as provided
               in clause "Second" below) to the Mortgagee,  the Note Holders and
               the other Indenture  Indemnitees under this Trust Indenture,  the
               Participation  Agreement  or  the  Equipment  Notes  (other  than
               amounts specified in clause Second below);

Second, (i)    to pay the amounts  specified in paragraph (i) of clause  "Third"
               of Section 3.03 hereof plus Make-Whole  Amount,  if any, then due
               and payable in respect of the Series A-1 and Series A-2 Equipment
               Notes;

         (ii)  after giving  effect to paragraph  (i) above,  to pay the amounts
               specified  in  paragraph  (ii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series B Equipment Notes;

         (iii) after giving effect to paragraph  (ii) above,  to pay the amounts
               specified  in paragraph  (iii) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series C-1 and Series C-2 Equipment Notes; and

         (iv)  after giving effect to paragraph  (iii) above, to pay the amounts
               specified  in  paragraph  (iv) of clause  "Third" of Section 3.03
               hereof plus  Make-Whole  Amount,  if any, then due and payable in
               respect of the Series D Equipment Notes; and

Third,         as provided in clause "Fourth" of Section 3.03 hereof;

PROVIDED, HOWEVER, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof,  any insurance,  condemnation or similar  proceeds which
result from such Event of Loss and are paid over to the Mortgagee  shall be held
by the Mortgagee as permitted by Section 7.04 hereof  (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner under Operative  Agreements and such proceeds (and such

<PAGE>

investment earnings),  to the extent not theretofore applied as provided herein,
shall be released to the Owner at the Owner's  written  request upon the release
of such Airframe or Engine and the replacement thereof as provided herein.

            SECTION 3.03.  PAYMENTS AFTER EVENT OF DEFAULT

            Except as otherwise  provided in Section  3.04 hereof,  all payments
received and amounts held or realized by the  Mortgagee  (including  any amounts
realized by the Mortgagee from the exercise of any remedies  pursuant to Article
V hereof) after an Event of Default  shall have  occurred and be continuing  and
after the  declaration  specified  in  Section  5.02(b)  hereof,  as well as all
payments or amounts then held by the Mortgagee as part of the Collateral,  shall
be promptly distributed by the Mortgagee in the following order of priority:

First,         so much of such  payments  or amounts as shall be required to (i)
               reimburse  the Mortgagee or WTC for any tax (except to the extent
               resulting  from a failure  of the  Mortgagee  to  withhold  taxes
               pursuant  to  Section  2.04(b)  hereof),  expense  or other  loss
               (including, without limitation, all amounts to be expended at the
               expense of, or charged upon the rents, revenues, issues, products
               and profits of, the property included in the Collateral (all such
               property being herein called the "Mortgaged  Property")  pursuant
               to Section 5.03(b)  hereof)  incurred by the Mortgagee or WTC (to
               the extent not previously reimbursed),  the expenses of any sale,
               or other  proceeding,  reasonable  attorneys'  fees and expenses,
               court costs, and any other expenditures  incurred or expenditures
               or advances made by the Mortgagee, WTC or the Note Holders in the
               protection, exercise or enforcement of any right, power or remedy
               or any  damages  sustained  by  the  Mortgagee,  WTC or any  Note
               Holder, liquidated or otherwise, upon such Event of Default shall
               be applied by the Mortgagee as between  itself,  WTC and the Note
               Holders in  reimbursement of such expenses and any other expenses
               for which the Mortgagee,  WTC or the Note Holders are entitled to
               reimbursement  under  any  Operative  Agreement  and (ii) pay all
               Secured  Obligations  payable to the other Indenture  Indemnitees
               hereunder  and  under the  Participation  Agreement  (other  than
               amounts specified in clauses Second and Third below);  and in the
               case the aggregate amount to be so distributed is insufficient to
               pay as aforesaid in clauses (i) and (ii),  then ratably,  without
               priority of one over the other, in proportion to the amounts owed
               each hereunder;

Second,        so much  of such  payments  or  amounts  remaining  as  shall  be
               required to reimburse the then existing or prior Note Holders for
               payments  made pursuant to Section 6.03 hereof (to the extent not
               previously reimbursed) shall be distributed to such then existing
               or prior Note Holders  ratably,  without priority of one over the
               other,  in accordance  with the amount of the payment or payments
               made by each such then existing or prior Note Holder  pursuant to
               said Section 6.03 hereof;

Third, (i)     so much  of such  payments  or  amounts  remaining  as  shall  be
               required to pay in full the aggregate  unpaid  Original Amount of
               all Series A-1 and Series A-2  Equipment  Notes,  and the accrued
               but unpaid  interest  and other  amounts due thereon  (other than

<PAGE>

               Make-Whole  Amount  which shall not be due and  payable)  and all
               other Secured Obligations in respect of the Series A-1 and Series
               A-2 Equipment Notes (other than Make-Whole Amount) to the date of
               distribution,  shall be distributed to the Note Holders of Series
               A-1 and Series  A-2,  and in case the  aggregate  amount so to be
               distributed  shall be  insufficient  to pay in full as aforesaid,
               then  ratably,  without  priority  of one over the other,  in the
               proportion  that the  aggregate  unpaid  Original  Amount  of all
               Series  A-1 and Series A-2  Equipment  Notes held by each  holder
               plus the  accrued  but  unpaid  interest  and other  amounts  due
               hereunder or thereunder (other than Make-Whole Amount, if any) to
               the date of distribution,  bears to the aggregate unpaid Original
               Amount of all Series A-1 and Series A-2  Equipment  Notes held by
               all such holders  plus the accrued but unpaid  interest and other
               amounts due thereon (other than Make-Whole Amount) to the date of
               distribution;

         (ii)  after  giving  effect to  paragraph  (i)  above,  so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series B Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series B, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series B Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution;

         (iii) after  giving  effect to  paragraph  (ii) above,  so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate unpaid Original Amount of all Series C-1 and Series
               C-2  Equipment  Notes,  and the accrued but unpaid  interest  and
               other  amounts due thereon  (other than  Make-Whole  Amount which
               shall not be due and payable) and all other  Secured  Obligations
               in respect of the  Series  C-1 and  Series  C-2  Equipment  Notes
               (other than Make-Whole Amount) to the date of distribution, shall
               be  distributed to the Note Holders of Series C-1 and Series C-2,
               and in case the aggregate  amount so to be  distributed  shall be
               insufficient to pay in full as aforesaid,  then ratably,  without
               priority  of one  over  the  other,  in the  proportion  that the
               aggregate unpaid Original Amount of all Series C-1 and Series C-2
               Equipment  Notes held by each  holder plus the accrued but unpaid
               interest and other  amounts due  hereunder or  thereunder  (other
               than the Make-Whole  Amount, if any) to the date of distribution,
               bears to the aggregate  unpaid  Original Amount of all Series C-1
               and Series C-2 Equipment  Notes held by all such holders plus the
               accrued but unpaid  interest and other amounts due thereon (other
               than the Make-Whole Amount) to the date of distribution; and

<PAGE>

         (iv)  after  giving  effect to paragraph  (iii) above,  so much of such
               payments or amounts remaining as shall be required to pay in full
               the aggregate  unpaid  Original  Amount of all Series D Equipment
               Notes,  and the accrued but unpaid interest and other amounts due
               thereon (other than Make-Whole  Amount which shall not be due and
               payable)  and all other  Secured  Obligations  in  respect of the
               Series D Equipment  Notes (other than  Make-Whole  Amount) to the
               date of distribution, shall be distributed to the Note Holders of
               Series D, and in case the aggregate  amount so to be  distributed
               shall be insufficient to pay in full as aforesaid,  then ratably,
               without  priority of one over the other,  in the proportion  that
               the aggregate  unpaid  Original  Amount of all Series D Equipment
               Notes held by each holder  plus the  accrued but unpaid  interest
               and other  amounts due  hereunder or  thereunder  (other than the
               Make-Whole Amount, if any) to the date of distribution,  bears to
               the aggregate  unpaid  Original  Amount of all Series D Equipment
               Notes  held by all such  holders  plus  the  accrued  but  unpaid
               interest and other amounts due thereon (other than the Make-Whole
               Amount) to the date of distribution; and

Fourth,        the  balance,  if any,  of such  payments  or  amounts  remaining
               thereafter shall be distributed to the Owner.

            No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the  acceleration  of the Equipment  Notes as a result of an
Event of Default.

            SECTION 3.04.  CERTAIN PAYMENTS

                  (a) Any  payments  received  by the  Mortgagee  for  which  no
provision as to the application  thereof is made in this Trust Indenture and for
which such provision is made in any other  Operative  Agreement shall be applied
forthwith to the purpose for which such payment was made in accordance  with the
terms of such other Operative Agreement, as the case may be.

                  (b) Notwithstanding anything to the contrary contained in this
Article III, the Mortgagee will  distribute  promptly upon receipt any indemnity
payment  received  by it from  the  Owner in  respect  of the  Mortgagee  in its
individual capacity, any Note Holder or any other Indenture Indemnitee,  in each
case  whether  or not  pursuant  to  Section 8 of the  Participation  Agreement,
directly to the Person entitled  thereto.  Any payment received by the Mortgagee
under  the  third  paragraph  of  Section  2.02  shall  be  distributed  to  the
Subordination  Agent  in its  capacity  as  Note  Holder  to be  distributed  in
accordance with the terms of the Intercreditor Agreement.

            SECTION 3.05.  OTHER PAYMENTS

            Any payments  received by the Mortgagee for which no provision as to
the  application  thereof is made  elsewhere  in this Trust  Indenture or in any
other  Operative  Agreement  shall be distributed by the Mortgagee to the extent
received or realized at any time, in the order of priority  specified in Section
3.01 hereof,  and after  payment in full of all amounts  then due in  accordance

<PAGE>

with  Section  3.01 in the manner  provided in clause  "Fourth" of Section  3.03
hereof.

                                   ARTICLE IV

                             COVENANTS OF THE OWNER

            SECTION 4.01.  LIENS

            The Owner will not directly or indirectly create,  incur,  assume or
suffer to exist any Lien or with respect to the Airframe or any Engine, title to
any of the foregoing or any interest of Owner therein,  except  Permitted Liens.
The  Owner  shall  promptly,  at its own  expense,  take  such  action as may be
necessary  to duly  discharge  (by bonding or  otherwise)  any Lien other than a
Permitted Lien arising at any time.

            SECTION   4.02.   POSSESSION,   OPERATION   AND  USE,   MAINTENANCE,
REGISTRATION AND MARKINGS

                  (a) GENERAL.  Except as otherwise  expressly  provided herein,
the Owner shall be entitled to operate, use, locate, employ or otherwise utilize
or not utilize  the  Airframe,  any Engine or any Parts in any lawful  manner or
place in accordance with the Owner's business judgment.

                  (b)  POSSESSION.  The  Owner,  without  the prior  consent  of
Mortgagee,  shall not lease or  otherwise  in any manner  deliver,  transfer  or
relinquish possession of the Aircraft, the Airframe or any Engine or install any
Engine,  or permit any Engine to be  installed,  on any airframe  other than the
Airframe;  except  that the Owner may,  without  such prior  written  consent of
Mortgagee:

                        (i)  Subject or permit any  Permitted  Lessee to subject
(i) the Airframe to normal  interchange  agreements or (ii) any Engine to normal
interchange  agreements  or pooling  agreements  or  arrangements,  in each case
customary in the commercial  airline  industry and entered into by Owner or such
Permitted  Lessee,  as the case may be,  in the  ordinary  course  of  business;
PROVIDED,  HOWEVER,  that if Owner's title to any such Engine is divested  under
any such  agreement  or  arrangement,  then such Engine  shall be deemed to have
suffered  an Event of Loss as of the date of such  divestiture,  and Owner shall
comply with Section 4.04(e) in respect thereof;

                        (ii) Deliver or permit any  Permitted  Lessee to deliver
possession  of  the  Aircraft,  Airframe,  any  Engine  or any  Part  (x) to the
manufacturer  thereof or to any  third-party  maintenance  provider for testing,
service,  repair,  maintenance or overhaul work on the Aircraft,  Airframe,  any
Engine or any Part, or, to the extent required or permitted by Section 4.04, for
alterations or  modifications  in or additions to the Aircraft,  Airframe or any
Engine or (y) to any Person for the purpose of transport to a Person referred to
in the preceding clause (x);

<PAGE>

                        (iii) Install or permit any Permitted  Lessee to install
an Engine on an airframe  owned by Owner or such Permitted  Lessee,  as the case
may be, free and clear of all Liens,  except (x) Permitted  Liens and those that
do not apply to the Engines,  and (y) the rights of third  parties  under normal
interchange  or pooling  agreements and  arrangements  of the type that would be
permitted under Section 4.02(b)(i);

                        (iv) Install or permit any  Permitted  Lessee to install
an Engine on an airframe leased to Owner or such Permitted  Lessee, or purchased
by Owner or such  Permitted  Lessee subject to a mortgage,  security  agreement,
conditional sale or other secured  financing  arrangement,  but only if (x) such
airframe is free and clear of all Liens, except (A) the rights of the parties to
such lease, or any such secured  financing  arrangement,  covering such airframe
and (B)  Liens of the type  permitted  by  clause  (iii)  above and (y) Owner or
Permitted  Lessee,  as the case may be,  shall have  received  from the  lessor,
mortgagee,  secured party or conditional seller, in respect of such airframe,  a
written  agreement  (which  may  be a  copy  of the  lease,  mortgage,  security
agreement,  conditional sale or other agreement covering such airframe), whereby
such  Person  agrees  that it will not  acquire  or claim  any  right,  title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to the Lien of this Trust
Indenture;

                        (v) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted  Lessee,  leased to Owner
or such Permitted Lessee, or purchased by Owner or such Permitted Lessee subject
to a conditional  sale or other security  agreement  under  circumstances  where
neither clause (iii) or (iv) above is applicable;  PROVIDED,  HOWEVER,  that any
such installation  shall be deemed an Event of Loss with respect to such Engine,
and Owner shall comply with Section 4.04(e) hereof in respect thereof;

                        (vi) Transfer or permit any Permitted Lessee to transfer
possession of the Aircraft,  Airframe or any Engine to the U.S.  Government,  in
which  event  Owner  shall  promptly  notify  Mortgagee  in  writing of any such
transfer of  possession  and, in the case of any transfer  pursuant to CRAF,  in
such  notification  shall  identify by name,  address and telephone  numbers the
Contracting Office  Representative or  Representatives  for the Military Airlift
Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF;

                        (vii) Enter into a charter or Wet Lease or other similar
arrangement  with  respect to the  Aircraft  or any other  aircraft on which any
Engine may be installed  (which shall not be considered a transfer of possession
hereunder);  PROVIDED THAT the Owner's  obligations  hereunder shall continue in
full force and  effect  notwithstanding  any such  charter or Wet Lease or other
similar arrangement;

                        (viii)  So long  as  no  Event  of  Default  shall  have
occurred and be  continuing,  and subject to the  provisions of the  immediately
following paragraph,  enter into a lease with respect to the Aircraft,  Airframe
or any  Engine to any  Permitted  Air  Carrier  that is not then  subject to any
bankruptcy,  insolvency,  liquidation,  reorganization,  dissolution  or similar
proceeding  and  shall  not  have  substantially  all  of  its  property  in the
possession of any  liquidator,  trustee,  receiver or similar  person;  PROVIDED
THAT,  in the case only of a lease to a Permitted  Foreign Air Carrier,  (A) the

<PAGE>

United States  maintains  diplomatic  relations  with the country of domicile of
such  Permitted  Foreign  Air  Carrier  (or,  in the case of Taiwan,  diplomatic
relations at least as good as those in effect on the Closing Date) and (B) Owner
shall have  furnished  Mortgagee  a  favorable  opinion of  counsel,  reasonably
satisfactory to Mortgagee,  in the country of domicile of such Permitted Foreign
Air Carrier,  that (v) the terms of such lease are the legal,  valid and binding
obligations  of  the  parties  thereto   enforceable  under  the  laws  of  such
jurisdiction, (w) it is not necessary for Mortgagee to register or qualify to do
business in such jurisdiction,  if not already so registered or qualified,  as a
result,  in whole or in part, of the proposed  lease,  (x)  Mortgagee's  Lien in
respect of, the  Aircraft,  Airframe  and  Engines  will be  recognized  in such
jurisdiction,  (y) the  Laws of  such  jurisdiction  of  domicile  require  fair
compensation  by the  government  of such  jurisdiction,  payable  in a currency
freely convertible into Dollars, for the loss of title to the Aircraft, Airframe
or  Engines in the event of the  requisition  by such  government  of such title
(unless  Owner shall provide  insurance in the amounts  required with respect to
hull insurance under this Trust  Indenture  covering the requisition of title to
the Aircraft, Airframe or Engines by the government of such jurisdiction so long
as the  Aircraft,  Airframe  or Engines  are  subject to such lease) and (z) the
agreement  of such  Permitted  Air Carrier  that its rights  under the lease are
subject and  subordinate to all the terms of this Trust Indenture is enforceable
against such Permitted Air Carrier under applicable law;

PROVIDED that (1) the rights of any transferee who receives possession by reason
of a transfer  permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust  Indenture,  (2) the Owner shall remain primarily liable
for the  performance  of all of the terms of this  Trust  Indenture  and all the
terms and conditions of this Trust Indenture and the other Operative  Agreements
shall remain in effect and (3) no lease or transfer of  possession  otherwise in
compliance  with this Section  4.02(b) shall (x) result in any  registration  or
re-registration  of an  Aircraft,  except to the  extent  permitted  by  Section
4.02(e) or the  maintenance,  operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.

            In the case of any lease permitted under this Section  4.02(b),  the
Owner  will  include in such lease  appropriate  provisions  which (t) make such
lease  expressly  subject  and  subordinate  to all of the  terms of this  Trust
Indenture,  including  the  rights of the  Mortgagee  to avoid such lease in the
exercise of its rights to  repossession  of the Airframe and Engines  hereunder;
(u) require the Permitted  Lessee to comply with the terms of Section 4.06;  and
(v)  require  that  the  Airframe  or any  Engine  subject  thereto  be  used in
accordance  with the  limitations  applicable to the Owner's  possession and use
provided in this Trust Indenture.  No lease permitted under this Section 4.02(b)
shall be entered into unless (w) Owner shall provide written notice to Mortgagee
(such notice in the event of a lease to a U.S. Air Carrier to be given  promptly
after  entering  into any such  lease  or,  in the case of a lease to any  other
Permitted  Air Carrier,  10 days in advance of entering  into such  lease);  (x)
Owner shall furnish to Mortgagee evidence  reasonably  satisfactory to Mortgagee
that the insurance required by Section 4.06 remains in effect; (y) all necessary
documents  shall have been duly  filed,  registered  or  recorded in such public
offices  as may be  required  fully to  preserve  the  first  priority  security
interest (subject to Permitted Liens) of Mortgagee in the Aircraft, Airframe and

<PAGE>

Engines;  and (z) Owner  shall  reimburse  Mortgagee  for all of its  reasonable
out-of-pocket fees and expenses, including, without limitation,  reasonable fees
and disbursements of counsel,  incurred by Mortgagee in connection with any such
lease.  Except as otherwise provided herein and without in any way relieving the
Owner from its primary  obligation for the performance of its obligations  under
this Trust  Indenture,  the Owner may in its sole discretion  permit a lessee to
exercise any or all rights  which the Owner would be entitled to exercise  under
Sections  4.02 and 4.04,  and may cause a lessee  to  perform  any or all of the
Owner's  obligations under Article IV, and the Mortgagee agrees to accept actual
and full performance thereof by a lessee in lieu of performance by the Owner.

            Mortgagee  hereby  agrees,  and each Note Holder by acceptance of an
Equipment  Note  agrees,  for the benefit of each  lessor,  conditional  seller,
indenture  trustee or secured  party of any engine  leased to, or purchased  by,
Owner or any  Permitted  Lessee  subject  to a lease,  conditional  sale,  trust
indenture or other security agreement that Mortgagee, each Note Holder and their
respective  successors  and assigns  will not acquire or claim,  as against such
lessor, conditional seller, indenture trustee or secured party, any right, title
or interest in any engine as the result of such engine  being  installed  on the
Airframe  at any time while such  engine is subject to such  lease,  conditional
sale,  trust  indenture or other security  agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such indenture trustee or secured party.

                   (c) OPERATION  AND USE. So long as the Aircraft,  Airframe or
any Engine is subject to the Lien of this Trust  Indenture,  the Owner shall not
operate,  use or locate  the  Aircraft,  Airframe  or any  Engine,  or allow the
Aircraft,  Airframe or any Engine to be  operated,  used or located,  (i) in any
area excluded  from  coverage by any insurance  required by the terms of Section
4.06, except in the case of a requisition by the U.S. Government where the Owner
obtains  indemnity  in lieu of such  insurance  from  the  U.S.  Government,  or
insurance from the U.S. Government, against substantially the same risks and for
at least the amounts of the  insurance  required by Section 4.06  covering  such
area, or (ii) in any recognized area of hostilities unless covered in accordance
with Section 4.06 by war risk insurance,  or in either case unless the Aircraft,
the Airframe or any Engine is only temporarily operated, used or located in such
area as a result of an emergency,  equipment  malfunction,  navigational  error,
hijacking,  weather condition or other similar unforeseen circumstance,  so long
as Owner  diligently and in good faith proceeds to remove the Aircraft from such
area. So long as the Aircraft, the Airframe or any Engine is subject to the Lien
of this Trust Indenture,  the Owner shall not permit such Aircraft,  Airframe or
any  Engine,  as the case may be, to be used,  operated,  maintained,  serviced,
repaired or  overhauled  (x) in violation of any Law binding on or applicable to
such  Aircraft,  Airframe  or Engine or (y) in  violation  of any  airworthiness
certificate,  license or registration  of any Government  Entity relating to the
Aircraft,  the Airframe or any Engine,  except (i)  immaterial or  non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof,  or (ii) to the
extent the validity or application  of any such Law or  requirement  relating to
any such  certificate,  license or registration is being contested in good faith
by Owner or Permitted Lessee in any reasonable manner which does not involve any
material risk of the sale,  forfeiture or loss of the Aircraft,  Airframe or any
Engine,  any  material  risk of criminal  liability  or material  civil  penalty
against  Mortgagee or impair the Mortgagee's  security interest in the Aircraft,
Airframe or any Engine.

<PAGE>

                   (d) MAINTENANCE AND REPAIR. So long as the Aircraft, Airframe
or any Engine is subject to the Lien of this Trust  Indenture,  the Owner  shall
cause  the  Aircraft,  Airframe  and each  Engine  to be  maintained,  serviced,
repaired and overhauled in accordance with (i) maintenance standards required by
or substantially equivalent to those required by the FAA or the central aviation
authority of Canada,  France,  Germany,  Japan,  the  Netherlands  or the United
Kingdom for the Aircraft,  Airframe and Engines, so as to (A) keep the Aircraft,
the  Airframe and each Engine in as good  operating  condition as on the Closing
Date,  ordinary wear and tear excepted,  (B) keep the Aircraft in such operating
condition  as  may  be  necessary   to  enable  the   applicable   airworthiness
certification of such Aircraft to be maintained under the regulations of the FAA
or other Aviation  Authority then having  jurisdiction over the operation of the
Aircraft,  except  during (x) temporary  periods of storage in  accordance  with
applicable regulations,  (y) maintenance and modification permitted hereunder or
(z)  periods  when the FAA or such  other  Aviation  Authority  has  revoked  or
suspended the airworthiness  certificates for Similar Aircraft;  and (ii) except
during periods when a Permitted Lease is in effect,  the same standards as Owner
uses with respect to similar  aircraft of similar size in its fleet  operated by
Owner in similar circumstances and, during any period in which a Permitted Lease
is in effect,  the same standards  used by the Permitted  Lessee with respect to
similar  aircraft of similar  size in its fleet and  operated  by the  Permitted
Lessee  in  similar  circumstances.  Owner  further  agrees  that the  Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired, overhauled or
inspected in compliance  with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable  airworthiness  certificate,
license and registration relating to the Aircraft, Airframe or any Engine issued
by the Aviation  Authority,  other than minor or  nonrecurring  violations  with
respect to which corrective measures are taken upon discovery thereof and except
to the extent Owner or Permitted Lessee is contesting in good faith the validity
or application of any such Law or requirement  relating to any such certificate,
license  or  registration  in any  reasonable  manner  which  does not  create a
material risk of sale,  loss or forfeiture of the Aircraft,  the Airframe or any
Engine or the interest of Mortgagee  therein,  or any material  risk of criminal
liability or material civil penalty against Mortgagee.  The Owner shall maintain
or cause to be maintained the Aircraft Documents in the English language.

                   (e)  REGISTRATION.  The  Owner on or prior to the date of the
Closing shall cause the Aircraft to be duly registered in its name under the Act
and  except  as  otherwise  permitted  by  this  Section  4.02(e)  at all  times
thereafter  shall  cause the  Aircraft  to remain so  registered.  So long as no
Special Default or Event of Default shall have occurred and be continuing, Owner
may,  by  written  notice  to  Mortgagee,  request  to  change  the  country  of
registration of the Aircraft.  Any such change in registration shall be effected
only in  compliance  with,  and subject to all of the  conditions  set forth in,
Section 6.4.5 of the  Participation  Agreement.  Unless the Trust  Indenture has
been discharged,  Owner shall also cause the Trust Indenture to be duly recorded
and at all times  maintained of record as a  first-priority  perfected  mortgage
(subject to  Permitted  Liens) on the  Aircraft,  the  Airframe  and each of the
Engines  (except to the extent such  perfection or priority cannot be maintained
solely as a result of the  failure by  Mortgagee  to  execute  and  deliver  any
necessary documents).

                   (f)  MARKINGS.   If  permitted  by  applicable   Law,  on  or
reasonably  promptly after the Closing Date,  Owner will cause to be affixed to,
and maintained in, the cockpit of the Airframe and on each Engine, in each case,
in

<PAGE>

a clearly visible location, a placard of a reasonable size and shape bearing the
legend:  "Subject to a security  interest in favor of Wilmington  Trust Company,
not in its individual  capacity but solely as  Mortgagee."  Such placards may be
removed temporarily,  if necessary, in the course of maintenance of the Airframe
or Engines.  If any such  placard is damaged or becomes  illegible,  Owner shall
promptly  replace  it with a placard  complying  with the  requirements  of this
Section.

            SECTION 4.03.  INSPECTION

                  (a) At all  reasonable  times,  so  long  as the  Aircraft  is
subject  to the  Lien of this  Trust  Indenture,  Mortgagee  and its  authorized
representatives  (the  "Inspecting  Parties")  may (not more than once  every 12
months  unless an Event of Default  has  occurred  and is  continuing  then such
inspection  right shall not be so limited)  inspect the  Aircraft,  Airframe and
Engines  (including  without  limitation,  the Aircraft  Documents) and any such
Inspecting  Party may make  copies of such  Aircraft  Documents  not  reasonably
deemed confidential by Owner or such Permitted Lessee.

                  (b) Any inspection of the Aircraft  hereunder shall be limited
to a visual,  walk-around  inspection  and shall not  include the opening of any
panels,  bays or other components of the Aircraft,  and no such inspection shall
interfere with Owner's or any Permitted  Lessee's  maintenance  and operation of
the Aircraft, Airframe and Engines.

                  (c) With respect to such rights of inspection, Mortgagee shall
not have any duty or  liability  to make,  or any duty or liability by reason of
not making, any such visit, inspection or survey.

                  (d) Each  Inspecting  Party  shall  bear its own  expenses  in
connection  with any such  inspection  (including the cost of any copies made in
accordance with Section 4.03(a)).

             SECTION  4.04.  REPLACEMENT  AND  POOLING  OF  PARTS,  ALTERATIONS,
MODIFICATIONS AND ADDITIONS; SUBSTITUTION OF ENGINES

                  (a) REPLACEMENT OF PARTS. Except as otherwise provided herein,
so long as the  Airframe  or Engine is  subject  to the Lien of this  Indenture,
Owner, at its own cost and expense,  will, or will cause a Permitted  Lessee to,
at its own cost and  expense,  promptly  replace (or cause to be  replaced)  all
Parts which may from time to time be incorporated or installed in or attached to
the Aircraft, Airframe or any Engine and which may from time to time become worn
out, lost,  stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, Owner
may, at its own cost and  expense,  or may permit a Permitted  Lessee at its own
cost and expense to,  remove (or cause to be removed) in the ordinary  course of
maintenance, service, repair, overhaul or testing any Parts, whether or not worn
out, lost,  stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or
permanently  rendered unfit for use; PROVIDED,  HOWEVER,  that Owner,  except as
otherwise  provided herein,  at its own cost and expense,  will, or will cause a
Permitted  Lessee at its own cost and expense to, replace such Parts as promptly
as  practicable.  All  replacement  Parts  shall be free and clear of all Liens,
except for Permitted Liens and pooling  arrangements to the extent  permitted by

<PAGE>

Section  4.04(c)  below  (and  except  in  the  case  of  replacement   property
temporarily  installed  on an  emergency  basis) and shall be in good  operating
condition  and have a value and  utility  not less than the value and utility of
the Parts replaced  (assuming such replaced Parts were in the condition required
hereunder).

                  (b) PARTS.  Except as otherwise  provided herein,  any Part at
any time removed  from the  Airframe or any Engine  shall remain  subject to the
Lien of this Trust Indenture,  no matter where located,  until such time as such
Part shall be replaced by a Part that has been  incorporated  or installed in or
attached  to such  Airframe  or any Engine and that meets the  requirements  for
replacement  Parts  specified  above.  Immediately  upon  any  replacement  Part
becoming incorporated or installed in or attached to such Airframe or any Engine
as provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the  Mortgagee  and shall no longer
be deemed a Part hereunder,  and (ii) such replacement Part shall become subject
to this Trust  Indenture and be deemed part of such  Airframe or any Engine,  as
the  case may be,  for all  purposes  hereof  to the same  extent  as the  Parts
originally  incorporated  or  installed  in or attached to such  Airframe or any
Engine.

                  (c)  POOLING OF PARTS.  Any Part  removed  from the  Aircraft,
Airframe or an Engine may be subjected  by the Owner or a Permitted  Lessee to a
normal pooling arrangement customary in the airline industry and entered into in
the ordinary course of business of Owner or Permitted Lessee,  provided that the
part  replacing  such  removed  Part shall be  incorporated  or  installed in or
attached to such Airframe or any Engine in accordance with Sections  4.04(a) and
4.04(b) as promptly as  practicable  after the removal of such removed  Part. In
addition,  any replacement part when incorporated or installed in or attached to
the Airframe or any Engine may be owned by any third party,  subject to a normal
pooling arrangement, so long as the Owner or a Permitted Lessee, at its own cost
and expense,  as promptly thereafter as reasonably  possible,  either (i) causes
such  replacement  part to become  subject to the Lien of this Trust  Indenture,
free and  clear  of all  Liens  except  Permitted  Liens,  at  which  time  such
replacement part shall become a Part or (ii) replaces (or causes to be replaced)
such  replacement  part by  incorporating  or  installing in or attaching to the
Aircraft,  Airframe or any Engine a further  replacement Part owned by the Owner
free and clear of all Liens  except  Permitted  Liens  and  which  shall  become
subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).

                  (d) ALTERATIONS, MODIFICATIONS AND ADDITIONS. The Owner shall,
or shall cause a Permitted Lessee to, make (or cause to be made) alterations and
modifications in and additions to the Aircraft,  Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation  Authority having  jurisdiction  over the operation of the
Aircraft,  to the extent made mandatory in respect of the Aircraft (a "Mandatory
Modification");  PROVIDED HOWEVER,  that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure,  contest the validity or application of
any law,  rule,  regulation  or order in any  reasonable  manner  which does not
materially  adversely affect  Mortgagee's  interest in the Aircraft and does not
involve any  material  risk of sale,  forfeiture  or loss of the Aircraft or the
interest of Mortgagee therein, or any material risk of material civil penalty or
any material risk of criminal liability being imposed on Mortgagee or the holder
of any Equipment Note. In addition,  the Owner, at its own expense,  may, or may
permit a Permitted Lessee at its own cost and expense to, from time to time make

<PAGE>

or cause to be made such  alterations and  modifications in and additions to the
Airframe or any Engine  (each an "Optional  Modification")  as the Owner or such
Permitted  Lessee  may deem  desirable  in the proper  conduct  of its  business
including,  without limitation,  removal of Parts which Owner deems are obsolete
or no longer suitable or appropriate  for use in the Aircraft,  Airframe or such
Engine;  PROVIDED,  HOWEVER,  that  no  such  Optional  Modification  shall  (i)
materially  diminish  the fair  market  value,  utility,  or useful  life of the
Aircraft  or any Engine  below its fair  market  value,  utility or useful  life
immediately prior to such Optional  Modification  (assuming the Aircraft or such
Engine was in the condition required by the Trust Indenture immediately prior to
such  Optional  Modification)  or (ii) cause the  Aircraft  to cease to have the
applicable  standard  certificate of  airworthiness.  All Parts  incorporated or
installed  in or  attached  to any  Airframe  or any Engine as the result of any
alteration,  modification  or  addition  effected by the Owner shall be free and
clear of any Liens except Permitted Liens and become subject to the Lien of this
Trust  Indenture;  PROVIDED that the Owner or any  Permitted  Lessee may, at any
time so long as the  Airframe or any Engine is subject to the Lien of this Trust
Indenture,  remove  any such  Part  (such  Part  being  referred  to herein as a
"REMOVABLE  Part")  from  such  Airframe  or an  Engine  if (i) such  Part is in
addition  to,  and  not in  replacement  of or in  substitution  for,  any  Part
originally  incorporated  or  installed  in or attached to such  Airframe or any
Engine at the time of delivery thereof  hereunder or any Part in replacement of,
or in  substitution  for, any such original Part, (ii) such Part is not required
to be  incorporated or installed in or attached or added to such Airframe or any
Engine  pursuant to the terms of Section  4.02(d) or the first  sentence of this
Section  4.04(d)  and (iii) such Part can be removed  from such  Airframe or any
Engine  without  materially  diminishing  the  fair  market  value,  utility  or
remaining  useful life which such  Airframe or any Engine  would have had at the
time of removal had such  removal not been  effected by the Owner,  assuming the
Aircraft  was  otherwise  maintained  in the  condition  required  by this Trust
Indenture and such Removable Part had not been  incorporated  or installed in or
attached to the Aircraft, Airframe or such Engine. Upon the removal by the Owner
of any such Part as above provided, title thereto shall, without further act, be
free and clear of all rights of the  Mortgagee  and such Part shall no longer be
deemed a Part hereunder. Removable Parts may be leased from or financed by third
parties other than Mortgagee.

                  (e)  SUBSTITUTION OF ENGINES.  Upon the occurrence of an Event
of Loss with respect to an Engine under  circumstances in which an Event of Loss
with respect to the Airframe has not occurred,  Owner shall promptly (and in any
event within 15 days after such occurrence) give the Mortgagee written notice of
such Event of Loss. The Owner shall have the right at its option at any time, on
at least 5 Business Days' prior notice to the Mortgagee,  to substitute,  and if
an  Event  of  Loss  shall  have  occurred  with  respect  to  an  Engine  under
circumstances  in which an Event of Loss with  respect to the  Airframe  has not
occurred,  shall  within  60  days  of the  occurrence  of  such  Event  of Loss
substitute, a Replacement Engine for any Engine. In such event, immediately upon
the effectiveness of such substitution and without further act, (i) the replaced
Engine shall  thereupon be free and clear of all rights of the Mortgagee and the
Lien of this Trust  Indenture and shall no longer be deemed an Engine  hereunder
and (ii) such  Replacement  Engine shall become subject to this Trust  Indenture
and be deemed part of the Aircraft for all purposes hereof to the same extent as
the replaced Engine.  Such Replacement Engine shall be an engine manufactured by
Engine Manufacturer that is the same model as the Engine to be replaced thereby,
or an improved  model,  and that is  suitable  for  installation  and use on the
Airframe,  and that has a value,  utility and  remaining  useful  life  (without
regard to hours and  cycles  remaining  until  overhaul)  at least  equal to the

<PAGE>

Engine to be replaced thereby  (assuming that such Engine had been maintained in
accordance with this Trust  Indenture).  The Owner's right to make a replacement
hereunder  shall be subject to the fulfillment  (which may be simultaneous  with
such replacement) of the following conditions precedent at the Owner's sole cost
and expense,  and the Mortgagee agrees to cooperate with the Owner to the extent
necessary to enable it to timely satisfy such conditions:

                         (i) an executed  counterpart  of each of the  following
documents shall be delivered to the Mortgagee:

                  (A) a Trust  Indenture  Supplement  covering  the  Replacement
            Engine, which shall have been duly filed for recordation pursuant to
            the Act or such other applicable law of the jurisdiction  other than
            the United  States in which the  Aircraft  of which such Engine is a
            part is registered in accordance with Section  4.02(e),  as the case
            may be;

                  (B) a full warranty  bill of sale (as to title),  covering the
            Replacement Engine, executed by the former owner thereof in favor of
            the Owner (or, at the Owner's option,  other evidence of the Owner's
            ownership of such Replacement Engine, reasonably satisfactory to the
            Mortgagee); and

                  (C) UCC financing  statements  covering the security interests
            created by this Trust Indenture (or any similar  statements or other
            documents  required to be filed or delivered pursuant to the laws of
            the  jurisdiction  in which such Aircraft may be  registered) as are
            deemed  necessary  or  desirable  by counsel  for the  Mortgagee  to
            protect the security  interests of the Mortgagee in the  Replacement
            Engine;

                         (ii)  the  Owner  shall  cause to be  delivered  to the
Mortgagee  an  opinion  of  counsel  to the  effect  that the Lien of this Trust
Indenture  continues  to be in  full  force  and  effect  with  respect  to  the
Replacement Engine and such evidence of compliance with the insurance provisions
of Section  4.06 with  respect to such  Replacement  Engine as  Mortgagee  shall
reasonably request;

                         (iii) the Owner shall have  furnished  to  Mortgagee an
opinion of Owner's aviation law counsel reasonably satisfactory to Mortgagee and
addressed  to  Mortgagee  as to the due  filing  for  recordation  of the  Trust
Indenture  Supplement with respect to such  Replacement  Engine under the Act or
such other  applicable law of the  jurisdiction  other than the United States in
which the Aircraft is registered in accordance with Section 4.02(e), as the case
may be; and

                         (iv) the Owner  shall have  furnished  to  Mortgagee  a
certificate of a qualified  aircraft  engineer (who may be an employee of Owner)
certifying  that such  Replacement  Engine has a value and utility and remaining
useful life (without  regard to hours and cycles  remaining  until  overhaul) at
least  equal to the  Engine so  replaced  (assuming  that such  Engine  had been
maintained in accordance with this Trust Indenture).

<PAGE>

Upon  satisfaction  of all  conditions to such  substitution,  (x) the Mortgagee
shall execute and deliver to the Owner such documents and instruments,  prepared
at the Owner's expense,  as the Owner shall  reasonably  request to evidence the
release of such replaced Engine from the Lien of this Trust  Indenture,  (y) the
Mortgagee  shall  assign to the Owner all claims it may have  against  any other
Person  relating to any Event of Loss giving rise to such  substitution  and (z)
the Owner shall receive all  insurance  proceeds  (other than those  reserved to
others  under  Section  4.06(b))  and  proceeds  in respect of any Event of Loss
giving  rise to such  replacement  to the extent not  previously  applied to the
purchase price of the Replacement Engine as provided in Section 4.05(d).

            SECTION 4.05.  LOSS, DESTRUCTION OR REQUISITION

                  (a)  EVENT OF LOSS  WITH  RESPECT  TO THE  AIRFRAME.  Upon the
occurrence  of an Event of Loss with  respect to the  Airframe,  the Owner shall
promptly  (and in any  event  within 15 days  after  such  occurrence)  give the
Mortgagee written notice of such Event of Loss. The Owner shall,  within 45 days
after such occurrence,  give the Mortgagee written notice of Owner's election to
either  replace the Airframe as provided  under  Section  4.05(a)(i)  or to make
payment in respect of such Event of Loss as provided  under Section  4.05(a)(ii)
(it being agreed that if Owner shall not have given the Mortgagee such notice of
such election within the above specified time period,  the Owner shall be deemed
to have  elected to make  payment  in respect of such Event of Loss as  provided
under Section 4.05(a)(ii)):

                         (i) if Owner  elects to  replace  the  Airframe,  Owner
shall,  subject  to the  satisfaction  of the  conditions  contained  in Section
4.05(c),  as  promptly as  possible  and in any event  within 120 days after the
occurrence  of such  Event of Loss,  cause to be  subjected  to the Lien of this
Trust Indenture,  in replacement of the Airframe with respect to which the Event
of Loss  occurred,  a  Replacement  Airframe  and, if any Engine shall have been
installed  on the Airframe  when it suffered  the Event of Loss,  a  Replacement
Engine therefor,  such Replacement  Airframe and Replacement  Engines to be free
and clear of all Liens except  Permitted Liens and to have a value,  utility and
remaining  useful life (without  regard to hours or cycles  remaining  until the
next regular maintenance check) at least equal to the Airframe or Engine, as the
case may be, to be replaced  thereby  (assuming that such Airframe or Engine had
been maintained in accordance with this Trust  Indenture);  PROVIDED THAT if the
Owner shall not perform its  obligation  to effect such  replacement  under this
clause (i) during the 120-day period of time provided  herein,  it shall pay the
amounts  required to be paid pursuant to and within the time frame  specified in
clause (ii) below; or

                         (ii) if Owner  elects to make a payment  in  respect of
such Event of Loss of the Airframe,  Owner shall make a payment to the Mortgagee
for purposes of redeeming Equipment Notes in accordance with Section 2.10 hereof
on a date on or before the  Business Day next  following  the earlier of (x) the
120th day  following the date of the  occurrence of such Event of Loss,  and (y)
the fourth Business Day following the receipt of insurance proceeds with respect
to such  Event of Loss (but in any event not  earlier  than the date of  Owner's
election under Section 4.05(a) to make payment under this Section 4.05 (a)(ii));
and upon such payment and payment of all other Secured  Obligations then due and
payable, the Mortgagee shall, at the cost and expense of the Owner, release from
the Lien of this Trust Indenture the Airframe and the Engines, by executing and

<PAGE>

delivering  to  the  Owner  all  documents  and  instruments  as the  Owner  may
reasonably request to evidence such release.

                  (b) EFFECT OF  REPLACEMENT.  Should the Owner have  provided a
Replacement Airframe and Replacement Engines, if any, as provided for in Section
4.05(a)(i),  (i) the Lien of this Trust Indenture shall continue with respect to
such Replacement Airframe and Replacement Engines, if any, as though no Event of
Loss had  occurred;  (ii) the  Mortgagee  shall,  at the cost and expense of the
Owner,  release from the Lien of this Trust Indenture the replaced  Airframe and
Engines,  if any, by executing and  delivering  to the Owner such  documents and
instruments  as the Owner may reasonably  request to evidence such release;  and
(iii) in the case of a replacement  upon an Event of Loss,  the Mortgagee  shall
assign to the Owner all claims the  Mortgagee  may have against any other Person
arising  from the  Event of Loss  and the  Owner  shall  receive  all  insurance
proceeds  (other  than those  reserved  to others  under  Section  4.06(b))  and
proceeds  from any award in respect of  condemnation,  confiscation,  seizure or
requisition,  including  any  investment  interest  thereon,  to the  extent not
previously  applied  to the  purchase  price  of the  Replacement  Airframe  and
Replacement Engines, if any, as provided in Section 4.05(d).

                  (c) CONDITIONS TO AIRFRAME AND ENGINE REPLACEMENT. The Owner's
right to substitute a Replacement  Airframe and Replacement  Engines, if any, as
provided  in Section  4.05(a)(i)  shall be subject  to the  fulfillment,  at the
Owner's sole cost and expense,  in addition to the conditions  contained in such
Section 4.05(a)(i), of the following conditions precedent:

                         (i) on the  date  when  the  Replacement  Airframe  and
Replacement  Engines,  if any, is subjected to the Lien of this Trust  Indenture
(such date being  referred to in this Section 4.05 as the  "Replacement  Closing
Date"), an executed  counterpart of each of the following  documents (or, in the
case of the FAA Bill of Sale and full warranty bill of sale referred to below, a
photocopy thereof) shall have been delivered to the Mortgagee:

                  (A) a Trust  Indenture  Supplement  covering  the  Replacement
            Airframe and Replacement Engines, if any, which shall have been duly
            filed for recordation  pursuant to the Act or such other  applicable
            law of such  jurisdiction  other than the United States in which the
            Replacement  Airframe  and  Replacement  Engines,  if any, are to be
            registered in accordance with Section 4.02(e), as the case may be;

                  (B) an FAA Bill of Sale (or a comparable document,  if any, of
            another Aviation Authority,  if applicable) covering the Replacement
            Airframe and  Replacement  Engines,  if any,  executed by the former
            owner thereof in favor of the Owner;

                  (C) a full  warranty (as to title) bill of sale,  covering the
            Replacement  Airframe and Replacement  Engines,  if any, executed by
            the former  owner  thereof in favor of the Owner (or, at the Owner's
            option,  other evidence of the Owner's ownership of such Replacement
            Airframe and Replacement Engines, if any, reasonably satisfactory to
            the Mortgagee); and

<PAGE>

                  (D) UCC  financing  statements  (or any similar  statements or
            other  documents  required to be filed or delivered  pursuant to the
            laws of the  jurisdiction  in which  the  Replacement  Airframe  and
            Replacement  Engines,  if any, may be registered in accordance  with
            Section 4.02(e)) as are deemed necessary or desirable by counsel for
            the Mortgagee to protect the security  interests of the Mortgagee in
            the Replacement Airframe and Replacement Engines, if any;

                         (ii) the Replacement  Airframe and Replacement Engines,
if any,  shall be of the same model as the Airframe or Engines,  as the case may
be,  or an  improved  model of such  aircraft  or  engines  of the  manufacturer
thereof,  shall  have a value  and  utility  (without  regard to hours or cycles
remaining until the next regular maintenance check) at least equal to, and be in
as good operating condition and repair as, the Airframe and any Engines replaced
(assuming such Airframe and Engines had been  maintained in accordance with this
Trust Indenture);

                         (iii)   the   Mortgagee    (acting   directly   or   by
authorization to its special counsel) shall have received  satisfactory evidence
as to the compliance with Section 4.06 with respect to the Replacement  Airframe
and Replacement Engines, if any;

                         (iv) on the  Replacement  Closing  Date,  (A) the Owner
shall cause the  Replacement  Airframe and  Replacement  Engines,  if any, to be
subject to the Lien of this Trust  Indenture free and clear of Liens (other than
Permitted Liens), (B) the Replacement Airframe shall have been duly certified by
the FAA as to type and  airworthiness in accordance with the terms of this Trust
Indenture and (C)  application for  registration of the Replacement  Airframe in
accordance  with Section 4.02(e) shall have been duly made with the FAA or other
applicable  Aviation Authority and the Owner shall have authority to operate the
Replacement Airframe;

                         (v) the  Mortgagee  at the expense of the Owner,  shall
have received  (acting  directly or by authorization to its special counsel) (A)
an  opinion of  counsel,  addressed  to the  Mortgagee,  to the effect  that the
Replacement  Airframe and Replacement Engine, if any, has or have duly been made
subject to the Lien of this Trust  Indenture,  and Mortgagee will be entitled to
the benefits of Section 1110 with respect to the Replacement Airframe,  provided
that such  opinion  with  respect to Section  1110 need not be  delivered to the
extent that  immediately  prior to such replacement the benefits of Section 1110
were not, solely by reason of a change in law or court  interpretation  thereof,
available  to  Mortgagee,  and (B) an opinion of Owner's  aviation  law  counsel
reasonably satisfactory to and addressed to Mortgagee as to the due registration
of any such  Replacement  Airframe  and the due filing for  recordation  of each
Trust  Indenture  Supplement  with  respect  to  such  Replacement  Airframe  or
Replacement   Engine  under  the  Act  or  such  other  applicable  law  of  the
jurisdiction  other than the United States in which the Replacement  Airframe is
to be registered in accordance with Section 4.02(e), as the case may be; and

                         (vi) the Owner shall have  furnished to the Mortgagee a
certificate of a qualified  aircraft  engineer (who may be an employee of Owner)
certifying that the Replacement Airframe and Replacement Engines, if any, have a
value and utility and remaining useful life (without regard to hours and cycles

<PAGE>

remaining  until  overhaul)  at least equal to the  Airframe  and any Engines so
replaced  (assuming  that such  Airframe  and  Engines  had been  maintained  in
accordance with this Trust Indenture).

                  (d) NON-INSURANCE  PAYMENTS RECEIVED ON ACCOUNT OF AN EVENT OF
LOSS. Any amounts,  other than  insurance  proceeds in respect of damage or loss
not  constituting an Event of Loss (the  application of which is provided for in
Annex B), received at any time by Mortgagee or Owner from any Government  Entity
or any other Person in respect of any Event of Loss will be applied as follows:

                  (i) If such amounts are received with respect to the Airframe,
            and any Engine installed  thereon at the time of such Event of Loss,
            upon  compliance  by Owner  with  the  applicable  terms of  Section
            4.05(c) with respect to the Event of Loss for which such amounts are
            received, such amounts shall be paid over to, or retained by, Owner;

                  (ii) If such  amounts are  received  with respect to an Engine
            (other  than an Engine  installed  on the  Airframe at the time such
            Airframe  suffers an Event of Loss),  upon  compliance by Owner with
            the applicable terms of Section 4.04(e) with respect to the Event of
            Loss for which such amounts are received, such amounts shall be paid
            over to, or retained by, Owner;

                  (iii) If such amounts are received,  in whole or in part, with
            respect to the Airframe,  and Owner makes,  has made or is deemed to
            have  made the  election  set  forth in  Section  4.05(a)(ii),  such
            amounts shall be applied as follows:

                        FIRST,  if the sum described in Section  4.05(a)(ii) has
            not then been paid in full by Owner,  such amounts  shall be paid to
            Mortgagee to the extent necessary to pay in full such sum; and

                        SECOND, the remainder, if any, shall be paid to Owner.

                  (e) REQUISITION FOR USE. In the event of a requisition for use
by any  Government  Entity of the Airframe  and the Engines,  if any, or engines
installed on such  Airframe  while such  Airframe is subject to the Lien of this
Trust  Indenture,  the  Owner  shall  promptly  notify  the  Mortgagee  of  such
requisition and all of the Owner's  obligations under this Trust Indenture shall
continue to the same extent as if such  requisition  had not occurred  except to
the extent that the  performance  or observance  of any  obligation by the Owner
shall have been  prevented  or delayed by such  requisition;  PROVIDED  THAT the
Owner's obligations under this Section 4.05 with respect to the occurrence of an
Event of Loss for the payment of money and under  Section 4.06 (except  while an
assumption  of  liability  by the U.S.  Government  of the scope  referred to in
Section  4.02(c)  is in  effect)  shall  not  be  reduced  or  delayed  by  such
requisition.  Any payments  received by the  Mortgagee or the Owner or Permitted
Lessee from such Government Entity with respect to such requisition of use shall
be paid over to, or retained by, the Owner.  In the event of an Event of Loss of
an Engine resulting from the requisition for use by a Government  Entity of such
Engine (but not the Airframe),  the Owner will replace such Engine  hereunder by

<PAGE>

complying  with the terms of Section  4.04(e) and any  payments  received by the
Mortgagee  or the  Owner  from  such  Government  Entity  with  respect  to such
requisition shall be paid over to, or retained by, the Owner.

                  (f)  CERTAIN  PAYMENTS  TO BE HELD  AS  SECURITY.  Any  amount
referred to in this Section 4.05 or Section 4.06 which is payable or  creditable
to, or retainable by, the Owner shall not be paid or credited to, or retained by
the Owner if at the time of such payment,  credit or retention a Special Default
or an Event of Default shall have occurred and be continuing,  but shall be paid
to and held by the Mortgagee as security for the  obligations of the Owner under
this Trust  Indenture  and the Operative  Agreements,  and at such time as there
shall not be continuing any such Special Default or Event of Default such amount
and any gain realized as a result of investments required to be made pursuant to
Section 6.06 shall to the extent not theretofore  applied as provided herein, be
paid over to the Owner.

            SECTION 4.06.  INSURANCE

                  (a) OWNER'S OBLIGATION TO INSURE.  Owner shall comply with, or
cause to be complied with,  each of the provisions of Annex B, which  provisions
are hereby incorporated by this reference as if set forth in full herein.

                  (b) INSURANCE  FOR OWN ACCOUNT.  Nothing in Section 4.06 shall
limit or prohibit (a) Owner from maintaining the policies of insurance  required
under  Annex B with  higher  limits  than  those  specified  in  Annex B, or (b)
Mortgagee from obtaining insurance for its own account (and any proceeds payable
under  such  separate  insurance  shall be  payable  as  provided  in the policy
relating  thereto);  PROVIDED,  HOWEVER,  that no  insurance  may be obtained or
maintained  that would limit or otherwise  adversely  affect the coverage of any
insurance  required  to be  obtained  or  maintained  by Owner  pursuant to this
Section 4.06 and Annex B.

                  (c)  INDEMNIFICATION  BY  GOVERNMENT  IN  LIEU  OF  INSURANCE.
Mortgagee agrees to accept,  in lieu of insurance  against any risk with respect
to the  Aircraft  described  in  Annex B,  indemnification  from,  or  insurance
provided  by, the U.S.  Government,  or upon the written  consent of  Mortgagee,
other Government Entity,  against such risk in an amount that, when added to the
amount of insurance (including permitted  self-insurance),  if any, against such
risk  that  Owner  (or any  Permitted  Lessee)  may  continue  to  maintain,  in
accordance  with this Section  4.06,  during the period of such  requisition  or
transfer,  shall be at least equal to the amount of insurance  against such risk
otherwise required by this Section 4.06.

                  (d)  APPLICATION OF INSURANCE  PROCEEDS.  As between Owner and
Mortgagee,  all insurance  proceeds received as a result of the occurrence of an
Event of Loss with respect to the Aircraft or any Engine under policies required
to be  maintained  by Owner  pursuant  to this  Section  4.06 will be applied in
accordance  with  Section  4.05(d).  All  proceeds of  insurance  required to be
maintained by Owner,  in accordance  with Section 4.06 and Section B of Annex B,
in respect of any property damage or loss not constituting an Event of Loss with
respect to the  Aircraft,  Airframe or any Engine will be applied in payment (or
to reimburse  Owner) for repairs or for  replacement  property,  and any balance
remaining after such repairs or replacement  with respect to such damage or loss
shall be paid over to, or retained by, Owner.

<PAGE>

            SECTION 4.07.  MERGER OF OWNER

                  (a)   IN GENERAL.
Owner  shall  not  consolidate  with  or  merge  into  any  other  person  under
circumstances  in  which  Owner is not the  surviving  corporation,  or  convey,
transfer or lease in one or more  transactions all or  substantially  all of its
assets to any other person, unless:

                         (i) such  person  is  organized,  existing  and in good
standing under the Laws of the United States,  any State of the United States or
the District of Columbia and, upon consummation of such transaction, such person
will be a U.S. Air Carrier;

                         (ii) such person  executes  and delivers to Mortgagee a
duly authorized,  legal, valid,  binding and enforceable  agreement,  reasonably
satisfactory  in form  and  substance  to  Mortgagee,  containing  an  effective
assumption by such person of the due and punctual  performance and observance of
each  covenant,  agreement  and  condition  in the  Operative  Agreements  to be
performed or observed by Owner;

                         (iii) such person  makes such  filings  and  recordings
with  the FAA  pursuant  to the Act as  shall  be  necessary  to  evidence  such
consolidation or merger; and

                         (iv)   immediately   after   giving   effect   to  such
consolidation  or  merger  no  Event  of  Default  shall  have  occurred  and be
continuing.

                  (b) EFFECT OF MERGER.
Upon any such  consolidation or merger of Owner with or into, or the conveyance,
transfer  or lease by Owner of all or  substantially  all of its  assets to, any
Person in accordance with this Section 4.07, such Person will succeed to, and be
substituted  for,  and may  exercise  every right and power of,  Owner under the
Operative  Agreements  with the same  effect as if such person had been named as
"Owner" therein.  No such  consolidation or merger,  or conveyance,  transfer or
lease,  shall have the effect of releasing  Owner or such Person from any of the
obligations,  liabilities,  covenants or  undertakings  of Owner under the Trust
Indenture.

                                    ARTICLE V

                   EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE

            SECTION 5.01.  EVENT OF DEFAULT

            "Event of Default" means any of the following  events  (whatever the
reason for such Event of Default and whether  such event shall be  voluntary  or
involuntary  or come about or be effected by  operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

                         (i) the failure of the Owner to pay (i)  principal  of,
interest on or Make-Whole Amount, if any, under any Equipment Note when due, and
such failure shall continue unremedied for a period of 10 Business Days, or (ii)
any other amount payable by it to the Note Holders under this Trust Indenture or
the Participation Agreement when due, and such failure shall continue for a

<PAGE>

period in excess of 10 Business  Days after Owner has  received  written  notice
from Mortgagee of the failure to make such payment when due;

                         (ii) Owner shall fail to carry and  maintain,  or cause
to be carried  and  maintained,  insurance  on and in  respect of the  Aircraft,
Airframe and Engines in accordance with the provisions of Section 4.06;

                         (iii) Owner shall fail to observe or perform (or caused
to be observed  and  performed)  in any  material  respect  any other  covenant,
agreement or obligation set forth herein or in any other Operative  Agreement to
which Owner is a party and such failure shall  continue  unremedied for a period
of 30 days from and after  the date of  written  notice  thereof  to Owner  from
Mortgagee,  unless such failure is capable of being corrected and Owner shall be
diligently  proceeding to correct such failure,  in which case there shall be no
Event of Default unless and until such failure shall  continue  unremedied for a
period of 270 days after receipt of such notice;

                         (iv)  any  representation  or  warranty  made by  Owner
herein,  in the Participation  Agreement or in any other Operative  Agreement to
which Owner is a party (a) shall prove to have been untrue or  inaccurate in any
material   respect  as  of  the  date  made,   (b)  such  untrue  or  inaccurate
representation or warranty is material at the time in question, (c) and the same
shall remain uncured (to the extent of the adverse impact of such  incorrectness
on the  interest  of the  Mortgagee)  for a period in excess of 30 days from and
after the date of written notice thereof from Mortgagee to Owner;

                         (v) the Owner shall  consent to the  appointment  of or
taking  possession  by a  receiver,  trustee  or  liquidator  of  itself or of a
substantial  part of its  property,  or the Owner  shall  admit in  writing  its
inability  to pay its debts  generally  as they come due or shall make a general
assignment for the benefit of its creditors, or the Owner shall file a voluntary
petition  in   bankruptcy  or  a  voluntary   petition  or  an  answer   seeking
reorganization,  liquidation  or  other  relief  under  any  bankruptcy  laws or
insolvency laws (as in effect at such time), or an answer admitting the material
allegations  of a petition filed against it in any such case, or the Owner shall
seek relief by voluntary  petition,  answer or consent,  under the provisions of
any  other  bankruptcy  or  similar  law  providing  for the  reorganization  or
winding-up of corporations  (as in effect at such time), or the Owner shall seek
an agreement, composition, extension or adjustment with its creditors under such
laws or the Owner's  board of  directors  shall adopt a  resolution  authorizing
corporate action in furtherance of any of the foregoing;

                         (vi) an order,  judgment or decree  shall be entered by
any court of  competent  jurisdiction  appointing,  without  the  consent of the
Owner, a receiver, trustee or liquidator of the Owner or of any substantial part
of its property,  or any substantial  part of the property of the Owner shall be
sequestered,  or granting  any other  relief in respect of the Owner as a debtor
under any bankruptcy laws or other  insolvency laws (as in effect at such time),
and any such order, judgment,  decree, or decree of appointment or sequestration
shall remain in force undismissed, unstayed or unvacated for a period of 90 days
after the date of entry thereof; or

<PAGE>

                         (vii) a  petition  against  the  Owner in a  proceeding
under any bankruptcy  laws or other  insolvency laws (as in effect at such time)
is filed and not withdrawn or dismissed within 90 days thereafter,  or if, under
the  provisions  of any  law  providing  for  reorganization  or  winding-up  of
corporations  which may apply to the Owner, any court of competent  jurisdiction
shall assume  jurisdiction,  custody or control of the Owner of any  substantial
part of its property and such  jurisdiction,  custody or control shall remain in
force unrelinquished, unstayed or unterminated for a period of 90 days.

            SECTION 5.02.  REMEDIES

                  (a)  If an  Event  of  Default  shall  have  occurred  and  be
continuing and so long as the same shall continue unremedied,  then and in every
such case the  Mortgagee  may  exercise  any or all of the rights and powers and
pursue any and all of the remedies pursuant to this Article V and shall have and
may exercise all of the rights and remedies of a secured party under the Uniform
Commercial  Code and may take  possession  of all or any part of the  properties
covered or intended to be covered by the Lien created hereby or pursuant  hereto
and may  exclude the Owner and all  persons  claiming  under it wholly or partly
therefrom;  PROVIDED, that the Mortgagee shall give the Owner twenty days' prior
written  notice of its intention to sell the Aircraft.  Without  limiting any of
the  foregoing,  it is understood and agreed that the Mortgagee may exercise any
right of sale of the  Aircraft  available  to it,  even though it shall not have
taken  possession of the Aircraft and shall not have  possession  thereof at the
time of such sale.

                  (b)  If an  Event  of  Default  shall  have  occurred  and  be
continuing,  then and in every  such case the  Mortgagee  may (and  shall,  upon
receipt  of a written  demand  therefor  from a  Majority  in  Interest  of Note
Holders),  at any time,  by delivery of written  notice or notices to the Owner,
declare all the  Equipment  Notes to be due and  payable,  whereupon  the unpaid
Original Amount of all Equipment Notes then  outstanding,  together with accrued
but unpaid interest  thereon (without  Make-Whole  Amount) and other amounts due
thereunder or otherwise  payable  hereunder,  shall  immediately  become due and
payable without presentment,  demand, protest or notice, all of which are hereby
waived;  provided that if an Event of Default referred to in clause (v), (vi) or
(vii) of Section  5.01 hereof shall have  occurred,  then and in every such case
the unpaid  Original Amount then  outstanding,  together with accrued but unpaid
interest and all other amounts due hereunder and under the Equipment Notes shall
immediately and without further act become due and payable without  presentment,
demand, protest or notice, all of which are hereby waived.

            This Section 5.02(b),  however, is subject to the condition that, if
at any time after the Original  Amount of the Equipment  Notes shall have become
so due and  payable,  and before any  judgment  or decree for the payment of the
money so due, or any thereof, shall be entered, all overdue payments of interest
upon the Equipment  Notes and all other amounts  payable  hereunder or under the
Equipment Notes (except the Original Amount of the Equipment Notes which by such
declaration  shall have  become  payable)  shall have been duly paid,  and every
other  Default and Event of Default with respect to any covenant or provision of
this  Trust  Indenture  shall  have been  cured,  then and in every  such case a
Majority  in Interest of Note  Holders may (but shall not be  obligated  to), by
written  instrument filed with the Mortgagee,  rescind and annul the Mortgagee's
declaration (or such automatic  acceleration) and its consequences;  but no such

<PAGE>

rescission  or  annulment  shall extend to or affect any  subsequent  Default or
Event of Default or impair any right consequent thereon.

                  (c) The Note Holders  shall be entitled,  at any sale pursuant
to this Section 5.02, to credit  against any purchase  price bid at such sale by
such holder all or any part of the unpaid  obligations owing to such Note Holder
and  secured by the Lien of this Trust  Indenture  (only to the extent that such
purchase price would have been paid to such Note Holder  pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing  provisions of
this subsection (c) were not given effect).

                  (d) In the  event of any sale of the  Collateral,  or any part
thereof,  pursuant  to any  judgment  or  decree of any  court or  otherwise  in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Original Amount of all Equipment  Notes then  outstanding,  together with
accrued  interest  thereon (without  Make-Whole  Amount),  and other amounts due
thereunder,  shall  immediately  become  due and  payable  without  presentment,
demand, protest or notice, all of which are hereby waived.

                  (e) Notwithstanding  anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is
a Note Holder,  the  Mortgagee  will not be  authorized  or empowered to acquire
title to any  Collateral  or take any action with respect to any  Collateral  so
acquired by it if such  acquisition  or action  would cause any Trust to fail to
qualify as a "grantor trust" for federal income tax purposes.

            SECTION 5.03.  RETURN OF AIRCRAFT, ETC.

                  (a)  If an  Event  of  Default  shall  have  occurred  and  be
continuing and the Equipment Notes have been accelerated,  at the request of the
Mortgagee,  the Owner shall  promptly  execute and deliver to the Mortgagee such
instruments of title and other  documents as the Mortgagee may deem necessary or
advisable to enable the  Mortgagee or an agent or  representative  designated by
the  Mortgagee,  at such time or times and place or places as the  Mortgagee may
specify,  to obtain possession of all or any part of the Collateral to which the
Mortgagee  shall at the time be entitled  hereunder.  If the Owner shall for any
reason fail to execute and deliver such  instruments  and  documents  after such
request by the Mortgagee,  the Mortgagee may (i) obtain a judgment conferring on
the  Mortgagee  the right to immediate  possession  and  requiring  the Owner to
execute and deliver such  instruments  and  documents to the  Mortgagee,  to the
entry of which  judgment the Owner hereby  specifically  consents to the fullest
extent permitted by Law, and (ii) pursue all or part of such Collateral wherever
it may be  found  and may  enter  any of the  premises  of Owner  wherever  such
Collateral  may be or be supposed to be and search for such  Collateral and take
possession  of and remove  such  Collateral.  All  expenses  of  obtaining  such
judgment or of pursuing,  searching  for and taking such property  shall,  until
paid, be secured by the Lien of this Trust Indenture.

                  (b) Upon every such taking of  possession,  the Mortgagee may,
from time to time, at the expense of the Collateral,  make all such expenditures
for  maintenance,   use,  operation,   storage,  insurance,   leasing,  control,
management, disposition,  modifications or alterations to and of the Collateral,
as it may deem proper.  In each such case, the Mortgagee shall have the right to

<PAGE>

maintain,  use, operate,  store, insure,  lease,  control,  manage,  dispose of,
modify or alter the  Collateral  and to  exercise  all  rights and powers of the
Owner relating to the Collateral,  as the Mortgagee  shall deem best,  including
the  right  to  enter  into  any and all such  agreements  with  respect  to the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition, modification or alteration of the Collateral or any part thereof as
the Mortgagee may determine,  and the Mortgagee shall be entitled to collect and
receive  directly all rents,  revenues and other  proceeds of the Collateral and
every part thereof,  without prejudice,  however,  to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be  deposited  with,  the  Mortgagee  hereunder.  Such rents,
revenues  and  other  proceeds  shall  be  applied  to pay the  expenses  of the
maintenance,  use, operation,  storage, insurance, leasing, control, management,
disposition,  improvement,  modification  or alteration of the Collateral and of
conducting  the business  thereof,  and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments,  insurance
or other proper charges upon the  Collateral or any part thereof  (including the
employment of engineers  and  accountants  to examine,  inspect and make reports
upon the properties and books and records of the Owner),  and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this  Trust  Indenture,  as well as just  and  reasonable  compensation  for the
services of the Mortgagee,  and of all persons  properly engaged and employed by
the Mortgagee with respect hereto.

            SECTION 5.04.  REMEDIES CUMULATIVE

            Each and  every  right,  power  and  remedy  given to the  Mortgagee
specifically  or otherwise in this Trust Indenture shall be cumulative and shall
be in addition to every other right, power and remedy herein  specifically given
or now or hereafter existing at Law, in equity or by statute, and each and every
right, power and remedy whether  specifically herein given or otherwise existing
may be  exercised  from  time to time and as often  and in such  order as may be
deemed  expedient by the  Mortgagee,  and the  exercise or the  beginning of the
exercise  of any power or remedy  shall not be  construed  to be a waiver of the
right to  exercise  at the same time or  thereafter  any other  right,  power or
remedy.  No delay or omission  by the  Mortgagee  in the  exercise of any right,
remedy or power or in the  pursuance  of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Owner or to be an acquiescence therein.

            SECTION 5.05.  DISCONTINUANCE OF PROCEEDINGS

            In case the  Mortgagee  shall  have  instituted  any  proceeding  to
enforce any right,  power or remedy under this Trust  Indenture by  foreclosure,
entry or  otherwise,  and such  proceedings  shall  have  been  discontinued  or
abandoned  for any  reason  or  shall  have  been  determined  adversely  to the
Mortgagee,  then and in every  such  case the  Owner  and the  Mortgagee  shall,
subject to any  determination in such  proceedings,  be restored to their former
positions and rights  hereunder with respect to the Collateral,  and all rights,
remedies and powers of the Owner or the Mortgagee  shall  continue as if no such
proceedings had been instituted.

<PAGE>

            SECTION 5.06.  WAIVER OF PAST DEFAULTS

            Upon  written  instruction  from a  Majority  in  Interest  of  Note
Holders,   the  Mortgagee  shall  waive  any  past  Default  hereunder  and  its
consequences  and upon any such waiver such Default shall cease to exist and any
Event of Default arising  therefrom shall be deemed to have been cured for every
purpose  of  this  Trust  Indenture,  but no such  waiver  shall  extend  to any
subsequent or other Default or impair any right  consequent  thereon;  provided,
that in the  absence  of written  instructions  from all the Note  Holders,  the
Mortgagee shall not waive any Default (i) in the payment of the Original Amount,
Make-Whole  Amount,  if any,  and  interest  and  other  amounts  due  under any
Equipment Note then  outstanding,  or (ii) in respect of a covenant or provision
hereof which, under Article X hereof,  cannot be modified or amended without the
consent of each Note Holder.

            SECTION 5.07.  APPOINTMENT OF RECEIVER

            The  Mortgagee  shall,  as a matter of  right,  be  entitled  to the
appointment  of a receiver (who may be the Mortgagee or any successor or nominee
thereof) for all or any part of the  Collateral,  whether such  receivership  be
incidental  to a proposed  sale of the  Collateral  or the taking of  possession
thereof or otherwise, and the Owner hereby consents to the appointment of such a
receiver and will not oppose any such  appointment.  Any receiver  appointed for
all or any part of the  Collateral  shall be entitled to exercise all the rights
and powers of the Mortgagee with respect to the Collateral.

            SECTION 5.08.  MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.

            The  Owner  irrevocably  appoints,  while an Event  of  Default  has
occurred and is continuing,  the Mortgagee the true and lawful  attorney-in-fact
of the Owner  (which  appointment  is coupled  with an interest) in its name and
stead and on its behalf,  for the purpose of effectuating any sale,  assignment,
transfer or delivery for the  enforcement  of the Lien of this Trust  Indenture,
whether  pursuant  to  foreclosure  or  power  of sale,  assignments  and  other
instruments as may be necessary or appropriate, with full power of substitution,
the  Owner  hereby  ratifying  and  confirming  all that  such  attorney  or any
substitute  shall  do by  virtue  hereof  in  accordance  with  applicable  law.
Nevertheless, if so requested by the Mortgagee or any purchaser, the Owner shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and   delivering  to  the  Mortgagee  or  such  purchaser  all  bills  of  sale,
assignments,  releases and other proper  instruments to effect such ratification
and confirmation as may be designated in any such request.

            SECTION 5.09.  RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT

            Notwithstanding  any other  provision of this Trust  Indenture,  the
right of any Note Holder to receive  payment of principal  of, and  premium,  if
any,  and  interest on an Equipment  Note on or after the  respective  due dates
expressed in such  Equipment  Note, or to bring suit for the  enforcement of any
such  payment on or after such  respective  dates in  accordance  with the terms
hereof,  shall not be  impaired  or  affected  without  the consent of such Note
Holder.

<PAGE>

                                   ARTICLE VI

                             DUTIES OF THE MORTGAGEE

            SECTION 6.01.  NOTICE OF EVENT OF DEFAULT

            If the Mortgagee shall have Actual  Knowledge of an Event of Default
or of a Default  arising from a failure to pay any  installment of principal and
interest on any Equipment  Note, the Mortgagee  shall give prompt written notice
thereof to each Note  Holder.  Subject to the terms of Sections  5.06,  6.02 and
6.03 hereof,  the Mortgagee shall take such action,  or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies  hereunder) as the Mortgagee  shall be
instructed in writing by a Majority in Interest of Note Holders.  Subject to the
provisions  of  Section   6.03,  if  the  Mortgagee   shall  not  have  received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note  Holders,  the  Mortgagee  may,  subject to  instructions
thereafter  received pursuant to the preceding  provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall  determine  advisable  in the best  interests of the Note
Holders; PROVIDED,  HOWEVER, that the Mortgagee may not sell the Aircraft or any
Engine  without the consent of a Majority in Interest of Note  Holders.  For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the  Mortgagee,  the  Mortgagee  shall not be deemed to have  knowledge  of a
Default  or an  Event  of  Default  (except,  the  failure  of  Owner to pay any
installment  of  principal  or interest  within one  Business Day after the same
shall become due, which failure shall constitute  knowledge of a Default) unless
notified in writing by the Owner or one or more Note Holders.

            SECTION  6.02.   ACTION  UPON   INSTRUCTIONS;   CERTAIN  RIGHTS  AND
LIMITATIONS

            Subject  to the  terms  of  Sections  5.02(a),  5.06,  6.01 and 6.03
hereof,  upon the  written  instructions  at any time and from time to time of a
Majority in Interest of Note Holders,  the Mortgagee shall, subject to the terms
of this Section 6.02, take such of the following  actions as may be specified in
such  instructions:  (i) give such notice or direction  or exercise  such right,
remedy or power  hereunder as shall be specified in such  instructions  and (ii)
give such notice or direction or exercise such right,  remedy or power hereunder
with  respect  to any  part of the  Collateral  as shall  be  specified  in such
instructions;  it being  understood  that without the written  instructions of a
Majority  in  Interest  of Note  Holders,  the  Mortgagee  shall not,  except as
provided  in  Section  6.01,  approve  any such  matter as  satisfactory  to the
Mortgagee.

            The Mortgagee will execute and the Owner will file such continuation
statements  with  respect  to  financing  statements  relating  to the  security
interest  created  hereunder in the  Collateral as may be specified from time to
time in written  instructions  of a Majority in Interest of Note Holders  (which
instructions shall be accompanied by the form of such continuation  statement so
to be filed).  The  Mortgagee  will furnish to each Note Holder,  promptly  upon
receipt  thereof,  duplicates  or  copies  of all  reports,  notices,  requests,
demands,   certificates  and  other  instruments   furnished  to  the  Mortgagee
hereunder.

<PAGE>

            SECTION 6.03.  INDEMNIFICATION

            The  Mortgagee  shall not be  required to take any action or refrain
from  taking  any action  under  Section  6.01  (other  than the first  sentence
thereof),  6.02 or  Article  V hereof  unless  the  Mortgagee  shall  have  been
indemnified  to its  reasonable  satisfaction  against  any  liability,  cost or
expense (including  counsel fees) which may be incurred in connection  therewith
pursuant to a written  agreement  with one or more Note  Holders.  The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity  (except  expenses for  foreclosure  of the type referred to in clause
"First" of Section 3.03 hereof)  owed to it pursuant to this Section  6.03.  The
Mortgagee  shall not be under any obligation to take any action under this Trust
Indenture or any other  Operative  Agreement and nothing herein or therein shall
require the  Mortgagee  to expend or risk its own funds or  otherwise  incur the
risk of any  financial  liability  in the  performance  of any of its  rights or
powers if it shall have reasonable  grounds for believing that repayment of such
funds or adequate  indemnity  against such risk or  liability is not  reasonably
assured to it (the written  indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof,  in favor of, delivered to and in form reasonably
satisfactory  to the  Mortgagee  shall be accepted as  reasonable  assurance  of
adequate  indemnity).  The  Mortgagee  shall not be  required to take any action
under Section 6.01 (other than the first sentence  thereof) or 6.02 or Article V
hereof,  nor shall any other  provision  of this  Trust  Indenture  or any other
Operative  Agreement  be deemed to  impose a duty on the  Mortgagee  to take any
action,  if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to Law.

            SECTION 6.04.  NO DUTIES  EXCEPT AS SPECIFIED IN TRUST  INDENTURE OR
INSTRUCTIONS

            The Mortgagee shall not have any duty or obligation to use, operate,
store,  lease,  control,  manage,  sell,  dispose of or otherwise  deal with the
Aircraft or any other part of the  Collateral,  or to otherwise  take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Collateral,  except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written  instructions from Note Holders as
provided in this Trust Indenture;  and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee.  The Mortgagee agrees that
it will in its individual  capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 8.01
hereof),  promptly  take such action as may be necessary  duly to discharge  all
liens and  encumbrances  on any part of the Collateral  which result from claims
against it in its individual  capacity not related to the  administration of the
Collateral  or any other  transaction  pursuant to this Trust  Indenture  or any
document included in the Collateral.

            SECTION 6.05. NO ACTION EXCEPT UNDER TRUST INDENTURE OR INSTRUCTIONS

            The Mortgagee will not use, operate, store, lease, control,  manage,
sell,  dispose of or  otherwise  deal with the Aircraft or any other part of the
Collateral  except in  accordance  with the powers  granted to, or the authority
conferred upon the Mortgagee  pursuant to this Trust Indenture and in accordance
with the express terms hereof.

<PAGE>

            SECTION 6.06.  INVESTMENT OF AMOUNTS HELD BY MORTGAGEE

            Any  amounts  held by the  Mortgagee  pursuant to the proviso to the
first  sentence of Section  3.01,  pursuant to Section  3.02, or pursuant to any
provision of any other Operative  Agreement  providing for amounts to be held by
the  Mortgagee  which are not  distributed  pursuant to the other  provisions of
Article III hereof shall be invested by the Mortgagee  from time to time in Cash
Equivalents  as directed by the Owner so long as the  Mortgagee  may acquire the
same using its best efforts. All Cash Equivalents held by the Mortgagee pursuant
to this Section 6.06 shall either be (a)  registered in the name of,  payable to
the  order  of, or  specially  endorsed  to,  the  Mortgagee,  or (b) held in an
Eligible Account.  Unless otherwise  expressly provided in this Trust Indenture,
any income realized as a result of any such  investment,  net of the Mortgagee's
reasonable  fees and  expenses  in  making  such  investment,  shall be held and
applied by the  Mortgagee  in the same  manner as the  principal  amount of such
investment is to be applied and any losses,  net of earnings and such reasonable
fees and expenses,  shall be charged against the principal amount invested.  The
Mortgagee  shall  not be  liable  for any loss  resulting  from  any  investment
required to be made by it under this Trust Indenture other than by reason of its
willful  misconduct or gross  negligence,  and any such  investment  may be sold
(without regard to its maturity) by the Mortgagee without instructions  whenever
such sale is necessary to make a distribution required by this Trust Indenture.

                                   ARTICLE VII

                                  THE MORTGAGEE

            SECTION 7.01.  ACCEPTANCE OF TRUSTS AND DUTIES

            The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform  the same but only upon the terms of this Trust  Indenture
and  agrees  to  receive  and  disburse  all  monies  constituting  part  of the
Collateral in accordance with the terms hereof. The Mortgagee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own  willful  misconduct  or gross  negligence  (other  than for the
handling of funds,  for which the  standard of  accountability  shall be willful
misconduct or  negligence),  (ii) as provided in the fourth  sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof,  and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or expressly made hereunder.

            SECTION 7.02.  ABSENCE OF DUTIES

            Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as provided in, and without limiting the
generality of,  Sections 6.03,  6.04 and 7.07 hereof the Mortgagee shall have no
duty (i) to see to any  registration  of the Aircraft or any recording or filing
of this Trust Indenture or any other  document,  or to see to the maintenance of
any such registration,  recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Owner shall
be in default with respect thereto,  (iii) to see to the payment or discharge of

<PAGE>

any lien or encumbrance of any kind against any part of the Collateral,  (iv) to
confirm,  verify or inquire into the failure to receive any financial statements
from Owner,  or (v) to inspect the  Aircraft at any time or ascertain or inquire
as to the  performance or observance of any of Owner's  covenants  herein or any
Permitted  Lessee's covenants under any assigned Permitted Lease with respect to
the Aircraft.

            SECTION  7.03.  NO  REPRESENTATIONS  OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS

            THE MORTGAGEE IN ITS  INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND
SHALL  NOT  BE  DEEMED  TO  HAVE  MADE  AND  HEREBY   EXPRESSLY   DISCLAIMS  ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,  AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS,  CONDITION,  DESIGN, QUALITY, DURABILITY,
OPERATION,  MERCHANTABILITY  OR FITNESS FOR USE FOR A PARTICULAR  PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER  REPRESENTATION  OR  WARRANTY  WHATSOEVER.  The  Mortgagee,  in its
individual  or trust  capacities,  does not make or shall  not be deemed to have
made  any   representation   or  warranty  as  to  the  validity,   legality  or
enforceability  of  this  Trust  Indenture,  the  Participation  Agreement,  the
Equipment  Notes,  or the Purchase  Agreement,  or as to the  correctness of any
statement  contained  in  any  thereof,   except  for  the  representations  and
warranties of the Owner made in its individual  capacity and the representations
and  warranties  of the  Mortgagee  in its  individual  capacity,  in each  case
expressly made in this Trust Indenture or in the  Participation  Agreement.  The
Note Holders make no representation or warranty hereunder whatsoever.

            SECTION 7.04.  NO SEGREGATION OF MONIES; NO INTEREST

            Any monies  paid to or  retained  by the  Mortgagee  pursuant to any
provision hereof and not then required to be distributed to the Note Holders, or
the Owner as provided in Article III hereof need not be segregated in any manner
except  to the  extent  required  by Law or  Section  6.06  hereof,  and  may be
deposited  under such general  conditions  as may be  prescribed by Law, and the
Mortgagee  shall  not be  liable  for any  interest  thereon  (except  that  the
Mortgagee  shall invest all monies held as directed by Owner so long as no Event
of Default has occurred and is continuing (or in the absence of such  direction,
by the  Majority  In Interest of Note  Holders) in Cash  Equivalents;  PROVIDED,
HOWEVER,  that any payments  received,  or applied  hereunder,  by the Mortgagee
shall be  accounted  for by the  Mortgagee  so that any portion  thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.

            SECTION 7.05.  RELIANCE; AGREEMENTS; ADVICE OF COUNSEL

            The Mortgagee shall not incur any liability to anyone in acting upon
any  signature,   instrument,  notice,  resolution,   request,  consent,  order,
certificate,  report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper  party or parties.  The

<PAGE>

Mortgagee  may  accept a copy of a  resolution  of the  Board of  Directors  (or
Executive  Committee  thereof) of the Owner,  certified  by the  Secretary or an
Assistant  Secretary  thereof as duly  adopted and in full force and effect,  as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and  effect.  As to the  aggregate  unpaid  Original  Amount of
Equipment  Notes  outstanding  as of any date,  the  Owner may for all  purposes
hereof rely on a certificate  signed by any Vice  President or other  authorized
corporate  trust officer of the Mortgagee.  As to any fact or matter relating to
the Owner the manner of the ascertainment of which is not specifically described
herein, the Mortgagee may for all purposes hereof rely on a certificate,  signed
by a duly authorized  officer of the Owner, as to such fact or matter,  and such
certificate  shall  constitute  full  protection to the Mortgagee for any action
taken or  omitted to be taken by it in good faith in  reliance  thereon.  In the
administration  of the trusts  hereunder,  the  Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder  directly or
through  agents or attorneys and may, at the expense of the  Collateral,  advise
with counsel,  accountants and other skilled persons to be selected and retained
by it, and the  Mortgagee  shall not be liable for  anything  done,  suffered or
omitted in good faith by it in  accordance  with the  written  advice or written
opinion of any such counsel, accountants or other skilled persons.

            SECTION 7.06.  COMPENSATION

            The  Mortgagee   shall  be  entitled  to  reasonable   compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default  hereunder,  have a priority claim on the Collateral for the
payment of such compensation,  to the extent that such compensation shall not be
paid by Owner,  and  shall  have the  right,  on and  subsequent  to an Event of
Default  hereunder,  to use or apply  any  monies  held by it  hereunder  in the
Collateral  toward such  payments.  The  Mortgagee  agrees that it shall have no
right against the Note Holders for any fee as  compensation  for its services as
trustee under this Trust Indenture.

            SECTION 7.07.  INSTRUCTIONS FROM NOTE HOLDERS

            In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek  instructions  from a Majority  in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions.  The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 7.07.

                                  ARTICLE VIII

                                 INDEMNIFICATION

            SECTION 8.01.  SCOPE OF INDEMNIFICATION

            The Mortgagee shall be indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.

<PAGE>

                                   ARTICLE IX

                         SUCCESSOR AND SEPARATE TRUSTEES

            SECTION 9.01.  RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR

                  (a) The Mortgagee or any  successor  thereto may resign at any
time without cause by giving at least 30 days' prior written notice to the Owner
and each Note Holder,  such  resignation  to be effective upon the acceptance of
the trusteeship by a successor Mortgagee. In addition, a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner,  which consent
shall  not be  unreasonably  withheld,  except  that such  consent  shall not be
necessary if an Event of Default is  continuing)  remove the  Mortgagee  without
cause by an instrument in writing delivered to the Owner and the Mortgagee,  and
the Mortgagee  shall promptly  notify each Note Holder thereof in writing,  such
removal to be effective  upon the  acceptance of the  trusteeship by a successor
Mortgagee.  In the  case of the  resignation  or  removal  of the  Mortgagee,  a
Majority  in Interest of Note  Holders may appoint a successor  Mortgagee  by an
instrument  signed  by such  holders,  which  successor,  so long as no Event of
Default  shall  have  occurred  and be  continuing,  shall be subject to Owner's
reasonable  approval.  If a successor  Mortgagee  shall not have been  appointed
within 30 days after such notice of resignation or removal,  the Mortgagee,  the
Owner or any Note  Holder may apply to any court of  competent  jurisdiction  to
appoint a  successor  Mortgagee  to act until such time,  if any, as a successor
shall  have  been  appointed  as above  provided.  The  successor  Mortgagee  so
appointed by such court shall  immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.

                  (b) Any successor Mortgagee,  however appointed, shall execute
and deliver to the Owner and the predecessor  Mortgagee an instrument  accepting
such appointment and assuming the obligations of the Mortgagee  arising from and
after the time of such  appointment,  and thereupon  such  successor  Mortgagee,
without  further  act,  shall become  vested with all the  estates,  properties,
rights,  powers and duties of the predecessor  Mortgagee  hereunder in the trust
hereunder applicable to it with like effect as if originally named the Mortgagee
herein;  but nevertheless upon the written request of such successor  Mortgagee,
such predecessor Mortgagee shall execute and deliver an instrument  transferring
to such successor Mortgagee,  upon the trusts herein expressed applicable to it,
all the estates,  properties,  rights and powers of such predecessor  Mortgagee,
and such predecessor Mortgagee shall duly assign, transfer, deliver and pay over
to such  successor  Mortgagee  all  monies or other  property  then held by such
predecessor Mortgagee hereunder.

                  (c) Any successor  Mortgagee,  however  appointed,  shall be a
bank or trust company  having its principal  place of business in the Borough of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington,  Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative  Agreements are guaranteed by an affiliated entity having) a
combined  capital  and  surplus  of at least  $100,000,000,  if there be such an
institution  willing,  able and legally  qualified  to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.

<PAGE>

                  (d) Any corporation  into which the Mortgagee may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Mortgagee shall be a
party,  or any  corporation  to  which  substantially  all the  corporate  trust
business of the Mortgagee  may be  transferred,  shall,  subject to the terms of
paragraph (c) of this Section  9.01, be a successor  Mortgagee and the Mortgagee
under this Trust Indenture without further act.

            SECTION 9.02.  APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES

                  (a)  Whenever  (i) the  Mortgagee  shall deem it  necessary or
desirable in order to conform to any Law of any jurisdiction in which all or any
part of the Collateral  shall be situated or to make any claim or bring any suit
with respect to or in connection with the Collateral,  this Trust Indenture, any
other  Indenture  Agreement,  the  Equipment  Notes  or any of the  transactions
contemplated by the Participation Agreement, (ii) the Mortgagee shall be advised
by  counsel  satisfactory  to it  that  it is so  necessary  or  prudent  in the
interests of the Note Holders (and the Mortgagee shall so advise the Owner),  or
(iii) the Mortgagee shall have been requested to do so by a Majority in Interest
of Note  Holders,  then in any such case,  the  Mortgagee  and, upon the written
request of the  Mortgagee,  the Owner,  shall  execute and deliver an  indenture
supplemental  hereto  and such  other  instruments  as may from  time to time be
necessary  or  advisable  either  (1) to  constitute  one or more  bank or trust
companies  or one or more  persons  approved  by the  Mortgagee,  either  to act
jointly with the Mortgagee as additional  trustee or trustees of all or any part
of the Collateral,  or to act as separate trustee or trustees of all or any part
of the Collateral, in each case with such rights, powers, duties and obligations
consistent  with this Trust  Indenture  as may be provided in such  supplemental
indenture  or other  instruments  as the  Mortgagee or a Majority in Interest of
Note  Holders may deem  necessary  or  advisable,  or (2) to clarify,  add to or
subtract from the rights, powers, duties and obligations theretofore granted any
such  additional  or  separate  trustee,  subject in each case to the  remaining
provisions  of this Section  9.02.  If the Owner shall not have taken any action
requested of it under this Section  9.02(a) that is permitted or required by its
terms within 15 days after the receipt of a written  request from the  Mortgagee
so to do, or if an Event of Default shall have occurred and be  continuing,  the
Mortgagee may act under the foregoing provisions of this Section 9.02(a) without
the concurrence of the Owner, and the Owner hereby  irrevocably  appoints (which
appointment  is  coupled  with  an  interest)  the  Mortgagee,   its  agent  and
attorney-in-fact  to act for it under the  foregoing  provisions of this Section
9.02(a) in either of such  contingencies.  The Mortgagee  may, in such capacity,
execute,  deliver  and  perform  any such  supplemental  indenture,  or any such
instrument,  as may be required for the  appointment  of any such  additional or
separate  trustee or for the  clarification  of, addition to or subtraction from
the  rights,  powers,  duties or  obligations  theretofore  granted  to any such
additional  or separate  trustee.  In case any  additional  or separate  trustee
appointed  under this Section  9.02(a)  shall die,  become  incapable of acting,
resign or be moved, all the assets, property, rights, powers, trusts, duties and
obligations of such additional or separate trustee shall revert to the Mortgagee
until a successor  additional  or separate  trustee is  appointed as provided in
this Section 9.02(a).

                  (b) No  additional  or separate  trustee  shall be entitled to
exercise any of the rights,  powers,  duties and obligations  conferred upon the
Mortgagee  in respect of the custody,  investment  and payment of monies and all

<PAGE>

monies received by any such additional or separate  trustee from or constituting
part of the Collateral or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee.  All other rights,
powers,  duties and  obligations  conferred  or imposed upon any  additional  or
separate  trustee  shall be exercised or  performed  by the  Mortgagee  and such
additional or separate  trustee jointly except to the extent that applicable Law
of any  jurisdiction in which any particular act is to be performed  renders the
Mortgagee  incompetent  or  unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part  of the  Collateral  in any  such  jurisdiction)  shall  be  exercised  and
performed by such  additional  or separate  trustee.  No  additional or separate
trustee shall take any  discretionary  action except on the  instructions of the
Mortgagee or a Majority in Interest of Note Holders.  No trustee hereunder shall
be  personally  liable  by reason of any act or  omission  of any other  trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting,  and the Mortgagee's own actions in acting
with, any additional or separate  trustee.  Each additional or separate  trustee
appointed  pursuant to this Section 9.02 shall be subject to, and shall have the
benefit of Articles V through IX and Article XI hereof  insofar as they apply to
the  Mortgagee.  The powers of any  additional  or  separate  trustee  appointed
pursuant  to this  Section  9.02  shall  not in any  case  exceed  those  of the
Mortgagee hereunder.

                  (c) If at any  time  the  Mortgagee  shall  deem it no  longer
necessary  or in order to  conform  to any such Law or take any such  action  or
shall be advised by such  counsel that it is no longer so necessary or desirable
in the interest of the Note Holders,  or in the event that the  Mortgagee  shall
have been  requested  to do so in  writing  by a Majority  in  Interest  of Note
Holders,  the Mortgagee  and,  upon the written  request of the  Mortgagee,  the
Owner, shall execute and deliver an indenture  supplemental hereto and all other
instruments  and  agreements  necessary  or proper to remove any  additional  or
separate  trustee.  The  Mortgagee  may act on behalf of the  Owner  under  this
Section  9.02(c)  when and to the extent it could so act under  Section  9.02(a)
hereof.

                                    ARTICLE X

              SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
                               AND OTHER DOCUMENTS

            SECTION 10.01.  INSTRUCTIONS OF MAJORITY; LIMITATIONS

                  (a) The  Mortgagee  agrees with the Note Holders that it shall
not enter into any amendment,  waiver or modification of,  supplement or consent
to this  Trust  Indenture,  or any other  Operative  Agreement  to which it is a
party,  unless such supplement,  amendment,  waiver,  modification or consent is
consented to in writing by a Majority in Interest of Note Holders,  but upon the
written  request of a Majority in Interest of Note Holders,  the Mortgagee shall
from time to time enter into any such  supplement or  amendment,  or execute and
deliver any such waiver,  modification  or consent,  as may be specified in such
request  and as may be (in  the  case  of  any  such  amendment,  supplement  or
modification),  to the extent such agreement is required, agreed to by the Owner
and,  as  may  be   appropriate,   the  Airframe   Manufacturer  or  the  Engine
Manufacturer;  PROVIDED, HOWEVER, that, without the consent of each holder of an

<PAGE>

affected Equipment Note then outstanding and of the Liquidity Providers, no such
amendment,  waiver  or  modification  of the terms of,  or  consent  under,  any
thereof,  shall (i) modify any of the  provisions of this Section  10.01,  or of
Article  II or III or  Section  5.01,  5.02(c),  5.02(d),  or 6.02  hereof,  the
definitions  of "Event of  Default,"  "Default,"  "Majority  in Interest of Note
Holders,"  "Make-Whole  Amount"  or "Note  Holder,"  or the  percentage  of Note
Holders  required  to take or approve  any  action  hereunder,  (ii)  reduce the
amount, or change the time of payment or method of calculation of any amount, of
Original  Amount,  Make-Whole  Amount,  if any, or interest  with respect to any
Equipment  Note,  (iii) reduce,  modify or amend any indemnities in favor of the
Mortgagee or the Note  Holders  (except  that the  Mortgagee  may consent to any
waiver or  reduction  of an  indemnity  payable to it),  or the other  Indenture
Indemnitees  or (iv)  permit  the  creation  of any Lien on the Trust  Indenture
Estate or any part thereof other than Permitted Liens or deprive any Note Holder
of the benefit of the Lien of this Trust Indenture on the Collateral,  except as
provided in  connection  with the exercise of remedies  under  Article V hereof.
Notwithstanding  the  foregoing,  without the consent of the affected  Liquidity
Providers,  neither the Owner nor the Mortgagee  shall enter into any amendment,
waiver or modification of,  supplement or consent to this Trust Indenture or the
other Operative  Agreements which shall reduce,  modify or amend any indemnities
in favor of such Liquidity Providers.

                  (b) The Owner  and the  Mortgagee  may enter  into one or more
agreements supplemental hereto without the consent of any Note Holder for any of
the following purposes: (i) (a) to cure any defect or inconsistency herein or in
the Equipment Notes, or to make any change not inconsistent  with the provisions
hereof (PROVIDED that such change does not adversely affect the interests of any
Note Holder in its capacity  solely as Note Holder) or (b) to cure any ambiguity
or correct any mistake;  (ii) to evidence the succession of another party as the
Owner in accordance with the terms hereof or to evidence the succession of a new
trustee hereunder  pursuant hereto,  the removal of the trustee hereunder or the
appointment  of any  co-trustee  or  co-trustees  or any separate or  additional
trustee or trustees; (iii) to convey,  transfer,  assign, mortgage or pledge any
property to or with the Mortgagee or to make any other  provisions  with respect
to matters or  questions  arising  hereunder  so long as such  action  shall not
adversely  affect the  interests of the Note  Holders in its capacity  solely as
Note Holder;  (iv) to correct or amplify the  description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this  Trust  Indenture,  the  Airframe  or  Engines  or any  Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner for the
benefit  of the Note  Holders,  or to  surrender  any  rights  or  power  herein
conferred upon the Owner;  (vi) to add to the rights of the Note Holders;  (vii)
to  provide  for the  issuance  of Series D  Equipment  Notes  and Pass  Through
Certificates  issued  by the  Class D Pass  Through  Trust  and to make  changes
relating  thereto,  provided  that the  Series D  Equipment  Notes are issued in
accordance  with the Note  Purchase  Agreement;  and  (viii) to  include  on the
Equipment Notes any legend as may be required by Law.

            SECTION 10.02.  MORTGAGEE PROTECTED

            If, in the opinion of the institution acting as Mortgagee hereunder,
any  document  required  to be  executed  by it pursuant to the terms of Section

<PAGE>

10.01 hereof affects any right, duty, immunity or indemnity with respect to such
institution  under this Trust Indenture,  such institution may in its discretion
decline to execute such document.

            SECTION 10.03.  DOCUMENTS MAILED TO NOTE HOLDERS

            Promptly  after the  execution by the Owner or the  Mortgagee of any
document  entered into  pursuant to Section 10.01  hereof,  the Mortgagee  shall
mail, by first class mail,  postage  prepaid,  a copy thereof to Owner (if not a
party  thereto)  and to each Note  Holder at its  address  last set forth in the
Equipment  Note  Register,  but the failure of the Mortgagee to mail such copies
shall not impair or affect the validity of such document.

            SECTION 10.04.  NO REQUEST NECESSARY FOR TRUST INDENTURE
SUPPLEMENT

            No  written  request  or consent  of the Note  Holders  pursuant  to
Section  10.01 hereof  shall be required to enable the  Mortgagee to execute and
deliver a Trust Indenture Supplement specifically required by the terms hereof.

                                   ARTICLE XI

                                  MISCELLANEOUS

            SECTION 11.01.  TERMINATION OF TRUST INDENTURE

            Upon (or at any time after)  payment in full of the Original  Amount
of,  Make-Whole  Amount, if any, and interest on and all other amounts due under
all  Equipment  Notes and  provided  that there  shall then be no other  Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner  shall  direct the  Mortgagee  to execute and deliver to or as directed in
writing by the Owner an  appropriate  instrument  releasing the Aircraft and the
Engines and all other  Collateral  from the Lien of the Trust  Indenture and the
Mortgagee  shall execute and deliver such  instrument  as  aforesaid;  PROVIDED,
HOWEVER,  that this Trust  Indenture and the trusts created hereby shall earlier
terminate and this Trust  Indenture  shall be of no further force or effect upon
any  sale  or  other  final   disposition  by  the  Mortgagee  of  all  property
constituting part of the Collateral and the final  distribution by the Mortgagee
of all monies or other property or proceeds  constituting part of the Collateral
in accordance  with the terms hereof.  Except as aforesaid  otherwise  provided,
this Trust  Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.

            SECTION 11.02.  NO LEGAL TITLE TO COLLATERAL IN NOTE HOLDERS

            No holder of an Equipment Note shall have legal title to any part of
the Collateral.  No transfer, by operation of law or otherwise, of any Equipment
Note or  other  right,  title  and  interest  of any Note  Holder  in and to the
Collateral  or  hereunder  shall  operate to terminate  this Trust  Indenture or
entitle  such  holder  or any  successor  or  transferee  of such  holder  to an
accounting  or to the  transfer  to it of any  legal  title  to any  part of the
Collateral.

<PAGE>

            SECTION 11.03.  SALE OF AIRCRAFT BY MORTGAGEE IS BINDING

            Any sale or other conveyance of the Collateral,  or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust  Indenture  shall bind the Note  Holders and shall be
effective to transfer or convey all right,  title and interest of the Mortgagee,
the  Owner  and such  holders  in and to such  Collateral  or part  thereof.  No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity,  expediency  or  regularity  of such sale or  conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.

            SECTION 11.04. TRUST INDENTURE FOR BENEFIT OF OWNER, MORTGAGEE, NOTE
HOLDERS AND THE OTHER INDENTURE INDEMNITEES

            Nothing in this Trust Indenture,  whether express or implied,  shall
be construed to give any person other than the Owner,  the  Mortgagee,  the Note
Holders  and the other  Indenture  Indemnitees,  any legal or  equitable  right,
remedy or claim  under or in respect of this Trust  Indenture,  except  that the
persons  referred to in the last  paragraph  of Section  4.02(b)  shall be third
party beneficiaries of such paragraph.

            SECTION 11.05.  NOTICES

            Unless  otherwise  expressly  specified  or  permitted  by the terms
hereof, all notices, requests, demands,  authorizations,  directions,  consents,
waivers or documents  provided or permitted by this Trust  Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid,  or by facsimile or confirmed telex, and (i) if
to the  Owner,  addressed  to it at 1600 Smith  Street,  Houston,  Texas  77002,
Attention:  Vice President-Corporate  Finance,  facsimile number (713) 324-2447,
(ii) if to Mortgagee, addressed to it at its office at Rodney Square North, 1100
North Market Street,  Wilmington,  Delaware  19890,  Attention:  Corporate Trust
Administration,  facsimile number (302) 651-8882, (iii) if to any Note Holder or
any Indenture Indemnitee,  addressed to such party at such address as such party
shall have  furnished  by notice to the Owner and the  Mortgagee,  or,  until an
address is so  furnished,  addressed  to the  address of such party (if any) set
forth on Schedule 1 to the  Participation  Agreement  or in the  Equipment  Note
Register. Whenever any notice in writing is required to be given by the Owner or
the Mortgagee or any Note Holder to any of the other of them,  such notice shall
be deemed given and such requirement  satisfied when such notice is received, or
if such notice is mailed by certified mail, postage prepaid, three Business Days
after being mailed, addressed as provided above. Any party hereto may change the
address to which  notices  to such  party will be sent by giving  notice of such
change to the other parties to this Trust Indenture.

            SECTION 11.06.  SEVERABILITY

            Any  provision  of this  Trust  Indenture  which  is  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining  provisions  hereof. Any such prohibition or  unenforceability  in any

<PAGE>

particular  jurisdiction  shall  not  invalidate  or render  unenforceable  such
provision in any other jurisdiction.

            SECTION 11.07.  NO ORAL MODIFICATION OR CONTINUING WAIVERS

            No term or provision of this Trust  Indenture or the Equipment Notes
may be  changed,  waived,  discharged  or  terminated  orally,  but  only  by an
instrument in writing signed by the Owner and the Mortgagee,  in compliance with
Section  10.01 hereof.  Any waiver of the terms hereof or of any Equipment  Note
shall be effective  only in the specific  instance and for the specific  purpose
given.

            SECTION 11.08.  SUCCESSORS AND ASSIGNS

            All covenants and agreements contained herein shall be binding upon,
and inure to the  benefit  of,  each of the  parties  hereto  and the  permitted
successors and assigns of each,  all as herein  provided.  Any request,  notice,
direction,  consent,  waiver or other  instrument  or action by any Note  Holder
shall bind the  successors  and assigns of such holder.  Each Note Holder by its
acceptance of an Equipment  Note agrees to be bound by this Trust  Indenture and
all provisions of the Operative Agreements applicable to a Note Holder.

            SECTION 11.09.  HEADINGS

            The headings of the various  Articles and sections herein and in the
table of contents  hereto are for  convenience  of reference  only and shall not
define or limit any of the terms or provisions hereof.

            SECTION 11.10.  NORMAL COMMERCIAL RELATIONS

            Anything   contained  in  this  Trust   Indenture  to  the  contrary
notwithstanding.  Owner and Mortgagee may conduct any banking or other financial
transactions,  and have banking or other commercial  relationships,  with Owner,
fully  to the  same  extent  as if this  Trust  Indenture  were  not in  effect,
including  without  limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever,  whether related to any of the transactions
contemplated hereby or otherwise.

            SECTION 11.11.  GOVERNING LAW; COUNTERPART FORM

            THIS TRUST  INDENTURE  SHALL IN ALL  RESPECTS  BE  GOVERNED  BY, AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE OF NEW YORK,
INCLUDING  ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE.  THIS TRUST
INDENTURE IS BEING  DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties  hereto in separate  counterparts  (or upon  separate
signature  pages bound  together into one or more  counterparts),  each of which
when so executed and delivered shall be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

<PAGE>

            SECTION 11.12.  VOTING BY NOTE HOLDERS

            All  votes of the Note  Holders  shall  be  governed  by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.

            SECTION 11.13.  BANKRUPTCY

            It is the  intention  of the  parties  that the  Mortgagee  shall be
entitled  to the  benefits  of  Section  1110 with  respect to the right to take
possession of the Aircraft,  Airframe,  Engines and Parts as provided  herein in
the event of a case under Chapter 11 of the Bankruptcy  Code in which Owner is a
debtor,  and in any instance where more than one construction is possible of the
terms and conditions  hereof or any other pertinent  Operative  Agreement,  each
such party agrees that a  construction  which would preserve such benefits shall
control over any construction which would not preserve such benefits.

            IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this Trust
Indenture and Mortgage to be duly executed by their respective  officers thereof
duly authorized as of the day and year first above written.

                                         CONTINENTAL AIRLINES, INC.

                                         By:___________________________________
                                            Name:
                                            Title:

                                         WILMINGTON TRUST COMPANY,
                                            as Mortgagee

                                         By:___________________________________
                                            Name:
                                            Title:

<PAGE>

                                     ANNEX A

                                   DEFINITIONS

                               GENERAL PROVISIONS

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

                  (e) For purposes of each Operative  Agreement,  the occurrence
and  continuance  of a  Default  or  Event of  Default  referred  to in  Section
5.01(v),(vi)  or (vii) shall not be deemed to prohibit the Owner from taking any
action or  exercising  any right  that is  conditioned  on no  Special  Default,
Default or Event of Default  having  occurred and be  continuing if such Special
Default,   Default  or  Event  of  Default   consists  of  the   institution  of
reorganization  proceedings  with  respect  to  Owner  under  Chapter  11 of the
Bankruptcy  Code and the  trustee or  debtor-in-possession  in such  proceedings
shall have agreed to perform its obligations  under the Trust Indenture with the
approval of the applicable  court and thereafter shall have continued to perform
such obligations in accordance with Section 1110.

                                  DEFINED TERMS

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

            "ACTUAL  KNOWLEDGE"  means (a) as it  applies to  Mortgagee,  actual
knowledge of a responsible  officer in the Corporate Trust Office, and (b) as it
applies to Owner, actual knowledge of a Vice President or more senior officer of
Owner or any other officer of Owner having  responsibility  for the transactions
contemplated  by the  Operative  Agreements;  PROVIDED  that  each of Owner  and
Mortgagee  shall be deemed to have "Actual  Knowledge" of any matter as to which
it has received  notice from Owner,  any Note Holder or  Mortgagee,  such notice
having been given pursuant to Section 11.05 of the Trust Indenture.

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

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

            "AIRCRAFT  BILL  OF  SALE"  means  the  full  warranty  bill of sale
covering the Aircraft delivered by Airframe Manufacturer to Owner on the Closing
Date.

<PAGE>

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

            "AIRFRAME" means (a) the aircraft (excluding Engines or engines from
time to time  installed  thereon)  manufactured  by  Airframe  Manufacturer  and
identified by Airframe  Manufacturer's model number,  United States registration
number and Airframe  Manufacturer's serial number set forth in the initial Trust
Indenture  Supplement  and any  Replacement  Airframe  and (b) any and all Parts
incorporated  or installed in or attached or appurtenant  to such airframe,  and
any and all Parts  removed  from  such  airframe,  unless  the Lien of the Trust
Indenture  shall not be applicable to such Parts in accordance with Section 4.04
of the Trust Indenture. Upon substitution of a Replacement Airframe under and in
accordance  with the Trust  Indenture,  such  Replacement  Airframe shall become
subject to the Trust  Indenture and shall be the  "Airframe" for all purposes of
the Trust  Indenture  and the  other  Operative  Agreements  and  thereupon  the
Airframe  for which the  substitution  is made shall no longer be subject to the
Trust Indenture, and such replaced Airframe shall cease to be the "Airframe."

            "AIRFRAME   MANUFACTURER"  means  The  Boeing  Company,  a  Delaware
corporation.

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

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

            "APPLICABLE  PASS THROUGH  TRUST"  means each of the  separate  pass
through trusts created under the Applicable Pass Through Trust Agreements.

            "APPLICABLE PASS THROUGH TRUST AGREEMENT" means each of the separate
Pass Through Trust  Agreements by and between the Lessee and an Applicable  Pass
Through Trustee.

            "APPLICABLE  PASS THROUGH  TRUSTEE" means each Pass Through  Trustee
that is a party to the Participation Agreement.

            "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

<PAGE>

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

            "AVIATION  AUTHORITY" means the FAA or, if the Aircraft is permitted
to be,  and is,  registered  with  any  other  Government  Entity  under  and in
accordance with Section 4.02 (e) of the Trust Indenture and Section 6.4.5 of the
Participation Agreement, such other Government Entity.

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

            "BASIC PASS THROUGH  TRUST  AGREEMENT"  means the Pass Through Trust
Agreement, dated September 25, 1997, between Owner and Pass Through Trustee, but
does not include any Trust Supplement.

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

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

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

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

            "CITIZEN  OF  THE  UNITED  STATES"  is  defined  in  49  U.S.C.  ss.
40102(a)(15).

            "CLASS D  ISSUANCE  DATE"  means  the date of  issuance  of the Pass
Through Certificates by the Class D Pass Through Trust.

<PAGE>

            "CLASS D PASS THROUGH  TRUST" means the  Continental  Airlines  Pass
Through Trust 2000-1D.

            "CLOSING" means the closing of the transactions  contemplated by the
Participation Agreement.

            "CLOSING DATE" means the date on which the Closing occurs.

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

            "COLLATERAL"  is  defined  in  the  Granting  Clause  of  the  Trust
Indenture.

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

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

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

            "DEBT RATE"  means,  with  respect to (i) any  Series,  the rate per
annum specified for such Series under the heading  "Interest Rate" in Schedule I
to the Trust  Indenture  and (ii) for any other  purpose,  with  respect  to any
period, the weighted average interest rate per annum during such period borne by
the outstanding  Equipment Notes,  excluding any interest payable at the Payment
Due Rate.

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

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

            "DEPOSITARY"  means Credit Suisse First Boston,  New York branch, as
Depositary under each Deposit Agreement.

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

<PAGE>

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

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

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

            "ENGINE"  means  (a)  each of the  engines  manufactured  by  Engine
Manufacturer  and  identified by Engine  Manufacturer's  model number and Engine
Manufacturer's serial number set forth in the initial Trust Indenture Supplement
and  originally  installed  on  the  Airframe  on  the  Closing  Date,  and  any
Replacement  Engine,  in any case whether or not from time to time  installed on
such  Airframe or installed on any other  airframe or aircraft,  and (b) any and
all Parts  incorporated  or  installed  in or  attached or  appurtenant  to such
engine,  and any and all Parts removed from such engine,  unless the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust  Indenture.  Upon  substitution  of a Replacement  Engine under and in
accordance  with the Trust  Indenture,  such  Replacement  Engine  shall  become
subject to the Trust  Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative  Agreements and thereupon the Engine for
which  the  substitution  is made  shall  no  longer  be  subject  to the  Trust
Indenture, and such replaced Engine shall cease to be an "Engine."

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

            "ENGINE   MANUFACTURER"  means   [_________________]  a  corporation
organized under the laws of [__________].

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

            "EQUIPMENT  NOTES"  means and includes  any  equipment  notes issued
under the Trust Indenture in the form specified in Section 2.01 thereof (as such

<PAGE>

form may be  varied  pursuant  to the  terms  of the  Trust  Indenture)  and any
Equipment  Note issued under the Trust  Indenture in exchange for or replacement
of any Equipment Note.

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

            "ESCROW AGENT" means First Security Bank, National  Association,  as
Escrow Agent under each of the Escrow Agreements.

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

            "EVENT  OF  DEFAULT"  is  defined  in  Section  5.01  of  the  Trust
Indenture.

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

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

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

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

                  (d)  any  seizure,  condemnation,   confiscation,   taking  or
requisition  (including loss of title) of such property by any Government Entity
or purported  Government  Entity (other than a requisition of use by a Permitted
Government Entity) for a period exceeding 180 consecutive days;

                  (e) as a result of any law, rule,  regulation,  order or other
action by the Aviation  Authority or by any Government  Entity of the government
of  registry  of the  Aircraft  or by any  Government  Entity  otherwise  having
jurisdiction over the operation or use of the Aircraft, the use of such property
in the normal  course of Owner's  business of passenger  air  transportation  is
prohibited  for a period of 180  consecutive  days  unless  Owner,  prior to the
expiration of such 180-day period, shall have undertaken and shall be diligently
carrying  forward  such steps as may be  necessary  or  desirable  to permit the
normal use of such  property  by Owner,  but in any event if such use shall have
been prohibited for a period of two consecutive years, provided that no Event of

<PAGE>

Loss shall be deemed to have occurred if such prohibition has been applicable to
Owner's entire U.S. fleet of such property and Owner, prior to the expiration of
such two-year period, shall have conformed at least one unit of such property in
its fleet to the requirements of any such law, rule, regulation,  order or other
action and commenced regular commercial use of the same in such jurisdiction and
shall be diligently  carrying  forward,  in a manner which does not discriminate
against such property in so conforming such property,  steps which are necessary
or desirable to permit the normal use of the Aircraft by Owner, but in any event
if such use shall have been prohibited for a period of three years.

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

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

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

            "FAA FILED DOCUMENTS"  means the Trust Indenture,  the initial Trust
Indenture  Supplement,  the FAA Bill of Sale and an application for registration
of the Aircraft with the FAA in the name of Owner.

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

            "FINANCING  STATEMENTS"  means,  collectively,   UCC-1  (and,  where
appropriate,  UCC-3) financing statements covering the Collateral,  by Owner, as
debtor,  showing  Mortgagee as secured party, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Collateral.

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

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

<PAGE>

relating to the  observance  or  performance  of the  obligations  of any of the
parties to the Operative Agreements.

            "INDEMNITEE"  means (i) WTC and  Mortgagee,  (ii) each  separate  or
additional  trustee  appointed  pursuant  to  the  Trust  Indenture,  (iii)  the
Subordination  Agent, the Paying Agent and the Escrow Agent,  (iv) the Liquidity
Providers,  (v) the Pass Through  Trustees,  (vi) each  Affiliate of the persons
described in clauses (i) and (ii), (vii) each Affiliate of the persons described
in clauses  (iii),  (iv) and (v),  (viii) the  respective  directors,  officers,
employees,  agents and servants of each of the persons described in clauses (i),
(ii) and (vi), (ix) the respective directors,  officers,  employees,  agents and
servants of each of the persons described in clauses (iii), (iv), (v) and (vii),
(x) the  successors  and permitted  assigns of the persons  described in clauses
(i),  (ii) and (viii),  and (xi) the  successors  and  permitted  assigns of the
persons  described  in clauses  (iii),  (iv),  (v) and (ix);  provided  that the
persons  described  in  clauses  (iii),  (iv),  (v),  (vii),  (ix)  and (xi) are
Indemnitees only for purposes of Section 8.1 of the Participation  Agreement. If
any  Indemnitee  is  Airframe   Manufacturer  or  Engine   Manufacturer  or  any
subcontractor or supplier of either thereof,  such Person shall be an Indemnitee
only in its capacity as Note Holder.

            "INDENTURE AGREEMENTS" means the Purchase Agreement and the Bills of
Sale, to the extent included in Granting Clause (2) of the Trust Indenture,  and
any other  contract,  agreement  or  instrument  from time to time  assigned  or
pledged under the Trust Indenture.

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

            "INDENTURE   EVENT  OF  DEFAULT"  means  any  one  or  more  of  the
conditions, circumstances, acts or events set forth in Section 5.01 of the Trust
Indenture.

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

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

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

            "ISSUANCE DATE" means March 15, 2000.

<PAGE>

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

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

            "LIQUIDITY  FACILITIES"  means the five Revolving Credit  Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust)  between the  Subordination  Agent,  as
borrower,  and the  Liquidity  Provider,  each  dated as of the  Issuance  Date,
PROVIDED  that,  for  purposes  of  any  obligation  of  Owner,   no  amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Liquidity Facility shall be effective unless consented to by Owner.

            "LIQUIDITY GUARANTEES" means the Guarantee Agreements, each dated as
of the Issuance Date,  providing for the guarantee by the Liquidity Guarantor of
certain  obligations  of Morgan  Stanley  Capital  Services Inc., as a Liquidity
Provider;  provided that, for purposes of any obligation of Owner, no amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Agreement shall be effective unless consented to by Owner.

            "LIQUIDITY  GUARANTOR"  means  Morgan  Stanley Dean Witter & Co., as
guarantor  of the  obligations  of Morgan  Stanley  Capital  Services  Inc. as a
Liquidity Provider.

            "LIQUIDITY PROVIDER" means each of (i) Credit Suisse First Boston, a
banking institution organized under the laws of Switzerland,  acting through its
New York  branch,  as "Class  A-1  Liquidity  Provider,"  "Class  A-2  Liquidity
Provider"  and "Class B  Liquidity  Provider"  and (ii) Morgan  Stanley  Capital
Services  Inc., a Delaware  corporation,  as "Class C-1 Liquidity  Provider" and
"Class C-2 Liquidity  Provider" (as such terms are defined in the  Intercreditor
Agreement).

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

            "MAKE-WHOLE  AMOUNT" means,  with respect to any Equipment  Note, an
amount (as determined by an independent  investment  bank of national  standing)
equal to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such  Equipment  Note computed
by  discounting  such  payments  on a  semiannual  basis  on each  Payment  Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield OVER (b) the outstanding principal amount of such Equipment

<PAGE>

Note  plus  accrued  interest  to the date of  determination.  For  purposes  of
determining  the  Make-Whole  Amount,  "Treasury  Yield"  means,  at the date of
determination  with respect to any Equipment  Note, the interest rate (expressed
as a decimal and, in the case of United States  Treasury  bills,  converted to a
bond  equivalent  yield)  determined  to be the  per  annum  rate  equal  to the
semi-annual yield to maturity for United States Treasury  securities maturing on
the  Average  Life  Date  of such  Equipment  Note  and  trading  in the  public
securities markets either as determined by interpolation between the most recent
weekly  average  yield to  maturity  for two  series of United  States  Treasury
securities,  trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than,  the Average Life Date of such  Equipment Note
and (B) the other  maturing as close as possible to, but later than, the Average
Life Date of such  Equipment  Note, in each case as published in the most recent
H.15(519) or, if a weekly  average yield to maturity for United States  Treasury
securities  maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519).  "H.15(519)" means the weekly statistical  release designated
as such,  or any successor  publication,  published by the Board of Governors of
the Federal Reserve System.  The date of  determination  of a Make-Whole  Amount
shall be the third  Business Day prior to the  applicable  payment or redemption
date and the "most recent H.15(519)" means the H.15(519)  published prior to the
close of business on the third Business Day prior to the  applicable  payment or
redemption date.

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

            "MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 3 to the
Participation Agreement.

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

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

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

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

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

            "NOTE PURCHASE AGREEMENT" means the Note Purchase  Agreement,  dated
as of the Issuance Date, among  Continental  Airlines,  Inc., the  Subordination
Agent,  the Escrow  Agent,  the Paying Agent and the Pass Through  Trustee under
each Pass  Through  Trust  Agreement  providing  for,  among other  things,  the
issuance and sale of certain equipment notes.

<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  Indenture,  the initial Trust Indenture  Supplement,  the
Bills of Sale, and the Equipment Notes.

            "OPERATIVE  INDENTURES"  means each of the  indentures  under  which
notes have been issued and  purchased by the Pass Through  Trustees  pursuant to
the Note Purchase Agreement.

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

            "OWNER PERSON" means Owner, any lessee, assignee, successor or other
user or person in  possession  of the  Aircraft,  Airframe  or an Engine with or
without color of right, or any Affiliate of any of the foregoing  (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical).

            "PARTICIPATION   AGREEMENT"   means  the   Participation   Agreement
[_______]  dated as of  [________________]  among  Owner,  the  Applicable  Pass
Through Trustees, the Subordination Agent and Mortgagee.

            "PARTS"  means  all  appliances,  parts,  components,   instruments,
appurtenances,  accessories,  furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines,  and (b) any Removable Part leased by
Owner from a third  party or subject to a security  interest  granted to a third
party),  that may from time to time be installed or  incorporated in or attached
or appurtenant to the Airframe or any Engine.

            "PASS THROUGH  AGREEMENTS"  means the Pass Through Trust Agreements,
the Note Purchase Agreement, the Deposit Agreements,  the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities,  the Liquidity Guarantees and
the Fee Letters referred to in Section 2.03 of each of the Liquidity Facilities,
provided that no amendment,  modification  or supplement to, or  substitution or
replacement  of, any such Fee Letter  shall be  effective  for  purposes  of any
obligation of Owner, unless consented to by Owner.

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

            "PASS  THROUGH  TRUST" means each of the five  separate pass through
trusts created under the Pass Through Trust Agreements.

<PAGE>

            "PASS THROUGH TRUST AGREEMENT" means each of the five separate Trust
Supplements,  together in each case with the Basic Pass Through Trust Agreement,
each dated as of the  Issuance  Date by and between the Owner and a Pass Through
Trustee, provided, that, for purposes of any obligation of Lessee, no amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Agreement shall be effective unless consented to by Lessee.

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

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

            "PAYING AGENT" means Wilmington Trust Company, as paying agent under
each of the Escrow Agreements.

            "PAYMENT  DATE"  means  each May 1 and  November  1,  commencing  on
[_________________].

            "PAYMENT DUE RATE" means,  with respect to (i) any payment made to a
Note Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable  to  such  Series  plus  2% and (b) the  maximum  rate  permitted  by
applicable law and (ii) any other payment made under any Operative  Agreement to
any other  Person,  [______]  per annum  (computed on the basis of a year of 360
days comprised of twelve 30-day months).

            "PERMITTED AIR CARRIER" means (i) any  manufacturer  of airframes or
aircraft  engines,  or any Affiliate of a manufacturer  of airframes or aircraft
engines,  (ii) any Permitted  Foreign Air Carrier,  (iii) any person approved in
writing by Lessor or (iv) any U.S. Air Carrier.

            "PERMITTED  COUNTRY"  means any country  listed on Schedule 4 to the
Participation Agreement.

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

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

            "PERMITTED  LIEN"  means  (a) the  rights  of  Mortgagee  under  the
Operative Agreements,  or of any Permitted Lessee under any Permitted Lease; (b)
Liens attributable to Mortgagee (both in its capacity as trustee under the Trust
Indenture  and in its  individual  capacity);  (c) the  rights of  others  under
agreements or  arrangements  to the extent  expressly  permitted by the terms of
Section 4.02(b) or 4.04 of the Trust Indenture; (d) Liens of Taxes of Owner (and

<PAGE>

its U.S.  federal  tax law  consolidated  group),  or Liens for Taxes of any Tax
Indemnitee (and its U.S. federal tax law consolidated  group) for which Owner is
obligated  to  indemnify  such  Tax  Indemnitee   under  any  of  the  Operative
Agreements, in any such case either not yet due or being contested in good faith
by  appropriate  proceedings  so long as such Liens and such  proceedings do not
involve any material risk of the sale,  forfeiture or loss of the Aircraft,  the
Airframe,  or any Engine or the interest of Mortgagee therein or impair the Lien
of the Trust Indenture;  (e) materialmen's,  mechanics',  workers',  repairers',
employees'  or other like Liens  arising in the ordinary  course of business for
amounts the payment of which is either not yet  delinquent for more than 60 days
or is being contested in good faith by appropriate proceedings,  so long as such
Liens  and such  proceedings  do not  involve  any  material  risk of the  sale,
forfeiture or loss of the Aircraft,  the Airframe, or any Engine or the interest
of  Mortgagee  therein  or  impair  the Lien of the Trust  Indenture;  (f) Liens
arising out of any judgment or award against Owner (or any Permitted Lessee), so
long as such judgment shall,  within 60 days after the entry thereof,  have been
discharged or vacated,  or execution thereof stayed pending appeal or shall have
been discharged, vacated or reversed within 60 days after the expiration of such
stay,  and so long as during  any such 60 day period  there is not,  or any such
judgment or award does not involve, any material risk of the sale, forfeiture or
loss of the Aircraft,  the Airframe,  or any Engine or the interest of Mortgagee
therein  or impair  the Lien of the  Trust  Indenture;  (g) any other  Lien with
respect to which Owner (or any  Permitted  Lessee)  shall have  provided a bond,
cash  collateral  or  other  security  adequate  in the  reasonable  opinion  of
Mortgagee.

            "PERMITTED  LEASE" means a lease  permitted under Section 4.02(b) of
the Trust Indenture.

            "PERMITTED LESSEE" means the lessee under a Permitted Lease.

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

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

            "PURCHASE  AGREEMENT" means the Purchase Agreement No. [____], dated
[________________],  between  Airframe  Manufacturer  and Owner  (including  all
exhibits thereto, together with all letter agreements entered into that by their
terms constitute part of such Purchase Agreement), to the extent included in the
Granting Clause (2) of the Trust Indenture.

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

            "REMOVABLE  PART"  is  defined  in  Section  4.04(d)  of  the  Trust
Indenture.

            "REPLACEMENT  AIRFRAME"  means  any  airframe  substituted  for  the
Airframe pursuant to Article IV of the Trust Indenture.

<PAGE>

            "REPLACEMENT  ENGINE"  means an  engine  substituted  for an  Engine
pursuant to Article IV of the Trust Indenture.

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

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

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

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

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

            "SENIOR   HOLDER"  is  defined  in  Section  2.13(c)  of  the  Trust
Indenture.

            "SERIES" means any of Series A-1,  Series A-2, Series B, Series C-1,
Series C-2 or Series D.

            "SERIES A-1" or "SERIES A-1 EQUIPMENT  NOTES" means  Equipment Notes
issued under the Trust Indenture and designated as "Series A-1"  thereunder,  in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series A-1."

            "SERIES A-2" or "SERIES A-2 EQUIPMENT  NOTES" means  Equipment Notes
issued under the Trust Indenture and designated as "Series A-2"  thereunder,  in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series A-2."

            "SERIES B" or  "SERIES B  EQUIPMENT  NOTES"  means  Equipment  Notes
issued under the Trust Indenture and designated as "Series B" thereunder, in the
Original  Amount and maturities and bearing  interest as specified in Schedule I
to the Trust Indenture under the heading "Series B."

            "SERIES C-1" or "SERIES C-1 EQUIPMENT  NOTES" means  Equipment Notes
issued under the Trust Indenture and designated as "Series C-1"  thereunder,  in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series C-1."

            "SERIES C-2" or "SERIES C-2 EQUIPMENT  NOTES" means  Equipment Notes
issued under the Trust Indenture and designated as "Series C-2"  thereunder,  in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series C-2."

<PAGE>

            "SERIES D" or  "SERIES D  EQUIPMENT  NOTES"  means  Equipment  Notes
issued under the Trust Indenture and designated as "Series D" thereunder, in the
Original  Amount and maturities and bearing  interest as specified in Schedule I
to the Trust  Indenture  under the  heading  "Series D (or,  if the Series D are
issued  after the  Closing  Date,  as  specified  in an  amendment  to the Trust
Indenture at the time of issuance of the Series D).

            "SIMILAR AIRCRAFT" means a Boeing Model [_______] aircraft.

            "SPECIAL  DEFAULT"  means (i) the failure by Owner to pay any amount
of  principal  of or  interest  on any  Equipment  Note  when  due or  (ii)  the
occurrence  of any Default or Event of Default  referred to in Section  5.01(v),
(vi) or (vii).

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

            "TAX INDEMNITEE"  means (a) WTC and Mortgagee,  (b) each separate or
additional  trustee  appointed  pursuant to the Trust  Indenture,  (c) each Note
Holder and (d) the respective  successors,  assigns,  agents and servants of the
foregoing.

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

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

            "TRANSACTION  EXPENSES"  means all costs and  expenses  incurred  by
Mortgagee in connection with (a) the preparation,  execution and delivery of the
Operative Agreements and the recording or filing of any documents,  certificates
or instruments in accordance with any Operative  Agreement,  including,  without
limitation,  the FAA  Filed  Documents  and the  Financing  Statements,  (b) the
initial fee of Mortgagee  under the Trust  Indenture and (c) the reasonable fees
and  disbursements of counsel for each Mortgagee and special counsel in Oklahoma
City, Oklahoma, in each case, in connection with the Closing.

            "TRANSACTIONS"   means   the   transactions   contemplated   by  the
Participation Agreement.

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

            "TRANSFEREE"  means a person to which any Note  Holder  purports  or
intends to Transfer any or all of its right,  title or interest in the Equipment
Note, as described in Section 9 of the Participation Agreement.

<PAGE>

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

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

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

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

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

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

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

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

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

            "WET  LEASE"  means any  arrangement  whereby  Owner or a  Permitted
Lessee agrees to furnish the  Aircraft,  Airframe or any Engine to a third party
pursuant to which the Aircraft,  Airframe or Engine shall at all times be in the
operational control of Owner or a Permitted Lessee, provided that Owner's

<PAGE>

obligations  under the Trust  Indenture  shall continue in full force and effect
notwithstanding any such arrangement.

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

<PAGE>

                                                   ------------------------
                                                  |  ANNEX  B - INSURANCE  |
                                                  |  TRUST INDENTURE ____  |
                                                   ------------------------

                                     ANNEX B

                                    INSURANCE

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                                                       EXHIBIT A
                                                                              TO
                                                    TRUST INDENTURE AND MORTGAGE

                   TRUST INDENTURE AND MORTGAGE SUPPLEMENT

            This  TRUST   INDENTURE  AND  MORTGAGE   SUPPLEMENT  NO.  __,  dated
[______________ ___, ____] (herein called this "Trust Indenture  Supplement") of
CONTINENTAL AIRLINES, INC., as Owner (the "Owner").

                              W I T N E S S E T H:

            WHEREAS,   the   Trust   Indenture   and   Mortgage,   dated  as  of
[______________  __, 20__] (as amended and supplemented to the date hereof,  the
"Trust Indenture")  between the Owner and Wilmington Trust Company, as Mortgagee
(the  "Mortgagee"),  provides  for the  execution  and  delivery of a supplement
thereto  substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and

            WHEREAS,  each of the Trust Agreement and Trust Indenture relates to
the  Airframe  and  Engines  described  below,  and a  counterpart  of the Trust
Indenture  is attached  hereto and made a part  hereof and this Trust  Indenture
Supplement,  together with such  counterpart  of the Trust  Indenture,  is being
filed for recordation on the date hereof with the FAA as one document;

            NOW, THEREFORE,  this Trust Indenture Supplement WITNESSETH that the
Owner hereby  confirms  that the Lien of the Trust  Indenture on the  Collateral
covers  all of  Owner's  right,  title  and  interest  in  and to the  following
described property:

                                    AIRFRAME

One airframe identified as follows:

                                           FAA Registration     Manufacturer's
Manufacturer                Model               Number          Serial Number
------------------- --------------------- ------------------ -------------------

The Boeing Company

together with all of the Owner's  right,  title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.

                                AIRCRAFT ENGINES

            Two  aircraft  engines,  each such  engine  having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:

<PAGE>

Manufacturer               Manufacturer's Model         Serial Number
------------------------ ------------------------ ------------------------

together  with all of Owner's  right,  title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.

            Together with all of Owner's right, title and interest in and to (a)
all Parts of whatever  nature,  which from time to time are included  within the
definition of "Airframe" or "Engine",  whether now owned or hereafter  acquired,
including  all  substitutions,  renewals  and  replacements  of  and  additions,
improvements,  accessions and  accumulations  to the Airframe and Engines (other
than additions,  improvements,  accessions and  accumulations  which  constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.

            TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee,  its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture  Indemnitees,  except
as provided in Section 2.13 and Article III of the Trust  Indenture  without any
preference,  distinction or priority of any one Equipment Note over any other by
reason of priority of time of issue, sale, negotiation, date of maturity thereof
or  otherwise  for any  reason  whatsoever,  and for the uses and  purposes  and
subject to the terms and provisions set forth in the Trust Indenture.

            This Trust Indenture  Supplement  shall be construed as supplemental
to the Trust  Indenture  and shall form a part thereof.  The Trust  Indenture is
each hereby  incorporated by reference herein and is hereby  ratified,  approved
and confirmed.

            AND,  FURTHER,  the  Owner  hereby  acknowledges  that the  Aircraft
referred to in this Trust  Indenture  Supplement has been delivered to the Owner
and is included in the property of the Owner  subject to the pledge and mortgage
thereof under the Trust Indenture.

                                      * * *

            IN  WITNESS  WHEREOF,  the Owner has  caused  this  Trust  Indenture
Supplement  to  be  duly  executed  by  one  of  its  officers,  thereunto  duly
authorized, on the day and year first above written.

                                         CONTINENTAL AIRLINES, INC.

                                         By:___________________________________
                                            Name:
                                            Title:

<PAGE>

                                   SCHEDULE I

                                 ORIGINAL AMOUNT           INTEREST RATE
                            ------------------------- -----------------------

Series A-1:

Series A-2:

Series B:

Series C-1:

Series C-2:

Series D:

Maximum Aggregate
Original Amount:

                          Trust Indenture and Mortgage
                           Equipment Note Amortization

                                  Percentage of Original
         Payment Date                Amount to be Paid
   ------------------------ ----------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]