Document:

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

                                      Among

                           CONTINENTAL AIRLINES, INC.,
                                     Lessee,

                               [_______________],

                               Owner Participant,

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

                                 Owner Trustee,
                                       and

                            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,

                         Mortgagee and Loan Participant

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

                          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.      PARTICIPATION IN LESSOR'S COST; ISSUANCE OF
                EQUIPMENT NOTES; TERMINATION OF OBLIGATION
                TO PARTICIPATE.................................................3
         2.1    Participation in Lessor's Cost.................................3
         2.2    Nature of Obligations of Participants..........................3
         2.3    Termination of Obligation to Participate.......................3

SECTION 3.      COMMITMENT TO LEASE AIRCRAFT...................................4

SECTION 4.      PROCEDURE FOR PARTICIPATION IN PAYMENT OF
                LESSOR'S COST; POSTPONEMENT OF SCHEDULED
                DELIVERY DATE..................................................4
         4.1    Notices of Scheduled Delivery Date.............................4
         4.2    Payment of Lessor's Cost.......................................4
         4.3    Postponement of Scheduled Delivery Date........................5
         4.4    Closing........................................................6

SECTION 5.      CONDITIONS PRECEDENT...........................................6
         5.1    Conditions Precedent to Obligations of Participants............6
         5.2    Conditions Precedent to Obligations of Owner Trustee..........14
         5.3    Conditions Precedent to Obligations of Mortgagee..............14
         5.4    Conditions Precedent to Obligations of Lessee.................15
         5.5    Post-Registration Opinion.....................................16

SECTION 6.      REPRESENTATIONS AND WARRANTIES................................16
         6.1    Lessee's Representations and Warranties.......................16
         6.2    Owner Participant's Representations and Warranties............20
         6.3    Bank's Representations and Warranties.........................23
         6.4    WTC's Representations and Warranties..........................26

SECTION 7.      COVENANTS, UNDERTAKINGS AND AGREEMENTS........................30
         7.1    Covenants of Lessee...........................................30
         7.2    Covenants of Owner Participant................................32
         7.3    Covenants of Bank and Owner Trustee...........................35
         7.4    Covenants of WTC..............................................37
         7.5    Covenants of Note Holders.....................................38
         7.6    Agreements....................................................40

SECTION 8.      CONFIDENTIALITY...............................................48

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SECTION 9.      INDEMNIFICATION AND EXPENSES..................................48
         9.1    General Indemnity.............................................48
         9.2    Expenses......................................................56
         9.3    General Tax Indemnity.........................................57
         9.4    Payments......................................................69
         9.5    Interest......................................................69
         9.6    Benefit of Indemnities........................................69

SECTION 10.     ASSIGNMENT OR TRANSFER OF INTERESTS...........................70
         10.1   Participants, Owner Trustee and Note Holders..................70
         10.2   Effect of Transfer............................................72

SECTION 11.     REFUNDING AND CERTAIN OTHER MATTERS...........................73
         11.1   Refunding Generally...........................................73
         11.2   Limitations on Obligation to Refund...........................75
         11.3   Execution of Certain Documents................................75
         11.4   ERISA.........................................................75
         11.5   Consent to Optional Redemptions...............................76

SECTION 12.     SECTION 1110..................................................76

SECTION 13.     CHANGE OF CITIZENSHIP.........................................76
         13.1   Generally.....................................................76
         13.2   Owner Participant.............................................77
         13.3   Owner Trustee.................................................77
         13.4   Mortgagee.....................................................77

SECTION 14.     CONCERNING OWNER TRUSTEE......................................78

SECTION 15.     MISCELLANEOUS.................................................78
         15.1   Amendments....................................................78
         15.2   Severability..................................................78
         15.3   Survival......................................................79
         15.4   Reproduction of Documents.....................................79
         15.5   Counterparts..................................................79
         15.6   No Waiver.....................................................80
         15.7   Notices.......................................................80
         15.8   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE..............81
         15.9   Third-Party Beneficiary.......................................81
         15.10  Entire Agreement..............................................82
         15.11  Further Assurances............................................82

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ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions

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

EXHIBIT A -  Opinion of special counsel to Lessee
EXHIBIT B -  Opinion of corporate counsel to Lessee
EXHIBIT C -  Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D -  Opinion of special counsel to Owner Trustee
EXHIBIT E -  Opinion of special counsel to Mortgagee and the Loan Participants
EXHIBIT F -  Opinion of special counsel to Owner Participant
EXHIBIT G -  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 ("Lessee"), (b)
[_______________] a corporation organized under the laws of the OP Jurisdiction
("Owner Participant"), (c) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee (this and all other
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in Section 1) (in its capacity as Owner Trustee, "Owner
Trustee" or "Lessor," and in its individual capacity, "Bank"), (d) WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not in its individual capacity,
except as expressly provided herein, but solely as Mortgagee (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under each of the Applicable Pass
Through Trust Agreements, (each, an "Applicable Pass Through Trustee") and (f)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent").

                                    RECITALS

      A. Owner Participant and Bank, concurrently herewith, are entering into
the Trust Agreement, pursuant to which, among other things, Owner Trustee agrees
to hold the Trust Estate for the use and benefit of Owner Participant upon and
subject to the terms and conditions set forth therein.

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

      C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.

<PAGE>

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

      E. Pursuant to the Note Purchase Agreement, 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 the Owner Trustee, 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.

      F. Owner Trustee 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 Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to mortgage, pledge and assign to Mortgagee all of Owner Trustee's
right, title and interest in the Trust Indenture Estate to secure the Secured
Obligations, including, without limitation, Owner Trustee's obligations under
the Equipment Notes.

      G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee shall lease the Aircraft from Lessor upon and subject to the terms
and conditions set forth therein.

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

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

<PAGE>

SECTION 1.  DEFINITIONS AND CONSTRUCTION

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

SECTION 2.  PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
            TERMINATION OF OBLIGATION TO PARTICIPATE

      2.1   PARTICIPATION IN LESSOR'S COST

      Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Applicable Pass Through Trustee shall
participate in the payment of Lessor's Cost as follows:

      (a)   Owner Participant shall participate in the payment of Lessor's Cost
            for the Aircraft by making an equity investment in the beneficial
            ownership of the Aircraft in the amount in Dollars equal to Owner
            Participant's Percentage multiplied by Lessor's Cost; and

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

      2.2   NATURE OF OBLIGATIONS OF PARTICIPANTS

      The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by either Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participant, except to the
extent provided in Section 5.4.

      2.3   TERMINATION OF OBLIGATION TO PARTICIPATE

      Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost

<PAGE>

shall expire and be of no further force and effect; PROVIDED, that the liability
of any Participant that has defaulted in the payment of its Commitment shall not
be released.

SECTION 3.  COMMITMENT TO LEASE AIRCRAFT

      Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from
Owner Trustee, under the Lease.

SECTION 4.  PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S
            COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE

      4.1   NOTICES OF SCHEDULED DELIVERY DATE

      Without limiting its obligations to the Loan Participant under Section
1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the
amount of each Participant's Commitment. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if
Mortgagee shall have received from each Participant funds in the full amount of
its respective Commitment.

      4.2   PAYMENT OF LESSOR'S COST

      (a) Each Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its respective Commitment available, by
wire transfer of immediately available funds to WTC's account at Citibank, N.A.,
ABA No. 021000089, Account No. 0016-1728, reference Continental Lease [___], at
or before 12:00 Noon, New York City time, on the Scheduled Delivery Date. All
such funds made available by each Participant to WTC shall, until payment
thereof to Airframe Manufacturer and Lessee as provided in Section 4.2(b)(ii) or
return thereof to the respective Participant as provided in Section 4.3.2, be
held by WTC in trust for the benefit of the respective Participant, as the sole
and exclusive property of the respective Participant and not as part of the
Trust Estate or the Trust Indenture Estate.

<PAGE>

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

            (i) purchase, take title to, and accept delivery of, the Aircraft;

            (ii) in consideration of the transfer of title to the Aircraft to
      Owner Trustee, direct WTC to pay, from the funds made available to WTC
      hereunder by the Participants, all or a specified portion of its
      Commitment either to (A) Airframe Manufacturer, which payments in the
      aggregate shall be equal to Manufacturer's Purchase Price, by wire
      transfer of immediately available funds to Airframe Manufacturer's account
      set forth in Schedule 1 and (B) Lessee, which payments in the aggregate
      shall be equal to Lessor's Cost minus Manufacturer's Purchase Price, by
      wire transfer of immediately available funds to Lessee's account set forth
      in Schedule 1 or as otherwise directed by Lessee;

            (iii) execute an application for registration of the Aircraft with
      the FAA and Lease Supplement No. 1, in each case with respect to the
      Aircraft;

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

            (v) lease the Aircraft to Lessee, pursuant to the Lease; and

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

      4.3   POSTPONEMENT OF SCHEDULED DELIVERY DATE

            4.3.1    POSTPONEMENT

      If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New York City
time (such telephonic notice to be promptly confirmed in writing by personal
delivery or facsimile), on the Scheduled Delivery Date to each Participant,
Owner Trustee and Mortgagee, designate a Delayed Delivery Date, in which case

<PAGE>

the Owner Participant will keep its funds available, and each Loan Participant
shall comply with its obligations under Section 5.01 of each applicable Trust
Supplement.

            4.3.2    RETURN OF FUNDS

      WTC shall promptly return to each Participant that makes funds available
to it in accordance with Section 4.2(a) such funds, together with interest or
income earned thereon, if the Closing fails to occur on the Scheduled Delivery
Date, PROVIDED that any funds made available by the Loan Participant shall be
returned on such Scheduled Delivery Date.

      4.4   CLOSING

      The Closing shall occur at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree.

SECTION 5.  CONDITIONS PRECEDENT

      5.1   CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS

      The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 5.1; PROVIDED, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; PROVIDED, FURTHER, that Sections 5.1.2(iii), (xv) and
(xxiii) (H) shall not be conditions precedent to the obligation of Loan
Participants and Sections 5.1.15 and 5.1.16 shall not be conditions precedent to
the obligation of Owner Participant.

            5.1.1    NOTICE

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

            5.1.2    DELIVERY OF DOCUMENTS

      Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or

<PAGE>

documents, and such counterparts (a) shall have been duly authorized, executed
and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:

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

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

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

            (iv) the Trust Agreement;

            (v) the Trust Indenture;

            (vi) the initial Trust Indenture Supplement;

            (vii) the Purchase Agreement Assignment;

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

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

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

            (xi) the Bills of Sale;

<PAGE>

            (xii) an invoice from Airframe Manufacturer to Owner Trustee in
      respect of the Aircraft (except for the BFE) specifying the amount of the
      Manufacturer's Purchase Price and an invoice from Lessee specifying the
      amount due to Lessee in respect of the Aircraft and the BFE, which
      amounts, in the aggregate, shall equal Lessor's Cost of the Aircraft;

            (xiii) an appointment of authorized representatives by Owner
      Trustee, and an acceptance thereof by such representatives in each case,
      dated the Delivery Date;

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

            (xv) an appraisal or appraisals from an Appraiser, which appraisal
      or appraisals shall be reasonably satisfactory in form and substance to
      Owner Participant; PROVIDED, that only Owner Participant and Lessee shall
      receive copies of such appraisal or appraisals;

            (xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
      Lessee and resolutions of the board of directors of Lessee and/or the
      executive committee thereof, in each case certified as of the Delivery
      Date, by the Secretary or an Assistant Secretary of Lessee, duly
      authorizing the execution, delivery and performance by Lessee of the
      Lessee Operative Agreements required to be executed and delivered by
      Lessee on or prior to the Delivery Date in accordance with the provisions
      hereof and thereof; (B) an incumbency certificate of Lessee, Owner
      Participant, Bank and WTC as to the person or persons authorized to
      execute and deliver the relevant Operative Agreements on behalf of such
      party; and (C) a copy of the Certificate of Incorporation or Articles of
      Incorporation and By-Laws and general authorizing resolutions of the
      boards of directors (or executive committees) or other satisfactory
      evidence of authorization of Owner Participant, Bank and WTC, certified as
      of the Delivery Date by the Secretary or an Assistant or Attesting
      Secretary of Owner Participant, Bank and WTC, respectively, which
      authorize the execution, delivery and performance by Owner Participant,
      Bank and WTC, respectively, of each of the Operative Agreements to which
      it is a party, together with such other documents and evidence with
      respect to it as Lessee or any Participant may reasonably request in order

<PAGE>

      to establish the consummation of the transactions contemplated by this
      Agreement and the taking of all corporate proceedings in connection
      therewith;

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

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

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

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

            (xxi) an application for registration of the Aircraft with the FAA
      in the name of Owner Trustee; PROVIDED, that only special counsel in
      Oklahoma City, Oklahoma shall receive the sole executed copy thereof for
      filing with the FAA;

            (xxii) the Financing Statements;

            (xxiii) the following opinions of counsel, in each case dated the
      Delivery Date:

<PAGE>

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

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

                  (C) an opinion of [__________ _________,] corporate counsel to
            Airframe Manufacturer, substantially in the form of Exhibit C;

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

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

                  (F) an opinion of [_________,] special counsel to Owner
            Participant, substantially in the form of Exhibit F;

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

                  (H) an opinion of [___________,] special tax counsel to Owner
            Participant, with respect to certain tax consequences of the
            transactions contemplated hereby; PROVIDED, that only Owner
            Participant shall receive such opinion;

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

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

<PAGE>

            5.1.3    OTHER COMMITMENTS

      Each other Participant shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee in accordance with Section 4.

            5.1.4    VIOLATION OF LAW

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

            5.1.5    TAX LAW CHANGE

      In respect of Owner Participant, no Adverse Change in Tax Law shall have
been enacted, promulgated or issued on or prior to the Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Delivery Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or before the
Delivery Date shall preclude Owner Participant from not closing with respect to
such Aircraft as a result of any Adverse Change in Tax Law.

            5.1.6    REPRESENTATIONS, WARRANTIES AND COVENANTS

      The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Delivery Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and

<PAGE>

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 Delivery Date.

            5.1.7    NO EVENT OF DEFAULT

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

            5.1.8    NO EVENT OF LOSS

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

            5.1.9    TITLE

      Owner Trustee shall have good title (subject to filing and recordation of
the FAA Bill of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) of Section
6 of the Lease.

            5.1.10   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.

            5.1.11   SECTION 1110

      Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines and to enforce any of its other rights or

<PAGE>

remedies as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.

            5.1.12   FILING

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

            5.1.13   NO PROCEEDINGS

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

            5.1.14   GOVERNMENTAL ACTION

      All appropriate action required to have been taken prior to the Delivery
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 Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.

            5.1.15   NOTE PURCHASE AGREEMENT

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

            5.1.16   PERFECTED SECURITY INTEREST

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

<PAGE>

      5.2   CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE

      The obligation of Owner Trustee to direct the Participants to apply the
Commitments to pay Lessor's Cost on the Delivery Date is subject to satisfaction
or waiver by Owner Trustee, on or prior to the Delivery Date, of the conditions
precedent set forth below in this Section 5.2.

            5.2.1    NOTICE

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

            5.2.2    DOCUMENTS

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

            5.2.3    OTHER CONDITIONS PRECEDENT

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

      5.3   CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE

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

            5.3.1    NOTICE

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

            5.3.2    DOCUMENTS

      Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,

<PAGE>

except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.

            5.3.3    OTHER CONDITIONS PRECEDENT

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

      5.4   CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE

      The obligation of Lessee to lease the Aircraft on the Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 5.4.

            5.4.1    DOCUMENTS

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

            5.4.2    SALES TAX

      Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Delivery Date to the extent that Lessee has
liability therefor under Section 9.3.

            5.4.3    OTHER CONDITIONS PRECEDENT

      Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Indenture Defaults or Indenture
Events of Default not constituting Lease Defaults or Lease Events of Default,
respectively), 5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.

<PAGE>

            5.4.4    TAX LAW CHANGE

      No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Delivery Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Delivery Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Delivery Date, specifying such Adverse Change in Tax Law.

      5.5   POST-REGISTRATION OPINION

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

SECTION 6.  REPRESENTATIONS AND WARRANTIES

      6.1   LESSEE'S REPRESENTATIONS AND WARRANTIES

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

            6.1.1    ORGANIZATION; QUALIFICATION

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

<PAGE>

            6.1.2    CORPORATE AUTHORIZATION

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

            6.1.3    NO VIOLATION

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

            6.1.4    APPROVALS

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

            6.1.5    VALID AND BINDING AGREEMENTS

      The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery

<PAGE>

thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.

            6.1.6    LITIGATION

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

            6.1.7    FINANCIAL CONDITION

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

            6.1.8    REGISTRATION AND RECORDATION

      Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing

<PAGE>

Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the placards referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdictions in the
United States.

            6.1.9    CHIEF EXECUTIVE OFFICE

      The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at 1600 Smith Street, Houston, Texas 77002.

            6.1.10   NO DEFAULT

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

            6.1.11   NO EVENT OF LOSS

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

            6.1.12   COMPLIANCE WITH LAWS

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

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

<PAGE>

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

            6.1.13   SECURITIES LAWS

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

            6.1.14   BROKER'S FEES

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

            6.1.15   SECTION 1110

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

      6.2   OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES

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

            6.2.1    ORGANIZATION, ETC.

      Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, 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

<PAGE>

obligations under the Owner Participant Agreements, and has a tangible net worth
(exclusive of goodwill) greater than $75,000,000.

            6.2.2    CORPORATE AUTHORIZATION

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

            6.2.3    NO VIOLATION

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

            6.2.4    APPROVALS

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

<PAGE>

            6.2.5    VALID AND BINDING AGREEMENTS

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

            6.2.6    CITIZENSHIP

      On the Delivery Date, Owner Participant is a Citizen of the United States.

            6.2.7    NO LIENS

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

            6.2.8    INVESTMENT BY OWNER PARTICIPANT

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

            6.2.9    ERISA

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

            6.2.10   LITIGATION

      There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,

<PAGE>

if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.

            6.2.11   SECURITIES LAWS

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

            6.2.12   BROKER'S FEES

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

      6.3   BANK'S REPRESENTATIONS AND WARRANTIES

      Bank represents and warrants to Lessee, Owner Participant, Loan
Participants, Subordination Agent and Mortgagee that:

            6.3.1    ORGANIZATION, ETC.

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

            6.3.2    CORPORATE AUTHORIZATION

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

            6.3.3    NO VIOLATION

      The execution and delivery by Bank, in its individual capacity and as
Owner Trustee of the Owner Trustee Agreements, the performance by Bank, in its

<PAGE>

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

            6.3.4    APPROVALS

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

            6.3.5    VALID AND BINDING AGREEMENTS

      The Owner Trustee Agreements have been duly authorized, executed and
delivered by Bank, in its individual capacity or as Owner Trustee, as the case
may be, and constitute the legal, valid and binding obligations of Bank, in its
individual capacity and as Owner Trustee, and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, are
enforceable against Bank, in its individual capacity and as Owner Trustee, in
accordance with the respective terms thereof, except as such enforceability may

<PAGE>

be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law or in equity.

            6.3.6    CITIZENSHIP

      On the Delivery Date, Bank is a Citizen of the United States.

            6.3.7    CHIEF EXECUTIVE OFFICE

      The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah
84111.

            6.3.8    TITLE

      On the Delivery Date, Owner Trustee shall have received whatever title (a)
to the Aircraft (other than the BFE) as was conveyed to it by Airframe
Manufacturer and (b) to the BFE as was conveyed to it by Lessee.

            6.3.9    NO LIENS; FINANCING STATEMENTS

      On the Delivery Date, there are no Lessor Liens attributable to Bank or
Owner Trustee in respect of all or any part of the Aircraft, Trust Estate or the
Trust Indenture Estate. Except for the Financing Statements, it has not, either
in its individual capacity or as Owner Trustee, executed any UCC financing
statements relating to the Aircraft or the Lease.

            6.3.10   LITIGATION

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

            6.3.11   SECURITIES LAWS

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

<PAGE>

for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.

            6.3.12   EXPENSES AND TAXES

      There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, any Applicable Pass Through
Trustee, Subordination Agent, Owner Trustee or Mortgagee (except as to Owner
Trustee, Taxes imposed on the fees payable to Owner Trustee) under the laws of
Utah in connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.

      6.4   WTC'S REPRESENTATIONS AND WARRANTIES

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

            6.4.1    ORGANIZATION, ETC.

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

            6.4.2    CORPORATE AUTHORIZATION

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

<PAGE>

the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.

            6.4.3    NO VIOLATION

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

            6.4.4    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 Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, 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 Delivery
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,

<PAGE>

or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.

            6.4.5    VALID AND BINDING AGREEMENTS

      The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, 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.

            6.4.6    CITIZENSHIP

      WTC is a Citizen of the United States.

            6.4.7    NO LIENS

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

            6.4.8    LITIGATION

      There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
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
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

<PAGE>

Agreements, the Pass Through Trustee Agreements or the Subordination Agent
Agreements.

            6.4.9    SECURITIES LAWS

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

            6.4.10   INVESTMENT

      The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the 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 10.1.3, the
disposition by it of its Equipment Notes shall at all times be within its
control.

            6.4.11   TAXES

      There are no Taxes payable by 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
the trusts created by the Pass Through Trust Agreements will not be taxable as

<PAGE>

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;

            6.4.12   CONTROL

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

            6.4.13   BROKER'S FEES

      No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, 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 7.  COVENANTS, UNDERTAKINGS AND AGREEMENTS

      7.1   COVENANTS OF LESSEE

      Lessee covenants and agrees, at its own cost and expense, with Owner
Participant, Loan Participants, Owner Trustee and Mortgagee as follows:

            7.1.1    CORPORATE EXISTENCE; U.S. AIR CARRIER

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

            7.1.2    NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

      Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any 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 7.1.3(c) as a result of such relocation.

            7.1.3    CERTAIN ASSURANCES

      (a) Lessee shall duly execute, acknowledge and deliver, or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such

<PAGE>

further acts and things, in any case, as Owner Participant, Owner Trustee or
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.

      (b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and refiling of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial Trust Indenture Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture. Lessee shall furnish to
Owner Participant or Owner Trustee such information (other than with respect to
the citizenship of Owner Participant and Owner Trustee) in Lessee's possession
or otherwise reasonably available to Lessee as may be required to enable Owner
Participant or Owner Trustee to make application for registration of the
Aircraft under the Act (subject to Lessee's rights under Section 7.1.2 of the
Lease) and shall pay or cause to be paid all out-of-pocket costs and expenses
thereof (including, without limitation, reasonable attorneys' fees and
disbursements).

      (c) Lessee, 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 pursuant to
Section 13.2 of the Lease, 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 Owner Trustee and Mortgagee, as applicable,
duly and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or the UCC or
similar law of any other applicable jurisdiction (with respect to such other
documents).

      (d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to Owner
Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such

<PAGE>

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 Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.

            7.1.4    SECURITIES LAWS

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

            7.1.5    NOTICE OF SUBLEASE

      Lessee shall give to Standard & Poor's a copy of any notice regarding a
sublease of the Aircraft required to be given to the Mortgagee pursuant to
Section 7.2.7(a) of the Lease, at the time such notice is given to Mortgagee, if
at such time Standard & Poor's is then rating the Pass Through Certificates.

      7.2   COVENANTS OF OWNER PARTICIPANT

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

            7.2.1    LIENS

      Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to Owner Participant
on all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft and (c) will hold harmless and indemnify Lessee, Owner Trustee, each
Note Holder, Mortgagee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and

<PAGE>

against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft
imposed on, incurred by or asserted against any of the foregoing as a
consequence of any such Lessor Lien.

            7.2.2    REVOCATION OF TRUST AGREEMENT

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

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

            7.2.3    CHANGE OF SITUS OF OWNER TRUST

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

<PAGE>

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

            7.2.4    COMPLIANCE WITH LEASE PROVISIONS

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

            7.2.5    SECURITIES ACT

      Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,

<PAGE>

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
Owner Participant any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.

            7.2.6    REGARDING THE OWNER TRUSTEE

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

      7.3   COVENANTS OF BANK AND OWNER TRUSTEE

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

            7.3.1    LIENS

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

            7.3.2    OTHER BUSINESS

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

            7.3.3    NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

      Bank, in its individual capacity and as Owner Trustee, will give Lessee,
each Participant and Mortgagee 30 days' prior written notice of any relocation
of its chief executive office (as such term is defined in Article 9 of the UCC)

<PAGE>

from its then present location and will promptly take any action required by
Section 7.3.8 as a result of such relocation.

            7.3.4    SECURITIES ACT

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

            7.3.5    PERFORMANCE OF AGREEMENTS

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

            7.3.6    RELEASE OF LIEN OF TRUST INDENTURE

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

            7.3.7    NOTICES; DOCUMENTS

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

            7.3.8    FILINGS

      After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC

<PAGE>

financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.

            7.3.9    TRUST AGREEMENT

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

      7.4   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 Lessee, Owner Participant and Owner Trustee as follows:

            7.4.1    LIENS

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

<PAGE>

by or asserted against any of the foregoing as a consequence of any such Lessor
Lien.

            7.4.2    SECURITIES ACT

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

            7.4.3    PERFORMANCE OF AGREEMENTS

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

            7.4.4    WITHHOLDING TAXES

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

      7.5   COVENANTS OF NOTE HOLDERS

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

            7.5.1    WITHHOLDING TAXES

      Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,

<PAGE>

penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.

            7.5.2    TRANSFER; COMPLIANCE

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

      (b) Except 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 and except as otherwise required
by the terms of Section 2.13 of the Trust Indenture or Section 11 hereof, each
Note Holder will not sell, assign, convey, exchange or otherwise transfer any
Equipment Note or any interest in, or represented by, any Equipment Note (it
being understood that this provision is not applicable to the Pass Through
Certificates) unless the proposed transferee thereof first provides Lessee and
Owner Participant with both of the following:

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

<PAGE>

      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).

      7.6   AGREEMENTS

            7.6.1    OWNER TRUSTEE IS OWNER FOR ALL PURPOSES

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

            7.6.2    COMMENCEMENT OF BANKRUPTCY PROCEEDINGS

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

            7.6.3    CERTAIN BANKRUPTCY MATTERS

      If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
Bank or Owner Participant is required, by reason of Bank or Owner Participant
being held to have recourse liability to any Note Holder or Mortgagee directly
or indirectly (other than the recourse liability of Bank or Owner Participant
under this Agreement, the Trust Indenture or by separate agreement), to make
payment on account of any amount payable as principal, Make-Whole Amount, if
any, interest or other amounts on the Equipment Notes, and (c) any Note Holder

<PAGE>

or Mortgagee actually receives any Excess Amount, as defined below, which
reflects any payment by Bank or Owner Participant on account of (b) above, then
such Note Holder or Mortgagee, as the case may be, shall promptly refund to Bank
or Owner Participant (whichever shall have made such payment) such Excess
Amount.

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

            7.6.4    QUIET ENJOYMENT; SALE BY OWNER TRUSTEE
                     BINDING

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

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

            7.6.5    RELEASE OF LIEN OF TRUST INDENTURE

      Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,

<PAGE>

upon request of Lessor and compliance with the applicable provisions of the
Lease and the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, promptly execute (at
Lessee's cost and expense) such instruments as Lessor or Lessee may reasonably
request to evidence the release of the Lien of the Trust Indenture with respect
to such property.

            7.6.6    NON-RECOURSE

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

            7.6.7    OTHER DOCUMENTS; AMENDMENT

      (a) Each of the Owner Participant and the Owner Trustee hereby (A) agrees
with Lessee, the Loan Participants and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
adversely affect such party without the prior written consent of such party.
Notwithstanding the foregoing, so long as the Lease has not been terminated or
expired, each Participant, the Mortgagee and the Owner Trustee hereby agree for
the benefit of Lessee that without the consent of Lessee they will not amend,
supplement or otherwise modify (i) Article III, Article IX or Section 2.05 of
the Trust Indenture, (ii) any provision of any Operative Agreement that will
affect the stated principal amount of or premium or interest on the Equipment
Notes or (iii) any other provision of the Trust Indenture or Equipment Notes in

<PAGE>

a manner that could adversely affect Lessee. Mortgagee and Owner Trustee agree
to promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Agreements to which Lessee is not a party.
Each Loan Participant agrees that it will not take any action in respect of the
Trust Indenture Estate except through the Mortgagee pursuant to the Trust
Indenture or as otherwise permitted by Trust Indenture.

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

            7.6.8    CONSENTS

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

            7.6.9    INSURANCE

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

            7.6.10   EXTENT OF INTEREST OF NOTE HOLDERS

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

<PAGE>

Note Holder hereunder and under any other Operative Agreement, shall have been
paid in full.

            7.6.11   FOREIGN REGISTRATION

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

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

            (i) each of the following requirements is satisfied:

            (A)   such registration shall be made only after the Tax Attribute
                  Period, unless Lessee prepays on a lump sum basis any
                  liability due under the Tax Indemnity Agreement as a result of
                  such registration based upon the assumption that such
                  registration would continue for the remainder of the term of
                  the Permitted Sublease described in clause (C) below;

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

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

            (D)   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 Delivery Date;

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

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

                  (B) the obligations of Lessee, and the rights and remedies of
            Owner Trustee, under the Lease are valid, binding and enforceable

<PAGE>

            under the laws of such jurisdiction (or the laws of the jurisdiction
            to which the laws of such jurisdiction would refer as the applicable
            governing law);

                  (C) after giving effect to such change in registration, the
            Lien of the Trust Indenture on the Owner Trustee's right, title and
            interest in and to the Aircraft and the Lease shall continue as a
            valid and 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
            Owner Trustee and the Mortgagee shall have received a certificate
            from Lessee that all possible preparations to accomplish such
            filing, recording and other action shall have been done, and such
            filing, recording and other action shall be accomplished and a
            supplemental opinion to that effect shall be delivered to the Owner
            Trustee and the Mortgagee on or prior to the effective date of such
            change in registration;

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

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

                  (F) unless Lessee shall have agreed to provide insurance
            covering the risk of requisition of use of the Aircraft by the

<PAGE>

            government of such country (so long as the Aircraft is registered
            under the laws of such country), the laws of such country require
            fair compensation by the government of such country payable in
            currency freely convertible into Dollars and freely removable from
            such country (without license or permit, unless Lessee prior to such
            proposed reregistration has obtained such license or permit) for the
            taking or requisition by such government of such use;

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

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

            (ii)  of the payment by Lessee of all reasonable out-of-pocket
                  expenses of Lessor, each Participant and Mortgagee in
                  connection with such change of registry, including, without
                  limitation (1) the reasonable fees and disbursements of
                  counsel to Lessee, Lessor and Mortgagee, (2) any filing or
                  recording fees, Taxes or similar payments incurred in
                  connection with the change of registration of the Aircraft and
                  the creation and perfection of the security interest therein
                  in favor of Mortgagee for the benefit of Note Holders, 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 and the Lease 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 Lessee shall have agreed upon additional indemnities that,
                  together with such original indemnities, in the reasonable
                  judgment of Lessor and Mortgagee, afford such protection).

<PAGE>

            7.6.12   OTHER COMMERCIAL RELATIONS UNAFFECTED

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

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

      (b) None of Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, and Engine Manufacturer, by its execution and delivery of
the Engine Consent and Agreement, shall be deemed to have waived any rights,
remedies or claims which Airframe Manufacturer or Engine Manufacturer (or any
subcontractor or supplier of either), as the case may be, may have against
Lessee; and the Operative Agreements do not and shall not be construed or deemed
to create any rights, waivers, immunities or indemnities in favor of Lessee with
respect to any such rights, remedies or claims of Airframe Manufacturer or
Engine Manufacturer (or any subcontractor or supplier of either).

            7.6.13   INTEREST IN CERTAIN ENGINES

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

<PAGE>

SECTION 8.  CONFIDENTIALITY

      Lessee, Owner Participant, Note Holders, Owner Trustee and Mortgagee shall
keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a Note Holder's, Liquidity Provider's, Owner
Trustee's, Mortgagee's or other Indenture Indemnitee's interest or their
respective counsel or special counsel, independent insurance brokers, auditors,
or other agents who agree to hold such information confidential, (B) to
Lessee's, Owner Participant's, a Note Holder's, Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
counsel or special counsel, independent insurance brokers, auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including those of any
applicable insurance regulatory bodies (including, without limitation, the
National Association of Insurance Commissioners), federal or state banking
examiners, Internal Revenue Service auditors or any stock exchange, (D) with
respect to Lessee and Owner Participant, by mutual agreement of such parties,
(E) with respect to a Note Holder or 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 Trust Certificates or to support an NAIC rating for
the Equipment Notes or (F) such other Persons as are reasonably deemed necessary
by the disclosing party in order to protect the interests of such party or for
the purposes of enforcing such documents by such party; PROVIDED, that any and
all disclosures permitted by clauses (C), (D), (E) or (F) above shall be made
only to the extent necessary to meet the specific requirements or needs of the
Persons making such disclosures.

SECTION 9.  INDEMNIFICATION AND EXPENSES

      9.1   GENERAL INDEMNITY

            9.1.1    INDEMNITY

      Whether or not any of the transactions contemplated hereby are
consummated, Lessee shall indemnify, protect, defend and hold harmless each
Indemnitee from, against and in respect of, and shall pay on a net after-tax

<PAGE>

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 Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;

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

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

            9.1.2    EXCEPTIONS

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

      (a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;

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

      (c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture or Section 11 hereof;

      (d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for out-of-pocket costs and expenses incurred as a result of
any such Transfer in connection with the exercise of remedies attributable to
the occurrence of an Indenture Event of Default that is a Lease Event of
Default;

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

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

      (g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee

<PAGE>

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 Trust Certificates, the Trust Estate or the Trust Agreement or any
similar interest, in violation of the Securities Act or other applicable
federal, state or foreign securities Laws (other than any thereof caused by the
acts or omissions of Lessee);

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

<PAGE>

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

            9.1.3    SEPARATE AGREEMENT

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

            9.1.4    NOTICE

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

<PAGE>

            9.1.5    NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS

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

      (b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, proceeding or compromise any such Expense during the continuance of any
Lease Event of Default arising under Section 14.1 of the Lease. In connection
with any such action, suit or proceeding being controlled by Lessee, such
Indemnitee shall have the right to participate therein, at its sole cost and
expense, with counsel reasonably satisfactory to Lessee; PROVIDED, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Lessee or its insurers to conduct such
proceedings, interfere with the defense of such case.

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

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

<PAGE>

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

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

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

            9.1.6    INFORMATION

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

            9.1.7    EFFECT OF OTHER INDEMNITIES; SUBROGATION;
                     FURTHER ASSURANCES

      Upon the payment in full by Lessee of any indemnity provided for under
this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or Article VII of the Trust Indenture or Section 5.3 or 7 of
the Trust Agreement) in respect of the matter as to which such indemnity was
paid. Each Indemnitee will give such further assurances or agreements and
cooperate with Lessee to permit Lessee to pursue such claims, if any, to the
extent reasonably requested by Lessee and at Lessee's expense.

<PAGE>

            9.1.8    REFUNDS

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

      9.2   EXPENSES

            9.2.1    INVOICES AND PAYMENT

      Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Applicable Pass Through Trustees, and the Subordination Agent shall promptly
submit to Lessee 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 Delivery Date). If so submitted
and approved, the Owner Participant agrees promptly, but in any event no later
than the 105th day after the Delivery Date, to pay (but not in excess of 1% of
Lessor's Cost) Transaction Expenses. Notwithstanding the foregoing, Lessee at
its sole option shall have the right to pay directly any and all Transaction
Expenses. Lessee shall be obligated to pay directly any and all Transaction
Expenses which are in excess of 1% of Lessor's Cost. If Owner Participant shall
fail to pay any Transaction Expense that it is obligated to pay hereunder,
Lessee shall pay such Transaction Expense. Any such payment by Lessee shall not
affect Owner Participant's obligations or Lessee's rights against Owner
Participant for its failure to make any such payment.

            9.2.2    PAYMENT OF OTHER EXPENSES

      Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (A) any transfer of title to the Aircraft or any Engine

<PAGE>

contemplated by Section 4.5 of the Lease or (B) any waiver, amendment or
modification of any Operative Agreement to the extent requested by Lessee.

            9.2.3    PAYMENTS IF TRANSACTIONS DO NOT CLOSE

      In the event that the transaction contemplated by this Agreement fails to
close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the Appraiser referred to
in Section 5.1.2(xv).

      9.3   GENERAL TAX INDEMNITY

            9.3.1    GENERAL

      Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal, state or local withholding taxes on, based on or measured by
gross or net income), and in the event that Lessee shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Lessee shall make all such withholdings or deductions, (y) the amount
payable by Lessee shall be increased so that after making all required
withholdings or deductions such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (z)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Lessee further agrees that, in the
event it is required to withhold from any payment of Basic Rent, Stipulated Loss
Value (and amounts determined by reference thereto), and amounts payable upon
exercise of Lessee's purchase option pursuant to Section 17.3 of the Lease, any
Tax imposed upon Owner Participant or Owner Trustee (including any withholding
Tax based on income or receipts of Owner Participant or Owner Trustee) and such
Tax is excluded from indemnification pursuant to Section 9.3.2, Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of

<PAGE>

the Equipment Notes prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Equipment Notes outstanding on the
relevant Payment Date, together with accrued and unpaid interest, due on the
Equipment Notes; Owner Participant or Owner Trustee, as the case may be, shall
reimburse Lessee for any such additional amounts within two Business Days after
demand therefor. Except as provided in Section 9.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Lessee shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien (other than a Lessor Lien), financing,
refinancing requested by the Lessee, abandonment or other disposition of the
Aircraft, the Airframe, any Engine, any Part, any data or any other thing
delivered or to be delivered under an Operative Agreement or (z) rent, interest,
fees or any other income, proceeds, receipts or earnings, whether actual or
deemed, arising upon, in connection with, or in respect of, any of the Operative
Agreements (including the property or income or other proceeds with respect to
property held as part of the Trust Estate) or the transactions contemplated
thereby.

            9.3.2    CERTAIN EXCEPTIONS

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

         (a) imposed on a Tax Indemnitee by the federal government of the
United States or any Taxing Authority or governmental subdivision of the United
States or therein (including any state or local Taxing Authority) (i) on, based

<PAGE>

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 a Lessee Person within the
jurisdiction of the Taxing Authority imposing such Tax, or (II) the activities
of any Lessee Person (except for activities of a Lessee Person that is not an
Affiliate, successor or assign of the Lessee, which activities are unrelated to
the transactions contemplated by the Operative Agreements) in such jurisdiction,
including, but not limited to, use of any other aircraft by Lessee in such
jurisdiction, (III) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (IV) Lessee 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, any
Participant or any related Tax Indemnitee, the Lessee being incorporated,
organized, maintaining a place of business or conducting activities in such
jurisdiction);

<PAGE>

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

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

      (e) that are being contested as provided in Section 9.3.4 hereof;

      (f) 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;

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

      (h) 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 (g) above;

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

      (j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the

<PAGE>

request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of
payments by Lessee under the Operative Agreements after such period);

      (k) 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 Lessee to fulfill its
obligations, if any, under Section 9.3.6 with respect to such return;

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

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

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

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

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

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

<PAGE>

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

            9.3.3    PAYMENT

      (a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3.

      (b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification shall result in an adjustment in Lessee's favor of 5%
or more of the net present value 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 Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.

      (d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day

<PAGE>

prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 9.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.

      (e) If any Tax Indemnitee shall actually realize a tax savings by reason
of any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity such Tax Indemnitee shall pay to
Lessee 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 9.3 by Lessee to such Tax Indemnitee
(less any payments previously made by such Tax Indemnitee to Lessee pursuant to
this Section 9.3.3 (e)) (and the excess, if any, of the amount described in
clause (i) over the amount described in clause (ii) shall be carried forward and
applied to reduce pro tanto any subsequent obligations of Lessee to make
payments to such Tax Indemnitee pursuant to this Section 9.3); provided, that
such Tax Indemnitee shall not be required to make any payment pursuant to this
sentence so long as a Lease Event of Default of a monetary nature has occurred
and is continuing. If a tax benefit is later disallowed or denied, the

<PAGE>

disallowance or denial shall be treated as a Tax indemnifiable under Section
9.3.1 without regard to the provisions of Section 9.3.2 (other than Section
9.3.2 (f)). Each such Tax Indemnitee shall in good faith use reasonable efforts
in filing its tax returns and in dealing with Taxing Authorities to seek and
claim any such tax benefit.

            9.3.4    CONTEST

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

<PAGE>

applicability or amount of such Taxes by (I) resisting payment thereof, (II) not
paying the same except under protest if protest is necessary and proper or (III)
if the payment is made, using reasonable efforts to obtain a refund thereof in
an appropriate administrative and/or judicial proceeding. If requested to do so
by Lessee, the Tax Indemnitee shall appeal any adverse administrative or
judicial decision, except that the Tax Indemnitee shall not be required to
pursue any appeals to the United States Supreme Court. If and to the extent the
Tax Indemnitee is able to separate the contested issue or issues from other
issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct of
any such proceeding and shall provide to Lessee (at Lessee'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
Lessee in good faith regarding the manner of contesting such claim and shall
keep Lessee reasonably informed regarding the progress of such contest. A Tax
Indemnitee shall not fail to take any action expressly required by this Section
9.3.4 (including, without limitation, any action regarding any appeal of an
adverse determination with respect to any claim) or settle or compromise any
claim without the prior written consent of the Lessee (except as contemplated by
Section 9.3.4(b) or (c)).

      (b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free after-Tax basis to such Tax Indemnitee (and such Tax Indemnitee
shall promptly pay to the Lessee any net realized tax benefits resulting from
such advance including any tax benefits resulting from making such payment),
(iii) such Tax Indemnitee shall have reasonably determined that the action to be

<PAGE>

taken will not result in any material risk of forfeiture, sale or loss of the
Aircraft (unless Lessee shall have made provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify Lessee in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Lessee has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Lessee, Lessee shall have acknowledged its liability for
such claim hereunder, provided that Lessee shall not be bound by its
acknowledgment if the Final Determination articulates conclusions of law and
fact that demonstrate that Lessee has no liability for the contested amounts
hereunder. Notwithstanding the foregoing, if any Tax Indemnitee shall release,
waive, compromise or settle any claim which may be indemnifiable by Lessee
pursuant to this Section 9.3 without the written permission of Lessee, Lessee's
obligation to indemnify such Tax Indemnitee with respect to such claim (and all
directly related claims and claims based on the outcome of such claim) shall
terminate, subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such
Tax Indemnitee shall repay to Lessee any amount previously paid or advanced to
such Tax Indemnitee with respect to such claim, plus interest at the rate that
would have been payable by the relevant Taxing Authority with respect to a
refund of such Tax.

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

<PAGE>

            9.3.5    REFUND

      If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Lessee to
such Tax Indemnitee theretofore made pursuant to this Section 9.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant
to this Section 9.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Lessee prior to the receipt of such refund or realization of such
credit.

            9.3.6    TAX FILING

      If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is

<PAGE>

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.

            9.3.7    FORMS

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

            9.3.8    NON-PARTIES

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

            9.3.9    SUBROGATION

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

            9.3.10   FOREIGN TAX ON LOAN PAYMENTS

         If an Owner Participant is incorporated or organized, or maintains a
place of business or conducts activities in, a country other than the United
States or in a territory, possession or commonwealth of the United States
(within the meaning of the tax law of that foreign jurisdiction) and if as a
result thereof any foreign Taxes (including withholding Taxes) are imposed on
the Pass Through Trustees, Pass Through Trusts, or Note Holders, then Owner

<PAGE>

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

      9.4   PAYMENTS

      Any payments made pursuant to Section 9.1 or 9.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to Lessee, in immediately available funds at such bank or
to such account as specified by such Indemnitee or Tax Indemnitee or Lessee, as
the case may be, in written directives to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order of, and mailed
to, such Indemnitee or Tax Indemnitee or Lessee, as the case may be, by
certified mail, postage prepaid, at its address as set forth in this Agreement.

      9.5   INTEREST

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

      9.6   BENEFIT OF INDEMNITIES

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

<PAGE>

SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS

      10.1  PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS

            10.1.1   OWNER PARTICIPANT

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

            (i) The Transferee shall have full power, authority and legal right
      to execute and deliver and to perform the obligations of Owner Participant
      under this Agreement and the other Owner Participant Agreements and shall
      provide reasonably satisfactory evidence of such power and authority to
      Lessee, Owner Trustee and Mortgagee;

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

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

            (iv) Owner Participant shall deliver to Lessee, Owner Trustee and
      Mortgagee an opinion of counsel reasonably satisfactory to each of them to
      the effect that such agreement or agreements referred to in Section
      10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi) are legal, binding and
      enforceable in accordance with its or their terms and that such transfer
      will not violate the Act, the registration provisions of the Securities
      Act, or any other applicable Federal law;

            (v) The Transfer shall relate to the Owner Participant's entire
      interest as Owner Participant;

<PAGE>

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

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

      (b) Owner Participant shall give written notice to Lessee, Mortgagee and
Owner Trustee at least 10 days prior to any such Transfer, specifying the name
and address of the proposed Transferee, and providing financial statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.

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

            10.1.2   OWNER TRUSTEE

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

            10.1.3   NOTE HOLDERS

      Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any

<PAGE>

portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by 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 Trust Indenture Estate and
Lessee 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.

      10.2  EFFECT OF TRANSFER

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

<PAGE>

SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS

      11.1  REFUNDING GENERALLY

      Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
promptly conclude an agreement with Lessee as to the terms of such refunding
transaction (including the terms of any debt to be issued in connection with
such refunding transaction and the documentation to be executed in connection
therewith), and after Lessee and Owner Participant shall have concluded such an
agreement:

            11.1.1   REFUNDING CERTIFICATE

      Within ten Business Days after reaching such agreement, Owner Participant
will deliver to Lessee a Refunding Certificate. Within ten Business Days of its
receipt of the Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in the Refunding
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refunding Certificate or the determination pursuant to such
verification procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.

            11.1.2   FINANCING AGREEMENTS

      The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or institutions on the
Refunding Date of the New Debt and (b) the application of the proceeds of the
sale of the New Debt to the redemption of all such Equipment Notes on the
Refunding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee
at least 30 days' revocable prior written notice of the proposed date of the
optional redemption.

<PAGE>

            11.1.3   LEASE AMENDMENTS

      As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value, from
and after the Refunding Date shall be as provided in the Refunding Information.

            11.1.4   SECURITY AGREEMENTS

      Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding.

            11.1.5   EXPENSES

      Whether or not such refunding transaction is consummated, Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.

            11.1.6   MAKE WHOLE AMOUNT

      At the closing of such refunding, Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding transaction), to the Mortgagee for the account
of each Note Holder, the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.

            11.1.7   RETURN OF EQUIPMENT NOTES

      Subject to compliance by Owner Trustee and Lessee with all applicable
terms and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-outstanding principal amount of such
Equipment Notes, accrued and unpaid interest and Make-Whole Amount, if any,

<PAGE>

thereon, together with payment in full of all other amounts then payable to such
Note Holder and Mortgagee hereunder or under the Trust Indenture.

      11.2  LIMITATIONS ON OBLIGATION TO REFUND

      Notwithstanding the foregoing, Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:

      (a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to indemnify
Owner Participant against such adverse tax consequence;

      (b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and related
payments in respect of the New Debt), cost or expense (including, without
limitation, reasonable attorneys' fees) related to or arising out of any such
refunding transaction;

      (c) If a Lease Event of Default shall have occurred and be continuing; or

      (d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.

      11.3  EXECUTION OF CERTAIN DOCUMENTS

      Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee or any other person).

      11.4  ERISA

      Owner Participant shall not be obligated to conclude the proposed
refunding transaction unless the agreements utilized to effect such refunding
contain an agreement by the initial holders of the New Debt substantially the
same as Section 7.5.2(b) of this Agreement, except in the case of any refunding
transaction where the New Debt is sold in a public offering under the Securities
Act or a private placement intended for resale pursuant to Rule 144A under the

<PAGE>

Securities Act, in which case the holders of the New Debt shall be subject to
the restrictions relating to ERISA substantially the same as those applicable to
the purchasers of the Pass Through Certificates, as described in the Prospectus
Supplement relating to the initial issuance and sale of the Pass Through
Certificates.

      11.5  CONSENT TO OPTIONAL REDEMPTIONS

      Each of Owner Participant, Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional redemption of the Equipment Notes without Lessee's
consent except as set forth in Section 2.13 of the Trust Indenture.

SECTION 12. SECTION 1110

      It is the intention of each of Lessee, Owner Participant, Loan
Participants, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor.

SECTION 13. CHANGE OF CITIZENSHIP

      13.1  GENERALLY

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

      (a) Each of Lessee, Bank, 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; and

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

<PAGE>

(ii) such belief as soon as practicable after such public disclosure but in any
event within ten Business Days after such public disclosure.

      13.2  OWNER PARTICIPANT

      Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.

      13.3  OWNER TRUSTEE

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

      13.4  MORTGAGEE

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

<PAGE>

SECTION 14. CONCERNING OWNER TRUSTEE

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

SECTION 15. MISCELLANEOUS

      15.1  AMENDMENTS

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

      15.2  SEVERABILITY

      If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such

<PAGE>

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

      15.3  SURVIVAL

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

      15.4  REPRODUCTION OF DOCUMENTS

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

      15.5  COUNTERPARTS

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

<PAGE>

      15.6  NO WAIVER

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

      15.7  NOTICES

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

<PAGE>

      15.8  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

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

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

      (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

         (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.

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

      15.9  THIRD-PARTY BENEFICIARY

      This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Providers, The Liquidity Guarantor the

<PAGE>

Escrow Agent and the Paying Agent, each of which is an intended third party
beneficiary with respect to the provisions of Section 9.1) with any rights of
any nature whatsoever against any of the parties hereto and no person not a
party hereto (other than the Liquidity Providers, The Liquidity Guarantor the
Escrow Agent and the Paying Agent, with respect to the provisions of Section
9.1) shall have any right, power or privilege in respect of any party hereto, or
have any benefit or interest, arising out of this Agreement.

      15.10 ENTIRE AGREEMENT

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

      15.11 FURTHER ASSURANCES

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

                      [This space intentionally left blank]

<PAGE>

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

                                           CONTINENTAL AIRLINES, INC.,
                                             Lessee

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

                                           [____________________,]
                                             Owner Participant

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

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

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

<PAGE>

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

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

                                           WILMINGTON TRUST COMPANY,
                                             not in its individual
                                             capacity, except as
                                             expressly provided herein,
                                             but solely as Pass Through
                                             Trustee under the Pass
                                             Through Trust Agreement for
                                             the Continental Airlines
                                             Pass Through Trust, 2001-
                                             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, 2001-
                                             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, 2001-
                                             1B-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, 2001-
                                             1C-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>

                                                      --------------------------
                                                      Annex A - Definitions [__]
                                                      --------------------------

                                    ANNEX A

DEFINITIONS

GENERAL PROVISIONS

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

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

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

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

<PAGE>

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

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

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

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

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

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

DEFINED TERMS

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

<PAGE>

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

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

       "ADVERSE CHANGE IN TAX LAW" means (a) for Lessee, a Change in Tax Law
that Lessee regards as one that could adversely affect the economic consequences
of the transactions contemplated by the Participation Agreement and the other
Operative Agreements that are anticipated by Lessee or (b) for Owner
Participant, any Change in Tax Law that would adversely affect any of the
following tax assumptions:

               (i) For federal income tax purposes, the Lease will be a "true"
          lease for purposes of the Code and Owner Participant will be treated
          as the owner of the Aircraft and Lessee will be treated as the lessee
          thereof;

               (ii) For federal income tax purposes, Owner Participant will be
          entitled to depreciation or cost recovery deductions with respect to
          Lessor' s Cost of the Aircraft; and

               (iii) For federal income tax purposes, Owner Participant will be
          entitled to deductions for interest payments on the Equipment Notes.

       "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

<PAGE>

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 Trustee on the Delivery
Date.

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

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

       "AIRFRAME MANUFACTURER" means 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

<PAGE>

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

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

       "BANK" means Wells Fargo Bank Northwest, National Association (formerly
known as First Security Bank, National Association), a national banking
association, not in its capacity as Owner Trustee under the Trust Agreement, but
in its individual capacity.

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

<PAGE>

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

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

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

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

       "BFE" means all appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment of whatever nature sold by Lessee to
Owner Trustee pursuant to the BFE Bill of Sale.

       "BFE AMOUNT" means the amount paid by Owner Trustee to Lessee to purchase
the BFE, and is designated by Dollar amount in Schedule 3 to the Participation
Agreement.

       "BFE BILL OF SALE" means the full warranty bill of sale executed by
Lessee in favor of Owner Trustee, dated the Delivery Date, identifying and
covering the BFE.

       "BILLS OF SALE" means the FAA Bill of Sale, the Aircraft Bill of Sale and
the BFE 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)

<PAGE>

certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's equal to A1 or higher.

       "CHANGE IN TAX LAW" means any amendment, modification, addition or change
in or to the provisions of the Code, any other federal tax statutes, the
Treasury Regulations promulgated thereunder, the Internal Revenue Service
Revenue Rulings, Revenue Procedures or other administrative or judicial
interpretations of the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner
Participant's anticipated Net Economic Return (other than a change in the
alternative minimum tax or other change that results in Owner Participant being
subject to alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).

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

       "CLASS C ISSUANCE DATE" means June 26, 2001.

       "CLASS C PASS THROUGH TRUST" means the "Class C Trust" as defined in the
Intercreditor Agreement.

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

       "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.

       "COMMENCEMENT DATE" is defined in Schedule 1 to the Lease.

       "COMMITMENT" means, for any Participant, the amount of its participation
in the payment of Lessor's Cost.

<PAGE>

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

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

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

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

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

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

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

       "DEBT RATE" means, 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) 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.

<PAGE>

       "DELAYED DELIVERY DATE" means a delayed Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.3 of
the Participation Agreement, which delayed Delivery Date shall be a Business Day
not later than the Commitment Termination Date.

       "DELIVERY DATE" means the Business Day specified in Lease Supplement No.
1 as the date on which, among other things, the Aircraft is delivered to and
accepted by Lessee under the Lease and the Closing occurs.

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

       "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.

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

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

       "ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities

<PAGE>

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

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

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

       "ENGINE 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 [CFM International, a Delaware corporation.]
[General Electric Company, a New York corporation.]

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

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

<PAGE>

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

       "ESCROW AGENT" means Wells Fargo Bank Northwest, National Association
(formerly known as First Security Bank, National Association), as Escrow Agent
under each of the Escrow Agreements.

       "ESCROW AGREEMENT" means each of the four 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 or, in the case of the Escrow Agreement
relating to the Class C Pass Through Trust, the Class C Issuance Date, each of
which relates to one of the Pass Through Trusts, PROVIDED that, for purposes of
any obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Escrow Agreement shall be effective
unless consented to by Lessee.

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

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

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

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

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

     (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

<PAGE>

          Permitted Government Entity) for a period exceeding 180 consecutive
          days or, if earlier, at the end of the Term;

     (e)  any seizure, condemnation, confiscation, taking or requisition of use
          of such property by any Permitted Government Entity that continues
          until the 30th day after the last day of the Term, PROVIDED that no
          such Event of Loss shall exist if Lessor shall have elected not to
          treat such event as an Event of Loss pursuant to Section 10.6 of the
          Lease; and

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

       "EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,

<PAGE>

(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner Participant pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (vii) any interest that pursuant to the Operative Agreements may
from time to time accrue in respect of any of the amounts described in clauses
(i) through (vi) above, (viii) any right to enforce the payment of any amount
described in clauses (i) through (vii) above (PROVIDED, that the rights referred
to in this clause (viii) shall not be deemed to include the exercise of any
remedies provided for in the Lease other than the right to sue for specific
performance of any covenant to make such payment or to sue for damages in
respect of the breach of any such covenant) and (ix) any right to exercise any
election or option or make any decision or determination, or to give or receive
any notice, consent, waiver or approval, or to take any other action in respect
of, but in each case, only to the extent relating to, any Excluded Payments.

       "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
Trustee on the Delivery Date by Airframe Manufacturer.

<PAGE>

       "FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, 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 Trustee.

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

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

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

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

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

<PAGE>

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

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

       "GTA" means the General Terms Agreement as defined in the Purchase
Agreement Assignment.

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

       "INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Engine Consent and Agreement, the Bills of Sale and any other

<PAGE>

contract, agreement or instrument from time to time assigned or pledged under
the Trust Indenture.

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

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

       "INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (iii)
the Subordination Agent, (iv) the Liquidity Provider, (v) 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 certain Pass Through Trustees, the Liquidity Provider and the
Subordination Agent, dated as of the Issuance Date, as amended by that certain
Amendment No. 1 to Intercreditor Agreement, dated as of the Class C Issuance
Date, among the Pass Through Trustees, the Liquidity Provider, the Subordination
Agent and Lessee, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Intercreditor Agreement shall be effective unless consented to by Lessee.

       "INTERIM LEASE TERM" means the period commencing on and including the
Delivery Date, and ending on and including the day immediately preceding the
Commencement Date or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.

       "INTERIM RENT" is defined in Schedule 1 to the Lease.

       "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 April 19, 2001.

       "LAW" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any

<PAGE>

judicial or administrative interpretation or application of, or decision under,
any of the foregoing.

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

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

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

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

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

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

       "LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the BFE Bill of
Sale, the Purchase Agreement Assignment and each other agreement between Lessee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.

       "LESSEE PERSON" means Lessee, any sublessee, 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, but not
excluding any Person claiming directly or indirectly through or under the
Lease).

       "LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation
Agreement.

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

<PAGE>

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

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

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

       "LIQUIDITY FACILITIES" means the four 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 or, in
the case of the Liquidity Facility relating to the Class C Pass Through Trust,
the Class C Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, any such Liquidity Facility shall be effective unless consented
to by Lessee.

       "LIQUIDITY PROVIDER" means Landesbank Hessen-Thuringen Girozentrale, a
public law banking institution organized under the laws of Germany, as "Class

<PAGE>

A-1 Liquidity Provider," "Class A-2 Liquidity Provider", "Class B Liquidity
Provider" and "Class C Liquidity Provider" (as such terms are defined in the
Intercreditor Agreement).

       "LOAN PARTICIPANTS" mean, until the Closing shall have been consummated,
the Applicable Pass Through Trustees, and after the Closing shall have been
consummated, each Note Holder.

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

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

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

       "MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment 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 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

<PAGE>

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.

       "MANUFACTURER'S PURCHASE PRICE" means the amount required to be paid to
the Airframe Manufacturer to purchase the Aircraft pursuant to the Purchase
Agreement Assignment.

       "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 1 to the
Lease.

       "MOODY'S" means Moody's Investors Service, Inc.

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

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

       "MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and each other agreement between Mortgagee and any other

<PAGE>

party to the Participation Agreement, relating to the Transactions, delivered on
the Delivery Date.

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

       "NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Basic Rent, Stipulated Loss Value percentages and Termination Value percentages,
as of the Delivery Date, as such assumptions may be adjusted for events that
have been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b)
of the Lease or events giving rise to indemnity payments pursuant to Section 5
of the Tax Indemnity Agreement; PROVIDED, that, if the initial Owner Participant
shall have transferred its interest, Net Economic Return shall be calculated as
if the initial Owner Participant had retained its interest; PROVIDED FURTHER,
that, notwithstanding the preceding proviso, solely for purposes of Section 11
of the Participation Agreement and calculating any adjustments to Basic Rent,
Stipulated Loss Values and Termination Values in connection with a refunding
pursuant to such Section 11 at a time when Owner Participant is a transferee
(other than an Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic Return shall be
calculated on the basis of the methodology and assumptions utilized by the
transferee Owner Participant as of the date on which it acquired its interest.

       "NET PRESENT VALUE OF RENTS" means the present value, as of the date of
determination, discounted at 8% per annum, compounded semiannually to the date

<PAGE>

of determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Lease Term, expressed as a percentage of Lessor's Cost.

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

       "NEW DEBT" means debt securities in an aggregate principal amount
specified in the Refunding Information.

       "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 Amended and Restated Note Purchase
Agreement, dated as of the Class C 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, PROVIDED that,
for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, such Agreement shall be
effective unless consented to by Lessee.

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

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

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

<PAGE>

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

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

       "OWNER PARTICIPANT" means the person executing the Participation
Agreement as "Owner Participant"; PROVIDED that if an Owner Participant
Transfers its interest to a successor Owner Participant, such transferring Owner
Participant shall thereafter no longer be considered an "Owner Participant".

       "OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Delivery Date.

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

       "OWNER TRUSTEE" means Bank, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.

       "OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, the
Purchase Agreement Assignment, and each other agreement between Owner Trustee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.

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

       "PARTICIPATION AGREEMENT" means the Participation Agreement [________]
dated as of [________] among Lessee, Owner Participant, Owner Trustee, the
Applicable Pass Through Trustees, 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 items leased by Lessee

<PAGE>

from a third party other than Lessor)), that may from time to time be installed
or incorporated in or attached or appurtenant to the Airframe or any Engine.

       "PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities 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 Lessee,
unless consented to by Lessee.

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

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

       "PASS THROUGH TRUST AGREEMENT" means each of the four separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date or, in the case of the Trust Supplement
relating to the Class C Pass Through Trust, the Class C Issuance Date, by and
between the Lessee and 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

<PAGE>

Agreements, the Escrow Agreements, and the Intercreditor Agreement.

       "PAYMENT DATE" means (i) each June 15 and December 15 during the Term,
commencing with the first such date to occur after the Commencement Date, (ii)
the Scheduled Expiration Date and (iii) each Scheduled Renewal Term Expiration
Date, if any.

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

       "PAYMENT PERIOD" means each of the consecutive semiannual periods (or
such applicable shorter period ended on the Scheduled Expiration Date and the
first and last Payment Dates of any Renewal Term) during the Term ending on a
Payment Date, the first such period commencing on and including the Commencement
Date.

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

       "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 5 to the Lease.

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

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

       "PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution, corporation, firm, partnership, limited liability company
or other organization (other than, without Lessee's consent, a commercial air
carrier, a commercial aircraft operator, a freight forwarder or Affiliate of any
of the foregoing), in each case with a combined capital and surplus or net worth
of at least $50,000,000.

<PAGE>

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

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

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

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

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

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

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

       "PURCHASE AGREEMENT" means the Purchase Agreement [________] between
Airframe Manufacturer and Lessee (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.

       "PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement and Engine
Warranties Assignment [________], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.

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

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

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

<PAGE>

       "REFUNDING CERTIFICATE" means a certificate of an authorized
representative of Owner Participant delivered pursuant to Section 11.1.1 of the
Participation Agreement, setting forth (a) the Refunding Date and (b) the
following information, subject to the limitations set forth in Section 11 of the
Participation Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent, Stipulated Loss Value
percentages and Termination Value percentages, and the proposed Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.

       "REFUNDING DATE" means the proposed date on which the outstanding
Equipment Notes will be redeemed and refinanced pursuant to Section 11 of the
Participation Agreement.

       "REFUNDING INFORMATION" means the information set forth in the Refunding
Certificate (other than the Refunding Date) as such information may have been
revised by any verification procedures demanded by Lessee pursuant to Section
3.2.1(d) of the Lease.

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

       "RENEWAL LEASE TERM" means, collectively, the Fixed Renewal Lease Terms
and the Subsequent Renewal Lease Terms, in each case, if any.

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

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

       "RENEWAL RENT LIMIT" is defined in Schedule 1 to the Lease.

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

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

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

<PAGE>

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

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

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

       "SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Fixed Renewal Lease Term, the second anniversary of the Scheduled Expiration
Date, in the case of the second Fixed Renewal Lease Term, the fourth anniversary
of the Scheduled Expiration Date and, in the case of any Subsequent Renewal
Lease Term, the day preceding the first anniversary of the commencement date of
such Subsequent Renewal Lease Term.

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

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

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

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

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

       "SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.

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

<PAGE>

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

       "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."

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

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

       "SPECIAL DEFAULT" means (i) the failure by Lessee to pay any amount of
Interim Rent, Basic Rent, Renewal Rent, Stipulated Loss Value or Termination
Value when due or (ii) the occurrence of any Lease Default or Lease Event of
Default referred to in Section 14.5 of the Lease.

       "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc.

       "STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during
the Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost and (b) during any Renewal Lease Term, the amount determined
pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to the

<PAGE>

contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.

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

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

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

       "SUBSEQUENT RENEWAL LEASE TERM" means each term for which the Lease is
extended by Lessee, if any, after the second Fixed Renewal Lease Term.

       "SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Interim Rent, Basic Rent or
Renewal Rent but including Make-Whole Amount, if any) that Lessee assumes or
becomes obligated to or agrees to pay under any Lessee Operative Agreement to or
on behalf of Lessor or any other person, including, without limitation, payments
of Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) to the extent not payable (whether or not in fact paid)
under Section 6(a) of the Note Purchase Agreement (as originally in effect or
amended with the consent of the Owner Participant), an amount or amounts equal
to the fees payable to the Liquidity Provider under Section 2.03 of 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
outstanding aggregate principal amount of the Series A-1 Equipment Notes, Series
A-2 Equipment Notes, Series B Equipment Notes and Series C 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" and "Series C Equipment Notes" (each as defined in
the Note Purchase Agreement); (ii) (x) the amount equal to interest on any

<PAGE>

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 forgoing 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 or Series C 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 Lessee in respect of 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 and Series C 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" and "Series C 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) Lessee'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 (i), (ii), (iii) or (iv) above, (c) Lessee's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Lessee under the Pass Through Trust Agreements, (d)
Lessee's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement, (e) Lessee's pro rata share of any amount payable under
Section 9.1 (and, if attributable thereto, Section 9.5) of the Participation

<PAGE>

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

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

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

<PAGE>

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

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

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

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

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

       "TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid

<PAGE>

principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.

       "TERMINATION VALUE DATE" means, for any month, the day in such month
specified in Schedule 4 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.

       "TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements.

       "TRANSACTION EXPENSES" means: (i) the reasonable and actual fees,
expenses and disbursements incurred in connection with the negotiation,
execution and delivery of the Operative Agreements of (1) Richards, Layton &
Finger, special counsel for Mortgagee and the Loan Participants, such
information to be furnished by Mortgagee and the Subordination Agent, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under the Trust
Agreement, such information to be furnished by Owner Trustee, and(3) Lytle,
Soule & Curlee, special counsel in Oklahoma City, Oklahoma, such information to
be furnished by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial fee and
reasonable and actual disbursements of Mortgagee under the Trust Indenture, such
information to be furnished by Mortgagee, (v) the fee of the Appraiser with
respect to the appraisal of the Aircraft referred to in Section 5.1.2(xv) of the
Participation Agreement, such information to be furnished by the Owner
Participant, (vi) the reasonable and actual fees, out-of-pocket expenses and
disbursements of special counsel to the Owner Participant (as defined in
Schedule 3 to the Participation Agreement), such information to be furnished by
the Owner Participant, (vii) the equity placement fee and reasonable
disbursements of Lessee's Advisor, such information to be furnished by Lessee
and (viii) an allocable portion of the underwriting fee and other expenses
relating to the public offering of the Pass Through Certificates, such
information to be furnished by Lessee.

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

       "TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or

<PAGE>

all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.

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

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

       "TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds and
requisition, indemnity or other payments of any kind for of with respect to the
Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payment.

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

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

       "TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage
[_____________] 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.

<PAGE>

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

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

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

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

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

<PAGE>

<TABLE>
<CAPTION>
                                                                   -------------------------
                                                                          SCHEDULE 1
                                                                              TO
                                                                    PARTICIPATION AGREEMENT
                                                                   -------------------------

                                    ACCOUNTS; ADDRESSES

                             ACCOUNT FOR PAYMENTS                ADDRESS FOR NOTICES
                             --------------------                -------------------
<S>                          <C>                                 <C>
CONTINENTAL AIRLINES, INC.   The Chase Manhattan Bank            Continental 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
                              Lease [_____]

OWNER PARTICIPANT            [_____]                             [_____]

THE BOEING COMPANY           The Chase Manhattan Bank            The Boeing Company
                             New York, New York 10081            P.O. Box 3707
                             Account No.: 910-1-012764           Seattle, Washington 98124-
                             ABA#: 021-000021                    3707
                             Attention: Paul Trupia              Attention: Treasurer
                             Voice: 212-552-2829                  M/S 68-34
                             Facsimile: 212-552-0107             Facsimile: (206) 237-8746
                             Reference: Continental
                              Lease [_____]

WELLS FARGO BANK             Wells Fargo Bank Northwest,         Wells Fargo Bank Northwest,
NORTHWEST, NATIONAL          National Association                National Association
ASSOCIATION                  79 South Main Street                79 South Main Street
                             Salt Lake City, Utah  84111         Salt Lake City, Utah  84111
                             Account No.: 051-0922115            Attention: Corporate Trust
                             Corporate Trust Department          Department
                             ABA#: 124-0000-12                   Facsimile: (801) 246-5053
                             Reference: Continental
                             Lease[____]

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS 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
                             Lease [____]

<PAGE>

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS SUBORDINATION AGENT       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
                              Lease [___]

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS PASS THROUGH TRUSTEE      New York, New York 10081            Rodney Square North
FOR THE 2001-1A-1 PASS       Account No.: 920-1-014363           1100 North Market Street
THROUGH TRUST                ABA#: 021-000021                    Wilmington, Delaware 19890
                             Attention: Corporate Trust          Attention: Corporate Trust
                              Administration                      Administration
                             Reference: Continental              Facsimile: (302) 651-8882
                              Lease [___]

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS PASS THROUGH TRUSTEE      New York, New York 10081            Rodney Square North
FOR THE 2001-1A-2 PASS       Account No.: 920-1-014363           1100 North Market Street
THROUGH TRUST                ABA#: 021-000021                    Wilmington, Delaware 19890
                             Attention: Corporate Trust          Attention: Corporate Trust
                              Administration                      Administration
                             Reference: Continental              Facsimile: (302) 651-8882
                              Lease [___]

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS PASS THROUGH TRUSTEE      New York, New York 10081            Rodney Square North
FOR THE 2001-1B PASS         Account No.: 920-1-014363           1100 North Market Street
THROUGH TRUST                ABA#: 021-000021                    Wilmington, Delaware 19890
                             Attention: Corporate Trust          Attention: Corporate Trust
                              Administration                      Administration
                             Reference: Continental              Facsimile: (302) 651-8882
                              Lease [___]

WILMINGTON TRUST COMPANY,    The Chase Manhattan Bank            Wilmington Trust Company
AS PASS THROUGH TRUSTEE      New York, New York 10081            Rodney Square North
FOR THE 2001-1C PASS         Account No.: 920-1-014363           1100 North Market Street
THROUGH TRUST                ABA#: 021-000021                    Wilmington, Delaware 19890
                             Attention: Corporate Trust          Attention: Corporate Trust
                              Administration                      Administration
                             Reference: Continental              Facsimile: (302) 651-8882
                              Lease [___]
</TABLE>

<PAGE>
                                                      -------------------------
                                                             SCHEDULE 2
                                                                 TO
                                                       PARTICIPATION AGREEMENT
                                                      -------------------------

                                   COMMITMENTS

<TABLE>
<CAPTION>
PARTICIPANT              PERCENTAGE OF LESSOR'S     DOLLAR AMOUNT
-----------              ----------------------     -------------
                         COST
                         ----

<S>                      <C>                        <C>
OWNER PARTICIPANT        OWNER PARTICIPANT'S
                         PERCENTAGE

PASS THROUGH TRUSTEE     LOAN PARTICIPANT'S
                         PTT PERCENTAGE

TOTAL                    100%
</TABLE>

<PAGE>

                                                      -------------------------
                                                             SCHEDULE 3
                                                                 TO
                                                       PARTICIPATION AGREEMENT
                                                      -------------------------

                                  CERTAIN TERMS

<TABLE>
<CAPTION>
DEFINED TERM                                      DEFINITION
<S>                                               <C>
BFE Amount                                        [______________]

Commitment Termination Date                       [______________]

Lessor's Cost                                     [______________]

Lessee's Advisor
OP Jurisdiction                                   [______________]

Special counsel to the Owner
Participant                                       [______________]
</TABLE>-------------------------------------------------------------------------
      CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND 4 OF THIS
          LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON DISSEMINATION
    SET FORTH IN SECTION 8 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN)
    -------------------------------------------------------------------------

================================================================================

                            LEASE AGREEMENT [______]

                          Dated as of [_______________]

                                     Between

                           WELLS FARGO BANK NORTHWEST,
                              NATIONAL ASSOCIATION,
                         Not in its Individual Capacity,
                      except as expressly provided herein,
                          but solely as Owner Trustee,

                                     Lessor

                                       and

                           CONTINENTAL AIRLINES, INC.,

                                     Lessee

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

                      One Boeing Model [737-824] [737-924]
                          [767-424] [777-224] Aircraft
              Bearing United States Registration No. N[______] and
               Bearing Manufacturer's Serial No. [______] with two
                               [CFM MODEL 56-7B26]
                 [GE MODEL CF6-80C2B8F] [GE MODEL GE90] Engines
         Bearing Engine Manufacturer's Serial Nos. [______] and [______]

================================================================================

      THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO, AMONG OTHER THINGS,
THIS LEASE AGREEMENT HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF WILMINGTON TRUST COMPANY, A DELAWARE BANKING CORPORATION, AS
MORTGAGEE, UNDER THE TRUST INDENTURE AND MORTGAGE [______], DATED AS OF
[_______________], FOR THE BENEFIT OF THE HOLDERS OF THE EQUIPMENT NOTES
REFERRED TO IN SUCH TRUST INDENTURE, ALL TO THE EXTENT PROVIDED IN SUCH TRUST
INDENTURE. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS; TO
THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN LESSOR'S RIGHT, TITLE AND INTEREST IN AND
TO THIS LEASE AGREEMENT MAY BE PERFECTED THROUGH THE DELIVERY OR POSSESSION OF
ANY COUNTERPART OF THIS LEASE AGREEMENT OTHER THAN THE COUNTERPART OF THIS LEASE
AGREEMENT THAT CONTAINS THE ORIGINAL RECEIPT EXECUTED BY WILMINGTON TRUST
COMPANY, AS MORTGAGEE.

<PAGE>

                                    CONTENTS

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

SECTION 2.          DELIVERY AND ACCEPTANCE...................................1

         2.1        Delivery and Lease of Aircraft............................1
         2.2        Acceptance by Lessee......................................2

SECTION 3.          TERM AND RENT.............................................2

         3.1        Term......................................................2
         3.2        Rent......................................................2
         3.3        Payments..................................................6

SECTION 4.          DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
                    SECTION 1110 MATTERS......................................6

         4.1        Disclaimer................................................7
         4.2        Certain Agreements of Lessor..............................7
         4.3        Quiet Enjoyment...........................................7
         4.4        Investment of Funds Held as Security......................8
         4.5        Title Transfers by Lessor.................................8
         4.6        Lessor's Interest in Certain Engines......................9
         4.7        Lease For U.S. Federal Income Tax Law
                    Purposes; Section 1110 of Bankruptcy Code................10

SECTION 5.          RETURN OF AIRCRAFT.......................................10

         5.1        Compliance with Annex B..................................10
         5.2        Storage and Related Matters..............................10
         5.3        Return of Other Engines..................................11
         5.4        Fuel.....................................................11

SECTION 6.          LIENS....................................................11

SECTION 7.          REGISTRATION, OPERATION, POSSESSION,
                    SUBLEASING AND RECORDS...................................12

         7.1        Registration and Operation...............................12
         7.2        Possession...............................................14
         7.3        Certain Limitations on Subleasing or Other
                    Relinquishment of Possession.............................18

<PAGE>

SECTION 8.          MAINTENANCE; REPLACEMENT AND POOLING OF
                    PARTS; ALTERATIONS, MODIFICATIONS AND
                    ADDITIONS; OTHER LESSEE COVENANTS.........................19

         8.1        Maintenance; Replacement and Pooling of
                    Parts; Alterations, Modifications and
                    Additions.................................................19
         8.2        Information, Certificates, Notices and
                    Reports...................................................19

SECTION 9.          VOLUNTARY TERMINATION UPON OBSOLESCENCE...................21

         9.1        Right of Termination......................................21
         9.2        Election by Lessor to Sell................................21
         9.3        Retention of Aircraft by Lessor...........................24

SECTION 10.         LOSS, DESTRUCTION, REQUISITION, ETC.......................26

         10.1       Event of Loss With Respect to Aircraft....................26
         10.2       Event of Loss With Respect to an Engine...................28
         10.3       Conditions to any Replacement.............................29
         10.4       Conveyance to Lessee......................................31
         10.5       Application of Payments...................................31
         10.6       Requisition of Aircraft for Use...........................32
         10.7       Requisition of an Engine for Use..........................33
         10.8       Application of Payments...................................33
         10.9       Application of Payments During Existence of
                    a Lease Event of Default..................................33

SECTION 11.         INSURANCE.................................................34

         11.1       Lessee's Obligation to Insure.............................34
         11.2       Insurance for Own Account.................................34
         11.3       Indemnification by Government in Lieu of
                    Insurance.................................................34
         11.4       Application of Insurance Proceeds.........................35
         11.5       Application of Payments During Existence of
                    Lease Event of Default....................................35

SECTION 12.         INSPECTION................................................35

SECTION 13.         ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............36

         13.1       In General................................................36
         13.2       Merger of Lessee..........................................36
         13.3       Assignment Security for Lessor's
                    Obligations...............................................37
         13.4       Successor Owner Trustee...................................38

<PAGE>

SECTION 14.         LEASE EVENTS OF DEFAULT...................................38

         14.1       Payments..................................................38
         14.2       Insurance.................................................39
         14.3       Other Covenants...........................................39
         14.4       Representations and Warranties............................39
         14.5       Bankruptcy and Insolvency.................................40

SECTION 15.         REMEDIES AND WAIVERS......................................40

         15.1       Remedies..................................................40
         15.2       Limitations Under CRAF....................................44
         15.3       Right to Perform for Lessee...............................44
         15.4       Determination of Fair Market Rental Value
                    and Fair Market Sales Value...............................45
         15.5       Remedies Cumulative.......................................45

SECTION 16.         LESSEE'S OBLIGATIONS; NO SETOFF,
                    COUNTERCLAIM, ETC.........................................46

SECTION 17.         RENEWAL AND PURCHASE OPTIONS..............................46

         17.1       Notices Generally.........................................46
         17.2       Renewal Options...........................................47
         17.3       Purchase Option...........................................49
         17.4       Appraisals................................................50

SECTION 18.         MISCELLANEOUS.............................................51

         18.1       Amendments................................................51
         18.2       Severability..............................................51
         18.3       Third-Party Beneficiary...................................51
         18.4       Reproduction of Documents.................................52
         18.5       Counterparts..............................................52
         18.6       Notices...................................................52
         18.7       GOVERNING LAW; SUBMISSION TO JURISDICTION;
                    VENUE.....................................................53
         18.8       No Waiver.................................................54
         18.9       Entire Agreement..........................................54

<PAGE>

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A             Definitions
ANNEX B             Return Conditions
ANNEX C             Maintenance
ANNEX D             Insurance

EXHIBIT A           Form of Lease Supplement
EXHIBIT B           Form of Return Acceptance Supplement

SCHEDULE 1          Certain Terms
SCHEDULE 2          Basic Rent
SCHEDULE 3          Stipulated Loss Value Schedule
SCHEDULE 4          Termination Value Schedule
SCHEDULE 5          Permitted Countries
SCHEDULE 6          Placards

<PAGE>

                            LEASE AGREEMENT [______]

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

                                    RECITALS

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

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

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

SECTION 1.     DEFINITIONS AND CONSTRUCTION

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

SECTION 2.     DELIVERY AND ACCEPTANCE

        2.1    DELIVERY AND LEASE OF AIRCRAFT

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

<PAGE>

        2.2    ACCEPTANCE BY LESSEE

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

      (b) Lessor has authorized one or more employees of Lessee, designated by
Lessee in writing, as the authorized representative or representatives of Lessor
to accept delivery of the Aircraft on behalf of Lessor pursuant to the Purchase
Agreement Assignment and the Participation Agreement. Lessee hereby agrees that
if delivery of the Aircraft shall be accepted by an employee or employees of
Lessee pursuant to such authorization by Lessor, such acceptance of delivery by
such employee or employees on behalf of Lessor shall, without further act,
irrevocably constitute acceptance by Lessee of the Aircraft for all purposes of
this Agreement.

SECTION 3.     TERM AND RENT

        3.1    TERM

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

        3.2    RENT

               3.2.1    INTERIM RENT; BASIC RENT; ADJUSTMENTS TO
                        BASIC RENT AND CERTAIN OTHER AMOUNTS

      (a) Lessee shall pay Interim Rent to Lessor on the last day of the Interim
Lease Term, which shall be allocated to the Interim Lease Term. During the Base
Lease Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the
amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such
Payment Date, which shall be allocated to the Payment Period ending on such
Payment Date, if designated as a payment in arrears, or allocated to the Payment
Period commencing on such Payment Date, if designated as a payment in advance,
in each case as specified in Schedule 2, as such amount may be adjusted pursuant
to Section 3.2.1(b).

<PAGE>

      (b) Basic Rent, Stipulated Loss Values and Termination Values, shall be
subject to adjustment as follows:

            (i) In the event that Transaction Expenses paid by Lessor pursuant
      to Section 9.2 of the Participation Agreement are determined to be other
      than 1.0% of Lessor's Cost, then in each case the Basic Rent percentages
      set forth in Schedule 2, Stipulated Loss Value percentages set forth in
      Schedule 3 and the Termination Value percentages set forth in Schedule 4
      shall be recalculated (upwards or downwards) by the Owner Participant, on
      or prior to the 120th day after the Delivery Date using the same methods
      and assumptions used to calculate original Basic Rent, Stipulated Loss
      Value and Termination Value percentages in order to (1) maintain the Owner
      Participant's Net Economic Return and (2) minimize the Net Present Value
      of Rents to Lessee to the extent possible consistent with clause (1)
      hereof.

            (ii) In the event of a refinancing as contemplated by Section 11 of
      the Participation Agreement, then the Basic Rent percentages set forth in
      Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3 and
      the Termination Value percentages set forth in Schedule 4 shall be
      recalculated (upwards and downwards) by the Owner Participant as
      contemplated by such Section to (1) maintain the Owner Participant's Net
      Economic Return and (2) to the extent possible consistent with clause (1)
      hereof, minimize the Net Present Value of Rents to Lessee.

            (iii) In the event that Lessee is required to indemnify the Owner
      Participant under the Tax Indemnity Agreement, then (A) in the event that
      the Lessee agrees to satisfy such indemnity obligation pursuant to Section
      __ of the Tax Indemnity Agreement, the Basic Rent percentages set forth in
      Schedule 2, and (B) in any event, the Stipulated Loss Value percentages
      set forth in Schedule 3 and the Termination Value percentages set forth in
      Schedule 4 shall be recalculated (upwards or downwards) by Owner
      Participant, using the same methods and assumptions (except to the extent
      such assumptions shall be varied to take into account the Tax Loss or
      Foreign Tax Credit Loss (as each such term is defined in the Tax Indemnity
      Agreement) that is the subject of such indemnification and any prior or
      contemporaneous Tax Loss or Foreign Tax Credit Loss) used to calculate the
      Basic Rent percentages, the Stipulated Loss Value percentages and the
      Termination Value percentages on the Delivery Date, in order to (1)

<PAGE>

      maintain the Owner Participant's Net Economic Return and (2) to the extent
      possible consistent with clause (1) hereof, minimize the Net Present Value
      of Rents to Lessee.

      (c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with this Section 3.2.1(c),
on the basis of the same methodology and assumptions used by Owner Participant
in determining the percentages of Basic Rent, Stipulated Loss Value and
Termination Value as of the Delivery Date, except as such assumptions have been
modified to reflect the events giving rise to adjustments hereunder. Promptly
after an adjustment is made hereunder, Owner Participant shall deliver to Lessee
a description of such adjustment, setting forth in reasonable detail the
calculation thereof. All adjustments shall (i) be made so as to avoid
characterization of the Lease as a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code unless such adjustments
are made in a manner that reflects the effect of such characterization and (ii)
be in compliance with the requirements of Sections 4.02(5), 4.07(l) and, on a
prospective basis, 4.08(1) of Revenue Procedure 75-28, except to the extent that
on the Delivery Date the Lease constituted a "disqualified leaseback or
long-term agreement" or was not in compliance with the regulations referred to
in clause (ii). All adjustments required pursuant to Section 3.2.1(b) shall be
set forth in a Lease Supplement or in an amendment to this Lease, and promptly
after execution thereof by Lessor and Lessee, Lessee shall give a copy thereof
to Mortgagee.

      (d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error, and if, after consultation, Lessee and Owner
Participant are unable to agree on an adjustment, then a nationally recognized
firm of accountants selected by Lessee and reasonably satisfactory to Owner
Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.1(c) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a

<PAGE>

confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in Basic Rent which
decreases the remaining Net Present Value of Rents by ten or more basis points
from the remaining Net Present Value of Rents as recalculated by the Owner
Participant, then the Owner Participant will pay such costs and expenses.

      (e) Notwithstanding anything to the contrary in any Operative Agreement,
the amount of the payment of Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of such Payment Date (assuming
timely payment of the Equipment Notes prior to such Date), the aggregate
principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens, (ii) any modification of the payment terms of the
Equipment Notes, other than as required or permitted by any Operative Agreement
(including, without limitation, as permitted upon the occurrence of a Lease
Event of Default) or (iii) the acceleration of any Equipment Note or Equipment
Notes due solely to the occurrence of an Indenture Event of Default that does
not constitute a Lease Event of Default.

               3.2.2    SUPPLEMENTAL RENT

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

<PAGE>

        3.3    PAYMENTS

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

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

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

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

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

<PAGE>

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

        4.1    DISCLAIMER

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

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

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

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

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

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

        4.2    CERTAIN AGREEMENTS OF LESSOR

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

        4.3    QUIET ENJOYMENT

      So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to

<PAGE>

continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term.

        4.4    INVESTMENT OF FUNDS HELD AS SECURITY

               4.4.1    INVESTMENT

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

               4.4.2    PAYMENT OF GAIN OR LOSS

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

               4.4.3    LIMITATION OF LIABILITY

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

<PAGE>

        4.5    TITLE TRANSFERS BY LESSOR

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

        4.6    LESSOR'S INTEREST IN CERTAIN ENGINES

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

<PAGE>

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

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

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

SECTION 5.     RETURN OF AIRCRAFT

        5.1    COMPLIANCE WITH ANNEX B

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

        5.2    STORAGE AND RELATED MATTERS

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

<PAGE>

        5.3    RETURN OF OTHER ENGINES

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

        5.4    FUEL

      Upon the return of the Airframe upon any termination of this Lease, Lessor
shall pay Lessee, as compensation for any fuel or oil contained in the fuel or
oil tanks of such Airframe, the value of such fuel or oil at the price paid by
Lessee for such fuel or oil, PROVIDED that if the Aircraft is being returned in
connection with the exercise of remedies pursuant to Section 15, Lessor shall
have no obligation to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to Section 15.

SECTION 6.     LIENS

      Lessee shall not, directly or indirectly, create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted Sublease, except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative Agreements, or of any Permitted Sublessee under any Permitted
Sublease; (b) Lessor Liens; (c) the rights of others under agreements or
arrangements to the extent permitted by the terms of Sections 7.2 and 7.3 or
Annex C; (d) Liens for Taxes of Lessee (and its U.S. federal tax law
consolidated group), or Liens for Taxes of any Tax Indemnitee (and its U.S.
federal tax law consolidated group) for which Lessee is obligated to indemnify
such Tax Indemnitee under any of the Lessee Operative Agreements, in any such
case either not yet due or being contested in good faith by appropriate
proceedings so long as such Liens and such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any
Engine or the interest of any Participant 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

<PAGE>

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, any Engine or the interest of any
Participant therein or impair the lien of the Trust Indenture; (f) Liens arising
out of any judgment or award against Lessee (or against any Permitted
Sublessee), 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, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture,
and (g) any other Lien with respect to which Lessee (or any Permitted Sublessee)
shall have provided a bond, cash collateral or other security adequate in the
reasonable opinion of Lessor. Lessee shall promptly take (or cause to be taken)
such action as may be necessary duly to discharge (by bonding or otherwise) any
Lien not excepted above if the same shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term.

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

        7.1    REGISTRATION AND OPERATION

               7.1.1    REGISTRATION AND RECORDATION

      Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute and deliver all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority

<PAGE>

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 Lessor or Mortgagee to
execute and deliver any necessary documents).

               7.1.2    REREGISTRATION

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

               7.1.3    MARKINGS

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

               7.1.4    COMPLIANCE WITH LAWS

      Lessee shall not, and shall not allow any other person to, operate, use,
maintain, service, repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft, the Airframe or any Engine, or (b) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, the Airframe or any Engine, except
(1) immaterial or non-recurring violations with respect to which corrective
measures are taken promptly by Lessee or a Permitted Sublessee, as the case may
be, upon discovery thereof, and (2) to the extent Lessee or any Permitted
Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner which does not involve any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the

<PAGE>

interest of any Participant therein, any material risk of criminal liability or
of material civil penalty against Lessor, Mortgagee or any Participant or impair
the lien of the Trust Indenture.

               7.1.5    OPERATION

      Lessee agrees not to operate, use or locate the Aircraft, the Airframe or
any Engine, or allow the Aircraft, the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of Section 11, except in the case of a requisition by the U.S.
Government where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government, or insurance from the U.S. Government, covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case referred to in this Section 7.1.5 the Aircraft is only temporarily
operated, used or located in such area as a result of an emergency, equipment
malfunction, navigational error, hijacking, weather condition or other similar
unforeseen circumstances, so long as Lessee diligently and in good faith
proceeds to remove the Aircraft from such area.

        7.2    POSSESSION

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

               7.2.1    INTERCHANGE AND POOLING

      Subject or permit any Permitted Sublessee to subject (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 Lessee or such Permitted
Sublessee, as the case may be, in the ordinary course of business; PROVIDED,
HOWEVER, that if Lessor's title to any such Engine is divested under any such
agreement or arrangement, then such Engine shall be deemed to have suffered an
Event of Loss as of the date of such divestiture, with the effect that Lessee

<PAGE>

shall be required to replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, Section 10.

               7.2.2    TESTING AND SERVICE

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

               7.2.3    TRANSFER TO U.S. GOVERNMENT

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

               7.2.4    INSTALLATION OF ENGINES ON OWNED AIRCRAFT

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

               7.2.5    INSTALLATION OF ENGINES ON OTHER AIRFRAMES

      Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,

<PAGE>

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

               7.2.6    INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

      Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such
Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject
to a conditional sale or other security agreement under circumstances where
neither Section 7.2.4 or 7.2.5 is applicable; PROVIDED, HOWEVER, that any such
installation shall be deemed an Event of Loss with respect to such Engine, and
Lessee shall comply with Section 10.2 hereof in respect thereof.

               7.2.7    SUBLEASING

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

      (a) Lessee shall provide written notice to Lessor and Mortgagee (such
notice in the event of a sublease to a U.S. Air Carrier to be given promptly
after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 10 days in advance of entering into such sublease);

      (b) At the time that Lessee enters into such sublease, such Permitted Air
Carrier shall not be 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;

      (c) Any such sublease (i) shall not extend beyond the expiration of the
Base Lease Term or any Renewal Lease Term then in effect unless Lessee shall

<PAGE>

have irrevocably committed to purchase the Aircraft, (ii) shall include
provisions for the maintenance, operation, possession, inspection and insurance
of the Aircraft that are the same in all material respects as the applicable
provisions of this Lease and (iii) shall be expressly subject and subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder, including, without limitation, Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default;

      (d) In connection with a sublease to a Permitted Foreign Air Carrier, (1)
the 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 Delivery Date) and (2)
Lessee shall have furnished Lessor and Mortgagee a favorable opinion of counsel,
reasonably satisfactory to Lessor, in the country of domicile of such Permitted
Foreign Air Carrier, that (i) the terms of such sublease are the legal, valid
and binding obligations of the parties thereto enforceable under the laws of
such jurisdiction, (ii) it is not necessary for Owner Participant, Lessor or
Mortgagee to register or qualify to do business in such jurisdiction, if not
already so registered or qualified, as a result, in whole or in part, of the
proposed sublease, (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease) and (v) the agreement of such Permitted Air Carrier
that its rights under the sublease are subject and subordinate to all the terms
of this Lease is enforceable against such Permitted Air Carrier under applicable
law;

      (e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant
evidence reasonably satisfactory to Lessor that the insurance required by
Section 11 remains in effect;

      (f) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the title

<PAGE>

of Lessor, and the first priority security interest (subject to Permitted Liens)
of Mortgagee, in the Aircraft, Airframe and Engines;

      (g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant for all
of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease; and

      (h) No such sublease shall be made to a Permitted Foreign Air Carrier
prior to the close of the Tax Attribute Period, unless Lessee prepays on a
lump-sum basis any liability due under the Tax Indemnity Agreement as a result
of such sublease based upon the assumption that such sublease were to continue
for the remainder of the term of such sublease.

        7.3    CERTAIN LIMITATIONS ON SUBLEASING OR OTHER
               RELINQUISHMENT OF POSSESSION

      Notwithstanding anything to the contrary in Section 7.2:

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

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

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

      (d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition

<PAGE>

of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and

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

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

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

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

        8.2    INFORMATION, CERTIFICATES, NOTICES AND REPORTS

               8.2.1    FINANCIAL INFORMATION

      Lessee will furnish to Lessor:

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

      (b)   Within 120 days after the end of each fiscal year of Lessee, a
            consolidated balance sheet of Lessee as of the end of such fiscal
            year and related statements of income and cash flows of Lessee for
            such fiscal year, in comparative form with the preceding fiscal

<PAGE>

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

               8.2.2    ANNUAL CERTIFICATE

      Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee (which,
in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail and, in
such case, need not include a manual signature of a required officer but instead
shall set forth a typed signature of such an officer) to the effect that such
officer is familiar with or has reviewed or caused to be reviewed the relevant
terms of this Lease and the other Lessee Operative Agreements and that such
officer does not have knowledge of the existence as at the date of such
certificate of any Lease Event of Default or, if any such Lease Event of Default
exists, specifying the nature and period of existence thereof and the action
Lessee has taken or is taking or proposes to take with respect thereto.

               8.2.3    INFORMATION FOR FILINGS

      Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to be filed by it
as lessor under the Lease or to enable Owner Participant to timely file any
reports required to be filed by it, as the beneficiary of the Trust Estate, in
either case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines,
this Lease or any other part of the Trust Estate; provided, however, that with
respect to any such information which Lessee reasonably deems commercially
sensitive or confidential, Owner Participant or Lessor, as the case may be,
shall afford Lessee a reasonable opportunity to seek from any such Government
Entity a waiver of the obligation of Owner Participant or Lessor to file any

<PAGE>

such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver
or consent is evidenced to the reasonable satisfaction of Owner Participant or
Lessor, as the case may be, then Lessee shall not be required to furnish such
information to Owner Participant or Lessor.

SECTION 9.     VOLUNTARY TERMINATION UPON OBSOLESCENCE

        9.1    RIGHT OF TERMINATION

      (a) Lessee shall have the right at its option to terminate this Lease
during the Base Lease Term, effective only on a Termination Date occurring on or
after the fifth anniversary of the Delivery Date, if:

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

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

      (b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell
or retain the Aircraft, as provided in this Section 9, within 30 days after
Lessee gives Lessor written notice pursuant to Section 9.1(a)(ii). Any failure
by Lessor to give such notice of its election shall be deemed to be an election
to sell the Aircraft, as provided in this Section 9.

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

        9.2    ELECTION BY LESSOR TO SELL

               9.2.1    BIDS; CLOSING OF SALE

      Unless Lessor has given Lessee notice of Lessor's election to retain the
Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days

<PAGE>

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

               9.2.2    CLOSING OF SALE

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

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

<PAGE>

            (i) all unpaid Basic Rent due at any time prior to such Termination
      Date and all Basic Rent due on such Termination Date to the extent payable
      in arrears with respect to the Payment Period then ended; plus

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

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

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

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

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

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

      (d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place
only on a Termination Date. Subject to Section 9.3, if no sale shall have
occurred on or as of the proposed Termination Date, this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall

<PAGE>

continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.

               9.2.3    WITHDRAWAL OF NOTICE OF TERMINATION

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

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

        9.3    RETENTION OF AIRCRAFT BY LESSOR

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

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

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

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

<PAGE>

                  (1)   all unpaid Basic Rent due at any time prior to such
                        Termination Date and all Basic Rent due on such
                        Termination Date to the extent payable in arrears with
                        respect to the Payment Period then ended; plus

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

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

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

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

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

<PAGE>

SECTION 10.    LOSS, DESTRUCTION, REQUISITION, ETC.

        10.1   EVENT OF LOSS WITH RESPECT TO AIRCRAFT

               10.1.1   NOTICE AND ELECTION

      (a) Upon the occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within 15 days after such occurrence)
give Lessor and Mortgagee written notice of such Event of Loss. Within 45 days
after such occurrence, Lessee shall give Lessor and Mortgagee written notice of
Lessee's election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3.

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

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

               10.1.2   PAYMENT OF LOSS AND TERMINATION OF LEASE

      (a) If Lessee elects, in accordance with Section 10.1.1, to make payment
in respect of any such Event of Loss, then Lessee shall pay, in the manner and
in funds of the type specified in Section 3.3, the following amounts:

            (i) on 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 occurrence (but in any event not earlier
      than the date of Lessee's election under Section 10.1.1 to make payment
      under this Section 10.1.2), Lessee shall pay to Lessor:

<PAGE>

            (1)   all unpaid Interim Rent, Basic Rent or Renewal Rent, as the
                  case may be, due at any time prior to the Stipulated Loss
                  Value Date that is on or immediately preceding the Loss
                  Payment Date; plus

            (2)   the Stipulated Loss Value of the Aircraft computed as of the
                  Stipulated Loss Value Date used in the foregoing clause (1)
                  for the computation of unpaid Rent; plus

            (3)   if the Stipulated Loss Value Date used in the foregoing clause
                  (1) is a Payment Date on which Basic Rent payable in arrears
                  is due, the amount of such Basic Rent; plus

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

            (5)   interest on the amounts specified in the foregoing clauses (2)
                  and (3) at the SLV Rate from and including the Stipulated Loss
                  Value Date used in the foregoing clause (1) for the
                  computation of unpaid Rent to the date such amount is due, and
                  thereafter at the Payment Due Rate to the date of payment of
                  such amounts in full; and

            (ii) on or before the date required for payment of the amounts
      specified in paragraph (i) above, Lessee shall also pay to Lessor,
      Mortgagee and the other Participants all other amounts due and payable by
      Lessee to Lessor, Mortgagee and the other Participants under this Lease,
      the Participation Agreement or any other Lessee Operative Agreement.

      (b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Interim Rent, Basic Rent or
Renewal Rent hereunder with respect to the Aircraft shall terminate, (ii) the
Term for the Aircraft shall end and (iii) Lessor will transfer the Aircraft to
Lessee, as-is and where-is, and subject to any insurer's salvage rights, but
otherwise in the manner described in Section 4.5.

<PAGE>

               10.1.3   REPLACEMENT OF AIRFRAME AND ENGINES

      (a) If Lessee elects, in accordance with Section 10.1.1, to replace the
Airframe, and any Engines actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in Section 10.3,
then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts required under,
and in accordance with, Section 10.1.2.

      (b) Any such Replacement Airframe shall be an airframe that is the same
model as the Airframe to be replaced thereby, or an improved model, and that has
a value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check), at least equal to the
Airframe to be replaced thereby (assuming that such Airframe had been maintained
in accordance with the Lease). Any such Replacement Engine shall meet the
requirements of, and be conveyed by Lessee to Lessor in accordance with, Section
10.2 (other than the notice requirement set forth in Section 10.2.1).

        10.2   EVENT OF LOSS WITH RESPECT TO AN ENGINE

               10.2.1   NOTICE

      Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to the Airframe has not
occurred, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.

               10.2.2   REPLACEMENT OF ENGINE

      Lessee shall, promptly and in any event within 60 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear

<PAGE>

of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).

               10.2.3   ENGINE EXCHANGE

      Upon not less than five (5) Business Days' prior written notice to Lessor,
Lessee may replace any Engine leased hereunder with another engine (the
"Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged
Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall
comply with the provisions of Section 10.3 with regard to the Exchanged Engine
and the Engine so replaced.

        10.3   CONDITIONS TO ANY REPLACEMENT

               10.3.1   DOCUMENTS

      Prior to or at the time of conveyance of title to any Replacement Airframe
or Replacement Engine to Lessor, Lessee shall take each of the following
actions:

      (a) furnish Lessor with a full warranty bill of sale duly conveying to
Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;

      (b) cause (i) a Lease Supplement subjecting such Replacement Airframe or
Replacement Engine to this Lease, duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation with
the FAA pursuant to the Act, (ii) a Trust Indenture Supplement, subjecting such
Replacement Airframe or Replacement Engine to the Trust Indenture, to be
delivered to Lessor for execution and, upon execution, to be filed for
recordation with the FAA pursuant to the Act and (iii) such Financing Statements
and other filings, as Lessor or Mortgagee may reasonably request, duly executed
by Lessee and, to the extent applicable, Lessor and Mortgagee (and Lessor and
Mortgagee shall execute and deliver the same), to be filed in such locations as
any such party may reasonably request;

<PAGE>

      (c) furnish such evidence of compliance with the insurance provisions of
Section 11 with respect to such Replacement Airframe or Replacement Engine as
Lessor may reasonably request;

      (d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed to
Lessor and Mortgagee to the effect that (i) such full warranty bill of sale
referred to in Section 10.3.1(a) constitutes an effective instrument for the
conveyance of title to the Replacement Airframe or Replacement Engine and (ii)
in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;

      (e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for recordation
of each Lease Supplement and Trust Indenture Supplement with respect to such
Replacement Airframe or Replacement Engine under the Act; and

      (f) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessor's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.1.3(b).

      Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.

<PAGE>

               10.3.2   OTHER OBLIGATIONS

      (a) Lessor and Lessee agree that, upon any Replacement Airframe becoming
the Airframe hereunder, and upon any Replacement Engine becoming an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease for
U.S. federal income tax purposes of, among other things, such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits.

      (b) No Event of Loss with respect to an Engine, or with respect to an
Airframe, shall result in, or otherwise allow or permit (other than as provided
in Section 10.1.2(b)), any reduction, deferral, discharge or other change in the
timing or amount of any Rent payable by Lessee hereunder, and (subject to such
Section 10.1.2(b)) Lessee shall pay all such Rent and other amounts as though
such Event of Loss had not occurred.

        10.4   CONVEYANCE TO LESSEE

      Upon compliance by Lessee with the applicable terms of Sections 10.1.3,
10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the
case may be, with respect to which such Event of Loss occurred, in accordance
with Section 4.5.

        10.5   APPLICATION OF PAYMENTS

      Any amounts, other than insurance proceeds in respect of damage or loss
not constituting an Event of Loss (the application of which is provided for in
Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee
from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:

               10.5.1   REPLACEMENT OF AIRFRAME AND ENGINES

      If such amounts are received with respect to the Airframe, and any Engine
installed thereon at the time of such Event of Loss, upon compliance by Lessee
with the applicable terms of Section 10.1.3 with respect to the Event of Loss
for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.

<PAGE>

               10.5.2   LOSS OF ENGINE

      If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.

               10.5.3   PAYMENT OF LOSS

      If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:

      (a) FIRST, if the sum described in Section 10.1.2 has not then been paid
in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so long
as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged, except with respect to Excluded Payments) to the
extent necessary to pay in full such sum;

      (b) SECOND, the remainder, if any, shall be paid to Lessee.

        10.6   REQUISITION OF AIRCRAFT FOR USE

      If any Government Entity shall requisition for use the Airframe and the
Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term or within 30 days thereafter, and
Lessor, upon notice given not less than 30 days nor more than 120 days before
the end of the Term, shall have elected to treat such event as constituting an
Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have
made the election set forth in Section 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss
had occurred as of the end of the Term. If Lessor shall not have elected to
treat such event as an Event of Loss, Lessee shall be obligated to return the
Airframe and Engines or engines to Lessor pursuant to, and in all other respects

<PAGE>

to comply with the provisions of, Section 5 promptly upon their return by such
Government Entity, and Lessee shall pay to Lessor upon such return an amount
equal to the average daily Basic Rent payable by Lessee during the Term for each
day after the end of the Term to but excluding the day of such return, up to a
maximum of 30 days.

        10.7   REQUISITION OF AN ENGINE FOR USE

      If any Government Entity shall requisition for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with the applicable terms
of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had occurred
with respect to such Engine, and any payments received by Lessor or Lessee from
such Government Entity with respect to such requisition shall be paid or
retained in accordance with Section 10.5.2.

        10.8   APPLICATION OF PAYMENTS

      All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term shall be paid over to, or retained by, Lessee
and all payments received by Lessor or Lessee from any Government Entity for the
use of the Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments shall
be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given
notice to Lessee that the Lien of the Trust Indenture has been duly discharged),
and held as provided in Section 10.5.

        10.9   APPLICATION OF PAYMENTS DURING EXISTENCE OF A
               LEASE EVENT OF DEFAULT

      Any amount described in this Section 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default or Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and the
other Lessee Operative Agreements and shall be invested pursuant to Section 4.4
hereof unless and until Lessor shall have demanded liquidated damages pursuant

<PAGE>

to Section 15.1.3 or 15.1.4 and such amount is applied, at the option of Lessor,
or upon the written request of Lessee to Lessor, from time to time during the
continuance of a Lease Event of Default, to Lessee's obligations under this
Lease as and when due, it being understood that any such application shall be
made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Special Default or
Lease Event of Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 10.9.

SECTION 11.    INSURANCE

        11.1   LESSEE'S OBLIGATION TO INSURE

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

        11.2   INSURANCE FOR OWN ACCOUNT

      Nothing in Section 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance required under Annex D with higher limits than those
specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant from
obtaining insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
PROVIDED, HOWEVER, that no insurance may be obtained or maintained that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to this Section 11 and Annex D.

        11.3   INDEMNIFICATION BY GOVERNMENT IN LIEU OF
               INSURANCE

      Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor, other
Government Entity, against such risk in an amount that, when added to the amount
of insurance (including permitted self-insurance), if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such requisition or transfer, shall
be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.

<PAGE>

        11.4   APPLICATION OF INSURANCE PROCEEDS

      As between Lessor and Lessee, all insurance proceeds received as a result
of the occurrence of an Event of Loss with respect to the Aircraft or any Engine
under policies required to be maintained by Lessee pursuant to this Section 11
will be applied in accordance with Section 10.5. All proceeds of insurance
required to be maintained by Lessee, in accordance with Section 11 and Section B
of Annex D, in respect of any property damage or loss not constituting an Event
of Loss with respect to the Aircraft, Airframe or any Engine will be applied in
payment (or to reimburse Lessee) for repairs or for replacement property, and
any balance remaining after such repairs or replacement with respect to such
damage or loss shall be paid over to, or retained by, Lessee.

        11.5   APPLICATION OF PAYMENTS DURING EXISTENCE OF LEASE
               EVENT OF DEFAULT

      Any amount described in this Section 11 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default or Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged) as security for the obligations of Lessee under this
Lease and shall be invested pursuant to Section 4.4 hereof unless and until
Lessor shall have demanded liquidated damages pursuant to Section 15.1.3 or
15.1.4 and such amount is applied, at the option of Lessor, or upon the written
request of Lessee to Lessor, from time to time during the continuance of a Lease
Event of Default, to Lessee's obligations under this Lease and the other Lessee
Operative Agreements as and when due, it being understood that any such
application shall be made to such obligations of Lessee as Lessor may determine
in its sole discretion. At such time as there shall not be continuing any
Special Default or Lease Event of Default, such amount shall be paid to Lessee
to the extent not previously applied in accordance with this Section 11.5.

SECTION 12.    INSPECTION

      (a) At all reasonable times Lessor, Mortgagee or the Owner Participant,
and their respective authorized representatives (the "Inspecting Parties") may
(not more than once every 12 months unless a Lease Event of Default has occurred

<PAGE>

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 Lessee or such Permitted
Sublessee.

      (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
Lessee's or any Permitted Sublessee's maintenance and operation of the Aircraft,
Airframe and Engines.

      (c) With respect to such rights of inspection, Lessor, Owner Participant
and 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 12(a)).

SECTION 13.    ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

        13.1   IN GENERAL

      This Lease and the other Lessee Operative Agreements shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective successors
and permitted assigns. Except as otherwise expressly permitted by the terms of
the Lease or any other Lessee Operative Agreement, Lessee will not, without the
prior written consent of Lessor and Mortgagee, assign any of its rights under
this Lease. Except as otherwise provided herein (including, without limitation,
under the provisions of Section 15 hereof), Lessor and Mortgagee may not assign
or convey any of its right, title and interest in and to this Lease or the
Aircraft without the prior written consent of Lessee, such consent not to be
unreasonably withheld.

        13.2   MERGER OF LESSEE

               13.2.1   IN GENERAL

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

<PAGE>

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

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

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

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

               13.2.2   EFFECT OF MERGER

      Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.

        13.3   ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS

      In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Trust Indenture, among other things, to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor
of Mortgagee, subject to the reservations and conditions therein set forth.
Lessee hereby accepts and consents to the assignment of all Lessor's right,
title and interest in and to this Lease pursuant to the terms of the Trust
Indenture. In accordance with Section 3.3(c), Lessee agrees to pay directly to
Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge
of the Lien of the Trust Indenture, to Lessor), all amounts of Rent (other than

<PAGE>

Excluded Payments) due or to become due hereunder and assigned to Mortgagee and
Lessee agrees that Mortgagee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessee to Lessor to perform the terms and conditions of this Lease shall remain
in full force and effect.

        13.4   SUCCESSOR OWNER TRUSTEE

      Lessee agrees that in the case of the appointment of any successor Owner
Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.

SECTION 14.    LEASE EVENTS OF DEFAULT

      The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:

        14.1   PAYMENTS

      Lessee shall fail to pay any amount of Interim Rent, Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value within ten (10) Business Days
after the same shall have become due; or Lessee shall fail to pay any
Supplemental Rent (other than Stipulated Loss Value or Termination Value) when
due and such failure shall continue for a period in excess of ten (10) Business
Days from and after the date of any written notice to Lessee from Lessor of the

<PAGE>

failure to make such payment when due; provided that any such failure to pay any
Excluded Payment shall not constitute a Lease Event of Default until written
notice is given by the Owner Participant to Lessee and Mortgagee that such
failure constitutes a Lease Event of Default and such failure shall have
continued for a period in excess of ten (10) Business Days after such notice.

        14.2   INSURANCE

      Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.

        14.3   OTHER COVENANTS

      Lessee shall fail to observe or perform (or cause to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor or Mortgagee,
unless such failure is capable of being corrected and Lessee shall be diligently
proceeding to correct such failure, in which case there shall be no Lease Event
of Default unless and until such failure shall continue unremedied for a period
of 270 days after receipt of such notice.

        14.4   REPRESENTATIONS AND WARRANTIES

      Any representation or warranty made by Lessee herein, in the Participation
Agreement or in any other Lessee Operative Agreement (other than the
representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor or Mortgagee to Lessee.

<PAGE>

        14.5   BANKRUPTCY AND INSOLVENCY

      (a) Lessee shall consent to the appointment of or the taking of possession
by a receiver, trustee or liquidator of itself or of substantially all of its
property, or Lessee shall admit in writing its inability to pay its debts
generally as they come due, or does not pay its debts generally as they become
due or shall make a general assignment for the benefit of creditors, or Lessee
shall file a voluntary petition in bankruptcy or a voluntary petition or an
answer seeking reorganization, liquidation or other relief in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such time), or Lessee
shall seek relief by voluntary petition, answer or consent, under the provisions
of any other bankruptcy or other similar Law providing for the reorganization or
winding-up of corporations (as in effect at such time) or Lessee's board of
directors shall adopt a resolution authorizing any of the foregoing; or

      (b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee or of substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 days after the date of
entry thereof; or

      (c) a petition against Lessee in a case under any bankruptcy Laws or other
insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any Law
providing for reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.

SECTION 15.    REMEDIES AND WAIVERS

        15.1   REMEDIES

      If any Lease Event of Default shall occur and be continuing, Lessor may,
at its option and at any time and from time to time, exercise any one or more of
the following remedies as Lessor in its sole discretion shall elect:

<PAGE>

               15.1.1   RETURN AND REPOSSESSION

      Lessor may cause Lessee, upon giving written notice to Lessee, to return
promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor
may so demand, to Lessor or its order in the manner and condition required by,
and otherwise in accordance with, all the provisions of Section 5 as if the
Airframe or Engine were being returned at the end of the Base Lease Term or any
Renewal Lease Term or Lessor, at its option, may enter upon the premises where
the Airframe or any Engine, or any Part thereof, are located and take immediate
possession of and remove the same by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by such
taking or otherwise.

               15.1.2   SALE AND USE

      Lessor may sell the Airframe and/or any Engine at public or private sale,
at such times and places, and to such Persons (including Lessor, Mortgagee or
any Participant), as Lessor may determine; or Lessor may otherwise dispose of,
hold, use, operate, lease to others or keep idle the Airframe and/or any Engine,
as Lessor, in its sole discretion, may determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.

               15.1.3   CERTAIN LIQUIDATED DAMAGES

      Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to
the Airframe and/or any Engine, or any Part thereof, Lessor, by written notice
to Lessee specifying a payment date (which shall be the Stipulated Loss Value
Date next occurring not less than 10 days after the date of such notice), may
demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment
date so specified and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty

<PAGE>

(in lieu of the Interim Rent, Basic Rent or Renewal Rent, as the case may be,
for the Aircraft in respect of all periods commencing on or after the date
specified for payment in such notice), the following amounts:

      (a) all unpaid Interim Rent, Basic Rent or Renewal Rent, as the case may
be, due at any time prior to the Stipulated Loss Value Date specified in such
notice; plus

      (b) whichever of the following amounts Lessor, in its sole discretion
shall specify in such notice:

            (i) an amount equal to the excess, if any, of the present value,
      computed as of the Stipulated Loss Value Date specified in such notice,
      discounted to such date at a rate per annum equal to the Debt Rate,
      compounded semiannually, of all unpaid Interim Rent and Basic Rent during
      the then remaining portion of the Base Lease Term or, if a Renewal Lease
      Term has commenced, of all unpaid Renewal Rent during the remaining
      portion of such Renewal Lease Term, over the Fair Market Rental Value of
      the Aircraft for the remainder of the Term, after discounting such Fair
      Market Rental Value to its then present value (at a rate per annum equal
      to the Debt Rate, compounded semiannually) as of the Stipulated Loss Value
      Date specified in such notice, or

            (ii) an amount equal to the excess, if any, of the Stipulated Loss
      Value for the Aircraft, computed as of the Stipulated Loss Value Date
      specified in such notice, over the Fair Market Sales Value of the
      Aircraft, as of the Stipulated Loss Value Date specified in such notice;
      plus

      (c) interest on the amounts specified in the foregoing clause (a) at the
Payment Due Rate from and including the date on which any such amount was due to
the date of payment of such amount; plus

      (d) interest on the amount specified in the foregoing clause (b)(i) or
(b)(ii), according to Lessor's election, at the Payment Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the date of
payment of such amount.

               15.1.4   LIQUIDATED DAMAGES UPON SALE

      If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have sold
the Airframe and/or any Engine, Lessor, in lieu of exercising its rights under

<PAGE>

Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case
may be, may, if Lessor shall so elect, upon giving written notice to Lessee,
demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such
sale and in the manner and in funds of the type specified in Section 3.3, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Interim Rent, Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date of such sale), the
following amounts:

      (a)   all unpaid Interim Rent, Basic Rent or Renewal Rent, as the case may
            be, due at any time prior to the Stipulated Loss Value Date on or
            immediately preceding the date of such sale; plus

      (b)   an amount equal to the excess, if any, of (i) the Stipulated Loss
            Value of the Aircraft, computed as of the Stipulated Loss Value Date
            used in the foregoing clause (a) for the computation of unpaid Rent,
            over (ii) the proceeds of such sale, minus all reasonable costs of
            Lessor and Mortgagee in connection with the sale; plus

      (c)   if the date of such sale is not a Stipulated Loss Value Date, an
            amount equal to interest on the outstanding principal amount of the
            Equipment Notes at the rate per annum borne thereby from and
            including the Stipulated Loss Value Date used in the foregoing
            clause (a) for the computation of unpaid Rent to the date of such
            sale; plus

      (d)   interest on the amounts specified in the foregoing clause (a) at the
            Payment Due Rate from and including the date on which any such
            amount was due to the date of payment of such amount; plus

      (e)   interest on the sum of the amounts specified in the foregoing clause
            (b) at the Payment Due Rate from and including the date of such sale
            to the date of payment of such amounts.

               15.1.5   RESCISSION

      Lessor may (i) at its option, rescind or terminate this Lease as to the
Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any

<PAGE>

other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof.

               15.1.6   OTHER REMEDIES

      In addition to the foregoing remedies (but without duplication of amounts
otherwise paid under this Section 15), Lessee shall be liable for any and all
unpaid Rent due hereunder before, during or after (except as otherwise provided
herein) the exercise of any of the foregoing remedies and for all reasonable
attorneys' fees and other costs and expenses of Lessor, Mortgagee the Owner
Participant and the Note Holders, including, without limitation, interest on
overdue Rent at the rate as herein provided, incurred by reason of the
occurrence of any Lease Event of Default or the exercise of Lessor's remedies
with respect thereto, including all reasonable costs and expenses incurred in
connection with the return of the Airframe or any Engine, in accordance with the
terms of Section 5 or in placing the Airframe or any Engine, in the condition
and airworthiness required by Section 5.

        15.2   LIMITATIONS UNDER CRAF

      Notwithstanding the provisions of Section 15.1, during any period that the
Aircraft, Airframe or any Engine is subject to CRAF in accordance with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this Lease (or any
Permitted Sublessee's control under any Permitted Sublease) of the Aircraft,
Airframe or such Engine, unless at least 30 days' (or such other period as may
then be applicable under CRAF) written notice of default hereunder shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted Sublessee) with a copy to the Contracting Officer Representative
or Representatives for the Military Airlift Command of the United States Air
Force to whom notices must be given under the contract governing Lessee's (or
any Permitted Sublessee's) participation in CRAF with respect to the Aircraft,
Airframe or any Engine.

        15.3   RIGHT TO PERFORM FOR LESSEE

      If Lessee (i) fails to make any payment of Rent required to be made by it
hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor or Mortgagee to Lessee, Lessor or

<PAGE>

Mortgagee may (but shall not be obligated to) make such payment or perform or
comply with such agreement, and the amount of such payment and the amount of the
expenses of Lessor or Mortgagee incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the Payment Due Rate, shall be deemed Supplemental
Rent, payable by Lessee upon demand by Lessor or Mortgagee, whichever is
entitled thereto. No such payment, performance or compliance shall be deemed to
cure any Lease Default or Lease Event of Default or otherwise relieve Lessee of
its obligations with respect thereto.

        15.4   DETERMINATION OF FAIR MARKET RENTAL VALUE AND
               FAIR MARKET SALES VALUE

      For the purpose of this Section 15, the "Fair Market Rental Value" or the
"Fair Market Sales Value" of the Aircraft, Airframe or any Engine, shall be
determined on an "as is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which typically would be
incurred in connection with a re-lease or sale of the Aircraft, Airframe or any
Engine. Any such determination shall be made by an Appraiser selected by Lessor
and the costs and expenses associated therewith shall be borne by Lessee, unless
Lessor does not obtain possession of the Aircraft, Airframe and Engines pursuant
to this Section 15, in which case an Appraiser shall not be appointed and Fair
Market Rental Value and Fair Market Sales Value for purposes of this Section 15
shall be zero.

        15.5   REMEDIES CUMULATIVE

      Nothing contained in this Lease shall be construed to limit in any way any
right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
one shall not be deemed a waiver of the right to exercise any other. Lessee

<PAGE>

hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.

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

      (a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.

      (b) If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of law or otherwise except as specifically provided
herein, Lessee nonetheless agrees to pay an amount equal to each Rent payment at
the time such payment would have become due and payable in accordance with the
terms hereof had this Agreement not been terminated in whole or in part. Lessee
hereby waives, to the extent permitted by applicable law, any and all rights
that it may now have or that at any time hereafter may be conferred upon it, by
statute or otherwise, to terminate, cancel, quit or surrender this Agreement,
except in accordance with the express terms hereof.

      (c) Nothing set forth in this Section 16 shall be construed to prohibit
Lessee from separately pursuing any claim that it may have from time to time
against Lessor or any other Person with respect to any matter (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than the matters specified in paragraphs (a) and (b) above).

SECTION 17.    RENEWAL AND PURCHASE OPTIONS

        17.1   NOTICES GENERALLY

      (a) At least 120 days prior to the Scheduled Expiration Date or, if a
Renewal Lease Term is then in effect, prior to the Scheduled Renewal Term

<PAGE>

Expiration Date of such Renewal Lease Term, Lessee may provide notice to Lessor
that Lessee may exercise either the option to extend the leasing of the Aircraft
for a Renewal Lease Term pursuant to Section 17.2 or the option to purchase the
Aircraft on the Scheduled Expiration Date or Scheduled Renewal Term Expiration
Date of such Renewal Lease Term, as the case may be, pursuant to Section 17.3 (a
"Preliminary Notice").

      (b) If any such Preliminary Notice is given by Lessee, then Lessee may
provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be.

        17.2   RENEWAL OPTIONS

               17.2.1   RENEWAL NOTICE

      (a) If Lessee has given a Preliminary Notice, as specified in Section
17.1, and subject to the terms and conditions of this Section 17.2, Lessee may
exercise its option to extend the leasing of the Aircraft hereunder until the
next Scheduled Renewal Term Expiration Date, on the same terms, provisions and
conditions (except as contemplated by this Section 17) set forth herein and in
the other Lessee Operative Agreements with respect to the Base Lease Term, by
delivery of a notice (a "Renewal Notice") to Lessor not less than 90 days prior
to (i) if the Base Lease Term is then in effect, the Scheduled Expiration Date,
or (ii) if a Renewal Lease Term is then in effect, the Scheduled Renewal Term
Expiration Date for such Renewal Lease Term.

      (b) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:

            (i) No Preliminary Notice or Renewal Notice shall be binding on
      Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder
      for a Renewal Lease Term if any Lease Event of Default shall have occurred
      and be continuing on and as of the date that such Renewal Lease Term would
      otherwise commence.

            (ii) Any Renewal Notice shall be revocable by Lessee until 10
      Business Days after the Renewal Rent is determined in accordance with
      Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
      shall thereafter become irrevocable and shall constitute an unconditional

<PAGE>

      obligation of Lessee to extend the leasing of the Aircraft hereunder for
      the Renewal Lease Term to which such Renewal Notice relates.

            (iii) Lessee shall not be entitled to give any Renewal Notice if it
      has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
      Notice to Lessor.

               17.2.2   RENEWAL RENT

      (a) During the Renewal Lease Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Renewal Rent in arrears.

      (b) The Renewal Rent payable by Lessee on each Payment Date during any
Fixed Renewal Lease Term shall be the lower of (i) the Renewal Rent Limit and
(ii) the Fair Market Rental Value of the Aircraft for such Renewal Lease Term.
The Renewal Rent payable by Lessee on each Payment Date during any Subsequent
Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 120 days and not less than 100 days prior to the date of
commencement of such Renewal Lease Term by mutual agreement of Lessor and Lessee
or, if they shall be unable to agree, by an appraisal in accordance with Section
17.4. Notwithstanding the foregoing, (i) on the first Payment Date of a Renewal
Term, Lessee shall pay to Lessor a pro-rated amount of Renewal Rent equal to (x)
the Renewal Rent applicable to such Renewal Term divided by 180 multiplied by
(y) the actual number of days elapsed in such Payment Period and (ii) on the
last Payment Date in such Renewal Term Lessee shall pay to Lessor an amount
equal to the Renewal Rent minus the amount referred to in the preceding clause
(i).

               17.2.3   STIPULATED LOSS AND TERMINATION VALUES

      (a) For any Renewal Lease Term, Stipulated Loss Value Dates and
Termination Value Dates shall be extended throughout such Renewal Lease Term on
the same days and for the same months as during the Base Lease Term.

      (b) Stipulated Loss Value and Termination Value amounts that are payable
during any such Renewal Lease Term shall be determined at the same time that the
Renewal Rent for such Renewal Lease Term is determined under Section 17.2.2.
Stipulated Loss Values and Termination Values for any such Renewal Lease Term
shall, commencing on the first day of such Renewal Lease Term, be equal to the

<PAGE>

Fair Market Sales Value of the Aircraft, computed as of the first day of such
Renewal Lease Term, and shall decline ratably on a monthly basis to the Fair
Market Sales Value of the Aircraft as of the last day of such Renewal Lease
Term.

      (c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.

        17.3   PURCHASE OPTION

               17.3.1   PURCHASE NOTICE

      (a) Subject to Section 17.1 and the terms and conditions of this Section
17.3, Lessee may elect to purchase the Aircraft, on any Purchase Date, at a
purchase price equal to the lesser of 50% of Lessor's Cost and the Fair Market
Sales Value of the Aircraft computed as of the Purchase Date.

      (b) Lessee may exercise such option to purchase the Aircraft, by delivery
of a notice (a "Purchase Notice") to Lessor not less than 90 days prior to the
Purchase Date specified in such Purchase Notice.

      (c) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:

            (i) Any Purchase Notice (whether delivered or deemed to have been
      delivered) shall be revocable until 10 Business Days after the
      determination of the Fair Market Sales Value in accordance with Section
      17.3.2 and unless revoked by written notice by Lessee to Lessor shall
      thereafter become irrevocable and shall constitute an unconditional
      obligation of Lessee to purchase the Aircraft under this Section 17.3.

            (ii) Lessee shall not be entitled to give any Purchase Notice in
      respect of any Purchase Date if it has delivered a Renewal Notice for a
      Renewal Lease Term that would commence immediately following such Purchase
      Date.

               17.3.2   DETERMINATION OF FAIR MARKET SALES VALUE

      The Fair Market Sales Value of the Aircraft shall be determined not more
than 120 days and not less than 100 days prior to the applicable Purchase Date

<PAGE>

by mutual agreement of Lessor and Lessee or, if they shall be unable to agree,
by an appraisal in accordance with Section 17.4.

               17.3.3   TITLE

      Upon full and final payment by Lessee of (a) the applicable purchase price
of the Aircraft, (b) all unpaid Rent due and payable through and including the
Purchase Date and (c) all other amounts due and payable by Lessee under this
Agreement, Lessor will transfer to Lessee title to the Aircraft in accordance
with Section 4.5.

        17.4   APPRAISALS

      Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this Section 17,
Lessee and Lessor shall appoint a mutually satisfactory Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate Appraiser and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor fails to so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within 7 days after the appointment of the
latter of such two Appraisers, they cannot agree upon such amount, such two
Appraisers shall, within 8 days after such latter appointment, appoint a third
Appraiser and such amount shall be determined by such three Appraisers, who
shall make their separate appraisals within 7 days following the appointment of
the third Appraiser, and any determination so made shall be conclusive and
binding upon Lessor and Lessee. If no such third Appraiser is appointed within
such 8-day period, either Lessor or Lessee may apply to the American Arbitration
Association to make such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event be completed
no less than 125 days before the end of the Base Lease Term or the current
Renewal Lease Term, as the case may be. If three Appraisers are appointed and
the difference between the determination which is farther from the middle
determination and the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such farther
determination shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon Lessor and Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon Lessor and Lessee. The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne equally by Lessee and Lessor, PROVIDED that

<PAGE>

if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.

SECTION 18.    MISCELLANEOUS

        18.1   AMENDMENTS

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

        18.2   SEVERABILITY

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

        18.3   THIRD-PARTY BENEFICIARY

      This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees
and the Persons referred to in Section 4.6) with any rights of any nature
whatsoever against either of the parties hereto, and no person not a party
hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and

<PAGE>

the Persons referred to in Section 4.6) shall have any right, power or privilege
in respect of, or have any benefit or interest arising out of, this Agreement.

        18.4   REPRODUCTION OF DOCUMENTS

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

        18.5   COUNTERPARTS

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

        18.6   NOTICES

      Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such

<PAGE>

other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.

        18.7   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

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

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

      (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

      (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.

<PAGE>

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

        18.8   NO WAIVER

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

        18.9   ENTIRE AGREEMENT

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

                     [This space intentionally left blank.]

<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

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

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

                                       CONTINENTAL AIRLINES, INC.,
                                        as Lessee

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

      Receipt of this original counterpart of the foregoing Lease Agreement is
hereby acknowledged on this ____ day of _________, _______.

                                       WILMINGTON TRUST COMPANY,
                                        as Mortgagee

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

<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

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

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

                                        CONTINENTAL AIRLINES, INC.,
                                          as Lessee

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

<PAGE>

                                                  ------------------------------
                                                   EXHIBIT A - LEASE SUPPLEMENT
                                                       LEASE AGREEMENT [___]
                                                  ------------------------------

                             LEASE SUPPLEMENT NO.__

      LEASE SUPPLEMENT No. [__], dated [________, 20__,] between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement
[_____], dated as of [_____________,] with the Owner Participant named therein
(such Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").

      Lessor and Lessee have heretofore entered into that certain Lease
Agreement [______], dated as of [______________,] relating to one Boeing Model
[__________] aircraft (herein called the "Lease" and the defined terms therein
being hereinafter used with the same meanings). The Lease provides for the
execution and delivery of this Lease Supplement for the purpose of leasing the
Airframe and Engines under the Lease as and when delivered by Lessor to Lessee
in accordance with the terms thereof.

      The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.

      NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

      1. Lessee has been duly authorized by Lessor to accept, and does hereby
irrevocably accept on behalf of Lessor delivery of the Aircraft from Airframe
Manufacturer under, and for all purposes of, the Aircraft Bill of Sale, the
Participation Agreement and the Purchase Agreement Assignment.

      2. Lessor hereby delivers and leases to Lessee under the Lease and Lessee
hereby accepts and leases from Lessor under the Lease the following described
Boeing [__________] aircraft (the "Aircraft"), which Aircraft as of the date
hereof consists of the following components:

            (i) Airframe: U.S. Registration No. ___________; manufacturer's
      serial no. ___________; and

<PAGE>

            (ii) Engines: two (2) _________________________ engines bearing,
      respectively, manufacturer's serial nos. ___________ and ____________(each
      of which engines has 750 or more rated takeoff horsepower or the
      equivalent of such horsepower).

      3. The Delivery Date of the Aircraft is the date of this Lease Supplement
set forth in the opening paragraph hereof.

      4. Lessee hereby confirms to Lessor that Lessee has duly and irrevocably
accepted the Aircraft under and for all purposes hereof, of the Lease and of the
other Lessee Operative Agreements.

      5. All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference in the Lease to the same extent as if fully set forth
therein.

      6. This Lease Supplement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.

      7. To the extent, if any, that this Lease Supplement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original executed counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by the Mortgagee on the signature page
thereof.

                     [This space intentionally left blank.]

<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

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

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

                                        CONTINENTAL AIRLINES, INC.,
                                          as Lessee

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

<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

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

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

                                       CONTINENTAL AIRLINES, INC.,
                                         as Lessee

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

      Receipt of this original counterpart of the foregoing Lease Supplement is
hereby acknowledged on this ____ day of _________, __________.

                                       WILMINGTON TRUST COMPANY,
                                         as Mortgagee

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

<PAGE>

                                                  ------------------------------
                                                   EXHIBIT B - LEASE SUPPLEMENT
                                                      LEASE AGREEMENT [___]
                                                  ------------------------------

                          RETURN ACCEPTANCE SUPPLEMENT

      RETURN ACCEPTANCE SUPPLEMENT dated ________, between WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement
[_____________], dated as of [________________________], with the Owner
Participant named therein (such Owner Trustee, in its capacity as such Owner
Trustee being herein called "Lessor"), and CONTINENTAL AIRLINES, INC., a
Delaware corporation, as Lessee ("Lessee").

      Lessor and Lessee have heretofore entered into that certain Lease
Agreement [_________________], dated as of [_____________], relating to one
Boeing Model [___________________] aircraft (herein called the "Lease" and the
defined terms therein being hereinafter used with the same meanings). The Lease
relates to the Airframe and Engines described below.

      NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

            1. This Return Acceptance Supplement is executed by Lessor and
Lessee to confirm that on the date hereof the following described Airframe and
Engines were returned by Lessee to Lessor:

            (i) Airframe: U.S. Registration No. ________________; manufacturer's
      serial no. __________________; and

            (ii) Engines: two (2) _____________________ engines bearing,
      respectively, manufacturer's serial nos. ____________________________ and
      _________________________.

            2. This Return Acceptance Supplement is intended to be delivered in
_____________________.

            3. Lessor and Lessee agree that the return of the Aircraft is in
compliance with Section 5 and Annex B of the Lease, except as set forth below:

<PAGE>

            4. Lessor and Lessee agree that the Lease is terminated, except for
the provisions thereof that expressly survive termination.

      IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.

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

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

                                       CONTINENTAL AIRLINES, INC.,
                                         as Lessee

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

<PAGE>

                                 SCHEDULES 1-4

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>
                                              ----------------------------------
                                               SCHEDULE 5 - PERMITTED COUNTRIES
                                                   LEASE AGREEMENT [_____]
                                              ----------------------------------

                               PERMITTED COUNTRIES

Argentina                                 Malaysia

Australia                                 Malta

Austria                                   Mexico

Bahamas                                   Morocco

Belgium                                   Netherlands

Brazil                                    New Zealand

Canada                                    Norway

Chile                                     Paraguay

Denmark                                   Peoples Republic of China

Egypt                                     Philippines

Ecuador                                   Portugal

Finland                                   Republic of China (Taiwan)

France                                    Singapore

Germany                                   South Africa

Greece                                    South Korea

Hungary                                   Spain

Iceland                                   Sweden

India                                     Switzerland

Indonesia                                 Thailand

Ireland                                   Trinidad and Tobago

Italy                                     United Kingdom

Japan                                     Uruguay

Luxembourg                                Venezuela

<PAGE>

                                                       -------------------------
                                                         SCHEDULE 6 - PLACARDS
                                                        LEASE AGREEMENT [_____]
                                                       -------------------------

                                    PLACARDS

                                   Leased from

                Wells Fargo Bank Northwest, National Association,
                  not in its individual capacity but solely as
                         Owner Trustee, Owner and Lessor

                                       and
                                  Mortgaged to

                            Wilmington Trust Company,
             not in its individual capacity but solely as Mortgagee

<PAGE>

                                   ANNEXES B-D

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

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