Document:

TRUST SUPPLEMENT No. 2000-1C-2-S

                              Dated March 15, 2000

                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,

                                       and

                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997

                                   $45,917,000

               Continental Airlines Pass Through Trust 2000-1C-2-S
                           8.321% Continental Airlines
                           Pass Through Certificates,
                               Series 2000-1C-2-S

<PAGE>

            This Trust  Supplement No.  2000-1C-2-S,  dated as of March 15, 2000
(herein called the "TRUST SUPPLEMENT"),  between Continental  Airlines,  Inc., a
Delaware  corporation  (the  "COMPANY"),   and  Wilmington  Trust  Company  (the
"TRUSTEE"), to the Pass Through Trust Agreement, dated as of September 25, 1997,
between the Company and the Trustee (the "BASIC AGREEMENT").

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

            WHEREAS,  the  Basic  Agreement,   unlimited  as  to  the  aggregate
principal amount of Certificates (unless otherwise specified herein, capitalized
terms used herein without definition having the respective meanings specified in
the Basic  Agreement)  which  may be  issued  thereunder,  has  heretofore  been
executed and delivered;

            WHEREAS,  the Company has obtained  commitments  from Boeing for the
delivery of certain Aircraft;

            WHEREAS,  as of the Transfer  Date (as defined  below),  the Company
will have financed the  acquisition of all or a portion of such Aircraft  either
(i) through  separate  leveraged lease  transactions,  in which case the Company
leases such  Aircraft  (collectively,  the "LEASED  AIRCRAFT"),  or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "OWNED AIRCRAFT");

            WHEREAS,  as of the  Transfer  Date,  in the  case  of  each  Leased
Aircraft,  each  Owner  Trustee,  acting on behalf  of the  corresponding  Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment  Notes in order to  finance a portion  of its  purchase  price of such
Leased Aircraft;

            WHEREAS,  as of  the  Transfer  Date,  in the  case  of  each  Owned
Aircraft,  the Company will have issued pursuant to an Indenture,  on a recourse
basis,  Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;

            WHEREAS,  as of the Transfer Date, the Related  Trustee will assign,
transfer  and deliver all of such  trustee's  right,  title and  interest to the
trust  property  held by the  Related  Trustee to the  Trustee  pursuant  to the
Assignment and Assumption Agreement (as defined below);

            WHEREAS,  the  Trustee,  effective  only,  but  automatically,  upon
execution  and delivery of the  Assignment  and  Assumption  Agreement,  will be
deemed to have  declared the creation of the  Continental  Airlines Pass Through
Trust  2000-1C-2-S  (the  "APPLICABLE  TRUST") for the benefit of the Applicable
Certificateholders, and each Holder of Applicable Certificates outstanding as of
the Transfer Date, as the grantors of the Applicable  Trust, by their respective
acceptances of such Applicable  Certificates,  will join in the creation of this
Applicable Trust with the Trustee;

<PAGE>

            WHEREAS,  all  Applicable  Certificates  (as defined  below)  deemed
issued by the Applicable Trust will evidence  fractional  undivided interests in
the Applicable Trust and will convey no rights, benefits or interests in respect
of any  property  other  than the Trust  Property  except  for those  Applicable
Certificates to which an Escrow Receipt (as defined below) has been affixed;

            WHEREAS,  upon the  execution  and  delivery of the  Assignment  and
Assumption Agreement,  all of the conditions and requirements  necessary to make
this Trust Supplement,  when duly executed and delivered,  a valid,  binding and
legal  instrument  in  accordance  with its  terms and for the  purposes  herein
expressed,  have been done,  performed  and  fulfilled,  and the  execution  and
delivery  of this Trust  Supplement  in the form and with the terms  hereof have
been in all respects duly authorized;

            WHEREAS,  this Trust  Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;

            NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:

                                    ARTICLE I
                                THE CERTIFICATES

            Section 1.01. THE CERTIFICATES. The Applicable Certificates shall be
known  as  "8.321%  Continental  Airlines  Pass  Through  Certificates,   Series
2000-1C-2-S".  Each  Applicable  Certificate  represents a fractional  undivided
interest in the Applicable  Trust created  hereby.  The Applicable  Certificates
shall be the only instruments  evidencing a fractional undivided interest in the
Applicable Trust.

            The terms and conditions  applicable to the Applicable  Certificates
are as follows:

            (a) The aggregate  principal  amount of the Applicable  Certificates
      that shall be initially  deemed issued under the Agreement  shall be equal
      to  the  aggregate   principal  amount  of   "Outstanding"   pass  through
      certificates  representing  fractional  undivided interests in the Related
      Trust on the Transfer Date.  Subject to the preceding sentence and Section
      5.01 of this  Trust  Supplement  and except  for  Applicable  Certificates
      authenticated  and delivered  under Sections 3.03,  3.04, 3.05 and 3.06 of
      the Basic  Agreement,  no Applicable  Certificates  shall be authenticated
      under the Agreement.

            (b) The Regular  Distribution  Dates with  respect to any payment of
      Scheduled Payments means May 1 and November 1 of each year,  commencing on
      May 1, 2000,  until  payment of all of the  Scheduled  Payments to be made
      under the Equipment Notes has been made.

<PAGE>

            (c) The Special  Distribution  Dates with respect to the  Applicable
      Certificates  means any Business  Day on which a Special  Payment is to be
      distributed pursuant to the Agreement.

            (d) At the Escrow Agent's  request under the Escrow  Agreement,  the
      Trustee shall affix the  corresponding  Escrow Receipt to each  Applicable
      Certificate.  In any event,  any  transfer or  exchange of any  Applicable
      Certificate shall also effect a transfer or exchange of the related Escrow
      Receipt.  Prior to the Final  Withdrawal  Date, no transfer or exchange of
      any Applicable  Certificate  shall be permitted  unless the  corresponding
      Escrow  Receipt  is  attached  thereto  and  also  is  so  transferred  or
      exchanged.  By acceptance of any Applicable Certificate to which an Escrow
      Receipt  is  attached,  each  Holder  of  such an  Applicable  Certificate
      acknowledges  and  accepts  the  restrictions  on  transfer  of the Escrow
      Receipt set forth herein and in the Escrow Agreement.

            (e) (i) The Applicable Certificates shall be in the form attached as
      Exhibit  A to  the  Related  Pass  Through  Trust  Supplement,  with  such
      appropriate insertions,  omissions,  substitutions and other variations as
      are required or permitted by the Related Pass Through  Trust  Agreement or
      the Agreement, as the case may be, or as the Trustee may deem appropriate,
      to reflect  the fact that the  Applicable  Certificates  are being  issued
      under the  Agreement as opposed to under the Related  Pass  Through  Trust
      Agreement.  Any Person acquiring or accepting an Applicable Certificate or
      an interest therein will, by such acquisition or acceptance,  be deemed to
      represent and warrant to and for the benefit of each Owner Participant and
      the Company that either (i) the assets of an employee benefit plan subject
      to Title I of the Employee  Retirement  Income  Security  Act of 1974,  as
      amended  ("ERISA"),  or of a plan  subject to Section 4975 of the Internal
      Revenue  Code of 1986,  as  amended  (the  "Code"),  have not been used to
      purchase  Applicable  Certificates  or an  interest  therein  or (ii)  the
      purchase and holding of Applicable  Certificates or an interest therein is
      exempt from the prohibited transaction  restrictions of ERISA and the Code
      pursuant to one or more prohibited transaction statutory or administrative
      exemptions.

                  (ii)  The   Applicable   Certificates   shall  be   Book-Entry
      Certificates  and  shall be  subject  to the  conditions  set forth in the
      Letter of  Representations  between the Company  and the  Clearing  Agency
      attached as Exhibit B to the Related Pass Through Trust Supplement.

            (f)  The  "Participation   Agreements"  as  defined  in  this  Trust
      Supplement  are the "Note  Purchase  Agreements"  referred to in the Basic
      Agreement.

            (g)  Applicable   Certificates  are  subject  to  the  Intercreditor
      Agreement, the Deposit Agreement and the Escrow Agreement.

            (h)  Applicable  Certificates  are  entitled to the  benefits of the
      Liquidity Facility.

<PAGE>

            (i) Responsible Party is the Company.

            (j) The date referred to in clause (i) of the definition of the term
      "PTC Event of Default" in the Basic Agreement is the Final Maturity Date.

            (k) The particular  "sections of the Note Purchase  Agreement",  for
      purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
      8.1 (with  respect to Owned  Aircraft)  and Section  9.1 (with  respect to
      Leased Aircraft) of each Participation Agreement.

            (l) The  Equipment  Notes to be acquired and held in the  Applicable
      Trust, and the related  Aircraft and Note Documents,  are described in the
      NPA.

                                   ARTICLE II
                                   DEFINITIONS

            Section 2.01.  DEFINITIONS.  For all purposes of the Basic Agreement
as supplemented by this Trust Supplement,  the following  capitalized terms have
the following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic  Agreement shall have the meaning  assigned  thereto in
this Trust  Supplement for purposes of the Basic  Agreement as  supplemented  by
this Trust Supplement):

            AGREEMENT:  Means the Basic Agreement, as supplemented by this Trust
      Supplement.

            AIRCRAFT:  Means each of the New Aircraft or Substitute  Aircraft in
      respect of which a  Participation  Agreement is entered into in accordance
      with the NPA (or any  substitute  aircraft,  including  engines  therefor,
      owned by or leased  to the  Company  and  securing  one or more  Equipment
      Notes).

            AIRCRAFT PURCHASE AGREEMENT: Has the meaning specified in the NPA.

            APPLICABLE CERTIFICATE:  Means any of the "Applicable  Certificates"
      issued by the Related Trust and that are  "Outstanding" (as defined in the
      Related  Pass  Through  Trust  Agreement)  as of the  Transfer  Date  (the
      "TRANSFER  DATE  CERTIFICATES")  and any  Certificate  issued in  exchange
      therefor or replacement thereof pursuant to the Agreement.

            APPLICABLE  CERTIFICATEHOLDER:  Means the  Person  in whose  name an
      Applicable  Certificate  is registered on the Register for the  Applicable
      Certificates.

            APPLICABLE TRUST: Has the meaning specified in the recitals hereto.

            ASSIGNMENT  AND  ASSUMPTION  AGREEMENT:  Means  the  assignment  and
      assumption agreement substantially in the form of Exhibit C to the Related

<PAGE>

      Pass Through Trust  Supplement  executed and delivered in accordance  with
      Section 7.01 of the Related Trust Supplement.

            BASIC AGREEMENT: Has the meaning specified in the first paragraph of
      this Trust Supplement.

            BOEING: Means The Boeing Company.

            BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day
      on which  commercial banks are required or authorized to close in Houston,
      Texas,  New  York,  New  York,  Salt  Lake  City,  Utah or, so long as any
      Applicable  Certificate  is  Outstanding,  the city and state in which the
      Trustee  or any Loan  Trustee  maintains  its  Corporate  Trust  Office or
      receives and disburses funds.

            CLASS C  CERTIFICATEHOLDER:  Has the  meaning  specified  in Section
      4.01(a) of this Trust Supplement.

            CLASS  C  FRACTIONAL  UNDIVIDED  INTEREST:  Means,  at any  date  of
      computation, the fractional interest in the relevant Trust held by a Class
      C  Certificateholder  multiplied  by the Pool  Balance  (as defined in the
      Intercreditor  Agreement) of such Trust and divided by the aggregate  Pool
      Balances  (as  defined in the  Intercreditor  Agreement)  of the Class C-1
      Trust and the Class C-2 Trust, all determined at such date.

            CLASS D  CERTIFICATEHOLDER:  Has the  meaning  specified  in Section
      4.01(c)(ii) of this Trust Supplement.

            COMPANY:  Has the meaning  specified in the first  paragraph of this
      Trust Supplement.

            CONTROLLING  PARTY: Has the meaning  specified in the  Intercreditor
      Agreement.

            DELIVERY NOTICE: Has the meaning specified in the NPA.

            DELIVERY PERIOD  TERMINATION  DATE: Has the meaning specified in the
      Related Pass Through Trust Supplement.

            DEPOSITS: Has the meaning specified in the Deposit Agreement.

            DEPOSIT AGREEMENT: Means the Deposit Agreement dated as of March 15,
      2000 relating to the  Applicable  Certificates  between the Depositary and
      the Escrow Agent,  as the same may be amended,  supplemented  or otherwise
      modified from time to time in accordance with its terms.

            DEPOSITARY:  Means Credit Suisse First Boston, a banking institution
      organized  under  the laws of  Switzerland,  acting  through  its New York
      branch.

<PAGE>

            DISTRIBUTION  DATE: Means any Regular  Distribution  Date or Special
      Distribution Date as the context requires.

            ESCROW  AGENT:  Means,  initially,  First  Security  Bank,  National
      Association,  and any  replacement  or  successor  therefor  appointed  in
      accordance with the Escrow Agreement.

            ESCROW AGREEMENT:  Means the Escrow and Paying Agent Agreement dated
      as of March 15, 2000 relating to the  Applicable  Certificates,  among the
      Escrow Agent,  the Escrow Paying Agent, the Related Trustee (and after the
      Transfer  Date,  the  Trustee)  and the  Underwriters,  as the same may be
      amended,   supplemented  or  otherwise  modified  from  time  to  time  in
      accordance with its terms.

            ESCROW PAYING  AGENT:  Means the Person acting as paying agent under
      the Escrow Agreement.

            ESCROW RECEIPT:  Means the receipt substantially in the form annexed
      to the Escrow Agreement  representing a fractional  undivided  interest in
      the funds held in escrow thereunder.

            FINAL MATURITY DATE: Means November 1, 2006.

            FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.

            FINAL  WITHDRAWAL  DATE:  Has the  meaning  specified  in the Escrow
      Agreement.

            INDENTURE: Means each of the separate trust indentures and mortgages
      relating to the  Aircraft,  each as  specified  or described in a Delivery
      Notice  delivered  pursuant  to  the  NPA  or  the  related  Participation
      Agreement,  in each  case as the  same  may be  amended,  supplemented  or
      otherwise modified from time to time in accordance with its terms.

            INTERCREDITOR AGREEMENT:  Means the Intercreditor Agreement dated as
      of March 15, 2000 among the Related  Trustee (and after the Transfer Date,
      the Trustee), the Related Other Trustees (and after the Transfer Date, the
      Other Trustees),  the Liquidity Provider, the liquidity providers relating
      to the  Certificates  issued under each of the Related  Other Pass Through
      Trust Agreements, and Wilmington Trust Company, as Subordination Agent and
      as trustee thereunder, as amended, supplemented or otherwise modified from
      time to time in accordance with its terms.

            INVESTORS:  Means  the  Underwriters  together  with all  subsequent
      beneficial owners of the Applicable Certificates.

            LEASE:  Means,  with  respect  to each  Leased  Aircraft,  the lease
      between an Owner Trustee,  as the lessor, and the Company,  as the lessee,

<PAGE>

      referred  to in the  related  Indenture,  as such  lease  may be  amended,
      supplemented or otherwise modified in accordance with its terms.

            LEASED AIRCRAFT:  Has the meaning  specified in the third recital to
      this Trust Supplement.

            LEASED  AIRCRAFT  INDENTURE:   Has  the  meaning  specified  in  the
      Intercreditor Agreement.

            LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
      dated  as of March  15,  2000  relating  to the  Applicable  Certificates,
      between  the  Liquidity   Provider  and  Wilmington   Trust  Company,   as
      Subordination  Agent, as agent and trustee for the Applicable  Trust, and,
      from  and  after  the  replacement  of  such  agreement  pursuant  to  the
      Intercreditor  Agreement,  the replacement liquidity facility therefor, in
      each case as amended, supplemented or otherwise modified from time to time
      in accordance with their respective terms.

            LIQUIDITY  PROVIDER:   Means,  initially,   Morgan  Stanley  Capital
      Services Inc., a Delaware corporation,  and any replacements or successors
      therefor appointed in accordance with the Intercreditor Agreement.

            NEW AIRCRAFT: Has the meaning specified in the NPA.

            NOTE  DOCUMENTS:  Means the  Equipment  Notes  with  respect  to the
      Applicable  Certificates and, with respect to any such Equipment Note, (i)
      the Indenture and the Participation  Agreement  relating to such Equipment
      Note,  and  (ii) in the case of any  Equipment  Note  related  to a Leased
      Aircraft, the Lease relating to such Leased Aircraft.

            NPA:  Means the Note Purchase  Agreement  dated as of March 15, 2000
      among the Related Trustee (and after the Transfer Date, the Trustee),  the
      Related Other Trustees (and after the Transfer Date, the Other  Trustees),
      the  Company,   the  Escrow  Agent,   the  Escrow  Paying  Agent  and  the
      Subordination Agent, as the same may be amended, supplemented or otherwise
      modified from time to time, in accordance with its terms.

            OTHER  AGREEMENTS:  Means (i) the Basic Agreement as supplemented by
      Trust  Supplement  No.  2000-1A-1-S  dated  the date  hereof  relating  to
      Continental  Airlines  Pass  Through  Trust  2000-1A-1-S,  (ii) the  Basic
      Agreement as supplemented by Trust  Supplement No.  2000-1A-2-S  dated the
      date  hereof   relating  to   Continental   Airlines  Pass  Through  Trust
      2000-1A-2-S, (iii) the Basic Agreement as supplemented by Trust Supplement
      No. 2000-1B-S dated the date hereof relating to Continental  Airlines Pass
      Through Trust  2000-1B-S and (iv) the Basic  Agreement as  supplemented by
      Trust  Supplement  No.  2000-1C-1-S  dated  the date  hereof  relating  to
      Continental Airlines Pass Through Trust 2000-1C-1-S.

<PAGE>

            OTHER TRUSTEES:  Means the trustees under the Other Agreements,  and
      any successor or other trustee appointed as provided therein.

            OTHER  TRUSTS:  Means the  Continental  Airlines  Pass Through Trust
      2000-1A-1-S,  the Continental Airlines Pass Through Trust 2000-1A-2-S, the
      Continental  Airlines  Pass Through Trust  2000-1B-S  and the  Continental
      Airlines Pass Through Trust 2000-1C-1-S, created by the Other Agreements.

            OUTSTANDING:  When used with  respect  to  Applicable  Certificates,
      means, as of the date of  determination,  all Transfer Date  Certificates,
      and  all  other  Applicable  Certificates  theretofore  authenticated  and
      delivered under this Agreement, in each case except:

                  (i)  Applicable  Certificates   theretofore  canceled  by  the
            Registrar  or  delivered  to  the  Trustee  or  the   Registrar  for
            cancellation;

                  (ii)  Applicable  Certificates  for  which  money  in the full
            amount required to make the final  distribution with respect to such
            Applicable  Certificates  pursuant  to  Section  11.01 of the  Basic
            Agreement has been  theretofore  deposited with the Trustee in trust
            for the Applicable Certificateholders as provided in Section 4.01 of
            the  Basic  Agreement  pending  distribution  of such  money to such
            Applicable  Certificateholders  pursuant  to  payment  of such final
            distribution; and

                  (iii)  Applicable  Certificates  in exchange for or in lieu of
            which other  Applicable  Certificates  have been  authenticated  and
            delivered pursuant to this Agreement.

            OWNED  AIRCRAFT:  Has the meaning  specified in the third recital to
      this Trust Supplement.

            OWNED  AIRCRAFT   INDENTURE:   Has  the  meaning  specified  in  the
      Intercreditor Agreement.

            OWNER PARTICIPANT:  With respect to any Equipment Note relating to a
      Leased  Aircraft,  means the "Owner  Participant"  as  referred  to in the
      Indenture  pursuant  to  which  such  Equipment  Note  is  issued  and any
      permitted  successor  or  assign  of such  Owner  Participant;  and  OWNER
      PARTICIPANTS  at  any  time  of  determination  means  all  of  the  Owner
      Participants thus referred to in the Indentures.

            OWNER  TRUSTEE:  With respect to any  Equipment  Note  relating to a
      Leased  Aircraft,  means  the  "Owner  Trustee",  as  referred  to in  the
      Indenture  pursuant  to which such  Equipment  Note is issued,  not in its
      individual capacity but solely as trustee; and OWNER TRUSTEES means all of
      the Owner Trustees party to any of the Indentures.

            OWNER  TRUSTEE'S  PURCHASE  AGREEMENT:  Means,  with  respect to any
      Leased Aircraft,  the agreement between the Company and the relevant Owner

<PAGE>

      Trustee  pursuant to which,  INTER ALIA, the Company  assigns to the Owner
      Trustee  certain  rights  of  the  Company  under  the  aircraft  purchase
      agreement with respect to such Leased Aircraft.

            PARTICIPATION AGREEMENT:  Means each Participation Agreement entered
      into by the  Related  Trustee  pursuant  to the  NPA,  as the  same may be
      amended, supplemented or otherwise modified in accordance with its terms.

            POOL BALANCE: Means, as of any date, (i) the original aggregate face
      amount of the  "Applicable  Certificates"  as defined in the Related  Pass
      Through Trust  Agreement,  less (ii) the aggregate  amount of all payments
      made in respect of such  Certificates,  the  Applicable  Certificates  (as
      defined in the Related  Pass Through  Trust  Agreement)  or the  Deposits,
      other than  payments  made in respect of  interest  or premium  thereon or
      reimbursement of any costs or expenses  incurred in connection  therewith.
      The Pool  Balance  as of any  Distribution  Date shall be  computed  after
      giving effect to any special distribution with respect to unused Deposits,
      payment of  principal  of the  Equipment  Notes or payment with respect to
      other Trust Property and the distribution thereof to be made on that date.

            POOL  FACTOR:  Means,  as of any  Distribution  Date,  the  quotient
      (rounded to the seventh  decimal place)  computed by dividing (i) the Pool
      Balance by (ii) the  original  aggregate  face  amount of the  "Applicable
      Certificates" as defined in the Related Pass Through Trust Agreement.  The
      Pool Factor as of any  Distribution  Date shall be computed  after  giving
      effect to any  special  distribution  with  respect  to  unused  Deposits,
      payment of principal of the  Equipment  Notes or payments  with respect to
      other Trust Property and the distribution thereof to be made on that date.

            PROSPECTUS  SUPPLEMENT:  Means the Prospectus Supplement dated March
      1, 2000 relating to the offering of the Certificates.

            RELATED  OTHER  PASS  THROUGH  TRUST  AGREEMENTS:  Means the  "Other
      Agreements" as defined in the Related Pass Through Trust Agreement.

            RELATED OTHER TRUSTEES: Means the "Other Trustees" as defined in the
      Related Pass Through Trust Agreement.

            RELATED  OTHER  TRUSTS:  Means the "Other  Trusts" as defined in the
      Related Pass Through Trust Agreement.

            RELATED PASS THROUGH TRUST  AGREEMENT:  Means the Basic Agreement as
      supplemented by the Trust Supplement No. 2000-1C-2-O dated the date hereof
      (the "RELATED PASS THROUGH TRUST SUPPLEMENT"), relating to the Continental
      Airlines  Pass Through Trust  2000-1C-2-O  and entered into by the Company
      and the Related Trustee,  as amended,  supplemented or otherwise  modified
      from time to time in accordance with its terms.

<PAGE>

            RELATED TRUST: Means the Continental Pass Through Trust 2000-1C-2-O,
      formed under the Related Pass Through Trust Agreement.

            RELATED  TRUSTEE:  Means the trustee  under the Related Pass Through
      Trust Agreement.

            SPECIAL PAYMENT:  Means any payment (other than a Scheduled Payment)
      in respect of, or any proceeds of, any  Equipment  Note,  Trust  Indenture
      Estate (as defined in each Leased  Aircraft  Indenture) or Collateral  (as
      defined in each Owned Aircraft Indenture).

            SUBSTITUTE AIRCRAFT: Has the meaning specified in the NPA.

            TRANSFER  DATE:  Means the moment of  execution  and delivery of the
      Assignment and Assumption Agreement by each of the parties thereto.

            TRANSFER  DATE  CERTIFICATES:  Has  the  meaning  specified  in  the
      definition of "Applicable Certificates".

            TRIGGERING  EVENT:  Has the  meaning  assigned  to such  term in the
      Intercreditor Agreement.

            TRUST PROPERTY:  Means (i) subject to the  Intercreditor  Agreement,
      the  Equipment  Notes held as the property of the  Applicable  Trust,  all
      monies at any time  paid  thereon  and all  monies  due and to become  due
      thereunder,  (ii) funds  from time to time  deposited  in the  Certificate
      Account and the Special Payments Account and, subject to the Intercreditor
      Agreement,  any proceeds from the sale by the Trustee  pursuant to Article
      VI of the Basic  Agreement of any  Equipment  Note and (iii) all rights of
      the Applicable Trust and the Trustee,  on behalf of the Applicable  Trust,
      under the Intercreditor  Agreement,  the Escrow Agreement, the NPA and the
      Liquidity Facility,  including,  without limitation, all rights to receive
      certain payments thereunder,  and all monies paid to the Trustee on behalf
      of the  Applicable  Trust pursuant to the  Intercreditor  Agreement or the
      Liquidity  Facility,  PROVIDED that rights with respect to the Deposits or
      under the Escrow Agreement will not constitute Trust Property.

            TRUST  SUPPLEMENT:  Has the meaning specified in the first paragraph
      of this trust supplement.

            UNDERWRITERS:   Means,  collectively,  Credit  Suisse  First  Boston
      Corporation,  Morgan Stanley & Co.  Incorporated,  Chase  Securities Inc.,
      Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated  and Salomon  Smith
      Barney Inc.

            UNDERWRITING AGREEMENT: Means the Underwriting Agreement dated March
      1, 2000 among the  Underwriters,  the Company and the  Depositary,  as the

<PAGE>

      same may be amended,  supplemented or otherwise modified from time to time
      in accordance with its terms.

                                   ARTICLE III
                        STATEMENTS TO CERTIFICATEHOLDERS

            Section 3.01.  STATEMENTS TO APPLICABLE  CERTIFICATEHOLDERS.  (a) On
each  Distribution  Date,  the Trustee will include  with each  distribution  to
Applicable  Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement  setting forth the  information  provided below (in the
case of a Special  Payment,  reflecting in part the information  provided by the
Escrow Paying Agent under the Escrow Agreement).  Such statement shall set forth
(per $1,000 face amount  Applicable  Certificate as to (ii), (iii), (iv) and (v)
below) the following information:

            (i) the aggregate amount of funds  distributed on such  Distribution
      Date under the Agreement and under the Escrow  Agreement,  indicating  the
      amount allocable to each source;

            (ii) the amount of such distribution  under the Agreement  allocable
      to principal and the amount allocable to premium, if any;

            (iii) the amount of such distribution under the Agreement  allocable
      to interest;

            (iv) the  amount of such  distribution  under the  Escrow  Agreement
      allocable to interest;

            (v) the  amount  of such  distribution  under the  Escrow  Agreement
      allocable to unused Deposits, if any; and

            (vi) the Pool Balance and the Pool Factor.

            With respect to the Applicable  Certificates  registered in the name
of a Clearing Agency,  on the Record Date prior to each  Distribution  Date, the
Trustee will request from such  Clearing  Agency a securities  position  listing
setting forth the names of all Clearing  Agency  Participants  reflected on such
Clearing Agency's books as holding  interests in the Applicable  Certificates on
such Record Date. On each Distribution  Date, the Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.

            (b)  Within  a  reasonable  period  of  time  after  the end of each
calendar  year but not later than the latest date  permitted by law, the Trustee
shall  furnish to each Person who at any time during such  calendar  year was an
Applicable  Certificateholder  of record a statement  containing  the sum of the
amounts determined pursuant to clauses (a)(i),  (a)(ii),  (a)(iii),  (a)(iv) and

<PAGE>

(a)(v)  above  for such  calendar  year or,  in the  event  such  Person  was an
Applicable  Certificateholder  of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily  available to
the Trustee and which an Applicable  Certificateholder  shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's  preparation
of its federal income tax returns.  Such statement and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the holders of interests in the Applicable  Certificates in the
manner described in Section 3.01(a) of this Trust Supplement.

            (c) If the  aggregate  principal  payments  scheduled  for a Regular
Distribution Date prior to the Delivery Period  Termination Date differ from the
amount  thereof set forth for the  Applicable  Certificates  on page S-34 of the
Prospectus  Supplement,  by no later  than the  15th day  prior to such  Regular
Distribution  Date, the Trustee (if the Related Trustee has not already done so)
shall mail written notice of the actual amount of such scheduled payments to the
Applicable  Certificateholders  of record as of a date within 15  Business  Days
prior to the date of mailing.

            (d) Promptly  following (i) the Delivery Period Termination Date, if
there has been any change in the  information  set forth in clauses (x), (y) and
(z) below  from that set forth in page S-34 of the  Prospectus  Supplement,  and
(ii) the date of any early  redemption  or  purchase  of, or any  default in the
payment of principal or interest in respect of, any of the Equipment  Notes held
in the Applicable  Trust, or any Final  Withdrawal,  the Trustee (if the Related
Trustee has not already done so) shall furnish to Applicable  Certificateholders
of record on such date a statement  setting forth (x) the expected Pool Balances
for each  subsequent  Regular  Distribution  Date following the Delivery  Period
Termination  Date,  (y) the related Pool  Factors for such Regular  Distribution
Dates and (z) the  expected  principal  distribution  schedule of the  Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice. With
respect  to the  Applicable  Certificates  registered  in the name of a Clearing
Agency,  on the  Transfer  Date,  the Trustee  (if the  Related  Trustee has not
already done so) will request from such  Clearing  Agency a securities  position
listing setting forth the names of all Clearing Agency Participants reflected on
such  Clearing   Agency's  books  as  holding   interests  in  the   "Applicable
Certificates"  (as defined in the Related Pass Through  Trust  Agreement) on the
Delivery  Period  Termination  Date. The Trustee (if the Related Trustee has not
already  done  so)  will  mail to each  such  Clearing  Agency  Participant  the
statement described above and will make available additional copies as requested
by such Clearing  Agency  Participant  for forwarding to holders of interests in
the Applicable Certificates.

            (e) This Section 3.01  supersedes  and replaces  Section 4.03 of the
Basic Agreement, with respect to the Applicable Trust.

<PAGE>

                                   ARTICLE IV
                                     DEFAULT

            Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time
after the occurrence and during the  continuation  of a Triggering  Event,  each
Applicable  Certificateholder and Class C-1 Certificateholder  (each, a "CLASS C
CERTIFICATEHOLDER")  shall  have the  right  (which  shall not  expire  upon any
purchase  of the  Class  A-2  Certificates  pursuant  to  the  Class  A-1  Trust
Agreement,  any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement or any purchase of the Class A-1  Certificates and the Class A-2
Certificates  pursuant  to the Class B Trust  Agreement)  to  purchase,  for the
purchase prices set forth in the Class A-1 Trust Agreement,  the Class A-2 Trust
Agreement and the Class B Trust Agreement,  respectively, all, but not less than
all, of the Class A-1  Certificates,  the Class A-2 Certificates and the Class B
Certificates  upon ten days' written notice to the Class A-1 Trustee,  the Class
A-2  Trustee,   the  Class  B  Trustee  and  (x)  if  such  purchasing  Class  C
Certificateholder  is an  Applicable  Certificateholder,  each other  Applicable
Certificateholder  and  either  (I) if the Class C-1  Trustee  shall have made a
current list of Class C-1 Certificateholders  available to such purchasing Class
C Certificateholder  upon a request therefor,  each Class C-1 Certificateholder,
or (II) if clause (I) is not applicable,  the Class C-1 Trustee,  or (y) if such
purchasing  Class C  Certificateholder  is a Class C-1  Certificateholder,  each
other Class C-1  Certificateholder and either (I) if the Trustee shall have made
a current list of  Applicable  Certificateholders  available to such  purchasing
Class  C   Certificateholder   upon  a   request   therefor,   each   Applicable
Certificateholder,  or  (II)  if  clause  (I) is not  applicable,  the  Trustee,
PROVIDED  that (i) if prior to the end of such ten-day  period any other Class C
Certificateholder  notifies such purchasing Class C Certificateholder  that such
other Class C Certificateholder wants to participate in such purchase, then such
other  Class  C   Certificateholder   may  join  with  the  purchasing  Class  C
Certificateholder  to  purchase  all,  but not less than  all,  of the Class A-1
Certificates,  the Class A-2  Certificates and the Class B Certificates pro rata
based on the Class C  Fractional  Undivided  Interest  held by each such Class C
Certificateholder  and (ii) if prior to the end of such ten-day period any other
Class  C   Certificateholder   fails   to   notify   the   purchasing   Class  C
Certificateholder   of  such  other  Class  C   Certificateholder's   desire  to
participate in such a purchase,  then such other Class C Certificateholder shall
lose  its  right  to  purchase  the  Class  A-1  Certificates,   the  Class  A-2
Certificates  and the Class B  Certificates  pursuant to this  Section  4.01(a).
After the  occurrence and during the  continuation  of a Triggering  Event,  the
Trustee  either shall  comply with any request of a Class C-1  Certificateholder
for a current list of Applicable  Certificateholders  or shall forthwith  notify
each  Applicable  Certificateholder  of any notice received by it from any Class
C-1  Certificateholder of its exercise of its rights under the Agreement and the
Other  Agreements  to  purchase  the  Class  A-1  Certificates,  the  Class  A-2
Certificates and the Class B Certificates.

            (b) At any time after the occurrence and during the  continuation of
a Triggering Event, if the Class C-1 Trustee is then the Controlling Party, each
Applicable  Certificateholder  shall have the right (which shall not expire upon
any  purchase  of the Class  A-2  Certificates  pursuant  to the Class A-1 Trust
Agreement,  any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust  Agreement,  any purchase of the Class A-1  Certificates and the Class A-2
Certificates  pursuant  to the  Class  B  Trust  Agreement  or any  purchase  of

<PAGE>

Certificates  pursuant to clause (a) above) to purchase,  for the purchase price
set forth in the Class C-1 Trust  Agreement,  all, but not less than all, of the
Class C-1  Certificates  upon ten days' written  notice to the Class C-1 Trustee
and each other Applicable  Certificateholder,  PROVIDED that (i) if prior to the
end of such ten-day period any other Applicable  Certificateholder notifies such
purchasing   Applicable    Certificateholder    that   such   other   Applicable
Certificateholder  wants  to  participate  in such  purchase,  then  such  other
Applicable   Certificateholder   may  join   with  the   purchasing   Applicable
Certificateholder  to  purchase  all,  but not less than  all,  of the Class C-1
Certificates  pro  rata  based  on  the  Fractional  Undivided  Interest  in the
Applicable  Trust  held by each such  Applicable  Certificateholder  and (ii) if
prior to the end of such ten-day period any other  Applicable  Certificateholder
fails to  notify  the  purchasing  Applicable  Certificateholder  of such  other
Applicable  Certificateholder's  desire to participate in such a purchase,  then
such other  Applicable  Certificateholder  shall lose its right to purchase  the
Class C-1 Certificates pursuant to this Section 4.01(b).

            (c) By acceptance of its  Applicable  Certificate,  each  Applicable
Certificateholder  agrees that at any time after the  occurrence  and during the
continuation of a Triggering Event,

            (i) if the  Trustee is then the  Controlling  Party,  each Class C-1
      Certificateholder  shall have the right  (which  shall not expire upon any
      purchase  of the Class A-2  Certificates  pursuant  to the Class A-1 Trust
      Agreement,  any  purchase  of the Class A-1  Certificates  pursuant to the
      Class A-2 Trust Agreement,  any purchase of the Class A-1 Certificates and
      the Class A-2 Certificates  pursuant to the Class B Trust Agreement or any
      purchase of  Certificates  pursuant to clause (a) above) to purchase  all,
      but not less  than  all,  of the  Applicable  Certificates  upon ten days'
      written notice to the Trustee and each other Class C-1  Certificateholder,
      PROVIDED  that (A) if prior to the end of such  ten-day  period  any other
      Class  C-1   Certificateholder   notifies   such   purchasing   Class  C-1
      Certificateholder  that such other  Class C-1  Certificateholder  wants to
      participate in such purchase,  then such other Class C-1 Certificateholder
      may join with the purchasing Class C-1  Certificateholder to purchase all,
      but not less than all, of the  Applicable  Certificates  pro rata based on
      the Fractional Undivided Interest in the Class C-1 Trust held by each such
      Class C-1  Certificateholder  and (B) if prior to the end of such  ten-day
      period  any  other  Class  C-1  Certificateholder   fails  to  notify  the
      purchasing   Class  C-1   Certificateholder   of  such  other   Class  C-1
      Certificateholder's  desire to participate  in such a purchase,  then such
      other Class C-1  Certificateholder  shall lose its right to  purchase  the
      Applicable Certificates pursuant to this Section 4.01(c); and

            (ii)   each   holder   of  a  Class  D   Certificate   (a  "CLASS  D
      CERTIFICATEHOLDER")  shall have the right (which shall not expire upon any
      purchase  of the Class A-2  Certificates  pursuant  to the Class A-1 Trust
      Agreement,  any  purchase  of the Class A-1  Certificates  pursuant to the
      Class A-2 Trust Agreement,  any purchase of the Class A-1 Certificates and
      the Class A-2 Certificates  pursuant to the Class B Trust Agreement or any
      purchase of  Certificates  pursuant to clause (a), (b) or (c)(i) above) to
      purchase  all, but not less than all, of the Class A-1  Certificates,  the
      Class  A-2  Certificates,   the  Class  B  Certificates,   the  Class  C-1
      Certificates and the Applicable Certificates upon ten days' written notice

<PAGE>

      to the Class A-1 Trustee,  the Class A-2 Trustee, the Class B Trustee, the
      Class C-1 Trustee,  the Trustee and each other Class D  Certificateholder,
      PROVIDED  that (A) if prior to the end of such  ten-day  period  any other
      Class   D    Certificateholder    notifies   such   purchasing   Class   D
      Certificateholder  that  such  other  Class D  Certificateholder  wants to
      participate  in such purchase,  then such other Class D  Certificateholder
      may join with the purchasing  Class D  Certificateholder  to purchase all,
      but not less  than  all,  of the  Class  A-1  Certificates,  the Class A-2
      Certificates, the Class B Certificates, the Class C-1 Certificates and the
      Applicable  Certificates  pro  rata  based  on  the  Fractional  Undivided
      Interest in the Class D Trust held by each such Class D  Certificateholder
      and (B) if prior  to the end of such  ten-day  period  any  other  Class D
      Certificateholder fails to notify the purchasing Class D Certificateholder
      of such other Class D Certificateholder's  desire to participate in such a
      purchase,  then such other Class D Certificateholder  shall lose its right
      to purchase the Class A-1 Certificates,  the Class A-2  Certificates,  the
      Class B  Certificates,  the  Class  C-1  Certificates  and the  Applicable
      Certificates pursuant to this Section 4.01(c).

            The purchase price with respect to the Applicable Certificates shall
be equal to the Pool  Balance  of the  Applicable  Certificates,  together  with
accrued  and  unpaid  interest  thereon  to the date of such  purchase,  without
premium,  but including any other amounts then due and payable to the Applicable
Certificateholders  under the Agreement, the Intercreditor Agreement, the Escrow
Agreement  or  any  Note  Document  or  on  or  in  respect  of  the  Applicable
Certificates;   PROVIDED,   HOWEVER,   that  no  such   purchase  of  Applicable
Certificates  shall be effective  unless the  purchaser(s)  shall certify to the
Trustee that  contemporaneously  with such purchase,  such purchaser(s) is (are)
purchasing, pursuant to the terms of the Agreement and the Other Agreements, (A)
in the case of any purchase of the  Applicable  Certificates  pursuant to clause
(c)(i) above, all of the Applicable Certificates, or (B) in all other cases, the
Class A-1 Certificates,  the Class A-2  Certificates,  the Class B Certificates,
the Class C-1  Certificates and the Applicable  Certificates  that are senior to
the securities held by such purchaser(s).  Each payment of the purchase price of
the Applicable  Certificates  referred to in the first sentence  hereof shall be
made to an account or accounts  designated by the Trustee and each such purchase
shall  be  subject  to the  terms  of  this  Section  4.01(b).  Each  Applicable
Certificateholder  agrees by its acceptance of its Applicable  Certificate  that
(at any time after the  occurrence and during the  continuation  of a Triggering
Event) it will, upon payment from such Class C-1 Certificateholder(s) or Class D
Certificateholder(s), as the case may be, of the purchase price set forth in the
first  sentence of this  paragraph,  (i) forthwith  sell,  assign,  transfer and
convey to the purchaser(s) thereof (without recourse, representation or warranty
of any kind  except for its own acts),  all of the right,  title,  interest  and
obligation of such  Applicable  Certificateholder  in the Agreement,  the Escrow
Agreement,  the Deposit Agreement,  the Intercreditor  Agreement,  the Liquidity
Facility, the Note Documents, the NPA and all Applicable Certificates and Escrow
Receipts held by such Applicable  Certificateholder  (excluding all right, title
and  interest  under any of the  foregoing  to the extent such  right,  title or
interest is with respect to an  obligation  not then due and payable as respects
any action or  inaction or state of affairs  occurring  prior to such sale) (and
the  purchaser   shall  assume  all  of  such   Applicable   Certificateholder's
obligations under the Agreement,  the Escrow Agreement,  the Deposit  Agreement,

<PAGE>

the Intercreditor Agreement, the Liquidity Facility, the NPA, the Note Documents
and all such Applicable Certificates and Escrow Receipts), (ii) if such purchase
occurs after a record date  specified  in Section  2.03 of the Escrow  Agreement
relating  to the  distribution  of unused  Deposits  and/or  accrued  and unpaid
interest  on  Deposits  and  prior  to  or  on  the  related  distribution  date
thereunder,   forthwith  turn  over  to  the   purchaser(s)  of  its  Applicable
Certificate all amounts, if any, received by it on account of such distribution,
and  (iii)  if  such  purchase  occurs  after  a  Record  Date  relating  to any
distribution and prior to or on the related  Distribution  Date,  forthwith turn
over to the  purchaser(s)  of its Applicable  Certificate  all amounts,  if any,
received by it on account of such distribution. The Applicable Certificates will
be deemed to be  purchased  on the date  payment of the  purchase  price is made
notwithstanding the failure of the Applicable  Certificateholders to deliver any
Applicable  Certificates  and, upon such a purchase,  (I) the only rights of the
Applicable  Certificateholders will be to deliver the Applicable Certificates to
the purchaser(s) and receive the purchase price for such Applicable Certificates
and (II) if the purchaser(s) shall so request, such Applicable Certificateholder
will comply with all the  provisions  of Section 3.04 of the Basic  Agreement to
enable  new  Applicable  Certificates  to be  issued  to the  purchaser  in such
denominations  as it shall request.  All charges and expenses in connection with
the  issuance  of any such  new  Applicable  Certificates  shall be borne by the
purchaser thereof.

            As used in this Section 4.01 and elsewhere in this Trust Supplement,
the  terms  "Class  A-1  Certificate",  "Class  A-1  Trust",  "Class  A-1  Trust
Agreement",  "Class A-1 Trustee",  "Class A-2  Certificate",  "Class A-2 Trust",
"Class A-2 Trust Agreement", "Class A-2 Trustee", "Class B Certificate",  "Class
B Trust", "Class B Trust Agreement", "Class B Trustee", "Class C-1 Certificate",
"Class C-1  Certificateholder",  "Class C-1 Trust", "Class C-1 Trust Agreement",
"Class C-1 Trustee",  "Class D Certificate" and "Class D Trust",  shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.

            (d) This Section 4.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement, with respect to the Applicable Trust.

            Section  4.02.  AMENDMENT  OF SECTION  6.05 OF THE BASIC  AGREEMENT.
Section  6.05 of the Basic  Agreement  shall be  amended,  with  respect  to the
Applicable  Trust, by deleting the phrase "and thereby annul any Direction given
by such  Certificateholders  or the Trustee to such Loan  Trustee  with  respect
thereto," set forth in the first sentence thereof.

                                    ARTICLE V
                                   THE TRUSTEE

            Section  5.01.  ACQUISITION  OF TRUST  PROPERTY.  (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and  Assumption  Agreement on the date  specified in Section 7.01 of the Related
Pass  Through  Trust  Supplement,  subject  only  to  the  satisfaction  of  the
conditions set forth in said Section 7.01. This Agreement  (except only for this
sentence and the immediately preceding sentence hereof, which are effective upon
execution  and delivery  hereof) shall become  effective  upon the execution and
delivery  of the  Assignment  and  Assumption  Agreement  by the Trustee and the

<PAGE>

Related Trustee,  automatically  and without any further  signature or action on
the part of the Company and the  Trustee,  and shall  thereupon  constitute  the
legal, valid and binding  obligation of the parties hereto  enforceable  against
each of the parties hereto in accordance with its terms. Upon such execution and
delivery of the Assignment and Assumption Agreement,  the Related Trust shall be
terminated, the Applicable Certificateholders shall receive beneficial interests
in the  Applicable  Trust in exchange for their  interests in the Related  Trust
equal to their  respective  beneficial  interests  in the Related  Trust and the
"Outstanding"  (as defined in the Related Pass  Through  Trust  Agreement)  pass
through certificates  representing fractional undivided interests in the Related
Trust  shall be deemed  for all  purposes  of this  Agreement,  without  further
signature  or  action  of any  party or  Certificateholder,  to be  Certificates
representing  the same  Fractional  Undivided  Interests  in the Trust and Trust
Property.  By  acceptance  of  its  Applicable   Certificate,   each  Applicable
Certificateholder  consents  to  and  ratifies  such  assignment,  transfer  and
delivery  of the trust  property of the  Related  Trust to the Trustee  upon the
execution  and  delivery  of  the  Assignment  and  Assumption  Agreement.   The
provisions  of this Section  5.01(a)  supersede  and replace the  provisions  of
Section 2.02 of the Basic  Agreement with respect to the Applicable  Trust,  and
all  provisions of the Basic  Agreement  relating to Postponed  Notes or Section
2.02 of the Basic Agreement shall not apply to the Applicable Trust.

            (b) The Trustee,  upon the execution and delivery of the  Assignment
and Assumption  Agreement,  acknowledges its acceptance of all right,  title and
interest in and to the Trust  Property and declares  that the Trustee  holds and
will hold such right, title and interest for the benefit of all then present and
future  Applicable  Certificateholders,  upon the trusts herein and in the Basic
Agreement set forth. By the acceptance of each Applicable  Certificate issued to
it under the Related Pass Through  Trust  Agreement and deemed issued under this
Agreement,  each  Holder of any such  Applicable  Certificate  as grantor of the
Applicable Trust thereby joins in the creation and declaration of the Applicable
Trust.  The  provisions  of this  Section  5.01(b)  supersede  and  replace  the
provisions  of  Section  2.03  of  the  Basic  Agreement,  with  respect  to the
Applicable Trust.

            Section 5.02. [Intentionally Omitted]

            Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement  and Section 7.15 of the Basic  Agreement,  the Trustee  shall not be
responsible  in any  manner  whatsoever  for or in respect  of the  validity  or
sufficiency  of this Trust  Supplement,  the Deposit  Agreement,  the NPA or the
Escrow  Agreement or the due  execution  hereof or thereof by the Company or the
other  parties  thereto  (other than the  Trustee),  or for or in respect of the
recitals and statements  contained herein or therein,  all of which recitals and
statements  are made  solely by the  Company,  except  that the  Trustee  hereby
represents and warrants that each of this Trust Supplement, the Basic Agreement,
each Applicable Certificate, the Intercreditor Agreement, the NPA and the Escrow
Agreement  has been  executed  and  delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.

            (b)  Except as herein  otherwise  provided  and  except  during  the
continuation  of an Event of Default in respect of the Applicable  Trust created

<PAGE>

hereby,  no duties,  responsibilities  or liabilities  are assumed,  or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the  Agreement,  and this Trust  Supplement is executed and
accepted on behalf of the Trustee,  subject to all the terms and  conditions set
forth in the  Agreement,  as fully to all intents as if the same were herein set
forth at length.

            Section 5.04.  REPRESENTATIONS  AND  WARRANTIES OF THE TRUSTEE.  The
Trustee hereby represents and warrants, on the Transfer Date, that:

            (a) the Trustee has full power, authority and legal right to receive
      the Trust Property assigned by the Related Trustee, assume the obligations
      under, and perform,  the Assignment and Assumption  Agreement,  this Trust
      Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and
      the Note  Documents  to which it is a party and has  taken  all  necessary
      action to authorize such receipt, assumption and performance by it of this
      Trust Supplement,  the Intercreditor  Agreement, the Escrow Agreement, the
      NPA and the Note Documents to which it is a party;

            (b) the  receipt  of the Trust  Property  under the  Assignment  and
      Assumption  Agreement and the performance by the Trustee of the Assignment
      and  Assumption  Agreement,  this  Trust  Supplement,   the  Intercreditor
      Agreement,  the Escrow Agreement,  the NPA and the Note Documents to which
      it is a party (i) will not  violate  any  provision  of any United  States
      federal  law or the law of the  state  of the  United  States  where it is
      located  governing  the  banking  and trust  powers of the  Trustee or any
      order, writ, judgment, or decree of any court,  arbitrator or governmental
      authority  applicable  to the Trustee or any of its assets,  (ii) will not
      violate any  provision  of the articles of  association  or by-laws of the
      Trustee, and (iii) will not violate any provision of, or constitute,  with
      or  without  notice or lapse of time,  a default  under,  or result in the
      creation or imposition of any lien on any properties included in the Trust
      Property pursuant to the provisions of any mortgage, indenture,  contract,
      agreement or other  undertaking to which it is a party,  which  violation,
      default or lien could  reasonably be expected to have an adverse effect on
      the Trustee's  performance  or ability to perform its duties  hereunder or
      thereunder or on the transactions contemplated herein or therein;

            (c) the  receipt  of the Trust  Property  under the  Assignment  and
      Assumption  Agreement and the performance by the Trustee of the Assignment
      and  Assumption  Agreement,  this  Trust  Supplement,   the  Intercreditor
      Agreement,  the Escrow Agreement,  the NPA and the Note Documents to which
      it is a party will not require the authorization, consent, or approval of,
      the giving of notice to, the filing or registration with, or the taking of
      any other  action in respect of, any  governmental  authority or agency of
      the United  States or the state of the United  States  where it is located
      regulating the banking and corporate trust activities of the Trustee; and

            (d) the Assignment  and Assumption  Agreement has been duly executed
      and delivered by the Trustee and this Trust Supplement,  the Intercreditor
      Agreement,  the Escrow Agreement,  the NPA and the Note Documents to which

<PAGE>

      it is a party have been,  or will be, as  applicable,  duly  executed  and
      delivered  by  the  Trustee  and  constitute,   or  will  constitute,   as
      applicable,  the  legal,  valid and  binding  agreements  of the  Trustee,
      enforceable   against  it  in  accordance  with  their  respective  terms;
      PROVIDED,  HOWEVER,  that  enforceability may be limited by (i) applicable
      bankruptcy,  insolvency,   reorganization,   moratorium  or  similar  laws
      affecting the rights of creditors generally and (ii) general principles of
      equity.

            Section 5.05. TRUSTEE LIENS. The Trustee in its individual  capacity
agrees,  in addition to the  agreements  contained  in Section 7.17 of the Basic
Agreement,  that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is  attributable  to the Trustee in its
individual  capacity and which is unrelated to the transactions  contemplated by
the Intercreditor Agreement or the NPA.

                                   ARTICLE VI
                  ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

            Section  6.01.  AMENDMENT  OF SECTION  5.02 OF THE BASIC  AGREEMENT.
Section  5.02 of the Basic  Agreement  shall be  amended,  with  respect  to the
Applicable Trust, by (i) replacing the phrase "of the Note Documents and of this
Agreement"  set forth in  paragraph  (b)  thereof  with the  phrase "of the Note
Documents,  of the NPA and of this  Agreement" and (ii) replacing the phrase "of
this Agreement and any Note Document" set forth in the last paragraph of Section
5.02 with the phrase "of this Agreement, the NPA and any Note Document".

            Section 6.02.  SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic  Agreement,  the Company may (but will not be  required  to),  and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request,  at any  time  and  from  time to  time,  (i)  enter  into  one or more
agreements  supplemental  to the  Escrow  Agreement,  the  NPA  or  the  Deposit
Agreement,  for any of the purposes set forth in clauses (1) through (9) of such
Section  9.01,  and (without  limitation of the foregoing or Section 9.01 of the
Basic  Agreement)  (a)  clauses (2) and (3) of such  Section  9.01 shall also be
deemed to include the Company's  obligations  under (in the case of clause (2)),
and the  Company's  rights and powers  conferred by (in the case of clause (3)),
the NPA, and (b)  references in clauses (4), (6) and (7) of such Section 9.01 to
"any Intercreditor  Agreement or any Liquidity Facility" shall also be deemed to
refer to "the  Intercreditor  Agreement,  the  Liquidity  Facility,  the  Escrow
Agreement,  the NPA or the  Deposit  Agreement"  and (ii) enter into one or more
agreements  supplemental  to this  Agreement  to provide for the  formation of a
Class D Trust, the issuance of Class D Certificates, the purchase by the Class D
Trust of  Equipment  Notes and other  matters  incidental  thereto or  otherwise
contemplated by Section 2.01(b) of the Basic Agreement.

            Section  6.03.  SUPPLEMENTAL  AGREEMENTS  WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS.  Without  limitation of Section 9.02 of the Basic Agreement,

<PAGE>

the provisions of Section 9.02 of the Basic  Agreement shall apply to agreements
or  amendments  for the purpose of adding any  provisions  to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the NPA or modifying  in any manner the rights and  obligations  of
the  Applicable  Certificateholders  under the  Escrow  Agreement,  the  Deposit
Agreement or the NPA;  provided that the  provisions  of Section  9.02(1) of the
Basic Agreement shall be deemed to include reductions in any manner of, or delay
in the timing of, any receipt by the Applicable  Certificateholders  of payments
upon the Deposits.

                                   ARTICLE VII
                              TERMINATION OF TRUST

            Section  7.01.   TERMINATION  OF  THE  APPLICABLE   TRUST.  (a)  The
respective  obligations and responsibilities of the Company and the Trustee with
respect to the Applicable  Trust shall  terminate upon the  distribution  to all
Applicable  Certificateholders  and the  Trustee of all  amounts  required to be
distributed  to them  pursuant  to this  Agreement  and the  disposition  of all
property held as part of the Trust Property; PROVIDED, HOWEVER, that in no event
shall the Applicable Trust continue beyond one hundred ten (110) years following
the date of the execution of this Trust Supplement.

            Notice of any  termination,  specifying the  Distribution  Date upon
which  the  Applicable   Certificateholders   may  surrender  their   Applicable
Certificates  to  the  Trustee  for  payment  of  the  final   distribution  and
cancellation,   shall  be  mailed   promptly  by  the   Trustee  to   Applicable
Certificateholders not earlier than the 60th day and not later than the 15th day
next preceding such final Distribution Date specifying (A) the Distribution Date
upon which the proposed  final payment of the  Applicable  Certificates  will be
made upon presentation and surrender of Applicable Certificates at the office or
agency of the Trustee  therein  specified,  (B) the amount of any such  proposed
final  payment,  and (C) that  the  Record  Date  otherwise  applicable  to such
Distribution Date is not applicable,  payments being made only upon presentation
and  surrender  of the  Applicable  Certificates  at the office or agency of the
Trustee therein  specified.  The Trustee shall give such notice to the Registrar
at the  time  such  notice  is  given  to  Applicable  Certificateholders.  Upon
presentation  and surrender of the Applicable  Certificates  in accordance  with
such  notice,   the  Trustee  shall  cause  to  be   distributed  to  Applicable
Certificateholders such final payments.

            In the event that all of the Applicable Certificateholders shall not
surrender their Applicable Certificates for cancellation within six months after
the date specified in the above-mentioned written notice, the Trustee shall give
a second  written  notice  to the  remaining  Applicable  Certificateholders  to
surrender their  Applicable  Certificates for cancellation and receive the final
distribution  with respect thereto.  No additional  interest shall accrue on the
Applicable  Certificates  after the  Distribution  Date  specified  in the first
written notice.  In the event that any money held by the Trustee for the payment
of distributions on the Applicable  Certificates  shall remain unclaimed for two
years (or such lesser time as the Trustee shall be satisfied,  after sixty days'
notice from the Company, is one month prior to the escheat period provided under

<PAGE>

applicable  law) after the final  distribution  date with respect  thereto,  the
Trustee shall pay to each Loan Trustee the appropriate  amount of money relating
to such Loan Trustee and shall give written  notice thereof to the related Owner
Trustees, the Owner Participants and the Company.

            (b) The  provisions  of this Section 7.01  supersede and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety, with respect
to the Applicable Trust.

                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

            Section 8.01. BASIC AGREEMENT RATIFIED.  Except and so far as herein
expressly  provided,  all of the  provisions,  terms and conditions of the Basic
Agreement are in all respects  ratified and confirmed;  and the Basic  Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.  All  replacements of provisions of, and other  modifications of the
Basic  Agreement set forth in this Trust  Supplement  are solely with respect to
the Applicable Trust.

            SECTION  8.02.  GOVERNING  LAW.  THE  AGREEMENT  AND THE  APPLICABLE
CERTIFICATES  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF
THE STATE OF NEW YORK. THIS SECTION 8.02  SUPERSEDES AND REPLACES  SECTION 12.05
OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.

            Section 8.03.  EXECUTION IN COUNTERPARTS.  This Trust Supplement may
be executed in any number of  counterparts,  each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.

            Section 8.04.  INTENTION OF PARTIES.  The parties hereto intend that
the  Applicable  Trust be classified  for U.S.  federal income tax purposes as a
grantor trust under  Subpart E, Part I of  Subchapter J of the Internal  Revenue
Code of  1986,  as  amended,  and not as a trust  or  association  taxable  as a
corporation or as a partnership. Each Applicable Certificateholder and Investor,
by its  acceptance  of  its  Applicable  Certificate  or a  beneficial  interest
therein,  agrees to treat the  Applicable  Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.

<PAGE>

            IN WITNESS  WHEREOF,  the Company  and the Trustee  have caused this
Trust Supplement to be duly executed by their  respective  officers thereto duly
authorized, as of the day and year first written above.

                                       CONTINENTAL AIRLINES, INC.

                                       By:_________________________
                                          Name:  Gerald Laderman
                                          Title: Senior Vice President - Finance

                                       WILMINGTON TRUST COMPANY,
                                          as Trustee

                                       By:_________________________
                                          Name:
                                          Title:--------------------------------------------------------------------------------
                             INTERCREDITOR AGREEMENT

                                    (2000-1)

                                   Dated as of
                                 March 15, 2000

                                      AMONG

                          WILMINGTON TRUST COMPANY,
                         not in its individual capacity
                         but solely as Trustee under the
                Continental Airlines Pass Through Trust 2000-1A-1
               Continental Airlines Pass Through Trust 2000-1A-2,
                Continental Airlines Pass Through Trust 2000-1B,
               Continental Airlines Pass Through Trust 2000-1C-1,
                                       and
                Continental Airlines Pass Through Trust 2000-1C-2

                  CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH,
                        as Class A-1 Liquidity Provider,
                       as Class A-2 Liquidity Provider and
                         as Class B Liquidity Provider,

                      MORGAN STANLEY CAPITAL SERVICES INC.
                       as Class C-1 Liquidity Provider and
                         as Class C-2 Liquidity Provider

                                       AND

                            WILMINGTON TRUST COMPANY,
                      not in its individual capacity except
                        as expressly set forth herein but
                    solely as Subordination Agent and Trustee

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I   DEFINITIONS..................................................     2
     SECTION 1.1.   Definitions..........................................     2

ARTICLE II   TRUST ACCOUNTS; CONTROLLING PARTY...........................    24
     SECTION 2.1.   Agreement to Terms of Subordination;
                    Payments from Monies Received Only...................    24
     SECTION 2.2.   Trust Accounts.......................................    25
     SECTION 2.3.   Deposits to the Collection Account and
                    Special Payments Account.............................    26
     SECTION 2.4.   Distributions of Special Payments....................    26
     SECTION 2.5.   Designated Representatives...........................    29
     SECTION 2.6.   Controlling Party....................................    30

ARTICLE III  RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED.........................................................    31
     SECTION 3.1.   Written Notice of Distribution.......................    31
     SECTION 3.2.   Distribution of Amounts on Deposit in
                    the Collection Account...............................    34
     SECTION 3.3.   Distribution of Amounts on Deposit
                    Following a Triggering Event.........................    35
     SECTION 3.4.   Other Payments.......................................    37
     SECTION 3.5.   Payments to the Trustees and the
                    Liquidity Providers..................................    38
     SECTION 3.6.   Liquidity Facilities.................................    38

ARTICLE IV   EXERCISE OF REMEDIES........................................    47
     SECTION 4.1.   Directions from the Controlling Party................    47
     SECTION 4.2.   Remedies Cumulative..................................    49
     SECTION 4.3.   Discontinuance of Proceedings........................    49
     SECTION 4.4.   Right of Certificateholders to Receive
                    Payments Not to Be Impaired..........................    49
     SECTION 4.5.   Undertaking for Costs................................    49

ARTICLE V  DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF
TRUSTEES, ETC............................................................    50
     SECTION 5.1.   Notice of Indenture Default or
                    Triggering Event.....................................    50
     SECTION 5.2.   Indemnification......................................    50
     SECTION 5.3.   No Duties Except as Specified in
                    Intercreditor Agreement..............................    51
     SECTION 5.4.   Notice from the Liquidity Providers and
                    Trustees.............................................    51

ARTICLE VI   THE SUBORDINATION AGENT.....................................    51
     SECTION 6.1.   Authorization; Acceptance of Trusts and
                    Duties...............................................    51

<PAGE>

                                TABLE OF CONTENTS
                                  (Continued)
                                                                            PAGE

     SECTION 6.2.   Absence of Duties....................................    51
     SECTION 6.3.   No Representations or Warranties as to
                    Documents............................................    51
     SECTION 6.4.   No Segregation of Monies; No Interest................    52
     SECTION 6.5.   Reliance; Agents; Advice of Counsel..................    52
     SECTION 6.6.   Capacity in Which Acting.............................    52
     SECTION 6.7.   Compensation.........................................    53
     SECTION 6.8.   May Become Certificateholder.........................    53
     SECTION 6.9.   Subordination Agent Required; Eligibility............    53
     SECTION 6.10.  Money to Be Held in Trust............................    53

ARTICLE VII   INDEMNIFICATION OF SUBORDINATION AGENT.....................    53
     SECTION 7.1.   Scope of Indemnification.............................    53

ARTICLE VIII   SUCCESSOR SUBORDINATION AGENT.............................    54
     SECTION 8.1.   Replacement of Subordination Agent;
                    Appointment of Successor.............................    54

ARTICLE IX  SUPPLEMENTS AND AMENDMENTS..................................    55
     SECTION 9.1.   Amendments, Waivers, etc.............................    55
     SECTION 9.2.   Subordination Agent Protected........................    57
     SECTION 9.3.   Effect of Supplemental Agreements....................    57
     SECTION 9.4.   Notice to Rating Agencies............................    57

ARTICLE X  MISCELLANEOUS................................................    57
     SECTION 10.1.  Termination of Intercreditor Agreement...............    57
     SECTION 10.2.  Intercreditor Agreement for Benefit of
                    Trustees, Liquidity Providers and
                    Subordination Agent..................................    58
     SECTION 10.3.  Notices..............................................    58
     SECTION 10.4.  Severability.........................................    59
     SECTION 10.5.  No Oral Modifications or Continuing
                    Waivers..............................................    59
     SECTION 10.6.  Successors and Assigns...............................    59
     SECTION 10.7.  Headings.............................................    60
     SECTION 10.8.  Counterpart Form.....................................    60
     SECTION 10.9.  Subordination........................................    60
     SECTION 10.10. Governing Law........................................    61
     SECTION 10.11. Submission to Jurisdiction; Waiver of
                    Jury Trial; Waive.r of Immunity......................    61

<PAGE>

                             INTERCREDITOR AGREEMENT

            INTERCREDITOR AGREEMENT dated as of March 15, 2000, among WILMINGTON
TRUST COMPANY, a Delaware  corporation  ("WTC"),  not in its individual capacity
but solely as Trustee of each Trust (each as defined below); CREDIT SUISSE FIRST
BOSTON ("CSFB"), a banking institution  organized under the laws of Switzerland,
acting through its New York branch, as Class A-1 Liquidity  Provider,  Class A-2
Liquidity  Provider  and Class B  Liquidity  Provider,  MORGAN  STANLEY  CAPITAL
SERVICES INC. ("MSCS"),  a corporation  organized under the laws of the State of
Delaware, as Class C-1 Liquidity Provider and Class C-2 Liquidity Provider;  and
WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly set
forth herein,  but solely as Subordination  Agent and trustee hereunder (in such
capacity, together with any successor appointed pursuant to Article VIII hereof,
the "SUBORDINATION AGENT").

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

            WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft
that is owned by  Continental  at the time such  Indenture  is entered into (the
"OWNED  AIRCRAFT"),  Continental  will  issue  on a  recourse  basis  up to (and
including) five (or six, under certain  circumstances) series of Equipment Notes
to finance the purchase of such Aircraft,  and (ii) in the case of each Aircraft
that is  leased to  Continental  pursuant  to a  related  Lease at the time such
Indenture is entered into (the "LEASED  AIRCRAFT"),  the related  Owner  Trustee
will issue on a  nonrecourse  basis up to (and  including)  five (or six,  under
certain circumstances) series of Equipment Notes to finance the purchase of such
Aircraft;

            WHEREAS,  pursuant  to the  Financing  Agreements,  each  Trust will
acquire  Equipment  Notes  having an interest  rate equal to the  interest  rate
applicable to the Certificates to be issued by such Trust;

            WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes  to issue a single  class  of  Certificates  (a  "CLASS")  bearing  the
interest  rate and having the final  distribution  date  described in such Trust
Agreement on the terms and subject to the conditions set forth therein;

            WHEREAS,  pursuant to the Underwriting  Agreement,  the Underwriters
propose to purchase the Certificates  issued by each Trust in the aggregate face
amount set forth  opposite  the name of such Trust on  Schedule I thereto on the
terms and subject to the conditions set forth therein;

            WHEREAS, CSFB proposes to enter into three separate revolving credit
agreements  and MSCS  proposes  to  enter  into two  separate  revolving  credit
agreements (each such agreement,  a "LIQUIDITY FACILITY") with the Subordination
Agent, as agent for the Trustee of the applicable Trust,  respectively,  for the
benefit of the Certificateholders of such Trust;

<PAGE>

            WHEREAS,  Morgan  Stanley Dean Witter & Co. (the  "GUARANTOR")  will
guarantee in full,  pursuant to separate  Guarantee  Agreements  dated as of the
date hereof (each, a "GUARANTEE  AGREEMENT"),  the obligations of MSCS under the
Class C-1 Liquidity Facility and the Class C-2 Liquidity Facility; and

            WHEREAS,  it is a  condition  precedent  to the  obligations  of the
Underwriters under the Underwriting  Agreement that the Subordination Agent, the
Trustees and the Liquidity  Providers  agree to the terms of  subordination  set
forth in this  Agreement  in  respect  of each  Class of  Certificates,  and the
Subordination Agent, the Trustees and the Liquidity Providers,  by entering into
this Agreement,  hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.

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

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.1. DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:

            (1) the terms used herein that are defined in this  Article have the
      meanings assigned to them in this Article,  and include the plural as well
      as the singular;

            (2) all  references  in this  Agreement  to  designated  "Articles",
      "Sections" and other subdivisions are to the designated Articles, Sections
      and other subdivisions of this Agreement;

            (3) the words "herein",  "hereof" and "hereunder" and other words of
      similar  import  refer  to  this  Agreement  as a  whole  and  not  to any
      particular Article, Section or other subdivision; and

            (4) the term "including" shall mean "including without limitation".

            "ACCELERATION" means, with respect to the amounts payable in respect
of the  Equipment  Notes  issued  under any  Indenture,  such  amounts  becoming
immediately   due  and  payable  by  declaration  or  otherwise.   "Accelerate",
"ACCELERATED" and "ACCELERATING" have meanings correlative to the foregoing.

            "ADJUSTED  EXPECTED   DISTRIBUTIONS"  means,  with  respect  to  the
Certificates  of any  Trust on any  Current  Distribution  Date,  the sum of (x)
accrued and unpaid interest on such Certificates  (excluding  interest,  if any,
payable with respect to the Deposits  related to such Trust) and (y) the greater
of:

<PAGE>

            (A) the difference between (x) the Pool Balance of such Certificates
      as of the  immediately  preceding  Distribution  Date (or,  if the Current
      Distribution Date is the first  Distribution  Date, the original aggregate
      face amount of the Certificates of such Trust) and (y) the Pool Balance of
      such  Certificates as of the Current  Distribution  Date calculated on the
      basis that (i) the principal of the Non-Performing Equipment Notes held in
      such Trust has been paid in full and such payments  have been  distributed
      to the holders of such Certificates,  (ii) the principal of the Performing
      Equipment  Notes  held in such  Trust has been paid when due (but  without
      giving effect to any Acceleration of Performing  Equipment Notes) and such
      payments have been  distributed  to the holders of such  Certificates  and
      (iii) the  principal of any  Equipment  Notes  formerly held in such Trust
      that have been sold pursuant to the terms hereof has been paid in full and
      such payments have been  distributed to the holders of such  Certificates,
      but without giving effect to any reduction in the Pool Balance as a result
      of  any  distribution   attributable  to  Deposits   occurring  after  the
      immediately  preceding  Distribution Date (or, if the Current Distribution
      Date is the first Distribution Date,  occurring after the initial issuance
      of the Certificates of such Trust), and

            (B) the amount of the  excess,  if any,  of (i) the Pool  Balance of
      such Class of Certificates as of the  immediately  preceding  Distribution
      Date (or, if the Current Distribution Date is the first Distribution Date,
      the original  aggregate  face amount of the  Certificates  of such Trust),
      less the amount of the Deposits for such Class of  Certificates as of such
      preceding  Distribution Date (or, if the Current  Distribution Date is the
      first Distribution Date, the original aggregate amount of the Deposits for
      such  Class of  Certificates)  other  than any  portion  of such  Deposits
      thereafter  used to acquire  Equipment Notes pursuant to the Note Purchase
      Agreement, over (ii) the Aggregate LTV Collateral Amount for such Class of
      Certificates for the Current Distribution Date;

PROVIDED that,  until the date of the initial LTV  Appraisals,  clause (B) shall
not apply.

            For purposes of calculating  Adjusted  Expected  Distributions  with
respect to the  Certificates  of any Trust,  any premium  paid on the  Equipment
Notes held in such Trust that has not been distributed to the Certificateholders
of such  Trust  (other  than such  premium or a portion  thereof  applied to the
payment of interest on the  Certificates  of such Trust or the  reduction of the
Pool  Balance of such Trust)  shall be added to the amount of Adjusted  Expected
Distributions.

            "ADVANCE",  with  respect  to  any  Liquidity  Facility,  means  any
Advances as defined in such Liquidity Facility.

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

<PAGE>

            "AGGREGATE LTV COLLATERAL  AMOUNT" for any Class of Certificates for
any Distribution  Date means the product of (A)(i) the sum of the applicable LTV
Collateral  Amounts for each Leased Aircraft and Owned Aircraft,  minus (ii) the
Pool Balance for each Class of Certificates, if any, senior to such Class, after
giving effect to any  distribution of principal on such  Distribution  Date with
respect to such senior Class or Classes, multiplied by (B)(i) in the case of the
Class A-1  Certificates or Class A-2  Certificates,  a fraction the numerator of
which equals the Current Pool  Balance for the Class A-1  Certificates  or Class
A-2  Certificates,  as the case may be, and the  denominator of which equals the
aggregate  Current  Pool  Balance for the Class A-1  Certificates  and Class A-2
Certificates,  (ii) in the case of the Class B  Certificates,  1.0, and (iii) in
the case of the Class C-1 Certificates or Class C-2 Certificates, a fraction the
numerator   of  which  equals  the  Current  Pool  Balance  for  the  Class  C-1
Certificates or Class C-2 Certificates,  as the case may be, and the denominator
of  which  equals  the  aggregate   Current  Pool  Balance  for  the  Class  C-1
Certificates and Class C-2 Certificates.

            "AIRCRAFT"  means,  with respect to each  Indenture,  the "Aircraft"
referred to therein.

            "APPRAISAL"  means a fair  market  value  appraisal  (which may be a
"desktop"  appraisal)  performed  by  any  Appraiser  or  any  other  nationally
recognized  appraiser  on the basis of an  arm's-length  transaction  between an
informed and willing  purchaser  under no  compulsion to buy and an informed and
willing  seller  under no  compulsion  to sell and both having  knowledge of all
relevant facts.

            "APPRAISED  CURRENT  MARKET  VALUE" of any Leased  Aircraft or Owned
Aircraft  means the lower of the average and the median of the three most recent
Appraisals of such Aircraft.

            "APPRAISERS" means Aircraft Information Services, Inc., AvSolutions,
Inc. and Morten Beyer and Agnew, Inc.

            "ASSIGNMENT AND ASSUMPTION  AGREEMENTS" means each of the Assignment
and  Assumption  Agreements  to be  executed  among a Trustee and trustee of the
relevant Successor Trust in accordance with the relevant Trust Agreement, as the
same may be amended, modified or supplemented from time to time.

            "AVAILABLE  AMOUNT" means, with respect to any Liquidity Facility on
any drawing  date,  subject to the proviso  contained  in the first  sentence of
Section  3.6(g)  hereof,  an  amount  equal  to (a) the  Stated  Amount  of such
Liquidity  Facility at such time, LESS (b) the aggregate amount of each Interest
Drawing  honored by the Liquidity  Provider under such Liquidity  Facility on or
prior to such date which has not been  reimbursed or reinstated as of such date;
PROVIDED that, following a Downgrade Drawing, a Non-Extension Drawing or a Final
Drawing under such Liquidity  Facility,  the Available  Amount of such Liquidity
Facility shall be zero.

            "BASIC AGREEMENT" means the Pass Through Trust Agreement dated as of
September 25, 1997 between Continental and WTC, not in its individual  capacity,
except as otherwise expressly provided therein, but solely as trustee.

<PAGE>

            "BUSINESS  DAY" means any day other  than a Saturday  or Sunday or a
day on which  commercial  banks are required or  authorized to close in Houston,
Texas,  New York, New York, or, so long as any Certificate is  outstanding,  the
city and state in which any Trustee, the Subordination Agent or any Loan Trustee
maintains its Corporate Trust Office or receives and disburses  funds, and that,
solely with respect to draws under any Liquidity  Facility,  also is a "Business
Day" as defined in such Liquidity Facility.

            "CASH  COLLATERAL  ACCOUNT"  means  the  Class  A-1 Cash  Collateral
Account,  the Class A-2 Cash  Collateral  Account,  the Class B Cash  Collateral
Account,  the Class C-1 Cash Collateral Account or the Class C-2 Cash Collateral
Account, as applicable.

            "CERTIFICATE"   means  a  Class   A-1   Certificate,   a  Class  A-2
Certificate,  a Class B  Certificate,  a Class  C-1  Certificate  or a Class C-2
Certificate, as applicable.

            "CERTIFICATEHOLDER" means any holder of one or more Certificates.

            "CLASS"  has the meaning  assigned  to such term in the  preliminary
statements to this Agreement.

            "CLASS  A-1  CASH  COLLATERAL  ACCOUNT"  means an  Eligible  Deposit
Account  in the  name  of the  Subordination  Agent  maintained  at an  Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all  amounts  drawn  under the Class A-1  Liquidity  Facility  pursuant to
Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.

            "CLASS A-1 CERTIFICATEHOLDER"  means, at any time, any holder of one
or more Class A-1 Certificates.

            "CLASS A-1 CERTIFICATES"  means the certificates issued by the Class
A-1  Trust,  substantially  in the form of  Exhibit  A to the  Class  A-1  Trust
Agreement,  and authenticated by the Class A-1 Trustee,  representing fractional
undivided  interests  in the Class A-1  Trust,  and any  certificates  issued in
exchange therefor or replacement  thereof pursuant to the terms of the Class A-1
Trust Agreement.

            "CLASS A-1  LIQUIDITY  FACILITY"  means,  initially,  the  Revolving
Credit Agreement dated as of the date hereof,  between the Subordination  Agent,
as agent  and  trustee  for the  Class  A-1  Trust,  and the  initial  Class A-1
Liquidity Provider,  and from and after the replacement of such Revolving Credit
Agreement pursuant hereto, the Replacement  Liquidity Facility therefor, if any,
in each case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.

            "CLASS  A-1  LIQUIDITY  PROVIDER"  means  CSFB,  together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class A-1 Liquidity Facility pursuant to Section 3.6(e).

            "CLASS A-1 TRUST" means (i) prior to the Transfer,  the  Continental
Airlines Pass Through Trust 2000-1A-1-O created and administered pursuant to the

<PAGE>

Class A-1 Trust Agreement and (ii) after the Transfer,  the Continental Airlines
Pass Through Trust  2000-1A-1-S  created and administered  pursuant to the Class
A-1 Trust Agreement.

            "CLASS A-1 TRUST  AGREEMENT"  means (i) prior to the  Transfer,  the
Basic Agreement, as supplemented by the Supplement No. 2000-1A-1-O thereto dated
as of  the  date  hereof,  governing  the  creation  and  administration  of the
Continental  Airlines  Pass Through  Trust  2000-1A-1-O  and the issuance of the
Class A-1  Certificates,  as the same may be amended,  supplemented or otherwise
modified  from time to time in  accordance  with its  terms,  and (ii) after the
Transfer, the Basic Agreement, as supplemented by the Supplement No. 2000-1A-1-S
thereto,  governing the creation and administration of the Continental  Airlines
Pass Through Trust  2000-1A-1-S and the issuance of the Class A-1  Certificates,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.

            "CLASS A-1 TRUSTEE" means WTC, not in its individual capacity except
as expressly set forth in the Class A-1 Trust  Agreement,  but solely as trustee
under the  Class  A-1  Trust  Agreement,  together  with any  successor  trustee
appointed pursuant thereto.

            "CLASS  A-2  CASH  COLLATERAL  ACCOUNT"  means an  Eligible  Deposit
Account  in the  name  of the  Subordination  Agent  maintained  at an  Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all  amounts  drawn  under the Class A-2  Liquidity  Facility  pursuant to
Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.

            "CLASS A-2 CERTIFICATEHOLDER"  means, at any time, any holder of one
or more Class A-2 Certificates.

            "CLASS A-2 CERTIFICATES"  means the certificates issued by the Class
A-2  Trust,  substantially  in the form of  Exhibit  A to the  Class  A-2  Trust
Agreement,  and authenticated by the Class A-2 Trustee,  representing fractional
undivided  interests  in the Class A-2  Trust,  and any  certificates  issued in
exchange therefor or replacement  thereof pursuant to the terms of the Class A-2
Trust Agreement.

            "CLASS A-2  LIQUIDITY  FACILITY"  means,  initially,  the  Revolving
Credit Agreement dated as of the date hereof,  between the Subordination  Agent,
as agent  and  trustee  for the  Class  A-2  Trust,  and the  initial  Class A-2
Liquidity Provider,  and from and after the replacement of such Revolving Credit
Agreement pursuant hereto, the Replacement  Liquidity Facility therefor, if any,
in each case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.

            "CLASS  A-2  LIQUIDITY  PROVIDER"  means  CSFB,  together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class A-2 Liquidity Facility pursuant to Section 3.6(e).

            "CLASS A-2 TRUST" means (i) prior to the Transfer,  the  Continental
Airlines Pass Through Trust 2000-1A-2-O created and administered pursuant to the
Class A-2 Trust Agreement and (ii) after the Transfer,  the Continental Airlines
Pass Through Trust  2000-1A-2-S  created and administered  pursuant to the Class
A-2 Trust Agreement.

<PAGE>

            "CLASS A-2 TRUST  AGREEMENT"  means (i) prior to the  Transfer,  the
Basic Agreement, as supplemented by the Supplement No. 2000-1A-2-O thereto dated
as of  the  date  hereof,  governing  the  creation  and  administration  of the
Continental  Airlines  Pass Through  Trust  2000-1A-2-O  and the issuance of the
Class A-2  Certificates,  as the same may be amended,  supplemented or otherwise
modified  from time to time in  accordance  with its  terms,  and (ii) after the
Transfer, the Basic Agreement, as supplemented by the Supplement No. 2000-1A-2-S
thereto,  governing the creation and administration of the Continental  Airlines
Pass Through Trust  2000-1A-2-S and the issuance of the Class A-2  Certificates,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.

            "CLASS A-2 TRUSTEE" means WTC, not in its individual capacity except
as expressly set forth in the Class A-2 Trust  Agreement,  but solely as trustee
under the  Class  A-2  Trust  Agreement,  together  with any  successor  trustee
appointed pursuant thereto.

            "CLASS B CASH COLLATERAL  ACCOUNT" means an Eligible Deposit Account
in the name of the  Subordination  Agent maintained at an Eligible  Institution,
which shall be the  Subordination  Agent if it shall so qualify,  into which all
amounts drawn under the Class B Liquidity  Facility  pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.

            "CLASS B CERTIFICATEHOLDER" means, at any time, any holder of one or
more Class B Certificates.

            "CLASS B CERTIFICATES"  means the certificates issued by the Class B
Trust,  substantially  in the form of Exhibit A to the Class B Trust  Agreement,
and  authenticated  by the Class B Trustee,  representing  fractional  undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.

            "CLASS B LIQUIDITY FACILITY" means, initially,  the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class B Trust,  and the initial Class B Liquidity  Provider,
and, from and after the  replacement  of such  Agreement  pursuant  hereto,  the
Replacement  Liquidity  Facility  therefor,  if any,  in each  case as  amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms.

            "CLASS  B  LIQUIDITY   PROVIDER"  means  CSFB,   together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class B Liquidity Facility pursuant to Section 3.6(e).

            "CLASS B TRUST"  means (i) prior to the  Transfer,  the  Continental
Airlines Pass Through Trust 2000-1B-O  created and administered  pursuant to the
Class B Trust Agreement and (ii) after the Transfer,  the  Continental  Airlines
Pass Through Trust 2000-1B-S  created and  administered  pursuant to the Class B
Trust Agreement.

            "CLASS B TRUST AGREEMENT" means (i) prior to the Transfer, the Basic
Agreement,  as supplemented by the Supplement No. 2000-1B-O  thereto dated as of
the date hereof,  governing the creation and  administration  of the Continental
Airlines  Pass  Through  Trust  2000-1B-O  and  the  issuance  of  the  Class  B

<PAGE>

Certificates,  as the same may be amended,  supplemented  or otherwise  modified
from time to time in accordance with its terms, and (ii) after the Transfer, the
Basic  Agreement,  as  supplemented  by the  Supplement No.  2000-1B-S  thereto,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through  Trust  2000-1B-S and the issuance of the Class B  Certificates,  as the
same may be amended,  supplemented  or otherwise  modified  from time to time in
accordance with its terms.

            "CLASS B TRUSTEE" means WTC, not in its individual  capacity  except
as  expressly  set forth in the Class B Trust  Agreement,  but solely as trustee
under the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.

            "CLASS  C-1  CASH  COLLATERAL  ACCOUNT"  means an  Eligible  Deposit
Account in the name of the  Subordination  Agent and  maintained  at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all  amounts  drawn  under the Class C-1  Liquidity  Facility  pursuant to
Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.

            "CLASS C-1 CERTIFICATEHOLDER"  means, at any time, any holder of one
or more Class C-1 Certificates.

            "CLASS C-1 CERTIFICATES"  means the certificates issued by the Class
C-1  Trust,  substantially  in the form of  Exhibit  A to the  Class  C-1  Trust
Agreement,  and authenticated by the Class C-1 Trustee,  representing fractional
undivided  interests  in the Class C-1  Trust,  and any  certificates  issued in
exchange therefor or replacement  thereof pursuant to the terms of the Class C-1
Trust Agreement.

            "CLASS C-1  LIQUIDITY  FACILITY"  means,  initially,  the  Revolving
Credit Agreement dated as of the date hereof,  between the Subordination  Agent,
as agent  and  trustee  for the  Class  C-1  Trust,  and the  initial  Class C-1
Liquidity  Provider,  and,  from and after  the  replacement  of such  Agreement
pursuant hereto, the Replacement  Liquidity  Facility therefor,  if any, in each
case  as  amended,  supplemented  or  otherwise  modified  from  time to time in
accordance with its terms.

            "CLASS  C-1  LIQUIDITY  PROVIDER"  means  MSCS,  together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class C-1 Liquidity Facility pursuant to Section 3.6(e).

            "CLASS C-1 TRUST" means (i) prior to the Transfer,  the  Continental
Airlines Pass Through Trust 2000-1C-1-O created and administered pursuant to the
Class C-1 Trust Agreement and (ii) after the Transfer,  the Continental Airlines
Pass Through Trust  2000-1C-1-S  created and administered  pursuant to the Class
C-1 Trust Agreement.

            "CLASS C-1 TRUST  AGREEMENT"  means (i) prior to the  Transfer,  the
Basic Agreement, as supplemented by the Supplement No. 2000-1C-1-O thereto dated
as of  the  date  hereof,  governing  the  creation  and  administration  of the
Continental  Airlines  Pass Through  Trust  2000-1C-1-O  and the issuance of the
Class C-1  Certificates,  as the same may be amended,  supplemented or otherwise
modified  from time to time in  accordance  with its  terms,  and (ii) after the
Transfer, the Basic Agreement, as supplemented by the Supplement No. 2000-1C-1-S

<PAGE>

thereto,  governing the creation and administration of the Continental  Airlines
Pass Through Trust  2000-1C-1-S and the issuance of the Class C-1  Certificates,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.

            "CLASS C-1 TRUSTEE" means WTC, not in its individual capacity except
as expressly set forth in the Class C-1 Trust  Agreement,  but solely as trustee
under  the  Class  C-1  Trust  Agreement  together  with any  successor  trustee
appointed pursuant thereto.

            "CLASS  C-2  CASH  COLLATERAL  ACCOUNT"  means an  Eligible  Deposit
Account in the name of the  Subordination  Agent and  maintained  at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all  amounts  drawn  under the Class C-2  Liquidity  Facility  pursuant to
Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.

            "CLASS C-2 CERTIFICATEHOLDER"  means, at any time, any holder of one
or more Class C-2 Certificates.

            "CLASS C-2 CERTIFICATES"  means the certificates issued by the Class
C-2  Trust,  substantially  in the form of  Exhibit  A to the  Class  C-2  Trust
Agreement,  and authenticated by the Class C-2 Trustee,  representing fractional
undivided  interests  in the Class C-2  Trust,  and any  certificates  issued in
exchange therefor or replacement  thereof pursuant to the terms of the Class C-2
Trust Agreement.

            "CLASS C-2  LIQUIDITY  FACILITY"  means,  initially,  the  Revolving
Credit Agreement dated as of the date hereof,  between the Subordination  Agent,
as agent  and  trustee  for the  Class  C-2  Trust,  and the  initial  Class C-2
Liquidity  Provider,  and,  from and after  the  replacement  of such  Agreement
pursuant hereto, the Replacement  Liquidity  Facility therefor,  if any, in each
case  as  amended,  supplemented  or  otherwise  modified  from  time to time in
accordance with its terms.

            "CLASS  C-2  LIQUIDITY  PROVIDER"  means  MSCS,  together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class C-2 Liquidity Facility pursuant to Section 3.6(e).

            "CLASS C-2 TRUST" means (i) prior to the Transfer,  the  Continental
Airlines Pass Through Trust 2000-1C-2-O created and administered pursuant to the
Class C-2 Trust Agreement and (ii) after the Transfer,  the Continental Airlines
Pass Through Trust  2000-1C-2-S  created and administered  pursuant to the Class
C-2 Trust Agreement.

            "CLASS C-2 TRUST  AGREEMENT"  means (i) prior to the  Transfer,  the
Basic Agreement, as supplemented by the Supplement No. 2000-1C-2-O thereto dated
as of  the  date  hereof,  governing  the  creation  and  administration  of the
Continental  Airlines  Pass Through  Trust  2000-1C-2-O  and the issuance of the
Class C-2  Certificates,  as the same may be amended,  supplemented or otherwise
modified  from time to time in  accordance  with its  terms,  and (ii) after the
Transfer, the Basic Agreement, as supplemented by the Supplement No. 2000-1C-2-S
thereto,  governing the creation and administration of the Continental  Airlines
Pass Through Trust  2000-1C-2-S and the issuance of the Class C-2  Certificates,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.

<PAGE>

            "CLASS C-2 TRUSTEE" means WTC, not in its individual capacity except
as expressly set forth in the Class C-2 Trust  Agreement,  but solely as trustee
under the  Class  C-2  Trust  Agreement,  together  with any  successor  trustee
appointed pursuant thereto.

            "CLASS D CERTIFICATES" means any pass through certificates issued by
the Class D Trust  representing  fractional  undivided  interests in the Class D
Trust.

            "CLASS D TRUST" means the  Continental  Airlines  Pass Through Trust
2000-1D, if and when established.

            "CLOSING DATE" means March 15, 2000.

            "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the Treasury Regulations promulgated thereunder.

            "COLLECTION  ACCOUNT" means the Eligible Deposit Account established
by the Subordination Agent pursuant to Section 2.2 which the Subordination Agent
shall make deposits in and withdrawals from in accordance with this Agreement.

            "CONSENT NOTICE" has the meaning specified in Section 3.6(d).

            "CONSENT PERIOD" has the meaning specified in Section 3.6(d).

            "CONTINENTAL"   means   Continental   Airlines,   Inc.,  a  Delaware
corporation, and its successors and assigns.

            "CONTINENTAL BANKRUPTCY EVENT" means the occurrence and continuation
of any of the following:

            (a) Continental shall consent to the appointment of or the taking of
      possession  by a  receiver,  trustee  or  liquidator  of  itself  or  of a
      substantial  part of its property,  or Continental  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  Continental  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 an answer
      admitting the material allegations of a petition filed against Continental
      in any such case, or Continental 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  Continental  shall  seek an  agreement,
      composition,  extension or adjustment  with its creditors under such laws,
      or Continental's  board of directors shall adopt a resolution  authorizing
      corporate action in furtherance of 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 Continental,  a

<PAGE>

      receiver,  trustee or liquidator of Continental or of any substantial part
      of its property,  or any  substantial  part of the property of Continental
      shall  be  sequestered,  or  granting  any  other  relief  in  respect  of
      Continental as a debtor under any bankruptcy laws or other insolvency laws
      (as in effect at such  time),  and any such  order,  judgment or decree of
      appointment or sequestration  shall remain in force undismissed,  unstayed
      and unvacated for a period of 60 days after the date of entry thereof; or

            (c) a petition  against  Continental  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  60 days  thereafter,  or if,  under  the
      provisions  of any law  providing  for  reorganization  or  winding-up  of
      corporations  which  may  apply to  Continental,  any  court of  competent
      jurisdiction assumes jurisdiction, custody or control of Continental or of
      any  substantial  part of its property and such  jurisdiction,  custody or
      control remains in force  unrelinquished,  unstayed and unterminated for a
      period of 60 days.

            "CONTINENTAL  PROVISIONS"  has  the  meaning  specified  in  Section
9.1(a).

            "CONTROLLING  PARTY"  means  the  Person  entitled  to act  as  such
pursuant to the terms of Section 2.6.

            "CORPORATE  TRUST OFFICE"  means,  with respect to any Trustee,  the
Subordination  Agent or any Loan Trustee,  the office of such Person in the city
at  which,  at any  particular  time,  its  corporate  trust  business  shall be
principally administered.

            "CURRENT DISTRIBUTION DATE" means a Distribution Date specified as a
reference  date for  calculating  the  Expected  Distributions  or the  Adjusted
Expected  Distributions with respect to the Certificates of any Trust as of such
Distribution Date.

            "CURRENT POOL BALANCE"  means the amount  described in clause (B)(i)
of the definition of "Adjusted Expected Distributions".

            "DELIVERY  PERIOD  EXPIRY  DATE"  means the earlier of (a) March 31,
2001, or, if the Equipment Notes relating to all the New Aircraft (or Substitute
Aircraft in lieu thereof)  have not been  purchased by the Trusts on or prior to
such date due to any reason beyond the control of Continental and not occasioned
by  Continental's  fault or negligence,  September 30, 2001 (PROVIDED that, if a
labor strike occurs at The Boeing  Company on or prior to either or both of such
dates  referred to in this clause (a),  such date or dates on or  following  the
commencement  of such strike  shall be extended by adding  thereto the number of
days that such strike  continued in effect) and (b) the date on which  Equipment
Notes with respect to all New Aircraft (or Substitute  Aircraft in lieu thereof)
have  been  purchased  by the  Trusts  in  accordance  with  the  Note  Purchase
Agreement.

            "DEPOSIT  AGREEMENT"  shall  mean,  with  respect to any Class,  the
Deposit  Agreement  pertaining to such Class dated as of the date hereof between
the Escrow Agent,  and the Depositary,  as the same may be amended,  modified or
supplemented from time to time in accordance with the terms thereof.

<PAGE>

            "DEPOSITARY" means CSFB, as depositary under each Deposit Agreement.

            "DEPOSITS"  with  respect to any Class,  shall have the  meaning set
forth in the Deposit Agreement pertaining to such Class.

            "DESIGNATED   REPRESENTATIVES"   means   the   Subordination   Agent
Representatives,   the  Trustee   Representatives  and  the  LP  Representatives
identified under Section 2.5.

            "DISTRIBUTION  DATE" means a Regular  Distribution Date or a Special
Distribution Date.

            "DOLLARS" or "$" means United States dollars.

            "DOWNGRADE DRAWING" has the meaning assigned to such term in Section
3.6(c).

            "DOWNGRADE  EVENT" has the meaning  assigned to such term in Section
3.6(c).

            "DOWNGRADED  FACILITY"  has the  meaning  assigned  to such  term in
Section 3.6(c).

            "DRAWING"   means  an  Interest   Drawing,   a  Final   Drawing,   a
Non-Extension Drawing or a Downgrade Drawing, as the case may be.

            "ELIGIBLE  DEPOSIT  ACCOUNT"  means either (a) a segregated  account
with  an  Eligible  Institution  or (b) a  segregated  trust  account  with  the
corporate trust department of 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),  having  corporate  trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository  institution has a long-term unsecured debt
rating from each Rating  Agency of at least A-3 or its  equivalent.  An Eligible
Deposit  Account may be  maintained  with a  Liquidity  Provider so long as such
Liquidity  Provider is an Eligible  Institution;  PROVIDED  that such  Liquidity
Provider shall have waived all rights of set-off and  counterclaim  with respect
to such account.

            "ELIGIBLE  INSTITUTION"  means (a) the corporate trust department of
the  Subordination  Agent or any  Trustee,  as  applicable,  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 each Rating
Agency of at least A-3 or its equivalent.

            "ELIGIBLE  INVESTMENTS"  means (a) investments in obligations of, or
guaranteed by, the United States  Government  having maturities no later than 90
days  following  the date of such  investment,  (b)  investments  in open market
commercial  paper of any corporation  incorporated  under the laws of the United
States of America or any state thereof with a short-term  unsecured  debt rating
issued  by  Moody's  and S&P of at  least  A-1  and  P-1,  respectively,  having
maturities no later than 90 days  following  the date of such  investment or (c)
investments  in negotiable  certificates  of deposit,  time  deposits,  banker's
acceptances,  commercial  paper or other direct  obligations  of, or obligations

<PAGE>

guaranteed by, commercial banks organized under the laws of the United States or
of any political subdivision thereof (or any U.S. branch of a foreign bank) with
issuer ratings of at least B/C by Thomson Bankwatch,  having maturities no later
than 90 days following the date of such investment;  PROVIDED, HOWEVER, that (x)
all Eligible  Investments that are bank obligations shall be denominated in U.S.
dollars;  and (y) the aggregate  amount of Eligible  Investments at any one time
that are bank obligations issued by any one bank shall not be in excess of 5% of
such bank's  capital  surplus;  PROVIDED  FURTHER that (1) any investment of the
types  described  in  clauses  (a),  (b) and (c)  above  may be made  through  a
repurchase  agreement  in  commercially  reasonable  form  with a bank or  other
financial  institution  qualifying  as an Eligible  Institution  so long as such
investment  is held by a third party  custodian  also  qualifying as an Eligible
Institution,  and (2) all such  investments  set forth in clause (a), (b) or (c)
above  mature no later than the  Business  Day  immediately  preceding  the next
Regular  Distribution Date; PROVIDED FURTHER,  HOWEVER,  that in the case of any
Eligible  Investment  issued by a domestic  branch of a foreign bank, the income
from such investment shall be from sources within the United States for purposes
of the Code. Notwithstanding the foregoing, no investment of the types described
in clause (b) above which is issued or guaranteed by  Continental  or any of its
Affiliates,  and no investment in the  obligations  of any one bank in excess of
$10,000,000,  shall be an Eligible Investment unless written  confirmation shall
have been received  from each Rating  Agency that the making of such  investment
will  not  result  in  a  withdrawal  or  downgrading  of  the  ratings  of  the
Certificates.

            "EQUIPMENT  NOTES"  means,  at any time,  the Series  A-1  Equipment
Notes,  the Series A-2 Equipment Notes, the Series B Equipment Notes, the Series
C-1 Equipment  Notes and the Series C-2 Equipment  Notes,  collectively,  and in
each case,  any  Equipment  Notes  issued in exchange  therefor  or  replacement
thereof pursuant to the terms of the Indentures.

            "ESCROW AGENT" means First Security Bank, National  Association,  as
escrow agent under each Escrow and Paying  Agent  Agreement,  together  with its
successors in such capacity.

            "ESCROW AND PAYING AGENT  AGREEMENT" shall mean, with respect to any
Class,  the Escrow and Paying Agent Agreement  pertaining to such Class dated as
of the date hereof between the Escrow Agent, the  Underwriters,  the Trustee for
such  Class  and the  Paying  Agent,  as the same may be  amended,  modified  or
supplemented from time to time in accordance with the terms thereof.

            "EXPECTED  DISTRIBUTIONS" means, with respect to the Certificates of
any Trust on any Current  Distribution  Date,  the sum of (x) accrued and unpaid
interest on such Certificates  (excluding interest, if any, payable with respect
to the Deposits  related to such Trust) and (y) the  difference  between (A) the
Pool Balance of such Certificates as of the immediately  preceding  Distribution
Date (or, if the Current  Distribution Date is the first  Distribution Date, the
original  aggregate face amount of the Certificates of such Trust),  and (B) the
Pool Balance of such Certificates as of the Current Distribution Date calculated
on the basis that (i) the  principal of the  Equipment  Notes held in such Trust
has been paid when due (whether at stated maturity, upon redemption, prepayment,
purchase,  Acceleration or otherwise) and such payments have been distributed to

<PAGE>

the holders of such  Certificates  and (ii) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to the terms hereof has
been paid in full and such payments have been distributed to the holders of such
Certificates,  but without giving effect to any reduction in the Pool Balance as
a result  of any  distribution  attributable  to  Deposits  occurring  after the
immediately preceding Distribution Date (or, if the Current Distribution Date is
the first  Distribution  Date,  occurring  after  the  initial  issuance  of the
Certificates of such Trust). For purposes of calculating Expected  Distributions
with respect to the Certificates of any Trust, any premium paid on the Equipment
Notes   held  in  such   Trust   which   has  not   been   distributed   to  the
Certificateholders  of such Trust (other than such premium or a portion  thereof
applied to the  payment of  interest  on the  Certificates  of such Trust or the
reduction  of the Pool  Balance of such  Trust)  shall be added to the amount of
such Expected Distributions.

            "EXPIRY DATE" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.

            "FACILITY OFFICE" means, with respect to any Liquidity Facility, the
office of the Liquidity Provider thereunder,  presently located at New York, New
York for both CSFB and MSCS,  or such other  office as such  Liquidity  Provider
from time to time shall notify the applicable  Trustee as its "Facility  Office"
under any such Liquidity  Facility;  PROVIDED that such Liquidity Provider shall
not change its Facility Office to a Facility Office outside the United States of
America  except  in  accordance  with  Section  3.01,  3.02 or 3.03 of any  such
Liquidity Facility.

            "FEE LETTERS"  means,  collectively,  (i) the Fee Letter dated as of
the date hereof  between  CSFB and the  Subordination  Agent with respect to the
initial Class A-1 Liquidity  Facility,  the initial Class A-2 Liquidity Facility
and the initial Class B Liquidity Facility,  (ii) the Fee Letter dated as of the
date hereof between MSCS and the Subordination Agent with respect to the initial
Class C-1 Liquidity  Facility and the initial  Class C-2 Liquidity  Facility and
(iii) any fee  letter  entered  into  between  the  Subordination  Agent and any
Replacement Liquidity Provider in respect of such Liquidity Facilities.

            "FINAL DISTRIBUTIONS" means, with respect to the Certificates of any
Trust on any  Distribution  Date,  the sum of (x) the  aggregate  amount  of all
accrued and unpaid interest on such Certificates  (excluding  interest,  if any,
payable with  respect to the  Deposits  relating to such Trust) and (y) the Pool
Balance of such Certificates as of the immediately  preceding  Distribution Date
(less the  amount of the  Deposits  for such  Class of  Certificates  as of such
preceding  Distribution Date other than any portion of such Deposits  thereafter
used to acquire  Equipment Notes pursuant to the Note Purchase  Agreement).  For
purposes of calculating Final  Distributions with respect to the Certificates of
any Trust,  any premium paid on the Equipment Notes held in such Trust which has
not been  distributed to the  Certificateholders  of such Trust (other than such
premium  or a  portion  thereof  applied  to  the  payment  of  interest  on the
Certificates  of such Trust or the  reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.

            "FINAL  DRAWING"  has the  meaning  assigned to such term in Section
3.6(i).

<PAGE>

            "FINAL LEGAL  DISTRIBUTION DATE" means (i) with respect to the Class
A-1 Certificates,  May 1, 2022, (ii) with respect to the Class A-2 Certificates,
November 1, 2011,  (iii) with respect to the Class B Certificates,  May 1, 2022,
(iv) with respect to the Class C-1 Certificates,  November 1, 2012, and (v) with
respect to the Class C-2 Certificates, November 1, 2006.

            "FINANCING AGREEMENT" means each of the Participation Agreements and
the Note Purchase Agreement.

            "GUARANTEE  AGREEMENT" has the meaning  assigned to such term in the
preliminary statements to this Agreement.

            "GUARANTOR" has the meaning assigned to such term in the preliminary
statements to this Agreement.

            "INDENTURE"  means each of the Trust Indentures  entered into by the
Loan  Trustee,  and the  Owner  Trustee  or  Continental,  pursuant  to the Note
Purchase  Agreement,  in each case as the same may be amended,  supplemented  or
otherwise modified from time to time in accordance with its terms.

            "INDENTURE DEFAULT" means, with respect to any Indenture,  any Event
of Default (as such term is defined in such Indenture) thereunder.

            "INTEREST  DRAWING" has the meaning assigned to such term in Section
3.6(a).

            "INTEREST  PAYMENT  DATE"  means,  with  respect  to  any  Liquidity
Facility,  each date on which  interest is due and payable under such  Liquidity
Facility  on  a  Downgrade  Drawing,  Non-Extension  Drawing  or  Final  Drawing
thereunder,  other than any such date on which interest is due and payable under
such  Liquidity  Facility only on an Applied  Provider  Advance (as such term is
defined in such Liquidity Facility).

            "INVESTMENT  EARNINGS" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the Subordination
Agent in making such investments.

            "LEASE" means, with respect to each Indenture pertaining to a Leased
Aircraft, the "Lease" referred to therein.

            "LEASED  AIRCRAFT"  has the  meaning  assigned  to such  term in the
preliminary statements of this Agreement.

            "LEASED  AIRCRAFT  INDENTURE"  means,  with  respect to each  Leased
Aircraft, the Indenture pertaining thereto.

            "LIEN" means any mortgage,  pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including,  without limitation,  any thereof arising under any conditional
sales or other title retention agreement.

<PAGE>

            "LIQUIDITY EVENT OF DEFAULT" with respect to any Liquidity Facility,
has the meaning assigned to such term in such Liquidity Facility.

            "LIQUIDITY EXPENSES" means all Liquidity  Obligations other than (i)
the principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.

            "LIQUIDITY  FACILITIES"  means, at any time, the Class A-1 Liquidity
Facility,  the Class A-2 Liquidity Facility, the Class B Liquidity Facility, the
Class C-1 Liquidity Facility or the Class C-2 Liquidity Facility.

            "LIQUIDITY  OBLIGATIONS"  means all  principal,  interest,  fees and
other amounts owing to the Liquidity  Providers under the Liquidity  Facilities,
Section 8.1 of the  Participation  Agreements  with  respect to Owned  Aircraft,
Section 9.1 of the  Participation  Agreements with respect to Leased Aircraft or
the Fee Letters.

            "LIQUIDITY  PROVIDER"  means,  at any time,  any Class A-1 Liquidity
Provider,  any Class A-2 Liquidity Provider, any Class B Liquidity Provider, any
Class C-1 Liquidity Provider or any Class C-2 Liquidity Provider, as applicable.

            "LOAN TRUSTEE" means,  with respect to any Indenture,  the mortgagee
thereunder.

            "LP INCUMBENCY CERTIFICATE" has the meaning assigned to such term in
Section 2.5(c).

            "LP  REPRESENTATIVES"  has the  meaning  assigned  to  such  term in
Section 2.5(c).

            "LTV  APPRAISALS"  has the meaning  assigned to such term in Section
4.1(a).

            "LTV COLLATERAL AMOUNT" of any Leased Aircraft or Owned Aircraft for
any Class of Certificates  means, as of any Distribution Date, the lesser of (i)
the LTV Ratio for such Class of Certificates multiplied by the Appraised Current
Market Value of such  Aircraft (or with respect to any such  Aircraft  which has
suffered  an Event of Loss under and as defined  in the  relevant  Lease (in the
case of a Leased Aircraft) or Indenture (in the case of an Owned Aircraft),  the
amount of the  insurance  proceeds  paid to the related  Loan Trustee in respect
thereof to the extent then held by such Loan  Trustee  (and/or on deposit in the
Special  Payments  Account) or payable to such Loan Trustee in respect  thereof)
and (ii) the outstanding principal amount of the Equipment Notes secured by such
Aircraft after giving effect to any principal  payments of such Equipment  Notes
on or before such Distribution Date.

            "LTV  RATIO"  means  for  each  Class  of  Certificates  as  of  any
Distribution  Date,  the  percentages  set forth in the following  table for the
applicable time period:

<TABLE>
<CAPTION>
                       Class A-1      Class A-2       Class B       Class C-1     Class C-2
                      Certificates   Certificates   Certificates   Certificates  Certificates
                      -------------  ------------   ------------   ------------  ------------
<S>                      <C>            <C>            <C>            <C>            <C>
TIME PERIOD
Up to May 1, 2005        41.0%          41.0%          51.0%          63.0%          63.0%
May 2, 2005-May 1,       41.0           41.0           49.0           63.0           63.0
2010
After May 1, 2010        39.0           39.0           47.0           63.0           63.0
</TABLE>

<PAGE>

            "MINIMUM  SALE PRICE"  means,  with  respect to any  Aircraft or the
Equipment  Notes issued in respect of such Aircraft,  at any time, the lesser of
(a) 75% of the  Appraised  Current  Market  Value of such  Aircraft  and (b) the
aggregate outstanding principal amount of such Equipment Notes, plus accrued and
unpaid interest thereon.

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

            "NEW AIRCRAFT" shall have the meaning set forth in the Note Purchase
Agreement.

            "NON-CONTROLLING PARTY" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.

            "NON-EXTENDED  FACILITY"  has the  meaning  assigned to such term in
Section 3.6(d).

            "NON-EXTENSION  DRAWING"  has the  meaning  assigned to such term in
Section 3.6(d).

            "NON-PERFORMING  EQUIPMENT  NOTE"  means an  Equipment  Note  issued
pursuant to an Indenture that is not a Performing Equipment Note.

            "NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated as
of the date hereof,  among  Continental,  each Trustee,  the Escrow  Agent,  the
Subordination Agent and the Paying Agent.

            "OFFICER'S  CERTIFICATE" of any Person means a certification  signed
by a Responsible Officer of such Person.

            "OPERATIVE   AGREEMENTS"   means  this   Agreement,   the  Liquidity
Facilities,  the Guarantee Agreements, the Indentures, the Trust Agreements, the
Underwriting Agreement,  the Financing Agreements,  the Leases, the Fee Letters,
the  Equipment  Notes  and the  Certificates,  together  with all  exhibits  and
schedules included with any of the foregoing.

            "OUTSTANDING"  means,  when  used  with  respect  to each  Class  of
Certificates,  as of the date of  determination,  all Certificates of such Class
theretofore  authenticated  and  delivered  under the related  Trust  Agreement,
except:

            (i) Certificates of such Class theretofore canceled by the Registrar
      (as  defined  in  such  Trust  Agreement)  or  delivered  to  the  Trustee
      thereunder or such Registrar for cancellation;

            (ii)  Certificates  of such Class for which money in the full amount
      required to make the final  distribution with respect to such Certificates
      pursuant to Section  11.01 of such Trust  Agreement  has been  theretofore
      deposited  with the  related  Trustee  in trust  for the  holders  of such
      Certificates as provided in Section 4.01 of such Trust  Agreement  pending

<PAGE>

      distribution  of such money to such  Certificateholders  pursuant  to such
      final distribution payment; and

            (iii) Certificates of such Class in exchange for or in lieu of which
      other  Certificates have been authenticated and delivered pursuant to such
      Trust Agreement;

PROVIDED,  HOWEVER,  that in  determining  whether the holders of the  requisite
Outstanding  amount  of  such  Certificates  have  given  any  request,  demand,
authorization,  direction, notice, consent or waiver hereunder, any Certificates
owned by Continental or any of its  Affiliates  shall be disregarded  and deemed
not to be Outstanding, except that, in determining whether such Trustee shall be
protected in relying upon any such request,  demand,  authorization,  direction,
notice,  consent or waiver,  only  Certificates that such Trustee knows to be so
owned shall be so  disregarded.  Certificates so owned that have been pledged in
good faith may be regarded as  Outstanding  if the  pledgee  establishes  to the
satisfaction  of the  applicable  Trustee  the  pledgee's  right  so to act with
respect to such  Certificates  and that the pledgee is not Continental or any of
its Affiliates.

            "OVERDUE SCHEDULED PAYMENT" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days after the Scheduled
Payment Date relating thereto.

            "OWNED  AIRCRAFT"  has the  meaning  assigned  to  such  term in the
preliminary statements of this Agreement.

            "OWNED  AIRCRAFT  INDENTURE"  means,  with  respect  to  each  Owned
Aircraft, the Indenture pertaining to such Aircraft.

            "OWNER TRUSTEE" means, with respect to any Indenture pertaining to a
Leased  Aircraft,  the Owner Trustee (as defined  therein) not in its individual
capacity but solely as trustee under the related owner trust agreement, together
with any successor trustee appointed pursuant to such owner trust agreement.

            "PARTICIPATION AGREEMENT" means, with respect to each Indenture, the
"Participation Agreement" referred to therein.

            "PAYEE" has the meaning assigned to such term in Section 2.4(e).

            "PAYING AGENT" means Wilmington Trust Company, as paying agent under
each Escrow and Paying Agent  Agreement,  together  with its  successors in such
capacity.

            "PERFORMING  EQUIPMENT NOTE" means an Equipment Note issued pursuant
to an  Indenture  with  respect to which no payment  default has occurred and is
continuing  (without  giving effect to any  Acceleration);  PROVIDED that in the
event of a bankruptcy  proceeding  involving  Continental  under Title 11 of the
United States Code (the  "BANKRUPTCY  CODE"),  (i) any payment default  existing
during the 60-day period under Section  1110(a)(1)(A) of the Bankruptcy Code (or
such longer period as may apply under Section  1110(b) of the  Bankruptcy  Code)

<PAGE>

(the "SECTION 1110 PERIOD") shall not be taken into consideration, unless during
the Section 1110 Period the trustee in such proceeding or Continental refuses to
assume or agree to  perform  its  obligations  under the Lease  related  to such
Equipment Note (in the case of a Leased Aircraft) or under the Indenture related
to such Equipment  Note (in the case of an Owned  Aircraft) and (ii) any payment
default occurring after the date of the order of relief in such proceeding shall
not be taken into  consideration  if such payment default is cured under Section
1110(a)(1)(B)  of the Bankruptcy Code before the later of 30 days after the date
of such default or the expiration of the Section 1110 Period.

            "PERFORMING  NOTE  DEFICIENCY"  means any time that less than 65% of
the then  aggregate  outstanding  principal  amount of all  Equipment  Notes are
Performing Equipment Notes.

            "PERSON"  means  any  individual,  corporation,  partnership,  joint
venture,  association,  limited liability company,  joint-stock company,  trust,
trustee,  unincorporated  organization  or government or any agency or political
subdivision thereof.

            "POOL BALANCE" means, with respect to each Trust or the Certificates
issued by any Trust,  as of any date, (i) the original  aggregate face amount of
the  Certificates  of such Trust LESS (ii) the aggregate  amount of all payments
made in respect  of the  Certificates  of such  Trust or in respect of  Deposits
relating  to such Trust  other than  payments  made in  respect of  interest  or
premium  thereon  or  reimbursement  of any costs  and  expenses  in  connection
therewith. The Pool Balance for each Trust or for the Certificates issued by any
Trust as of any  Distribution  Date shall be computed after giving effect to any
special  distribution  with respect to unused Deposits,  payment of principal of
the Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date.

            "PROCEEDING"  means  any  suit in  equity,  action  at law or  other
judicial or administrative proceeding.

            "PTC EVENT OF DEFAULT" means,  with respect to each Trust Agreement,
the  failure to pay within 10  Business  Days of the due date  thereof:  (i) the
outstanding  Pool Balance of the applicable  Class of  Certificates on the Final
Legal Distribution Date for such Class or (ii) interest due on such Certificates
on any  Distribution  Date  (unless the  Subordination  Agent shall have made an
Interest Drawing, or a withdrawal from the Cash Collateral Account, with respect
thereto in an aggregate  amount  sufficient  to pay such interest and shall have
distributed such amount to the Trustee entitled thereto).

            "RATING AGENCIES" means, collectively,  at any time, each nationally
recognized   rating  agency  which  shall  have  been   requested  to  rate  the
Certificates and which shall then be rating the Certificates. The initial Rating
Agencies will be Moody's and Standard & Poor's.

            "RATINGS CONFIRMATION" means, with respect to any action proposed to
be taken,  a written  confirmation  from each of the Rating  Agencies  that such
action  would  not  result in (i) a  reduction  of the  rating  for any Class of
Certificates  below the then current  rating for such Class of  Certificates  or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.

<PAGE>

            "REGULAR  DISTRIBUTION  DATES"  means  each  May 1 and  November  1,
commencing on May 1, 2000; PROVIDED, HOWEVER, that, if any such day shall not be
a Business Day, the related  distribution  shall be made on the next  succeeding
Business Day without additional interest.

            "REPLACEMENT  LIQUIDITY FACILITY" means, for any Liquidity Facility,
an irrevocable  revolving credit agreement (or agreements) in substantially  the
form of the replaced Liquidity Facility,  including reinstatement provisions, or
in such other form  (which may  include a letter of credit) as shall  permit the
Rating  Agencies to confirm in writing their  respective  ratings then in effect
for the related  Certificates  (before downgrading of such ratings, if any, as a
result of the  downgrading  of the  applicable  Liquidity  Provider),  in a face
amount (or in an aggregate face amount) equal to the amount of interest  payable
on the  Certificates  of such Trust (at the Stated Interest Rate for such Trust,
and without regard to expected future  principal  payments) on the three Regular
Distribution  Dates following the date of replacement of such Liquidity Facility
and issued by a Person (or Persons)  having  unsecured  short-term  debt ratings
issued by both Rating  Agencies  which are equal to or higher than the Threshold
Rating.  Without  limitation of the form that a Replacement  Liquidity  Facility
otherwise may have pursuant to the preceding sentence,  a Replacement  Liquidity
Facility for any Class of Certificates may have a stated expiration date earlier
than  15 days  after  the  Final  Legal  Distribution  Date  of  such  Class  of
Certificates  so long as such  Replacement  Liquidity  Facility  provides  for a
Non-Extension Drawing as contemplated by Section 3.6(d) hereof.

            "REPLACEMENT  LIQUIDITY  PROVIDER"  means a Person (or  Persons) who
issues a Replacement Liquidity Facility.

            "REQUIRED AMOUNT" means, with respect to each Liquidity Facility, or
the  Cash  Collateral  Account,  for  any  Class,  for any  day,  the sum of the
aggregate  amount of  interest,  calculated  at the rate per annum  equal to the
Stated  Interest  Rate for the  related  Class of  Certificates,  that  would be
payable on such Class of  Certificates on each of the three  successive  Regular
Distribution  Dates immediately  following such day or, if such day is a Regular
Distribution  Date,  on such day and the  succeeding  two  Regular  Distribution
Dates, in each case calculated on the basis of the Pool Balance of such Class of
Certificates  on such date and  without  regard to expected  future  payments of
principal on such Class of Certificates.

            "RESPONSIBLE  OFFICER"  means (i) with respect to the  Subordination
Agent  and  each  of  the  Trustees,   any  officer  in  the   corporate   trust
administration  department  of the  Subordination  Agent or such  Trustee or any
other officer customarily performing functions similar to those performed by the
Persons  who at the time shall be such  officers,  respectively,  or to whom any
corporate  trust matter is referred  because of his knowledge of and familiarity
with a particular subject, and (ii) with respect to each Liquidity Provider, any
authorized officer of such Liquidity Provider.

            "SCHEDULED  PAYMENT" means,  with respect to any Equipment Note, (i)
any  payment of  principal  or interest  on such  Equipment  Note (other than an
Overdue  Scheduled  Payment) due from the obligor thereon or (ii) any payment of
interest on the  corresponding  Class of Certificates with funds drawn under any
Liquidity Facility, which payment represents the installment of principal at the

<PAGE>

stated  maturity of such  installment of principal on such  Equipment  Note, the
payment of regularly  scheduled  interest accrued on the unpaid principal amount
of such  Equipment  Note,  or both;  PROVIDED  that any payment of principal of,
premium,  if any, or interest  resulting  from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.

            "SCHEDULED  PAYMENT  DATE"  means,  with  respect  to any  Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.

            "SECTION 2.4(B)  FRACTION" has the meaning  assigned to such term in
Section 2.4(b).

            "SERIES A-1  EQUIPMENT  NOTES" means the 8.048% Series A-1 Equipment
Notes  issued  pursuant  to  any  Indenture  by the  related  Owner  Trustee  or
Continental,  as  the  case  may  be,  and  authenticated  by the  Loan  Trustee
thereunder,  and any  such  Equipment  Notes  issued  in  exchange  therefor  or
replacement thereof pursuant to the terms of such Indenture.

            "SERIES A-2  EQUIPMENT  NOTES" means the 7.918% Series A-2 Equipment
Notes  issued  pursuant  to  any  Indenture  by the  related  Owner  Trustee  or
Continental,  as  the  case  may  be,  and  authenticated  by the  Loan  Trustee
thereunder,  and any  such  Equipment  Notes  issued  in  exchange  therefor  or
replacement thereof pursuant to the terms of such Indenture.

            "SERIES B EQUIPMENT NOTES" means the 8.388% Series B Equipment Notes
issued pursuant to any Indenture by the related Owner Trustee or Continental, as
the case may be, and authenticated by the Loan Trustee thereunder,  and any such
Equipment Notes issued in exchange  therefor or replacement  thereof pursuant to
the terms of such Indenture.

            "SERIES C-1  EQUIPMENT  NOTES" means the 8.499% Series C-1 Equipment
Notes  issued  pursuant  to  any  Indenture  by the  related  Owner  Trustee  or
Continental,  as  the  case  may  be,  and  authenticated  by the  Loan  Trustee
thereunder,  and any  such  Equipment  Notes  issued  in  exchange  therefor  or
replacement thereof pursuant to the terms of such Indenture.

            "SERIES C-2  EQUIPMENT  NOTES" means the 8.321% Series C-2 Equipment
Notes  issued  pursuant  to  any  Indenture  by the  related  Owner  Trustee  or
Continental,  as  the  case  may  be,  and  authenticated  by the  Loan  Trustee
thereunder,  and any  such  Equipment  Notes  issued  in  exchange  therefor  or
replacement thereof pursuant to the terms of such Indenture.

            "SERIES D EQUIPMENT  NOTES" means  equipment  notes,  if any, issued
pursuant to any Indenture by the related Owner  Trustee or  Continental,  as the
case may be, and authenticated by the Loan Trustee thereunder, and designated as
"Series D" thereunder,  and any such equipment notes issued in exchange therefor
or replacement thereof pursuant to the terms of such Indenture.

            "SPECIAL  DISTRIBUTION  DATE"  means,  with  respect to any  Special
Payment,  the date chosen by the Subordination  Agent pursuant to Section 2.4(a)
for the distribution of such Special Payment in accordance with this Agreement.

<PAGE>

            "SPECIAL PAYMENT" means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note or Trust Indenture  Estate
(as defined in each Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft Indenture).

            "SPECIAL  PAYMENTS  ACCOUNT"  means  the  Eligible  Deposit  Account
created pursuant to Section 2.2 as a sub-account to the Collection Account.

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

            "STATED  AMOUNT" with respect to any Liquidity  Facility,  means the
Maximum  Commitment  (as defined in such  Liquidity  Facility) of the applicable
Liquidity Provider thereunder.

            "STATED  EXPIRATION  DATE"  has the  meaning  specified  in  Section
3.6(d).

            "STATED  INTEREST  RATE"  means  (i) with  respect  to the Class A-1
Certificates, 8.048% per annum, (ii) with respect to the Class A-2 Certificates,
7.918% per annum,  (iii) with  respect to the Class B  Certificates,  8.388% per
annum,  (iv) with respect to the Class C-1  Certificates,  8.499% per annum, and
(v) with respect to the Class C-2 Certificates, 8.321% per annum.

            "SUBORDINATION  AGENT"  has  the  meaning  assigned  to  it  in  the
preliminary statements to this Agreement.

            "SUBORDINATION   AGENT  INCUMBENCY   CERTIFICATE"  has  the  meaning
assigned to such term in Section 2.5(a).

            "SUBORDINATION  AGENT  REPRESENTATIVES"  has the meaning assigned to
such term in Section 2.5(a).

            "SUBSTITUTE  AIRCRAFT"  shall have the meaning set forth in the Note
Purchase Agreement.

            "SUCCESSOR TRUSTS" means,  collectively,  Continental  Airlines Pass
Through Trust 2000-1A-1-S,  Continental Airlines Pass Through Trust 2000-1A-2-S,
Continental  Airlines Pass Through Trust  2000-1B-S,  Continental  Airlines Pass
Through  Trust   2000-1C-1-S  and   Continental   Airlines  Pass  Through  Trust
2000-1C-2-S.

            "TAX" and  "TAXES"  mean any and all taxes,  fees,  levies,  duties,
tariffs,  imposts,  and other  charges  of any kind  (together  with any and all
interest,  penalties,  loss, damage,  liability,  expense,  additions to tax and
additional amounts or costs incurred or imposed with respect thereto) imposed or
otherwise  assessed  by the United  States of America or by any state,  local or
foreign  government  (or any  subdivision  or agency  thereof)  or other  taxing
authority,  including,  without  limitation:  taxes or other  charges on or with
respect  to income,  franchises,  windfall  or other  profits,  gross  receipts,
property,  sales,  use,  capital stock,  payroll,  employment,  social security,
workers'  compensation,  unemployment  compensation,  or net worth  and  similar

<PAGE>

charges;  taxes or other  charges  in the  nature  of  excise,  withholding,  ad
valorem, stamp, transfer, value added, taxes on goods and services, gains taxes,
license,  registration and  documentation  fees,  customs duties,  tariffs,  and
similar charges.

            "TAX  LETTER"  means,  collectively,  each of the three Tax Letters,
dated as of the date hereof,  between  Continental  and CSFB with respect to the
Class A-1 Liquidity  Facility,  the Class A-2 Liquidity Facility and the Class B
Liquidity Facility, and all tax letters entered into between Continental and any
Replacement Liquidity Provider.

            "TERMINATION  NOTICE" with respect to any Liquidity Facility has the
meaning assigned to such term in such Liquidity Facility.

            "THRESHOLD RATING" means the short-term unsecured debt rating of P-1
by Moody's and A-1+ by Standard & Poor's, in the case of the Class A-1 Liquidity
Provider,  the Class A-2 Liquidity Provider and the Class B Liquidity  Provider,
and the short-term unsecured debt rating of P-1 by Moody's and A-1 by Standard &
Poor's,  in the case of the  Class  C-1  Liquidity  Provider  and the  Class C-2
Liquidity  Provider;  provided  that  with  respect  to  each of the  Class  C-1
Liquidity Facility and the Class C-2 Liquidity Facility,  so long as MSCS is the
Liquidity Provider for such Liquidity Facility, the Threshold Rating shall apply
to the Guarantor in the case of such Liquidity Facility.

            "TRANSFER"   means,  with  respect  to  any  particular  Trust,  the
transfers  contemplated by the Assignment and Assumption  Agreement with respect
to such Trust.

            "TREASURY  REGULATIONS"  means  regulations,  including  proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions  of  proposed  or  temporary   regulations  shall  include  analogous
provisions  of  final   Treasury   Regulations  or  other   successor   Treasury
Regulations.

            "TRIGGERING  EVENT" means (x) the occurrence of an Indenture Default
under all of the Indentures  resulting in a PTC Event of Default with respect to
the most senior Class of Certificates then Outstanding,  (y) the Acceleration of
all of the  outstanding  Equipment  Notes  (PROVIDED  that,  with respect to the
period prior to the Delivery Period Expiry Date, the aggregate principal balance
of such Equipment Notes is in excess of $300,000,000) or (z) the occurrence of a
Continental Bankruptcy Event.

            "TRUST" means any of the Class A-1 Trust,  the Class A-2 Trust,  the
Class B Trust, the Class C-1 Trust or the Class C-2 Trust.

            "TRUST  ACCOUNTS"  has the meaning  assigned to such term in Section
2.2(a).

            "TRUST  AGREEMENT" means any of the Class A-1 Trust  Agreement,  the
Class A-2 Trust  Agreement,  the  Class B Trust  Agreement,  the Class C-1 Trust
Agreement or the Class C-2 Trust Agreement.

<PAGE>

            "TRUST  PROPERTY"  with  respect to any Trust,  has the  meaning set
forth in the Trust Agreement for such Trust.

            "TRUSTEE" means any of the Class A-1 Trustee, the Class A-2 Trustee,
the Class B Trustee, the Class C-1 Trustee or the Class C-2 Trustee.

            "TRUSTEE  INCUMBENCY  CERTIFICATE"  has the meaning assigned to such
term in Section 2.5(b).

            "TRUSTEE  REPRESENTATIVES"  has the meaning assigned to such term in
Section 2.5(b).

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

            "UNDERWRITING  AGREEMENT"  means the  Underwriting  Agreement  dated
March 1, 2000 among the Underwriters  and Continental,  relating to the purchase
of  the  Certificates  by  the  Underwriters,   as  the  same  may  be  amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms.

            "WITHDRAWAL NOTICE" has the meaning specified in Section 3.6(d).

            "WRITTEN NOTICE" means, from the Subordination Agent, any Trustee or
Liquidity   Provider,   a  written   instrument   executed  by  the   Designated
Representative  of such Person.  An invoice  delivered  by a Liquidity  Provider
pursuant to Section 3.1 in accordance with its normal invoicing procedures shall
constitute Written Notice under such Section.

            "WTC"  has the  meaning  assigned  to such  term in the  recital  of
parties to this Agreement.

                                   ARTICLE II

                        TRUST ACCOUNTS; CONTROLLING PARTY

            SECTION 2.1.  AGREEMENT  TO TERMS OF  SUBORDINATION;  PAYMENTS  FROM
MONIES  RECEIVED ONLY. (a) Each Trustee  hereby  acknowledges  and agrees to the
terms of  subordination  and distribution set forth in this Agreement in respect
of each Class of  Certificates  and agrees to enforce such  provisions and cause
all payments in respect of the Equipment  Notes and the Liquidity  Facilities to
be applied in accordance  with the terms of this  Agreement.  In addition,  each
Trustee  hereby  agrees to cause the  Equipment  Notes  purchased by the related
Trust to be registered in the name of the Subordination Agent or its nominee, as
agent and trustee  for such  Trustee,  to be held in trust by the  Subordination
Agent  solely  for  the  purpose  of   facilitating   the   enforcement  of  the
subordination and other provisions of this Agreement.

            (b) Except as otherwise  expressly  provided in the next  succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent

<PAGE>

hereunder  shall  be made  only  from  amounts  received  by it that  constitute
Scheduled  Payments,  Special  Payments,  payments  under  Section  8.1  of  the
Participation Agreements with respect to Owned Aircraft,  payments under Section
9.1 of the Participation  Agreements with respect to Leased Aircraft or payments
under Section 6 of the Note Purchase Agreement,  and only to the extent that the
Subordination  Agent shall have received sufficient income or proceeds therefrom
to enable it to make such payments in accordance with the terms hereof.  Each of
the Trustees and the Subordination  Agent hereby agrees and, as provided in each
Trust Agreement, each Certificateholder, by its acceptance of a Certificate, and
each Liquidity Provider,  by entering into the Liquidity Facility to which it is
a party,  has agreed to look solely to such amounts to the extent  available for
distribution  to it as provided in this  Agreement and to the relevant  Deposits
and that none of the Trustees, Owner Trustees, Loan Trustees, Owner Participants
nor the Subordination  Agent is personally liable to any of them for any amounts
payable  or any  liability  under  this  Agreement,  any  Trust  Agreement,  any
Liquidity Facility or such Certificate, except (in the case of the Subordination
Agent)  as  expressly  provided  herein  or (in  the  case of the  Trustees)  as
expressly provided in each Trust Agreement or (in the case of the Owner Trustees
and the Loan Trustees) as expressly provided in any Operative Agreement.

            SECTION  2.2.  TRUST  ACCOUNTS.  (a)  Upon  the  execution  of  this
Agreement,  the Subordination Agent shall establish and maintain in its name (i)
the Collection  Account as an Eligible  Deposit  Account,  bearing a designation
clearly  indicating that the funds  deposited  therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers, and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account,  bearing a designation  clearly indicating that the
funds deposited  therein are held in trust for the benefit of the Trustees,  the
Certificateholders  and the Liquidity  Providers.  The Subordination Agent shall
establish and maintain the Cash  Collateral  Accounts  pursuant to and under the
circumstances  set forth in Section 3.6(f) hereof.  Upon such  establishment and
maintenance  under Section 3.6(f) hereof,  the Cash  Collateral  Accounts shall,
together with the Collection Account, constitute the "TRUST ACCOUNTS" hereunder.

            (b) Funds on deposit in the Trust  Accounts  shall be  invested  and
reinvested by the Subordination  Agent in Eligible  Investments  selected by the
Subordination  Agent  if such  investments  are  reasonably  available  and have
maturities  no later than the earlier of (i) 90 days  following the date of such
investment  and  (ii)  the  Business  Day  immediately   preceding  the  Regular
Distribution  Date or the date of the related  distribution  pursuant to Section
2.4 hereof,  as the case may be,  next  following  the date of such  investment;
PROVIDED,  HOWEVER,  that  following  the  making of a  Downgrade  Drawing  or a
Non-Extension  Drawing under any Liquidity  Facility,  the  Subordination  Agent
shall invest and reinvest such amounts in Eligible  Investments at the direction
of Continental (or, if and to the extent so specified to the Subordination Agent
by Continental with respect to any Liquidity  Facility,  the Liquidity  Provider
with respect to such  Liquidity  Facility);  PROVIDED  FURTHER,  HOWEVER,  that,
notwithstanding  the foregoing proviso,  following the making of a Non-Extension
Drawing under any initial  Liquidity  Facility or a Downgrade  Drawing under the
initial  Class  C-1  Liquidity  Facility  or the  initial  Class  C-2  Liquidity
Facility,  the Subordination  Agent shall invest and reinvest the amounts in the
Cash  Collateral  Account  with respect to such  Liquidity  Facility in Eligible
Investments  pursuant  to the written  instructions  of the  Liquidity  Provider
funding such Drawing;  PROVIDED FURTHER,  HOWEVER,  that upon the occurrence and

<PAGE>

during the  continuation of a Triggering  Event, the  Subordination  Agent shall
invest and reinvest such amounts in accordance with the written  instructions of
the Controlling  Party.  Unless otherwise  expressly  provided in this Agreement
(including,  without limitation,  with respect to Investment Earnings on amounts
on  deposit  in the  Cash  Collateral  Accounts,  Section  3.6(f)  hereof),  any
Investment  Earnings shall be deposited in the Collection  Account when received
by the Subordination  Agent and shall be applied by the  Subordination  Agent in
the same manner as the other amounts on deposit in the Collection Account are to
be  applied  and any  losses  shall be  charged  against  the  principal  amount
invested,  in each case net of the  Subordination  Agent's  reasonable  fees and
expenses in making such investments. The Subordination Agent shall not be liable
for any loss resulting from any investment, reinvestment or liquidation required
to be made under this Agreement  other than by reason of its willful  misconduct
or gross negligence.  Eligible  Investments and any other investment required to
be made  hereunder  shall  be held to  their  maturities  except  that  any such
investment  may be sold (without  regard to its  maturity) by the  Subordination
Agent  without   instructions   whenever  such  sale  is  necessary  to  make  a
distribution  required  under this  Agreement.  Uninvested  funds held hereunder
shall not earn or accrue interest.

            (c) The  Subordination  Agent  shall  possess  all right,  title and
interest in all funds on deposit from time to time in the Trust  Accounts and in
all  proceeds  thereof  (including  all  income  thereon,  except  as  otherwise
expressly  provided  herein  with  respect to  Investment  Earnings).  The Trust
Accounts  shall be held in  trust  by the  Subordination  Agent  under  the sole
dominion and control of the Subordination Agent for the benefit of the Trustees,
the Certificateholders  and the Liquidity Providers,  as the case may be. If, at
any time, any of the Trust Accounts  ceases to be an Eligible  Deposit  Account,
the  Subordination  Agent shall within 10 Business Days (or such longer  period,
not to exceed 30  calendar  days,  to which  each  Rating  Agency  may  consent)
establish a new Collection Account,  Special Payments Account or Cash Collateral
Account,  as the case may be, as an Eligible  Deposit Account and shall transfer
any cash and/or any investments to such new Collection Account, Special Payments
Account  or Cash  Collateral  Account,  as the case may be. So long as WTC is an
Eligible Institution, the Trust Accounts shall be maintained with it as Eligible
Deposit Accounts.

            SECTION 2.3. DEPOSITS TO THE COLLECTION ACCOUNT AND SPECIAL PAYMENTS
ACCOUNT. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.

            (b) The  Subordination  Agent  shall,  on each date when one or more
Special Payments are made to the Subordination  Agent as holder of the Equipment
Notes,  deposit in the Special  Payments  Account the  aggregate  amount of such
Special Payments.

            SECTION  2.4.  DISTRIBUTIONS  OF  SPECIAL  PAYMENTS.  (a)  NOTICE OF
SPECIAL PAYMENT. Except as provided in Section 2.4(e) below, upon receipt by the
Subordination  Agent, as registered holder of the Equipment Notes, of any notice
of a Special Payment (or, in the absence of any such notice, upon receipt by the
Subordination  Agent  of a  Special  Payment),  the  Subordination  Agent  shall
promptly give notice  thereof to each Trustee and the Liquidity  Providers.  The
Subordination  Agent shall  promptly  calculate the amount of the  redemption or

<PAGE>

purchase of Equipment Notes or the amount of any Overdue Scheduled  Payment,  as
the case may be, comprising such Special Payment under the applicable  Indenture
or Indentures  and shall  promptly send to each Trustee a Written Notice of such
amount and the amount  allocable to each Trust.  Such Written  Notice shall also
set the  distribution  date for such  Special  Payment (a "SPECIAL  DISTRIBUTION
DATE"),  which shall be the Business Day which immediately  follows the later to
occur of (x) the 15th day after the date of such Written  Notice or (y) the date
the Subordination Agent has received or expects to receive such Special Payment.
Amounts on deposit in the  Special  Payments  Account  shall be  distributed  in
accordance with Sections 2.4(b) and 2.4(c) hereof, as applicable.

            (b) REDEMPTIONS AND PURCHASES OF EQUIPMENT  NOTES. (i) So long as no
Triggering  Event  shall  have  occurred   (whether  or  not  continuing),   the
Subordination Agent shall make distributions  pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption,
purchase (including, without limitation, a purchase resulting from a sale of the
Equipment  Notes  permitted  by Article IV hereof) or  prepayment  of all of the
Equipment Notes issued pursuant to an Indenture on the Special Distribution Date
for such Special Payment in the following order of priority:

            FIRST,  such  amount as shall be required to pay (A) all accrued and
      unpaid Liquidity  Expenses then in arrears plus (B) the product of (x) the
      aggregate  amount of all  accrued  and unpaid  Liquidity  Expenses  not in
      arrears to such Special  Distribution  Date  multiplied by (y) a fraction,
      the numerator of which is the aggregate  outstanding  principal  amount of
      Equipment  Notes  being  redeemed,  purchased  or prepaid on such  Special
      Distribution   Date  and  the   denominator  of  which  is  the  aggregate
      outstanding  principal  amount of all Equipment Notes (the "SECTION 2.4(B)
      FRACTION"),  shall be distributed  to the Liquidity  Providers pro rata on
      the  basis of the  amount of  Liquidity  Expenses  owed to each  Liquidity
      Provider;

            SECOND,  such amount as shall be required to pay (A) all accrued and
      unpaid  interest  (including  interest  accrued and unpaid on any Interest
      Drawing or any  Applied  Provider  Advance  (as  defined in any  Liquidity
      Facility))  then in  arrears  on all  Liquidity  Obligations  plus (B) the
      product of (x) the aggregate  amount of all accrued and unpaid interest on
      all Liquidity Obligations not in arrears to such Special Distribution Date
      (at the rate provided in the applicable  Liquidity Facility) MULTIPLIED BY
      (y) the Section  2.4(b)  Fraction,  shall be  distributed to the Liquidity
      Providers  pro  rata  on  the  basis  of  the  amount  of  such  Liquidity
      Obligations owed to each Liquidity Provider;

            THIRD,  such amount as shall be required (A) if any Cash  Collateral
      Account had been previously  funded as provided in Section 3.6(f), to fund
      such Cash Collateral  Account up to its Required Amount shall be deposited
      in such Cash  Collateral  Account,  (B) if any  Liquidity  Facility  shall
      become a  Downgraded  Facility or a  Non-Extended  Facility at a time when
      unreimbursed  Interest Drawings under such Liquidity Facility have reduced
      the Available Amount  thereunder to zero, to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount shall be deposited in such Cash Collateral  Account,  and
      (C)  if,  with  respect  to any  particular  Liquidity  Facility,  neither

<PAGE>

      subclause (A) nor subclause (B) of this clause "THIRD" are applicable,  to
      pay or  reimburse  the  Liquidity  Provider  in respect of such  Liquidity
      Facility  in an amount  equal to the amount of any  unreimbursed  Interest
      Drawings  under  such  Liquidity  Facility  shall be  distributed  to such
      Liquidity  Provider,  pro  rata on the  basis of the  amounts  of all such
      deficiencies  and/or  unreimbursed  Interest  Drawings  in respect of each
      Liquidity Provider;

            FOURTH, if, with respect to any particular  Liquidity Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "THIRD"  above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)
      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant  Class,  pro rata on the basis of such amounts in respect of each
      Liquidity Provider;

            FIFTH,  such  amount as shall be  required  to pay in full  Expected
      Distributions  to the holders of Class A-1  Certificates  on such  Special
      Distribution  Date shall be  distributed to the Class A-1 Trustee and such
      amount as shall be required to pay in full Expected  Distributions  to the
      holders of Class A-2 Certificates on such Special  Distribution Date shall
      be  distributed  to the Class A-2  Trustee,  pro rata on the basis of such
      amounts in respect of each such Class of Certificates;

            SIXTH,  such  amount as shall be  required  to pay in full  Expected
      Distributions  to the  holders  of Class B  Certificates  on such  Special
      Distribution Date shall be distributed to the Class B Trustee;

            SEVENTH,  such amount as shall be  required to pay in full  Expected
      Distributions  to the holders of Class C-1  Certificates  on such  Special
      Distribution  Date shall be  distributed to the Class C-1 Trustee and such
      amount as shall be required to pay in full Expected  Distributions  to the
      holders of Class C-2 Certificates on such Special  Distribution Date shall
      be  distributed  to the Class C-2  Trustee,  pro rata on the basis of such
      amounts in respect of each such Class of Certificates; and

            EIGHTH,  the  balance,  if any,  of such  Special  Payment  shall be
      transferred to the Collection  Account for distribution in accordance with
      Section 3.2 hereof.

For the  purposes  of this  Section  2.4(b),  clause  (x) of the  definition  of
"Expected  Distributions" shall be deemed to read as follows:  "(x) accrued, due
and unpaid  interest on such  Certificates  together with (without  duplication)
accrued  and  unpaid  interest  on a portion of such  Certificates  equal to the
outstanding principal amount of the Equipment Notes held in such Trust and being
redeemed,  purchased or prepaid (immediately prior to such redemption,  purchase
or prepayment), in each case excluding interest, if any, payable with respect to
the Deposits related to such Trust".

            (ii) Upon the  occurrence  of a  Triggering  Event  (whether  or not
continuing),  the Subordination Agent shall make distributions  pursuant to this
Section 2.4(b) of amounts on deposit in the Special  Payments Account on account

<PAGE>

of the redemption or purchase of all of the Equipment  Notes issued  pursuant to
an  Indenture  on the  Special  Distribution  Date for such  Special  Payment in
accordance with Section 3.3 hereof.

            (c) OTHER SPECIAL PAYMENTS.  Except as provided in clause (e) below,
any amounts on deposit in the Special  Payments Account other than in respect of
amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the
Special Distribution Date therefor in accordance with Article III hereof.

            (d) INVESTMENT OF AMOUNTS IN SPECIAL PAYMENTS  ACCOUNT.  Any amounts
on deposit in the Special  Payments  Account prior to the  distribution  thereof
pursuant to Section  2.4(b) or (c) shall be invested in accordance  with Section
2.2(b).  Investment  Earnings  on  such  investments  shall  be  distributed  in
accordance with Section 2.4(b) or (c), as the case may be.

            (e)  CERTAIN  PAYMENTS.  The  Subordination  Agent  will  distribute
promptly upon receipt thereof (i) any indemnity  payment received by it from the
Owner  Participant,  the Owner Trustee or Continental in respect of any Trustee,
any Liquidity Provider,  the Guarantor,  any Paying Agent, any Depositary or any
Escrow Agent (collectively,  the "PAYEES") and (ii) any compensation (including,
without  limitation,  any fees payable to any Liquidity  Provider  under Section
2.03 of any Liquidity  Facility) received by it from the Owner Participant,  the
Owner Trustee or  Continental  under any  Operative  Agreement in respect of any
Payee, directly to the Payee entitled thereto.

            SECTION 2.5.  DESIGNATED  REPRESENTATIVES.  (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion,  or upon any
Liquidity  Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month  period),  a certificate (a  "SUBORDINATION  AGENT
INCUMBENCY  CERTIFICATE") of a Responsible  Officer of the  Subordination  Agent
certifying as to the incumbency  and specimen  signatures of the officers of the
Subordination  Agent and the  attorney-in-fact  and agents of the  Subordination
Agent (the  "SUBORDINATION  AGENT  REPRESENTATIVES")  authorized to give Written
Notices on behalf of the  Subordination  Agent  hereunder.  Until each Liquidity
Provider  and  Trustee  receives a  subsequent  Subordination  Agent  Incumbency
Certificate,  it  shall be  entitled  to rely on the  last  Subordination  Agent
Incumbency Certificate delivered to it hereunder.

            (b) With the delivery of this Agreement,  each Trustee shall furnish
to the Subordination  Agent, and from time to time thereafter may furnish to the
Subordination  Agent, at such Trustee's  discretion,  or upon the  Subordination
Agent's  request  (which  request  shall  not be made  more than one time in any
12-month  period),  a  certificate  (a "TRUSTEE  INCUMBENCY  Certificate")  of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the  attorney-in-fact  and agents
of such  Trustee  (the  "TRUSTEE  REPRESENTATIVES")  authorized  to give Written
Notices  on behalf of such  Trustee  hereunder.  Until the  Subordination  Agent
receives a subsequent  Trustee Incumbency  Certificate,  it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.

<PAGE>

            (c) With the delivery of this  Agreement,  each  Liquidity  Provider
shall furnish to the  Subordination  Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion,  or
upon the  Subordination  Agent's  request  (which request shall not be made more
than  one  time in any  12-month  period),  a  certificate  (an  "LP  INCUMBENCY
CERTIFICATE") of any Responsible  Officer of such Liquidity Provider  certifying
as to the incumbency and specimen  signatures of any officer,  attorney-in-fact,
agent or other  designated  representative  of such Liquidity  Provider (the "LP
REPRESENTATIVES"  and, together with the Subordination Agent Representatives and
the Trustee  Representatives,  the "DESIGNATED  REPRESENTATIVES")  authorized to
give Written Notices on behalf of such Liquidity Provider  hereunder.  Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall be
entitled  to  rely  on  the  last  LP  Incumbency  Certificate  delivered  to it
hereunder.

            SECTION 2.6.  CONTROLLING  PARTY. (a) The Trustees and the Liquidity
Providers  hereby agree that,  with respect to any  Indenture at any given time,
the Loan Trustee  thereunder will be directed (i) in taking,  or refraining from
taking,  any action under such Indenture or with respect to the Equipment  Notes
issued  thereunder,  so  long  as no  Indenture  Default  has  occurred  and  is
continuing thereunder,  by the holders of at least a majority of the outstanding
principal  amount of such  Equipment  Notes  (provided  that, for so long as the
Subordination  Agent  is the  registered  holder  of the  Equipment  Notes,  the
Subordination Agent shall act with respect to this clause (i) in accordance with
the  directions of the Trustees (in the case of each such Trustee,  with respect
to the Equipment Notes issued under such Indenture and held as Trust Property of
such Trust)  constituting,  in the  aggregate,  directions  with respect to such
principal amount of Equipment  Notes),  and (ii) after the occurrence and during
the continuance of an Indenture  Default  thereunder  (which,  in the case of an
Indenture pertaining to a Leased Aircraft,  has not been cured by the applicable
Owner Trustee or the applicable Owner  Participant,  if applicable,  pursuant to
Section 4.03 of such  Indenture),  in taking,  or  refraining  from taking,  any
action under such Indenture or with respect to such Equipment  Notes,  including
exercising  remedies  thereunder  (including  Accelerating  the Equipment  Notes
issued  thereunder  or  foreclosing  the  Lien  on the  Aircraft  securing  such
Equipment Notes), by the Controlling Party.

            (b) The Person who shall be the "CONTROLLING  PARTY" with respect to
any Indenture upon the occurrence of an Indenture  Default  thereunder shall be:
(v) the Class A-1 Trustee or Class A-2 Trustee,  whichever  represents the Class
with the larger  principal  amount of Certificates  outstanding at the time that
such Indenture  Default occurs (whether or not any other Indenture Default shall
thereafter occur so long as such initial Indenture Default shall continue);  (w)
upon  payment of Final  Distributions  to the  holders of  Certificates  of such
larger Class, the other of the Class A-1 Trustee or Class A-2 Trustee;  (x) upon
payment of Final  Distributions  to the  holders of Class A-1  Certificates  and
Class  A-2  Certificates,  the  Class B  Trustee;  (y)  upon  payment  of  Final
Distributions  to the holders of Class B Certificates,  the Class C-1 Trustee or
Class C-2  Trustee,  whichever  represents  the Class with the larger  principal
amount of  Certificates  outstanding at such time; and (z) upon payment of Final
Distributions to the holders of such larger Class, the other of the Certificates
of the Class C-1 Trustee or Class C-2 Trustee.  For purposes of giving effect to
the foregoing, the Trustees (other than the Controlling Party) irrevocably agree
(and the Certificateholders  (other than the  Certificateholders  represented by
the  Controlling  Party) shall be deemed to agree by virtue of their purchase of
Certificates)  that the  Subordination  Agent, as record holder of the Equipment

<PAGE>

Notes,  shall  exercise its voting rights in respect of the  Equipment  Notes as
directed by the  Controlling  Party and any vote so  exercised  shall be binding
upon the Trustees and all Certificateholders.

            The  Subordination  Agent  shall give  written  notice to all of the
other  parties to this  Agreement  promptly upon a change in the identity of the
Controlling  Party. Each of the parties hereto agrees that it shall not exercise
any of the  rights  of the  Controlling  Party  at  such  time  as it is not the
Controlling Party hereunder;  PROVIDED,  HOWEVER,  that nothing herein contained
shall prevent or prohibit any Non-Controlling  Party from exercising such rights
as shall be  specifically  granted to such  Non-Controlling  Party hereunder and
under the other Operative Agreements.

            (c) Notwithstanding the foregoing,  at any time after 18 months from
the earlier to occur of (i) the date on which the entire  Available Amount under
any  Liquidity  Facility  shall have been  drawn  (for any  reason  other than a
Downgrade Drawing or a Non-Extension Drawing) and remain unreimbursed,  (ii) the
date on which  the  entire  amount of any  Downgrade  Drawing  or  Non-Extension
Drawing shall have become and remain  "Applied  Downgrade  Advances" or "Applied
Non-Extension  Advances",  as the  case may be,  under  and as  defined  in such
Liquidity  Facility and (iii) the date on which all  Equipment  Notes shall have
been  Accelerated  (PROVIDED  that,  with  respect  to the  period  prior to the
Delivery Period Expiry Date, such Equipment Notes have an aggregate  outstanding
principal balance of in excess of $300,000,000), the Liquidity Provider with the
highest  outstanding  amount of Liquidity  Obligations owed to it shall have the
right to elect,  by Written  Notice to the  Subordination  Agent and each of the
Trustees,  to  become  the  Controlling  Party  hereunder  with  respect  to any
Indenture at any time from and including the last day of such 18-month period.

            (d) The  exercise of remedies  by the  Controlling  Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.

            (e) The  Controlling  Party  shall not be  entitled  to  require  or
obligate any  Non-Controlling  Party to provide funds  necessary to exercise any
right or remedy hereunder.

                                   ARTICLE III

                      RECEIPT, DISTRIBUTION AND APPLICATION
                               OF AMOUNTS RECEIVED

            SECTION 3.1. WRITTEN NOTICE OF DISTRIBUTION.  (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each Regular
Distribution  Date (or Special  Distribution Date for purposes of Section 2.4(b)
hereof,  as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following  information as
at the close of business on such Business Day:

            (i) With  respect  to the Class A-1  Certificates  and the Class A-2
      Certificates,  respectively,  the  Class  A-1  Trustee  and the  Class A-2
      Trustee,  respectively,  shall separately set forth the amounts to be paid

<PAGE>

      in accordance  with clause  "FIFTH" of Section 3.2 or 2.4(b),  as the case
      may be, hereof (without giving effect to the pro rata sharing therein);

            (ii) With respect to the Class B  Certificates,  the Class B Trustee
      shall  separately  set forth the  amounts  to be paid in  accordance  with
      clause "SIXTH" of Section 3.2 or 2.4(b), as the case may be, hereof;

            (iii) With respect to the Class C-1  Certificates  and the Class C-2
      Certificates,  respectively,  the  Class  C-1  Trustee  and the  Class C-2
      Trustee,  respectively,  shall separately set forth the amounts to be paid
      in accordance with clause "SEVENTH" of Section 3.2 or 2.4(b),  as the case
      may be, hereof; (without giving effect to the pro rata sharing therein)

            (iv) With respect to each Liquidity Facility, the Liquidity Provider
      thereunder shall separately set forth the amounts to be paid in accordance
      with  clauses  "FIRST",  "SECOND",  "THIRD" and "FOURTH" of Section 3.2 or
      2.4(b), as the case may be, hereof; and

            (v)  Each  Trustee  shall  set  forth  the  amounts  to be  paid  in
      accordance with clause "EIGHTH" of Section 3.2 hereof.

            The notices required under this Section 3.1(a) may be in the form of
a schedule  or  similar  document  provided  to the  Subordination  Agent by the
parties  referenced  therein or by any one of them,  which  schedule  or similar
document may state that, unless there has been a prepayment of the Certificates,
such  schedule or similar  document is to remain in effect until any  substitute
notice  or  amendment  shall be given to the  Subordination  Agent by the  party
providing such notice.

            (b)  Following   the   occurrence   of  a  Triggering   Event,   the
Subordination  Agent shall request the following  information from the following
Persons,  and each of the  following  Persons  shall,  upon the  request  of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:

            (i) With  respect  to the Class A-1  Certificates  and the Class A-2
      Certificates,  respectively,  the Class A-1 Trustee and Class A-2 Trustee,
      respectively,  shall  separately  set  forth  the  amounts  to be  paid in
      accordance with clauses  "FIRST" (to reimburse  payments made by the Class
      A-1  Certificateholders  and Class A-2  Certificateholders,  respectively,
      pursuant to subclause  (iii) of clause  "FIRST" of Section 3.3 hereof) and
      "SEVENTH"  of Section 3.3 hereof  (without  giving  effect to the pro rata
      sharing therein);

            (ii) With respect to the Class B  Certificates,  the Class B Trustee
      shall  separately  set forth the  amounts  to be paid in  accordance  with
      clauses   "FIRST"   (to   reimburse   payments   made   by  the   Class  B
      Certificateholders  pursuant  to  subclause  (iii) of  clause  "FIRST"  of
      Section 3.3 hereof) and "EIGHTH" of Section 3.3 hereof;

            (iii) With respect to the Class C-1  Certificates  and the Class C-2
      Certificates,  respectively,  the  Class  C-1  Trustee  and the  Class C-2
      Trustee,  respectively,  shall separately set forth the amounts to be paid

<PAGE>

      in  accordance  with clauses  "FIRST" (to  reimburse  payments made by the
      Class   C-1   Certificateholders   and   Class   C-2   Certificateholders,
      respectively, pursuant to subclause (iii) of clause "FIRST" of Section 3.3
      hereof) and "NINTH" of Section 3.3 hereof  (without  giving  effect to the
      pro rata sharing therein);

            (iv) With respect to each Liquidity Facility, the Liquidity Provider
      thereunder  shall  separately  set forth the  amounts  to be paid to it in
      accordance  with  subclause  (iii) of clause "FIRST" of Section 3.3 hereof
      and clauses "SECOND", "THIRD", "FOURTH" and "FIFTH" of Section 3.3 hereof;
      and

            (v)  Each  Trustee  shall  set  forth  the  amounts  to be  paid  in
      accordance with clause "SIXTH" of Section 3.3 hereof.

            (c) At such time as a Trustee  or a  Liquidity  Provider  shall have
received  all  amounts  owing  to  it  (and,  in  the  case  of a  Trustee,  the
Certificateholders  for which it is acting)  pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable,  and, in the case of a Liquidity Provider, its commitment
under the related  Liquidity  Facility  shall have  terminated or expired,  such
Person shall, by a Written Notice,  so inform the  Subordination  Agent and each
other party to this Agreement.

            (d) As provided in Section 6.5 hereof, the Subordination Agent shall
be fully  protected in relying on any of the  information set forth in a Written
Notice provided by any Trustee or any Liquidity  Provider pursuant to paragraphs
(a)  through  (c) above and shall  have no  independent  obligation  to  verify,
calculate or recalculate any amount set forth in any Written Notice delivered in
accordance with such paragraphs.

            (e)  Any  Written  Notice  delivered  by a  Trustee  or a  Liquidity
Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if
made prior to 10:00  A.M.  (New York City time) on any  Business  Day,  shall be
effective on the date  delivered (or if delivered  later on a Business Day or if
delivered on a day which is not a Business Day shall be effective as of the next
Business Day). Subject to the terms of this Agreement,  the Subordination  Agent
shall as promptly as practicable  comply with any such  instructions;  PROVIDED,
HOWEVER,  that any transfer of funds pursuant to any instruction  received after
10:00  A.M.  (New York City  time) on any  Business  Day may be made on the next
succeeding Business Day.

            (f) In the event the Subordination  Agent shall not receive from any
Person any information set forth in paragraph (a) or (b) above which is required
to enable the Subordination Agent to make a distribution to such Person pursuant
to Section  3.2 or 3.3  hereof,  the  Subordination  Agent  shall  request  such
information  and,  failing to receive any such  information,  the  Subordination
Agent shall not make such  distribution(s)  to such Person.  In such event,  the
Subordination Agent shall make distributions pursuant to clauses "FIRST" through
"NINTH" of Section 3.2 and clauses "FIRST" through "NINTH" of Section 3.3 to the
extent  it  shall  have  sufficient  information  to  enable  it  to  make  such
distributions, and shall continue to hold any funds remaining, after making such
distributions,  until  the  Subordination  Agent  shall  receive  all  necessary
information to enable it to distribute any funds so withheld.

<PAGE>

            (g) On such  dates (but not more  frequently  than  monthly)  as any
Liquidity Provider or any Trustee shall request,  but in any event automatically
at the end of each calendar quarter,  the Subordination Agent shall send to such
party  a  written   statement   reflecting  all  amounts  on  deposit  with  the
Subordination Agent pursuant to Section 3.1(f) hereof.

            SECTION 3.2.  DISTRIBUTION  OF AMOUNTS ON DEPOSIT IN THE  COLLECTION
ACCOUNT.  Except as otherwise  provided in Sections  2.4,  3.1(f),  3.3, 3.4 and
3.6(b),  amounts on deposit in the  Collection  Account  (or, in the case of any
amount described in Section 2.4(c),  on deposit in the Special Payments Account)
shall be promptly distributed on each Regular Distribution Date (or, in the case
of any amount  described in Section  2.4(c),  on the Special  Distribution  Date
thereof)  in the  following  order  of  priority  and  in  accordance  with  the
information  provided to the  Subordination  Agent  pursuant  to Section  3.1(a)
hereof:

            FIRST,  such  amount as shall be  required  to pay all  accrued  and
      unpaid  Liquidity  Expenses  owed  to each  Liquidity  Provider  shall  be
      distributed to the Liquidity Providers pro rata on the basis of the amount
      of Liquidity Expenses owed to each Liquidity Provider;

            SECOND,  such  amount  as  shall  be  required  to pay in  full  the
      aggregate amount of interest accrued on all Liquidity  Obligations (at the
      rate, or in the amount, provided in the applicable Liquidity Facility) and
      unpaid shall be  distributed  to the  Liquidity  Providers pro rata on the
      basis of the amount of such Liquidity  Obligations  owed to each Liquidity
      Provider;

            THIRD,  such amount as shall be required (A) if any Cash  Collateral
      Account had been previously  funded as provided in Section 3.6(f), to fund
      such Cash Collateral  Account up to its Required Amount shall be deposited
      in such Cash  Collateral  Account,  (B) if any  Liquidity  Facility  shall
      become a  Downgraded  Facility or a  Non-Extended  Facility at a time when
      unreimbursed  Interest Drawings under such Liquidity Facility have reduced
      the Available Amount  thereunder to zero, to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount shall be deposited in such Cash Collateral  Account,  and
      (C)  if,  with  respect  to any  particular  Liquidity  Facility,  neither
      subclause (A) nor subclause (B) of this clause "THIRD" is  applicable,  to
      pay or  reimburse  the  Liquidity  Provider  in respect of such  Liquidity
      Facility  in an amount  equal to the amount of all  Liquidity  Obligations
      then due  under  such  Liquidity  Facility  (other  than  amounts  payable
      pursuant  to clause  "first" or  "SECOND"  of this  Section  3.2) shall be
      distributed  to such  Liquidity  Provider,  pro  rata on the  basis of the
      amounts of all such deficiencies and/or unreimbursed Liquidity Obligations
      in respect of each Liquidity Provider;

            FOURTH, if, with respect to any particular  Liquidity Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "THIRD"  above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)

<PAGE>

      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant  Class,  pro rata on the basis of such amounts in respect of each
      Liquidity Provider;

            FIFTH,  such  amount as shall be  required  to pay in full  Expected
      Distributions  to the  holders  of the  Class  A-1  Certificates  on  such
      Distribution  Date shall be  distributed to the Class A-1 Trustee and such
      amount as shall be required to pay in full Expected  Distributions  to the
      holders of the Class A-2 Certificates on such  Distribution  Date shall be
      distributed  to the  Class  A-2  Trustee,  pro  rata on the  basis of such
      amounts in respect of each such Class of Certificates;

            SIXTH,  such  amount as shall be  required  to pay in full  Expected
      Distributions  to  the  holders  of  the  Class  B  Certificates  on  such
      Distribution Date shall be distributed to the Class B Trustee;

            SEVENTH,  such amount as shall be  required to pay in full  Expected
      Distributions  to the  holders  of the  Class  C-1  Certificates  on  such
      Distribution  Date shall be  distributed to the Class C-1 Trustee and such
      amount as shall be required to pay in full Expected  Distributions  to the
      holders of the Class C-2 Certificates on such  Distribution  Date shall be
      distributed  to the  Class  C-2  Trustee,  pro  rata on the  basis of such
      amounts in respect of each such Class of Certificates;

            EIGHTH,  such  amount  as  shall  be  required  to pay in  full  the
      aggregate   unpaid  amount  of  fees  and  expenses  payable  as  of  such
      Distribution Date to the Subordination  Agent and each Trustee pursuant to
      the terms of this Agreement and the Trust Agreements,  as the case may be,
      shall be distributed to the Subordination Agent and such Trustee; and

            NINTH, the balance, if any, of any such amount remaining  thereafter
      shall  be  held  in the  Collection  Account  for  later  distribution  in
      accordance with this Article III.

            SECTION  3.3.   DISTRIBUTION  OF  AMOUNTS  ON  DEPOSIT  FOLLOWING  A
TRIGGERING  EVENT.  Except as otherwise  provided in Sections  3.1(f) and 3.6(b)
hereof,  upon the occurrence of a Triggering Event and at all times  thereafter,
all funds in the  Collection  Account or the Special  Payments  Account shall be
promptly  distributed  by the  Subordination  Agent  in the  following  order of
priority:

            FIRST,  such  amount  as  shall be  required  to  reimburse  (i) the
      Subordination  Agent for any  out-of-pocket  costs and  expenses  actually
      incurred by it (to the extent not previously reimbursed) in the protection
      of,  or the  realization  of the  value  of,  the  Equipment  Notes or any
      "Collateral"  or "Trust  Indenture  Estate"  (as such terms are defined in
      each relevant  Indenture),  shall be applied by the Subordination Agent in
      reimbursement  of such  costs  and  expenses,  (ii) each  Trustee  for any
      amounts of the nature  described in clause (i) above actually  incurred by
      it under the  applicable  Trust  Agreement  (to the extent not  previously
      reimbursed), shall be distributed to such Trustee, and (iii) any Liquidity
      Provider or  Certificateholder  for  payments,  if any,  made by it to the
      Subordination  Agent or any  Trustee in respect  of amounts  described  in
      clause (i) above,  shall be distributed  to such Liquidity  Provider or to

<PAGE>

      the applicable Trustee for the account of such Certificateholder,  in each
      such case,  pro rata on the basis of all amounts  described in clauses (i)
      through (iii) above;

            SECOND,  such  amount  remaining  as  shall be  required  to pay all
      accrued  and  unpaid  Liquidity  Expenses  shall  be  distributed  to each
      Liquidity  Provider  pro rata on the  basis  of the  amount  of  Liquidity
      Expenses owed to each Liquidity Provider;

            THIRD, such amount remaining as shall be required to pay accrued and
      unpaid interest on the Liquidity  Obligations as provided in the Liquidity
      Facilities shall be distributed to each Liquidity Provider pro rata on the
      basis of the  amount of such  accrued  and  unpaid  interest  owed to each
      Liquidity Provider;

            FOURTH,  such amount  remaining as shall be required (A) if any Cash
      Collateral  Account  had been  previously  funded as  provided  in Section
      3.6(f),  unless (i) a Performing  Note  Deficiency  exists and a Liquidity
      Event of Default shall have occurred and be continuing with respect to the
      relevant  Liquidity  Facility or (ii) a Final  Drawing shall have occurred
      with  respect to such  Liquidity  Facility,  to fund such Cash  Collateral
      Account up to its Required  Amount (less the amount of any  repayments  of
      Interest  Drawings under such Liquidity  Facility while  subclause  (A)(i)
      above is applicable)  shall be deposited in such Cash Collateral  Account,
      (B) if any  Liquidity  Facility  shall become a  Downgraded  Facility or a
      Non-Extended  Facility at a time when unreimbursed Interest Drawings under
      such Liquidity  Facility have reduced the Available  Amount  thereunder to
      zero, unless (i) a Performing Note Deficiency exists and a Liquidity Event
      of Default  shall have  occurred  and be  continuing  with  respect to the
      relevant  Liquidity  Facility or (ii) a Final  Drawing shall have occurred
      with respect to such Liquidity Facility,  to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount (less the amount of any  repayments of Interest  Drawings
      under such Liquidity  Facility while subclause (B)(i) above is applicable)
      shall be  deposited  in such Cash  Collateral  Account,  and (C) if,  with
      respect to any particular  Liquidity  Facility,  neither subclause (A) nor
      subclause (B) of this clause "fourth" are  applicable,  to pay in full the
      outstanding  amount  of all  Liquidity  Obligations  then due  under  such
      Liquidity Facility (other than amounts payable pursuant to clause "SECOND"
      or "THIRD" of this Section  3.3) shall be  distributed  to such  Liquidity
      Provider,  pro rata on the basis of the  amounts of all such  deficiencies
      and/or  unreimbursed  Liquidity  Obligations  in respect of each Liquidity
      Provider;

            FIFTH, if, with respect to any particular  Liquidity  Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "FOURTH" above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)
      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant  Class (less the amount of any  repayments  of Interest  Drawings
      under such Liquidity  Facility while  subclause  (A)(i) or (B)(i),  as the
      case may be,  of clause  "FOURTH"  above is  applicable),  pro rata on the
      basis of such amounts in respect of each Liquidity Provider;

<PAGE>

            SIXTH,  such amount as shall be required to reimburse or pay (i) the
      Subordination  Agent for any Tax (other than Taxes imposed on compensation
      paid  hereunder),  expense,  fee,  charge or other loss incurred by or any
      other amount  payable to the  Subordination  Agent in connection  with the
      transactions   contemplated   hereby  (to  the   extent   not   previously
      reimbursed),  shall be applied by the Subordination Agent in reimbursement
      of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
      compensation  paid under the applicable Trust  Agreement),  expense,  fee,
      charge,  loss or any  other  amount  payable  to such  Trustee  under  the
      applicable  Trust  Agreements (to the extent not  previously  reimbursed),
      shall be distributed to such Trustee, and (iii) each Certificateholder for
      payments,  if any, made by it pursuant to Section 5.2 hereof in respect of
      amounts  described  in  clause  (i)  above,  shall be  distributed  to the
      applicable Trustee for the account of such Certificateholder, in each such
      case,  pro rata on the  basis of all  amounts  described  in  clauses  (i)
      through (iii) above;

            SEVENTH,  such amount  remaining as shall be required to pay in full
      Adjusted  Expected  Distributions on the Class A-1  Certificates  shall be
      distributed to the Class A-1 Trustee and such amount remaining as shall be
      required to pay in full Adjusted  Expected  Distributions on the Class A-2
      Certificates  shall be distributed  to the Class A-2 Trustee,  pro rata on
      the basis of such amounts in respect of each such Class of Certificates;

            EIGHTH,  such amount  remaining  as shall be required to pay in full
      Adjusted  Expected  Distributions  on the  Class B  Certificates  shall be
      distributed to the Class B Trustee; and

            NINTH,  such  amount  remaining  as shall be required to pay in full
      Adjusted  Expected  Distributions on the Class C-1  Certificates  shall be
      distributed to the Class C-1 Trustee and such amount remaining as shall be
      required to pay in full Adjusted  Expected  Distributions on the Class C-2
      Certificates  shall be distributed  to the Class C-2 Trustee,  pro rata on
      the basis of such amounts in respect of each such Class of Certificates.

            SECTION  3.4.  OTHER  PAYMENTS.  (a) Any  payments  received  by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement  shall be distributed  by the  Subordination  Agent (i) in the
order of  priority  specified  in  Section  3.3  hereof  and (ii) to the  extent
received or realized at any time after the Final Distributions for each Class of
Certificates have been made, in the manner provided in clause "first" of Section
3.3 hereof.

            (b)  Notwithstanding  the priority of payments specified in Sections
2.4(b)(i),  3.2 and 3.3,  in the event any  Investment  Earnings  on  amounts on
deposit in any Cash  Collateral  Account  resulting  from an Unapplied  Provider
Advance are deposited in the Collection Account,  such Investment Earnings shall
be applied in  satisfaction  of  interest  payable in respect of such  Unapplied
Provider  Advance to the extent of such  Investment  Earnings.  On any  Interest
Payment Date under each Liquidity Facility which is not a Distribution Date, the
Subordination  Agent shall pay to the Liquidity  Provider  under such  Liquidity
Facility  from,  and to the  extent of,  amounts  on  deposit in the  Collection

<PAGE>

Account,  an amount equal to the amount of interest then due and payable to such
Liquidity Provider under such Liquidity Facility.

            (c) Except as  otherwise  provided  in Section  3.3  hereof,  if the
Subordination  Agent receives any Scheduled  Payment after the Scheduled Payment
Date relating  thereto,  but prior to such payment becoming an Overdue Scheduled
Payment,  then the  Subordination  Agent shall deposit such Scheduled Payment in
the  Collection  Account  and  promptly  distribute  such  Scheduled  Payment in
accordance with the priority of  distributions  set forth in Section 3.2 hereof;
PROVIDED that,  for the purposes of this Section 3.4(c) only,  each reference in
clause  "EIGHTH" of Section 3.2 to  "Distribution  Date" shall be deemed to mean
the actual  date of payment of such  Scheduled  Payment  and each  reference  in
clause "FIFTH", "SIXTH" or "SEVENTH" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.

            SECTION 3.5.  PAYMENTS TO THE TRUSTEES AND THE LIQUIDITY  PROVIDERS.
Any amounts  distributed  hereunder to any Liquidity  Provider  shall be paid to
such Liquidity  Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide  a Written  Notice  of any such  transfer  to the  applicable  Liquidity
Provider,  as the  case  may  be,  at the  time of such  transfer.  Any  amounts
distributed  hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire  transfer  funds  at the  address  such  Trustee  shall  provide  to the
Subordination Agent.

            SECTION 3.6. LIQUIDITY FACILITIES.  (a) INTEREST DRAWINGS. If on any
Distribution  Date, after giving effect to the subordination  provisions of this
Agreement,  the  Subordination  Agent  shall not have  sufficient  funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A-1  Certificates,  the Class A-2  Certificates,  the Class B Certificates,  the
Class C-1  Certificates  or the Class C-2  Certificates  (at the Stated Interest
Rate for such Class of  Certificates),  then,  prior to 1:00 p.m. (New York City
time) on such Distribution Date, the Subordination Agent shall request a drawing
(each such drawing,  an "INTEREST  DRAWING")  under the Liquidity  Facility with
respect to such Class of Certificates in an amount equal to the lesser of (i) an
amount  sufficient  to pay the amount of such  accrued  interest  (at the Stated
Interest  Rate for such Class of  Certificates)  and (ii) the  Available  Amount
under such  Liquidity  Facility,  and shall pay such amount to the Trustee  with
respect to such Class of Certificates in payment of such accrued interest.

            (b) APPLICATION OF INTEREST  DRAWINGS.  Notwithstanding  anything to
the contrary  contained  in this  Agreement,  (i) all  payments  received by the
Subordination  Agent in  respect  of an  Interest  Drawing  under  the Class A-1
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A-1 Cash  Collateral  Account,  and  payable in each case to the Class A-1
Certificateholders  or the Class A-1 Trustee,  shall be promptly  distributed to
the Class A-1 Trustee,  (ii) all payments received by the Subordination Agent in
respect of an Interest  Drawing under the Class A-2  Liquidity  Facility and all
amounts withdrawn by the Subordination  Agent from the Class A-2 Cash Collateral
Account,  and  payable in each case to the Class A-2  Certificateholders  or the
Class A-2 Trustee, shall be promptly distributed to the Class A-2 Trustee, (iii)

<PAGE>

all  payments  received  by the  Subordination  Agent in respect of an  Interest
Drawing  under the Class B Liquidity  Facility and all amounts  withdrawn by the
Subordination  Agent from the Class B Cash  Collateral  Account,  and payable in
each case to the Class B  Certificateholders  or the Class B  Trustee,  shall be
promptly  distributed to the Class B Trustee,  (iv) all payments received by the
Subordination  Agent in  respect  of an  Interest  Drawing  under  the Class C-1
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class C-1 Cash  Collateral  Account,  and  payable in each case to the Class C-1
Certificateholders  or the Class C-1 Trustee,  shall be promptly  distributed to
the Class C-1 Trustee and (v) all payments received by the  Subordination  Agent
in respect of an Interest Drawing under the Class C-2 Liquidity Facility and all
amounts withdrawn by the Subordination  Agent from the Class C-2 Cash Collateral
Account,  and  payable in each case to the Class C-2  Certificateholders  or the
Class C-2 Trustee, shall be promptly distributed to the Class C-2 Trustee.

            (c) DOWNGRADE DRAWINGS. (i) With respect to each Liquidity Facility,
a Downgrade Drawing shall be requested by the Subordination  Agent thereunder as
provided in Section 3.6(c)(iii), if at any time,

            (x) in the case of any Liquidity Facility (other than as provided in
      clause (y) below),  the unsecured  debt rating of the  Liquidity  Provider
      thereunder is lower than the applicable  Threshold Rating issued by either
      Rating Agency, or

            (y) in the case of the Class C-1 Liquidity Facility or the Class C-2
      Liquidity Facility,  so long as MSCS is the Liquidity Provider thereunder,
      the unsecured  debt rating of the  Guarantor is lower than the  applicable
      Threshold  Rating issued by either Rating Agency or the related  Guarantee
      Agreement  ceases to be in full  force and  effect or  becomes  invalid or
      unenforceable or the Guarantor denies its liability thereunder,

in  each  case  (a  "DOWNGRADE  EVENT";  the  relevant  Liquidity  Facility,   a
"DOWNGRADED  FACILITY"),  unless an event described in Section 3.6(c)(ii) occurs
with respect to such Liquidity Facility.

            (ii) If at any time any  Liquidity  Facility  becomes  a  Downgraded
Facility,  the Subordination  Agent shall request a Downgrade Drawing thereunder
in accordance with Section 3.6(c)(iii), unless the Liquidity Provider under such
Downgraded Facility or Continental arranges for a Replacement Liquidity Provider
to issue and deliver a Replacement Liquidity Facility to the Subordination Agent
within 10 days  (or,  in the case of a  downgrade  by  Standard  & Poor's of the
short-term  unsecured debt rating of such  Liquidity  Provider or Guarantor from
A-1+ to A-1,  such  longer  period  not to  exceed  40 days for  which a Ratings
Confirmation for the applicable Class of Certificates  shall have been obtained)
after  receiving  notice of a Downgrade Event (but not later than the expiration
date of such Downgraded Facility).

            (iii) Upon the occurrence of any Downgrade Event with respect to any
Liquidity Facility, unless any event described in Section 3.6(c)(ii) occurs with
respect thereto, the Subordination Agent shall, on the 10th day (or the last day
of such longer period) referred to in Section 3.6(c)(ii)(or if such 10th day (or
the  last  day of  such  longer  period)  is not a  Business  Day,  on the  next
succeeding Business Day) (or, if earlier, the expiration date of such Downgraded
Facility),  request a drawing in accordance with and to the extent  permitted by

<PAGE>

such Downgraded Facility (such drawing, a "DOWNGRADE  DRAWING") of all available
and undrawn amounts  thereunder.  Amounts drawn pursuant to a Downgrade  Drawing
shall be  maintained  and  invested as provided in Section  3.6(f)  hereof.  The
applicable  Liquidity  Provider  may also  arrange for a  Replacement  Liquidity
Provider to issue and deliver a Replacement Liquidity Facility at any time after
such Downgrade Drawing so long as such Downgrade Drawing has not been reimbursed
in full to such Liquidity Provider.

            (d) NON-EXTENSION  DRAWINGS.  If any Liquidity Facility with respect
to any Class of  Certificates  is  scheduled  to  expire on a date (the  "STATED
EXPIRATION  DATE")  prior to the date  that is 15 days  after  the  Final  Legal
Distribution Date for such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration  Date  until the  earlier of (i) the date which is 15 days after such
Final  Legal  Distribution  Date and (ii) the date  that is the day  immediately
preceding the 364th day occurring  after the last day of the applicable  Consent
Period (as  hereinafter  defined)  (unless  the  obligations  of such  Liquidity
Provider under such Liquidity Facility are earlier terminated in accordance with
such Liquidity  Facility).  Whether or not the Liquidity Provider has received a
request from the Subordination Agent, such Liquidity Provider may, but shall not
be obligated to, by a notice (a "CONSENT  NOTICE") to the  Subordination  Agent,
given  during  the  period  commencing  on the date that is 60 days prior to the
Stated  Expiration  Date then in effect  and  ending on the date that is 25 days
prior to the Stated  Expiration Date then in effect for such Liquidity  Facility
(such period,  with respect to such Liquidity  Facility,  the "CONSENT PERIOD"),
consent to such extension of such Stated  Expiration  Date, which consent may be
given  or  withheld  by  such  Liquidity  Provider  in  its  absolute  and  sole
discretion;  PROVIDED,  HOWEVER, that such extension shall not be effective with
respect to such Liquidity Provider if by a notice (a "WITHDRAWAL Notice") to the
Subordination Agent during the applicable Consent Period such Liquidity Provider
revokes its Consent  Notice.  If (A) on or before such 25th day, such  Liquidity
Facility shall not have been replaced in accordance with Section 3.6(e), and (B)
a  Withdrawal  Notice  has been given with  respect to such  Liquidity  Facility
during the applicable Consent Period or the applicable  Liquidity Provider shall
not have  delivered a Consent  Notice with  respect to such  Liquidity  Facility
within the applicable  Consent Period,  the  Subordination  Agent shall, on such
25th day (or as soon as possible  thereafter),  in accordance  with the terms of
the expiring Liquidity Facility (a "NON-EXTENDED  FACILITY"),  request a drawing
under such expiring Liquidity Facility (such drawing, a "NON-EXTENSION DRAWING")
of all available and undrawn amounts thereunder. Notwithstanding the immediately
preceding  three  sentences,  so long as MSCS is the Liquidity  Provider for the
Class C-1  Liquidity  Facility or the Class C-2 Liquidity  Facility,  the Stated
Expiration Date therefor shall be automatically extended,  effective on the 25th
day prior to such Stated  Expiration Date (unless such Stated Expiration Date is
on or after the date that is 15 days after the Final Legal Distribution Date for
the relevant Class of Certificates),  for a period of 364 days after such Stated
Expiration Date (unless the  obligations of such Liquidity  Provider are earlier
terminated in accordance with such Liquidity  Facility) without the necessity of
any act by the  Subordination  Agent or such  Liquidity  Provider,  unless  such
Liquidity Provider shall advise the Subordination Agent, prior to such 25th day,
that it does not agree to such extension of the Stated Expiration Date, in which
event, the  Subordination  Agent shall, on such 25th day (or as soon as possible
thereafter),  in accordance with and to the extent permitted by the terms of the

<PAGE>

Non-Extended  Facility,  request a Non-Extension  Drawing under the Non-Extended
Facility of all available and undrawn amounts thereunder. Amounts drawn pursuant
to a  Non-Extension  Drawing shall be maintained and invested in accordance with
Section 3.6(f) hereof.

            (e) ISSUANCE OF  REPLACEMENT  LIQUIDITY  FACILITY.  (i) At any time,
Continental  may,  at its  option,  with cause or without  cause,  arrange for a
Replacement  Liquidity  Facility to replace any Liquidity Facility for any Class
of Certificates  (including any Replacement Liquidity Facility provided pursuant
to Section 3.6(e)(ii)  hereof);  PROVIDED,  HOWEVER,  that the initial Liquidity
Provider  for any  Liquidity  Facility  and the  initial  Replacement  Liquidity
Provider for any of the Class A-1  Liquidity  Facility,  the Class A-2 Liquidity
Facility and the Class B Liquidity Facility shall not be replaced by Continental
as a Liquidity  Provider with respect to such  Liquidity  Facility  prior to the
fifth  anniversary of the Closing Date unless (A) there shall have become due to
such initial Liquidity  Provider,  or such initial Liquidity Provider shall have
demanded,  amounts  pursuant  to Section  3.01,  3.02 or 3.03 of any  applicable
Liquidity  Facility or pursuant  to the Tax Letter and the  replacement  of such
initial Liquidity  Provider would reduce or eliminate the obligation to pay such
amounts or  Continental  determines  in good  faith that there is a  substantial
likelihood that such initial Liquidity Provider will have the right to claim any
such amounts (unless such initial  Liquidity  Provider waives,  in writing,  any
right it may have to claim such amounts), which determination shall be set forth
in a certificate  delivered by  Continental to such initial  Liquidity  Provider
setting forth the basis for such  determination and accompanied by an opinion of
outside  counsel  selected by  Continental  and  reasonably  acceptable  to such
initial  Liquidity  Provider  verifying the legal  conclusions,  if any, of such
certificate  relating to such basis,  PROVIDED  that,  in the case of any likely
claim for such  amounts  based upon any  proposed,  or proposed  change in, law,
rule,   regulation,   interpretation,   directive,   requirement,   request   or
administrative practice, such opinion may assume the adoption or promulgation of
such  proposed  matter,  (B) it shall  become  unlawful or  impossible  for such
initial  Liquidity  Provider  (or its  Facility  Office) to maintain or fund its
LIBOR Advances as described in Section 3.10 of any Liquidity  Facility,  (C) the
short-term   unsecured  debt  rating  of  such  initial  Liquidity  Provider  is
downgraded  by  Standard  & Poor's  from  A-1+ to A-1 and  there is a  resulting
downgrade in the rating by any Rating Agency of any Class of  Certificates,  (D)
any  Liquidity  Facility  of such  initial  Liquidity  Provider  shall  become a
Downgraded  Facility or a  Non-Extended  Facility  or a  Downgrade  Drawing or a
Non-Extension  Drawing shall have occurred under any Liquidity  Facility of such
initial  Liquidity  Provider or (E) such initial  Liquidity  Provider shall have
breached any of its payment (including, without limitation, funding) obligations
under any Liquidity  Facility in respect of which it is the Liquidity  Provider.
If such Replacement Liquidity Facility is provided at any time after a Downgrade
Drawing or  Non-Extension  Drawing  has been  made,  all funds on deposit in the
relevant  Cash  Collateral  Account will be returned to the  Liquidity  Provider
being replaced.

            (ii) If any Liquidity  Provider shall determine not to extend any of
its Liquidity  Facilities in accordance with Section 3.6(d), then such Liquidity
Provider  may, at its option,  arrange for a Replacement  Liquidity  Facility to
replace such Liquidity Facility during the period no earlier than 40 days and no
later than 25 days prior to the then effective  Stated  Expiration  Date of such
Liquidity  Facility.  In addition,  the initial Liquidity Provider for the Class
A-1  Liquidity  Facility,  the  Class  A-2  Liquidity  Facility  and the Class B

<PAGE>

Liquidity  Facility  may, at its option,  arrange  for a  Replacement  Liquidity
Facility to replace any such Liquidity Facility at any time.

            (iii) No Replacement Liquidity Facility arranged by Continental or a
Liquidity  Provider in  accordance  with clause (i) or (ii) above or pursuant to
Section 3.6(c),  respectively,  shall become  effective and no such  Replacement
Liquidity  Facility shall be deemed a "Liquidity  Facility"  under the Operative
Agreements,  unless  and  until  (A)  each  of  the  conditions  referred  to in
sub-clauses  (iv)(x)  and (z)  below  shall  have  been  satisfied,  (B) if such
Replacement  Liquidity  Facility shall  materially  adversely affect the rights,
remedies,  interests or  obligations  of the Class A-1  Certificateholders,  the
Class  A-2  Certificateholders,  the Class B  Certificateholders,  the Class C-1
Certificateholders  or  the  Class  C-2  Certificateholders  under  any  of  the
Operative Agreements,  the applicable Trustee shall have consented,  in writing,
to the execution and issuance of such Replacement  Liquidity Facility and (C) in
the case of a Replacement  Liquidity  Facility arranged by a Liquidity  Provider
under  Section  3.6(e)(ii)  or  pursuant  to Section  3.6(c),  such  Replacement
Liquidity Facility is acceptable to Continental.

            (iv) In connection with the issuance of each  Replacement  Liquidity
Facility,  the  Subordination  Agent  shall  (x) prior to the  issuance  of such
Replacement  Liquidity  Facility,  obtain written  confirmation from each Rating
Agency that such  Replacement  Liquidity  Facility will not cause a reduction of
any rating then in effect for any Class of  Certificates  by such Rating  Agency
(without regard to any downgrading of any rating of any Liquidity Provider being
replaced pursuant to Section 3.6(c) hereof),  (y) pay all Liquidity  Obligations
then owing to the replaced Liquidity Provider (which payment shall be made first
from available funds in the applicable  Cash Collateral  Account as described in
clause (vii) of Section 3.6(f) hereof,  and thereafter  from any other available
source, including, without limitation, a drawing under the Replacement Liquidity
Facility)  and (z) cause the issuer of the  Replacement  Liquidity  Facility  to
deliver the Replacement  Liquidity Facility to the Subordination Agent, together
with a legal  opinion  opining that such  Replacement  Liquidity  Facility is an
enforceable obligation of such Replacement Liquidity Provider.

            (v) Upon  satisfaction  of the conditions set forth in clauses (iii)
and  (iv) of  this  Section  3.6(e)  with  respect  to a  Replacement  Liquidity
Facility,  (w)  the  replaced  Liquidity  Facility  shall  terminate,   (x)  the
Subordination  Agent shall,  if and to the extent so requested by Continental or
the Liquidity  Provider being  replaced,  execute and deliver any certificate or
other instrument required in order to terminate the replaced Liquidity Facility,
shall surrender the replaced  Liquidity Facility to the Liquidity Provider being
replaced and shall execute and deliver the  Replacement  Liquidity  Facility and
any associated Fee Letters,  (y) each of the parties hereto shall enter into any
amendments to this Agreement  necessary to give effect to (1) the replacement of
the  applicable  Liquidity  Provider with the applicable  Replacement  Liquidity
Provider and (2) the replacement of the applicable  Liquidity  Facility with the
applicable  Replacement  Liquidity  Facility and (z) the applicable  Replacement
Liquidity  Provider  shall be deemed to be a Liquidity  Provider with the rights
and obligations of a Liquidity  Provider hereunder and under the other Operative
Agreements  and such  Replacement  Liquidity  Facility  shall be  deemed to be a
Liquidity Facility hereunder and under the other Operative Agreements.

<PAGE>

            (f) CASH COLLATERAL ACCOUNTS; WITHDRAWALS; INVESTMENTS. In the event
the  Subordination  Agent shall draw all  available  amounts under the Class A-1
Liquidity  Facility,  the Class A-2  Liquidity  Facility,  the Class B Liquidity
Facility,  the Class C-1 Liquidity  Facility or the Class C-2 Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) hereof, or in the event amounts are
to be  deposited in the Cash  Collateral  Account  pursuant to subclause  (B) of
clause "third" of Section 2.4(b), subclause (B) of clause "third" of Section 3.2
or subclause  (B) of clause  "fourth" of Section 3.3,  amounts so drawn or to be
deposited,  as the case may be, shall be deposited by the Subordination Agent in
the Class A-1 Cash Collateral  Account,  the Class A-2 Cash Collateral  Account,
the Class B Cash Collateral  Account,  the Class C-1 Cash Collateral  Account or
the Class C-2 Cash Collateral Account,  respectively.  All amounts on deposit in
each Cash  Collateral  Account  shall be  invested  and  reinvested  in Eligible
Investments in accordance with Section 2.2(b) hereof.

            On each  Interest  Payment  Date  (or,  in the  case of any  Special
Distribution  Date with  respect to a  distribution  pursuant to Section  2.4(b)
hereof occurring prior to the occurrence of a Triggering  Event, on such Special
Distribution  Date),  Investment  Earnings  on  amounts  on deposit in each Cash
Collateral  Account  (or,  in the case of any  Special  Distribution  Date  with
respect to a distribution  pursuant to Section 2.4(b) hereof  occurring prior to
the  occurrence of a Triggering  Event, a fraction of such  Investment  Earnings
equal to the Section  2.4(b)  Fraction)  shall be  deposited  in the  Collection
Account  (or, in the case of any  Special  Distribution  Date with  respect to a
distribution pursuant to Section 2.4(b) hereof occurring prior to the occurrence
of a  Triggering  Event,  the  Special  Payments  Account)  and  applied on such
Interest  Payment  Date (or Special  Distribution  Date,  as the case may be) in
accordance with Section 2.4, 3.2, 3.3 or 3.4 (as applicable).  The Subordination
Agent  shall  deliver a  written  statement  to  Continental  and the  Liquidity
Provider one day prior to each  Interest  Payment Date and Special  Distribution
Date setting forth the aggregate amount of Investment  Earnings held in the Cash
Collateral Accounts as of such date. In addition,  from and after the date funds
are so  deposited,  the  Subordination  Agent shall make  withdrawals  from such
account as follows:

            (i) on each Distribution Date, the Subordination Agent shall, to the
      extent it shall not have received funds to pay accrued and unpaid interest
      due and owing on the Class A-1  Certificates  (at the Stated Interest Rate
      for the Class A-1 Certificates)  from any other source,  withdraw from the
      Class A-1 Cash Collateral  Account,  and pay to the Class A-1 Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid   interest  (at  the  Stated   Interest  Rate  for  the  Class  A-1
      Certificates) on such Class A-1 Certificates and (y) the amount on deposit
      in the Class A-1 Cash Collateral Account;

            (ii) on each Distribution  Date, the  Subordination  Agent shall, to
      the  extent it shall not have  received  funds to pay  accrued  and unpaid
      interest  due and  owing on the  Class  A-2  Certificates  (at the  Stated
      Interest  Rate for the Class  A-2  Certificates)  from any  other  source,
      withdraw from the Class A-2 Cash Collateral Account,  and pay to the Class
      A-2 Trustee,  an amount equal to the lesser of (x) an amount  necessary to
      pay accrued and unpaid interest (at the Stated Interest Rate for the Class
      A-2  Certificates)  on such Class A-2  Certificates  and (y) the amount on
      deposit in the Class A-2 Cash Collateral Account;

<PAGE>

            (iii) on each Distribution  Date, the Subordination  Agent shall, to
      the  extent it shall not have  received  funds to pay  accrued  and unpaid
      interest due and owing on the Class B Certificates (at the Stated Interest
      Rate for the Class B  Certificates)  from any other source,  withdraw from
      the Class B Cash Collateral  Account,  and pay to the Class B Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid interest (at the Stated Interest Rate for the Class B Certificates)
      on such Class B Certificates  and (y) the amount on deposit in the Class B
      Cash Collateral Account;

            (iv) on each Distribution  Date, the  Subordination  Agent shall, to
      the  extent it shall not have  received  funds to pay  accrued  and unpaid
      interest  due and  owing on the  Class  C-1  Certificates  (at the  Stated
      Interest  Rate for the Class  C-1  Certificates)  from any  other  source,
      withdraw from the Class C-1 Cash Collateral Account,  and pay to the Class
      C-1 Trustee,  an amount equal to the lesser of (x) an amount  necessary to
      pay accrued and unpaid interest (at the Stated Interest Rate for the Class
      C-1  Certificates)  on such Class C-1  Certificates  and (y) the amount on
      deposit in the Class C-1 Cash Collateral Account;

            (v) on each Distribution Date, the Subordination Agent shall, to the
      extent it shall not have received funds to pay accrued and unpaid interest
      due and owing on the Class C-2  Certificates  (at the Stated Interest Rate
      for the Class C-2 Certificates)  from any other source,  withdraw from the
      Class C-2 Cash Collateral  Account,  and pay to the Class C-2 Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid   interest  (at  the  Stated   Interest  Rate  for  the  Class  C-2
      Certificates) on such Class C-2 Certificates and (y) the amount on deposit
      in the Class C-2 Cash Collateral Account;

            (vi) on each date on which the Pool  Balance  of the Class A-1 Trust
      shall   have   been   reduced   by   payments   made  to  the   Class  A-1
      Certificateholders  pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
      to Section 2.03 of the Escrow and Paying Agent  Agreement  for such Class,
      the Subordination  Agent shall withdraw from the Class A-1 Cash Collateral
      Account such amount as is necessary  so that,  after giving  effect to the
      reduction of the Pool Balance on such date  (including  any such reduction
      resulting  from a prior  withdrawal of amounts on deposit in the Class A-1
      Cash  Collateral  Account on such  date) and any  transfer  of  Investment
      Earnings from such Cash  Collateral  Account to the Collection  Account or
      the Special  Payments  Account on such date, an amount equal to the sum of
      the Required  Amount (with  respect to the Class A-1  Liquidity  Facility)
      plus Investment  Earnings on deposit in such Cash Collateral  Account will
      be on deposit in the Class A-1 Cash  Collateral  Account and shall  FIRST,
      pay such  withdrawn  amount to the Class A-1 Liquidity  Provider until the
      Liquidity  Obligations (with respect to the Class A-1 Certificates)  owing
      to such  Liquidity  Provider  shall  have been paid in full,  and  SECOND,
      deposit any remaining withdrawn amount in the Collection Account;

            (vii) on each date on which the Pool  Balance of the Class A-2 Trust
      shall   have   been   reduced   by   payments   made  to  the   Class  A-2
      Certificateholders  pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
      to Section 2.03 of the Escrow and Paying Agent  Agreement  for such Class,
      the Subordination  Agent shall withdraw from the Class A-2 Cash Collateral
      Account such amount as is necessary  so that,  after giving  effect to the

<PAGE>

      reduction of the Pool Balance on such date  (including  any such reduction
      resulting  from a prior  withdrawal of amounts on deposit in the Class A-2
      Cash  Collateral  Account on such  date) and any  transfer  of  Investment
      Earnings from such Cash  Collateral  Account to the Collection  Account or
      the Special  Payments  Account on such date, an amount equal to the sum of
      the Required  Amount (with  respect to the Class A-2  Liquidity  Facility)
      plus Investment  Earnings on deposit in such Cash Collateral  Account will
      be on deposit in the Class A-2 Cash  Collateral  Account and shall  FIRST,
      pay such  withdrawn  amount to the Class A-2 Liquidity  Provider until the
      Liquidity  Obligations (with respect to the Class A-2 Certificates)  owing
      to such  Liquidity  Provider  shall  have been paid in full,  and  SECOND,
      deposit any remaining withdrawn amount in the Collection Account;

            (viii) on each date on which the Pool  Balance  of the Class B Trust
      shall have been reduced by payments made to the Class B Certificateholders
      pursuant to Section  2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
      the Escrow and Paying Agent  Agreement for such Class,  the  Subordination
      Agent shall withdraw from the Class B Cash Collateral  Account such amount
      as is necessary so that,  after giving effect to the reduction of the Pool
      Balance on such date (including any such reduction  resulting from a prior
      withdrawal of amounts on deposit in the Class B Cash Collateral Account on
      such  date)  and any  transfer  of  Investment  Earnings  from  such  Cash
      Collateral  Account  to the  Collection  Account or the  Special  Payments
      Account on such date,  an amount equal to the sum of the  Required  Amount
      (with respect to the Class B Liquidity  Facility) plus Investment Earnings
      on deposit in such Cash Collateral Account will be on deposit in the Class
      B Cash Collateral  Account and shall FIRST,  pay such withdrawn  amount to
      the Class B  Liquidity  Provider  until the  Liquidity  Obligations  (with
      respect  to the Class B  Certificates)  owing to such  Liquidity  Provider
      shall have been paid in full, and SECOND,  deposit any remaining withdrawn
      amount in the Collection Account;

            (ix) on each date on which the Pool  Balance  of the Class C-1 Trust
      shall   have   been   reduced   by   payments   made  to  the   Class  C-1
      Certificateholders  pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
      to Section 2.03 of the Escrow and Paying Agent  Agreement  for such Class,
      the Subordination  Agent shall withdraw from the Class C-1 Cash Collateral
      Account such amount as is necessary  so that,  after giving  effect to the
      reduction of the Pool Balance on such date  (including  any such reduction
      resulting  from a prior  withdrawal of amounts on deposit in the Class C-1
      Cash  Collateral  Account on such  date) and any  transfer  of  Investment
      Earnings from such Cash  Collateral  Account to the Collection  Account or
      the Special  Payment  Account on such date,  an amount equal to the sum of
      the Required  Amount (with  respect to the Class C-1  Liquidity  Facility)
      plus Investment  Earnings on deposit in such Cash Collateral  Account will
      be on deposit in the Class C-1 Cash  Collateral  Account and shall  FIRST,
      pay such  withdrawn  amount to the Class C-1 Liquidity  Provider until the
      Liquidity  Obligations (with respect to the Class C-1 Certificates)  owing
      to such  Liquidity  Provider  shall  have been paid in full,  and  SECOND,
      deposit any remaining withdrawn amount in the Collection Account;

            (x) on each  date on which the Pool  Balance  of the Class C-2 Trust
      shall   have   been   reduced   by   payments   made  to  the   Class  C-2
      Certificateholders  pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant

<PAGE>

      to Section 2.03 of the Escrow and Paying Agent  Agreement  for such Class,
      the Subordination  Agent shall withdraw from the Class C-2 Cash Collateral
      Account such amount as is necessary  so that,  after giving  effect to the
      reduction of the Pool Balance on such date  (including  any such reduction
      resulting  from a prior  withdrawal of amounts on deposit in the Class C-2
      Cash  Collateral  Account on such  date) and any  transfer  of  Investment
      Earnings from such Cash  Collateral  Account to the Collection  Account or
      the Special  Payments  Account on such date, an amount equal to the sum of
      the Required  Amount (with  respect to the Class C-2  Liquidity  Facility)
      plus Investment  Earnings on deposit in such Cash Collateral  Account will
      be on deposit in the Class C-2 Cash  Collateral  Account and shall  FIRST,
      pay such  withdrawn  amount to the Class C-2 Liquidity  Provider until the
      Liquidity  Obligations (with respect to the Class C-2 Certificates)  owing
      to such  Liquidity  Provider  shall  have been paid in full,  and  SECOND,
      deposit any remaining withdrawn amount in the Collection Account;

            (xi)  if  a  Replacement   Liquidity   Facility  for  any  Class  of
      Certificates  shall be delivered to the Subordination  Agent following the
      date on which funds have been deposited into the Cash  Collateral  Account
      for such Class of Certificates, the Subordination Agent shall withdraw all
      amounts  on  deposit in such Cash  Collateral  Account  and shall pay such
      amounts to the replaced Liquidity Provider until all Liquidity Obligations
      owed to such Person  shall have been paid in full,  and shall  deposit any
      remaining amount in the Collection Account; and

            (xii) following the payment of Final  Distributions  with respect to
      any Class of Certificates,  on the date on which the  Subordination  Agent
      shall  have been  notified  by the  Liquidity  Provider  for such Class of
      Certificates  that  the  Liquidity  Obligations  owed  to  such  Liquidity
      Provider have been paid in full,  the  Subordination  Agent shall withdraw
      all amounts on deposit in the Cash  Collateral  Account in respect of such
      Class of  Certificates  and shall  deposit  such amount in the  Collection
      Account.

            (g)  REINSTATEMENT.  With respect to any Interest  Drawing under the
Liquidity  Facility  for any Trust,  upon the  reimbursement  of the  applicable
Liquidity  Provider for all or any part of the amount of such Interest  Drawing,
together  with any  accrued  interest  thereon,  the  Available  Amount  of such
Liquidity  Facility shall be reinstated by an amount equal to the amount of such
Interest Drawing so reimbursed to the applicable  Liquidity  Provider but not to
exceed the Stated Amount for such Liquidity Facility;  PROVIDED,  HOWEVER,  that
such  Liquidity  Facility  shall not be so  reinstated in part or in full at any
time if (x) both a Performing  Note  Deficiency  exists and a Liquidity Event of
Default  shall have  occurred  and be  continuing  with  respect to the relevant
Liquidity  Facility or (y) a Final  Drawing  shall have occurred with respect to
such  Liquidity  Facility.  In the event that,  with  respect to any  particular
Liquidity  Facility,  (i) funds are withdrawn from any Cash  Collateral  Account
pursuant  to clause  (i),  (ii) or (iii) of Section  3.6(f)  hereof or (ii) such
Liquidity Facility shall become a Downgraded Facility or a Non-Extended Facility
at a time when unreimbursed Interest Drawings under such Liquidity Facility have
reduced the  Available  Amount  thereunder to zero,  then funds  received by the
Subordination  Agent at any time other than (x) any time when a Liquidity  Event
of Default shall have occurred and be continuing  with respect to such Liquidity

<PAGE>

Facility and a Performing Note  Deficiency  exists or (y) any time after a Final
Drawing  shall have occurred with respect to such  Liquidity  Facility  shall be
deposited  in such Cash  Collateral  Account  as and to the extent  provided  in
clause  "THIRD"  of Section  2.4(b),  clause  "THIRD"  of Section  3.2 or clause
"FOURTH" of Section 3.3, as applicable,  and applied in accordance  with Section
3.6(f) hereof.

            (h)  REIMBURSEMENT.  The amount of each drawing  under the Liquidity
Facilities  shall be due and payable,  together  with interest  thereon,  on the
dates and at the rates, respectively, provided in the Liquidity Facilities.

            (i) FINAL  DRAWING.  Upon  receipt  from a  Liquidity  Provider of a
Termination  Notice with respect to any Liquidity  Facility,  the  Subordination
Agent shall,  not later than the date specified in such Termination  Notice,  in
accordance  with the terms of such Liquidity  Facility,  request a drawing under
such  Liquidity  Facility of all  available  and undrawn  amounts  thereunder (a
"FINAL DRAWING").  Amounts drawn pursuant to a Final Drawing shall be maintained
and invested in accordance with Section 3.6(f) hereof.

            (j)  REDUCTION OF STATED  AMOUNT.  Promptly  following  each date on
which the Required Amount of the Liquidity  Facility for a Class of Certificates
is reduced as a result of a reduction  in the Pool  Balance with respect to such
Certificates,  the  Subordination  Agent shall,  if any such Liquidity  Facility
provides for reductions of the Stated Amount of such  Liquidity  Facility and if
such  reductions  are not automatic,  request such  Liquidity  Provider for such
Class of  Certificates  to reduce such Stated  Amount to an amount  equal to the
Required  Amount with respect to such  Liquidity  Facility (as calculated by the
Subordination  Agent after  giving  effect to such  payment).  Each such request
shall be made in  accordance  with the  provisions of the  applicable  Liquidity
Facility.

            (k) RELATION TO SUBORDINATION  PROVISIONS.  Interest  Drawings under
the Liquidity Facilities and withdrawals from the Cash Collateral  Accounts,  in
each case,  in respect of interest  on the  Certificates  of any Class,  will be
distributed  to the  Trustee  for such  Class of  Certificates,  notwithstanding
Sections 2.4, 3.2 and 3.3 hereof.

            (l) ASSIGNMENT OF LIQUIDITY FACILITY. The Subordination Agent agrees
not to consent to the assignment by any Liquidity  Provider of any of its rights
or obligations under any Liquidity Facility or any interest therein,  unless (i)
Continental  shall have consented to such assignment and (ii) each Rating Agency
shall have  provided  a Ratings  Confirmation  in  respect  of such  assignment;
PROVIDED,  that the Subordination  Agent shall consent to such assignment if the
conditions  in the  foregoing  clauses  (i)  and  (ii)  are  satisfied,  and the
foregoing  is not  intended to and shall not be construed to limit the rights of
the initial Liquidity Provider under Section 3.6(e)(ii).

                                   ARTICLE IV

                              EXERCISE OF REMEDIES

            SECTION  4.1.   DIRECTIONS  FROM  THE  CONTROLLING  PARTY.  (a)  (i)
Following the occurrence  and during the  continuation  of an Indenture  Default

<PAGE>

under any Indenture, the Controlling Party shall direct the Subordination Agent,
which in turn  shall  direct  the Loan  Trustee  under  such  Indenture,  in the
exercise of remedies  available  to the holders of the  Equipment  Notes  issued
pursuant to such Indenture,  including,  without limitation, the ability to vote
all  such  Equipment  Notes in favor of  Accelerating  such  Equipment  Notes in
accordance with the provisions of such Indenture. Subject to the Owner Trustees'
and the Owner  Participants'  rights,  if any, set forth in the Indentures  with
respect to Leased Aircraft to purchase the Equipment Notes and the provisions of
the next paragraph, if the Equipment Notes issued pursuant to any Indenture have
been  Accelerated  following an Indenture  Default  with  respect  thereto,  the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver  all (but not less than all) of such  Equipment  Notes to any  Person at
public or private sale, at any location at the option of the Controlling  Party,
all upon such  terms and  conditions  as it may  reasonably  deem  advisable  in
accordance with applicable law.

            (ii)  Subject  to the Owner  Trustees'  and the Owner  Participants'
rights,  if any, set forth in the Indentures  with respect to Leased Aircraft to
purchase the Equipment Notes, and notwithstanding the foregoing,  so long as any
Certificates remain  Outstanding,  during the period ending on the date which is
nine months after the earlier of (x) the  Acceleration  of the  Equipment  Notes
issued  pursuant  to  any  Indenture  or (y)  the  occurrence  of a  Continental
Bankruptcy Event,  without the consent of each Trustee,  (A) no Aircraft subject
to the Lien of such  Indenture  or such  Equipment  Notes may be sold if the net
proceeds  from such  sale  would be less than the  Minimum  Sale  Price for such
Aircraft or such Equipment  Notes,  and (B) with respect to any Leased Aircraft,
the amount and payment dates of rentals  payable by Continental  under the Lease
for such Aircraft may not be adjusted,  if, as a result of such adjustment,  the
discounted  present  value of all  such  rentals  would be less  than 75% of the
discounted  present value of the rentals payable by Continental under such Lease
before  giving  effect to such  adjustment,  in each  case,  using the  weighted
average  interest rate of the Equipment  Notes issued pursuant to such Indenture
as the discount rate.

            (iii) At the request of the  Controlling  Party,  the  Subordination
Agent may from time to time during the continuance of an Indenture  Default (and
before the occurrence of a Triggering  Event)  commission  LTV  Appraisals  with
respect to the Aircraft subject to such Indenture.

            (iv) After a Triggering  Event occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the Subordination Agent shall obtain Appraisals
with  respect  to all  of  the  Aircraft  (the  "LTV  APPRAISALS")  as  soon  as
practicable and additional LTV Appraisals on or prior to each anniversary of the
date of such initial LTV  Appraisals;  provided  that if the  Controlling  Party
reasonably  objects to the  appraised  value of the  Aircraft  shown in such LTV
Appraisals,  the Controlling Party shall have the right to obtain or cause to be
obtained  substitute  LTV Appraisals  (including  any LTV Appraisals  based upon
physical inspection of the Aircraft).

            (b)  The  Controlling  Party  shall  take  such  actions  as it  may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft or  Equipment  Notes.  In  addition,  in lieu of any sale,  assignment,
contract  to sell or other  disposition,  the  Controlling  Party  may  maintain
possession  of such  Equipment  Notes and continue to apply  monies  received in

<PAGE>

respect of such  Equipment  Notes in  accordance  with  Article III  hereof.  In
addition,  in  lieu  of  such  sale,  assignment,  contract  to  sell  or  other
disposition, or in lieu of such maintenance of possession, the Controlling Party
may, subject to the terms and conditions of the related Indenture,  instruct the
Loan  Trustee  under such  Indenture  to  foreclose  on the Lien on the  related
Aircraft.

            SECTION 4.2. REMEDIES  CUMULATIVE.  Each and every right,  power and
remedy given to the Trustees, the Liquidity Providers,  the Controlling Party or
the  Subordination  Agent  specifically  or otherwise in this Agreement shall be
cumulative  and shall be in  addition  to every  other  right,  power and remedy
herein  specifically  given or now or hereafter existing at law, in equity or by
statute,  and each and every right, power and remedy whether specifically herein
given or otherwise  existing  may,  subject  always to the terms and  conditions
hereof,  be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee,  any Liquidity Provider,  the Controlling Party
or the Subordination Agent, as appropriate, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to  exercise  at the same time or  thereafter  any other  right,  power or
remedy.  No delay or  omission  by any  Trustee,  any  Liquidity  Provider,  the
Controlling  Party or the  Subordination  Agent in the  exercise  of any  right,
remedy or power or in the  pursuit of any remedy  shall  impair any such  right,
power or  remedy  or be  construed  to be a waiver  of any  default  or to be an
acquiescence therein.

            SECTION 4.3.  DISCONTINUANCE  OF  PROCEEDINGS.  In case any party to
this Agreement  (including the  Controlling  Party in such capacity)  shall have
instituted  any  Proceeding  to enforce  any right,  power or remedy  under this
Agreement by foreclosure,  entry or otherwise,  and such  Proceeding  shall have
been  discontinued  or  abandoned  for any reason or shall have been  determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party  shall,  subject to any  determination  in such  Proceeding,  be
restored to its former position and rights hereunder,  and all rights,  remedies
and  powers of such  party  shall  continue  as if no such  Proceeding  had been
instituted.

            SECTION 4.4. RIGHT OF  CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO
BE IMPAIRED.  Anything in this  Agreement to the  contrary  notwithstanding  but
subject  to each  Trust  Agreement,  the right of any  Certificateholder  or any
Liquidity  Provider,  respectively,  to receive  payments  hereunder  (including
without  limitation  pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to
institute  suit  for  the  enforcement  of any  such  payment  on or  after  the
applicable  Distribution  Date,  shall not be impaired  or affected  without the
consent of such Certificateholder or such Liquidity Provider, respectively.

            SECTION  4.5.  UNDERTAKING  FOR  COSTS.  In any  Proceeding  for the
enforcement  of any right or remedy under this  Agreement  or in any  Proceeding
against any Controlling Party or the Subordination Agent for any action taken or
omitted by it as Controlling Party or Subordination Agent, as the case may be, a
court in its discretion may require the filing by any party litigant in the suit
of an  undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs,  including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good

<PAGE>

faith of the claims or defenses made by the party  litigant.  The  provisions of
this Section do not apply to a suit  instituted by the  Subordination  Agent,  a
Liquidity  Provider or a Trustee or a suit by  Certificateholders  holding  more
than 10% of the original principal amount of any Class of Certificates.

                                    ARTICLE V

                       DUTIES OF THE SUBORDINATION AGENT;
                         AGREEMENTS OF TRUSTEES, ETC.

            SECTION 5.1. NOTICE OF INDENTURE DEFAULT OR TRIGGERING EVENT. (a) In
the event the Subordination  Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering  Event, as promptly as practicable,  and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall  transmit by mail or courier to the Rating  Agencies,  the Liquidity
Providers and the Trustees notice of such Indenture Default or Triggering Event,
unless  such  Indenture  Default or  Triggering  Event  shall have been cured or
waived.  For all purposes of this Agreement,  in the absence of actual knowledge
on the part of a  Responsible  Officer,  the  Subordination  Agent  shall not be
deemed to have  knowledge of any Indenture  Default or  Triggering  Event unless
notified in writing by one or more Trustees,  one or more Liquidity Providers or
one or more Certificateholders.

            (b) OTHER  NOTICES.  The  Subordination  Agent will  furnish to each
Liquidity  Provider and Trustee,  promptly upon receipt  thereof,  duplicates or
copies of all  reports,  notices,  requests,  demands,  certificates,  financial
statements  and  other  instruments  furnished  to the  Subordination  Agent  as
registered  holder  of the  Equipment  Notes or  otherwise  in its  capacity  as
Subordination  Agent to the  extent  the same  shall  not  have  been  otherwise
directly  distributed  to such  Liquidity  Provider or Trustee,  as  applicable,
pursuant to the express provision of any other Operative Agreement.

            SECTION 5.2.  INDEMNIFICATION.  The Subordination Agent shall not be
required to take any action or refrain from taking any action under  Section 5.1
(other  than the  first  sentence  thereof)  or  Article  IV hereof  unless  the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability,  cost
or expense  (including  counsel  fees and  expenses)  which may be  incurred  in
connection therewith.  The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing  contained in this Agreement
shall  require  the  Subordination  Agent to  expend  or risk  its own  funds or
otherwise incur any financial  liability in the performance of any of its duties
hereunder  or in the  exercise  of any of its  rights or powers if it shall have
reasonable  grounds  for  believing  that  repayment  of such funds or  adequate
indemnity  against such risk or liability is not  reasonably  assured to it. The
Subordination  Agent shall not be required to take any action under  Section 5.1
(other  than the first  sentence  thereof)  or Article IV hereof,  nor shall any
other   provision  of  this  Agreement  be  deemed  to  impose  a  duty  on  the
Subordination  Agent to take any action, if the  Subordination  Agent shall have
been  advised by counsel  that such action is contrary to the terms hereof or is
otherwise contrary to law.

<PAGE>

            SECTION  5.3.  NO  DUTIES  EXCEPT  AS  SPECIFIED  IN   INTERCREDITOR
AGREEMENT. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection  with, this Agreement,
except as  expressly  provided  by the terms of this  Agreement;  and no implied
duties  or  obligations   shall  be  read  into  this   Agreement   against  the
Subordination  Agent.  The  Subordination  Agent  agrees  that it  will,  in its
individual  capacity  and at its own cost and expense  (but without any right of
indemnity  in  respect  of any such cost or  expense  under  Section  5.2 or 7.1
hereof)  promptly  take such action as may be  necessary to duly  discharge  all
Liens on any of the Trust Accounts or any monies deposited  therein which result
from claims against it in its individual  capacity not related to its activities
hereunder or any other Operative Agreement.

            SECTION 5.4.  NOTICE FROM THE LIQUIDITY  PROVIDERS AND TRUSTEES.  If
any  Liquidity  Provider  or  Trustee  has notice of an  Indenture  Default or a
Triggering  Event,  such Person shall  promptly give notice thereof to all other
Liquidity  Providers  and Trustees  and to the  Subordination  Agent,  PROVIDED,
HOWEVER,  that no such Person shall have any liability  hereunder as a result of
its failure to deliver any such notice.

                                   ARTICLE VI

                             THE SUBORDINATION AGENT

            SECTION 6.1. AUTHORIZATION; ACCEPTANCE OF TRUSTS AND DUTIES. Each of
the Class A-1 Trustee, the Class A-2 Trustee, the Class B Trustee, the Class C-1
Trustee  and  the  Class  C-2  Trustee   hereby   designates  and  appoints  the
Subordination  Agent  as the  agent  and  trustee  of  such  Trustee  under  the
applicable  Liquidity  Facility and authorizes the Subordination  Agent to enter
into the  applicable  Liquidity  Facility as agent and trustee for such Trustee.
Each of the Liquidity  Providers and the Trustees hereby designates and appoints
the  Subordination  Agent as the Subordination  Agent under this Agreement.  WTC
hereby   accepts  the  duties  hereby  created  and  applicable  to  it  as  the
Subordination  Agent and agrees to  perform  the same but only upon the terms of
this  Agreement and agrees to receive and disburse all monies  received by it in
accordance  with  the  terms  hereof.  The  Subordination  Agent  shall  not  be
answerable  or  accountable  under  any  circumstances,  except  (a) for its own
willful  misconduct or gross negligence (or ordinary  negligence in the handling
of funds), (b) as provided in Sections 2.2 or 5.3 hereof and (c) for liabilities
that may result from the material  inaccuracy of any  representation or warranty
of the  Subordination  Agent made in its  individual  capacity in any  Operative
Agreement. The Subordination Agent shall not be liable for any error of judgment
made in good faith by a Responsible  Officer of the Subordination  Agent, unless
it is proved that the  Subordination  Agent was  negligent in  ascertaining  the
pertinent facts.

            SECTION 6.2. ABSENCE OF DUTIES.  The Subordination  Agent shall have
no  duty to see to any  recording  or  filing  of this  Agreement  or any  other
document, or to see to the maintenance of any such recording or filing.

            SECTION 6.3. NO REPRESENTATIONS  OR WARRANTIES AS TO DOCUMENTS.  The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any  representation  or  warranty as to the  validity,  legality or
enforceability  of this Agreement or any other Operative  Agreement or as to the

<PAGE>

correctness  of  any  statement  contained  in  any  thereof,   except  for  the
representations  and  warranties  of  the  Subordination   Agent,  made  in  its
individual  capacity,  under any Operative Agreement to which it is a party. The
Certificateholders,   the  Trustees  and  the   Liquidity   Providers   make  no
representation or warranty hereunder whatsoever.

            SECTION 6.4. NO SEGREGATION OF MONIES; NO INTEREST.  Any monies paid
to or retained by the  Subordination  Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity  Provider as
provided  in  Articles  II and III  hereof or  deposited  into one or more Trust
Accounts need not be  segregated in any manner except to the extent  required by
such  Articles  II and III and by law,  and the  Subordination  Agent  shall not
(except as otherwise  provided in Section 2.2 hereof) be liable for any interest
thereon;  PROVIDED,  HOWEVER, that any payments received or applied hereunder by
the  Subordination  Agent shall be accounted for by the  Subordination  Agent so
that any portion  thereof paid or applied  pursuant hereto shall be identifiable
as to the source thereof.

            SECTION 6.5. RELIANCE;  AGENTS; ADVICE OF COUNSEL. The Subordination
Agent  shall  not incur  liability  to  anyone  in  acting  upon any  signature,
instrument,  notice, resolution,  request, consent, order, certificate,  report,
opinion,  bond or other  document  or paper  believed  by it to be  genuine  and
believed  by it to be  signed by the  proper  party or  parties.  As to the Pool
Balance  of any  Trust  as of any  date,  the  Subordination  Agent  may for all
purposes hereof rely on a certificate  signed by any Responsible  Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination  Agent for any  action  taken or omitted to be taken by it in good
faith in reliance  thereon.  As to any fact or matter  relating to the Liquidity
Providers  or  the  Trustees  the  manner  of  ascertainment  of  which  is  not
specifically  described  herein,  the  Subordination  Agent may for all purposes
hereof  rely  on a  certificate,  signed  by  any  Responsible  Officer  of  the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter,   and  such   certificate   shall  constitute  full  protection  to  the
Subordination  Agent for any  action  taken or omitted to be taken by it in good
faith in reliance thereon.  The Subordination  Agent shall assume,  and shall be
fully  protected in assuming,  that each of the Liquidity  Providers and each of
the Trustees are  authorized to enter into this Agreement and to take all action
to be taken by them  pursuant to the  provisions  hereof,  and shall not inquire
into  the  authorization  of each of the  Liquidity  Providers  and  each of the
Trustees with respect thereto.  In the  administration  of the trusts hereunder,
the  Subordination  Agent may  execute  any of the  trusts or powers  hereof and
perform its powers and duties hereunder  directly or through agents or attorneys
and may  consult  with  counsel,  accountants  and other  skilled  persons to be
selected and retained by it, and the Subordination Agent shall not be liable for
the acts or omissions of any agent appointed with due care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or written
opinion of any such counsel, accountants or other skilled persons.

            SECTION 6.6. CAPACITY IN WHICH ACTING. The Subordination  Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.

<PAGE>

            SECTION 6.7. COMPENSATION. The Subordination Agent shall be entitled
to  reasonable  compensation,  including  expenses  and  disbursements,  for all
services  rendered  hereunder and shall have a priority  claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such  compensation,  to the extent that such  compensation  shall not be paid by
others.  The Subordination  Agent agrees that it shall have no right against any
Trustee or Liquidity  Provider for any fee as  compensation  for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.

            SECTION 6.8. MAY BECOME CERTIFICATEHOLDER. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and  benefits  of a  Certificateholder  to the same extent as if it were not the
institution acting as the Subordination Agent.

            SECTION 6.9. SUBORDINATION AGENT REQUIRED;  ELIGIBILITY. There shall
at all times be a  Subordination  Agent  hereunder  which shall be a corporation
organized and doing  business  under the laws of the United States of America or
of any State or the District of Columbia  having a combined  capital and surplus
of at least $100,000,000 (or the obligations of which,  whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States of America, any
State  thereof or of the District of Columbia and having a combined  capital and
surplus of at least  $100,000,000),  if there is such an institution willing and
able to perform the duties of the Subordination  Agent hereunder upon reasonable
or customary terms. Such corporation shall be a citizen of the United States and
shall be authorized  under the laws of the United States or any State thereof or
of the  District of Columbia to  exercise  corporate  trust  powers and shall be
subject to supervision or examination by federal,  state or District of Columbia
authorities.  If such  corporation  publishes  reports  of  condition  at  least
annually,  pursuant  to  law  or to the  requirements  of  any of the  aforesaid
supervising  or examining  authorities,  then,  for the purposes of this Section
6.9, the combined capital and surplus of such corporation  shall be deemed to be
its  combined  capital  and  surplus as set forth in its most  recent  report of
condition so published.

            In case at any  time  the  Subordination  Agent  shall  cease  to be
eligible in accordance  with the provisions of this Section,  the  Subordination
Agent shall resign  immediately  in the manner and with the effect  specified in
Section 8.1.

            SECTION 6.10. MONEY TO BE HELD IN TRUST. All Equipment Notes, monies
and other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled to
such Equipment  Notes,  monies and other  property.  All such  Equipment  Notes,
monies  or  other  property  shall  be  held  in  the  Trust  Department  of the
institution acting as Subordination Agent hereunder.

                                   ARTICLE VII

                     INDEMNIFICATION OF SUBORDINATION AGENT

            SECTION 7.1. SCOPE OF INDEMNIFICATION. The Subordination Agent shall
be  indemnified  hereunder to the extent and in the manner  described in Section
8.1 of the Participation Agreements with respect to Owned Aircraft,  Section 9.1

<PAGE>

of the Participation Agreements with respect to Leased Aircraft and Section 6 of
the Note Purchase Agreement.  The indemnities contained in such Sections of such
agreements shall survive the termination of this Agreement.

                                  ARTICLE VIII

                          SUCCESSOR SUBORDINATION AGENT

            SECTION 8.1.  REPLACEMENT  OF  SUBORDINATION  AGENT;  APPOINTMENT OF
SUCCESSOR.  The  Subordination  Agent may resign at any time by so notifying the
Trustees  and the  Liquidity  Providers.  The  Controlling  Party may remove the
Subordination  Agent for cause by so notifying the  Subordination  Agent and may
appoint a successor  Subordination Agent. The Controlling Party shall remove the
Subordination Agent if:

            (1) the Subordination Agent fails to comply with Section 6.9 hereof;

            (2) the Subordination Agent is adjudged bankrupt or insolvent;

            (3) a   receiver  or  other  public  officer  takes  charge  of  the
      Subordination Agent or its property; or

            (4) the Subordination Agent otherwise becomes incapable of acting.

            If the  Subordination  Agent  resigns  or is removed or if a vacancy
exists in the office of  Subordination  Agent for any reason (the  Subordination
Agent in such  event  being  referred  to herein as the  retiring  Subordination
Agent),  the Controlling Party shall promptly appoint a successor  Subordination
Agent.

            A  successor   Subordination  Agent  shall  deliver  (x)  a  written
acceptance of its appointment as  Subordination  Agent hereunder to the retiring
Subordination  Agent and (y) a written  assumption of its obligations  hereunder
and  under  each  Liquidity  Facility  to each  party  hereto,  upon  which  the
resignation  or  removal  of  the  retiring  Subordination  Agent  shall  become
effective,  and the  successor  Subordination  Agent  shall have all the rights,
powers and duties of the Subordination Agent under this Agreement. The successor
Subordination  Agent  shall  mail a notice of its  succession  to the  Liquidity
Providers  and the Trustees.  The retiring  Subordination  Agent shall  promptly
transfer  its  rights  under  each of the  Liquidity  Facilities  and all of the
property held by it as Subordination Agent to the successor Subordination Agent.

            If a successor  Subordination  Agent does not take office  within 60
days after the retiring  Subordination Agent resigns or is removed, the retiring
Subordination  Agent or one or more of the  Trustees  may  petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.

            If the  Subordination  Agent fails to comply with Section 6.9 hereof
(to the extent  applicable),  one or more of the  Trustees or one or more of the

<PAGE>

Liquidity  Providers  may petition any court of competent  jurisdiction  for the
removal  of  the  Subordination   Agent  and  the  appointment  of  a  successor
Subordination Agent.

            Notwithstanding  the  foregoing,  no  resignation  or removal of the
Subordination  Agent shall be  effective  unless and until a successor  has been
appointed.  No appointment of a successor Subordination Agent shall be effective
unless  and  until  the  Rating   Agencies   shall  have   delivered  a  Ratings
Confirmation.

                                   ARTICLE IX

                           SUPPLEMENTS AND AMENDMENTS

            SECTION 9.1. AMENDMENTS, WAIVERS, ETC. (a) This Agreement may not be
supplemented,  amended or modified  without the consent of each Trustee (acting,
except in the case of any amendment pursuant to Section 3.6(e)(v)(y) hereof with
respect to any Replacement  Liquidity Facility or any amendment  contemplated by
the last  sentence  of this  Section  9.1(a),  with the  consent  of  holders of
Certificates  of the related  Class  evidencing  interests in the related  Trust
aggregating  not less than a majority in interest in such Trust or as  otherwise
authorized  pursuant to the relevant Trust Agreement),  the Subordination  Agent
and each  Liquidity  Provider;  PROVIDED,  HOWEVER,  that this  Agreement may be
supplemented, amended or modified without the consent of (x) any Trustee if such
supplement,  amendment or modification  (i) is in accordance with Section 9.1(c)
hereof  or (ii)  cures an  ambiguity  or  inconsistency  or does not  materially
adversely   affect  such  Trustee  or  the  holders  of  the  related  Class  of
Certificates  and (y) any Liquidity  Provider if such  supplement,  amendment or
modification  is in accordance  with Section  9.1(c) hereof;  PROVIDED  FURTHER,
HOWEVER,  that,  if such  supplement,  amendment or  modification  (A) would (x)
directly or indirectly modify or supersede,  or otherwise conflict with, Section
2.2(b),  Section 3.6(e),  Section  3.6(f)(other than the last sentence thereof),
Section 3.6(l),  the last sentence of this Section 9.1(a),  Section 9.1(c),  the
second sentence of Section 10.6 or this proviso (collectively,  the "CONTINENTAL
PROVISIONS")  or (y)  otherwise  adversely  affect the  interests of a potential
Replacement  Liquidity Provider or of Continental with respect to its ability to
replace any Liquidity Facility or with respect to its payment  obligations under
any  Operative  Agreement or (B) is made  pursuant to the last  sentence of this
Section 9.1(a) or pursuant to Section 9.1(c), then such supplement, amendment or
modification  shall not be effective  without the additional  written consent of
Continental.   Notwithstanding  the  foregoing,  without  the  consent  of  each
Certificateholder  and each  Liquidity  Provider,  no  supplement,  amendment or
modification  of this Agreement may (i) reduce the percentage of the interest in
any Trust  evidenced  by the  Certificates  issued by such  Trust  necessary  to
consent  to  modify  or  amend  any  provision  of this  Agreement  or to  waive
compliance  therewith  or (ii) except as provided in Section  9.1(c) or the last
sentence of this Section 9.1(a), modify Section 2.4, 3.2 or 3.3 hereof, relating
to the distribution of monies received by the Subordination Agent hereunder from
the Equipment Notes or pursuant to the Liquidity  Facilities.  Nothing contained
in this Section shall require the consent of a Trustee at any time following the
payment  of  Final   Distributions   with  respect  to  the  related   Class  of
Certificates.  If the Replacement  Liquidity Facility for any Liquidity Facility
in  accordance  with Section  3.6(e)  hereof is to be comprised of more than one
instrument as contemplated by the definition of the term "Replacement  Liquidity
Facility",  then each of the parties  hereto  agrees to amend this  Agreement to

<PAGE>

incorporate  appropriate  mechanics  for multiple  Liquidity  Facilities  for an
individual Trust.

            (b) In the event that the  Subordination  Agent,  as the  registered
holder of any  Equipment  Notes,  receives  a  request  for its  consent  to any
amendment,  modification,  consent or waiver  under such  Equipment  Notes,  the
Indenture  pursuant to which such  Equipment  Notes were issued,  or the related
Lease,  Participation  Agreement or other related document,  (i) if no Indenture
Default shall have occurred and be  continuing  with respect to such  Indenture,
the Subordination  Agent shall request directions with respect to each Series of
such  Equipment  Notes from the Trustee of the Trust which holds such  Equipment
Notes and shall  vote or  consent  in  accordance  with the  directions  of such
Trustee and (ii) if any Indenture  Default (which,  in the case of any Indenture
pertaining  to a Leased  Aircraft,  has not been cured by the  applicable  Owner
Trustee or the applicable Owner Participant, if applicable,  pursuant to Section
4.03 of such  Indenture)  shall have occurred and be continuing  with respect to
such  Indenture,  the  Subordination  Agent will  exercise its voting  rights as
directed  by the  Controlling  Party,  subject to  Sections  4.1 and 4.4 hereof;
provided  that no such  amendment,  modification  or waiver  shall,  without the
consent of each Liquidity Provider, reduce the amount of rent, supplemental rent
or stipulated  loss values payable by Continental  under any Lease or reduce the
amount of principal or interest payable by Continental  under any Equipment Note
issued under any Indenture in respect of an Owned Aircraft.

            (c) If with respect to any Aircraft Class D Certificates are issued,
this  Agreement  shall be amended by written  agreement of  Continental  and the
Subordination   Agent  to  provide  for  the   subordination  of  such  Class  D
Certificates  to the Class A-1  Certificates,  the Class A-2  Certificates,  the
Class B Certificates,  the Class C-1 Certificates and the Class C-2 Certificates
substantially in the same manner as the Class C-1 Certificates and the Class C-2
Certificates are subordinated  hereunder to the Class B Certificates,  the Class
A-1  Certificates  and the  Class  A-2  Certificates.  No such  amendment  shall
materially adversely affect any Trustee. The amendment to this Agreement to give
effect  to the  issuance  of any Class D  Certificates  shall  include,  without
limitation:

            (i) the  trustee  of the Class D Trust  shall be added as a party to
      this Agreement;

            (ii) the definitions of "Cash  Collateral  Account,"  "Certificate,"
      "Class,"  "Equipment Notes," "Final Legal  Distribution  Date," "Liquidity
      Facilities,"  "Liquidity  Provider," "LTV Ratio," "Stated  Interest Rate,"
      "Trust,"  "Trust  Agreement,"  "Controlling  Party"  shall be revised,  as
      appropriate,  to reflect the issuance of the Class D Certificates (and the
      subordination thereof); and

            (iii) the  provisions  of this  Agreement  governing  payments  with
      respect  to  Certificates   and  related   notices,   including,   without
      limitation,  Sections 2.4,  3.1, 3.2, 3.3 and 3.6(e),  shall be revised to
      provide for distributions on the Class D Certificates after payment of all
      relevant  distributions  on the Class C-1  Certificates  and the Class C-2
      Certificates.

<PAGE>

If, with  respect to any  Aircraft,  Series D Equipment  Notes are issued to any
Person other than the Class D Trust,  this Agreement shall be amended by written
agreement of  Continental  and the  Subordination  Agent to (i) provide for each
holder of a Series D  Equipment  Note to be bound by the  provisions  of Section
2.6(a)  hereof so that the  Controlling  Party,  among  other  things,  shall be
entitled  to direct the Loan  Trustee as  provided  therein  (and such  Series D
Equipment  Notes  shall make  effective  provision  therefor  so as to bind each
holder  thereof to such  provisions of Section 2.6(a) hereof) and (ii) to revise
the definitions of "Controlling Party" and "Equipment Notes", as appropriate, to
reflect the issuance of the Series D Equipment  Notes (and the prior rights,  as
against the holders of such Series D Equipment  Notes, of the Class A-1 Trustee,
the Class A-2 Trustee,  the Class B Trustee, the Class C-1 Trustee and the Class
C-2 Trustee to be such "Controlling  Party"). No such amendment shall materially
adversely affect any Trustee.

            SECTION 9.2.  SUBORDINATION  AGENT PROTECTED.  If, in the reasonable
opinion of the institution  acting as the  Subordination  Agent  hereunder,  any
document  required to be  executed  pursuant to the terms of Section 9.1 affects
any right,  duty,  immunity or indemnity with respect to it under this Agreement
or any Liquidity Facility, the Subordination Agent may in its discretion decline
to execute such document.

            SECTION 9.3. EFFECT OF SUPPLEMENTAL  AGREEMENTS.  Upon the execution
of any  amendment,  consent or  supplement  hereto  pursuant  to the  provisions
hereof,  this  Agreement  shall be and be deemed to be and shall be modified and
amended in  accordance  therewith  and the  respective  rights,  limitations  of
rights,  obligations,  duties and immunities under this Agreement of the parties
hereto and  beneficiaries  hereof shall thereafter be determined,  exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental agreement shall be and
be deemed to be and shall be part of the terms and  conditions of this Agreement
for any and all purposes.  In executing or accepting any supplemental  agreement
permitted  by this  Article  IX, the  Subordination  Agent  shall be entitled to
receive,  and shall be fully  protected in relying  upon,  an opinion of counsel
stating that the  execution of such  supplemental  agreement  is  authorized  or
permitted by this Agreement.

            SECTION  9.4.  NOTICE TO RATING  AGENCIES.  Promptly  following  its
receipt  of  each  amendment,  consent,   modification,   supplement  or  waiver
contemplated  by this  Article  IX, the  Subordination  Agent  shall send a copy
thereof to each Rating Agency.

                                    ARTICLE X

                                  MISCELLANEOUS

            SECTION 10.1.  TERMINATION  OF  INTERCREDITOR  AGREEMENT.  Following
payment of Final  Distributions  with respect to each Class of Certificates  and
the payment in full of all Liquidity  Obligations to the Liquidity Providers and
PROVIDED   that   there   shall   then   be  no   other   amounts   due  to  the
Certificateholders,  the Trustees, the Liquidity Providers and the Subordination
Agent  hereunder or under the Trust  Agreements,  and that the commitment of the
Liquidity  Providers under the Liquidity  Facilities  shall have expired or been
terminated,  this Agreement and the trusts  created  hereby shall  terminate and

<PAGE>

this  Agreement  shall be of no further force or effect.  Except as aforesaid or
otherwise provided,  this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.

            SECTION  10.2.  INTERCREDITOR  AGREEMENT  FOR  BENEFIT OF  TRUSTEES,
LIQUIDITY PROVIDERS AND SUBORDINATION  AGENT.  Subject to the second sentence of
Section  10.6 and the  provisions  of Section  4.4,  nothing in this  Agreement,
whether express or implied,  shall be construed to give to any Person other than
the Trustees,  the Liquidity  Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.

            SECTION  10.3.  NOTICES.  Unless  otherwise  expressly  specified or
permitted by the terms hereof, all notices, requests,  demands,  authorizations,
directions,  consents,  waivers  or  documents  provided  or  permitted  by this
Agreement to be made, given,  furnished or filed shall be in writing,  mailed by
certified mail, postage prepaid, or by confirmed telecopy and

            (i)   if to the Subordination Agent, addressed to at its office at:

                  WILMINGTON TRUST COMPANY
                  One Rodney Square
                  1100 N. Market Street
                  Wilmington, DE  19890-0001
                  Attention:  Corporate Trust Administration
                  Telecopy:  (302) 651-8882

            (ii)  if to any Trustee, addressed to it at its office at:

                  WILMINGTON TRUST COMPANY
                  One Rodney Square
                  1100 N. Market Street
                  Wilmington, DE  19890-0001
                  Attention:  Corporate Trust Administration
                  Telecopy:  (302) 651-8882

            (iii) if to the initial Liquidity  Provider for any of the Class A-1
      Liquidity  Facility,  the  Class  A-2  Liquidity  Facility  or the Class B
      Liquidity Facility, addressed to it at its office at:

                  CREDIT SUISSE FIRST BOSTON,
                  NEW YORK BRANCH
                  11 Madison Avenue
                  New York, NY 10010
                  Attention:  Robert Finney and Janko Gogolja
                  Telephone:  (212) 325-9038/0699
                  Telecopy:   (212) 325-8319

<PAGE>

            (iv) if to the initial  Liquidity  Provider  for either of the Class
      C-1 Liquidity Facility or the Class C-2 Liquidity  Facility,  addressed to
      it at its office at:

                  MORGAN STANLEY CAPITAL SERVICES INC.
                  1585 Broadway
                  New York, New York  10036
                  Attention:   Elinor Hoover/Ivana Komarcevic/Mark Esparrago
                  Telephone:  (212) 761-2522/1895/2618
                  Telecopy:    (212) 761-0268

                  with a copy to the General Counsel at the same address and fax
number.

Whenever  any  notice in  writing  is  required  to be given by any  Trustee  or
Liquidity Provider or the Subordination  Agent to any of the other of them, such
notice shall be deemed given and such requirement  satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving  notice  of such  change  to the  other  parties  to this
Agreement.

            SECTION 10.4. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

            SECTION 10.5. NO ORAL MODIFICATIONS OR CONTINUING  WAIVERS. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom  enforcement  of the change,  waiver,  discharge or  termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.

            SECTION 10.6.  SUCCESSORS AND ASSIGNS.  All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the  successors and assigns of each, all as herein  provided.
In  addition,   the  Continental  Provisions  shall  inure  to  the  benefit  of
Continental  and its  successors  and assigns,  and (without  limitation  of the
foregoing) Continental is hereby constituted, and agreed to be, an express third
party  beneficiary  of the  Continental  Provisions.  Upon the occurrence of the
Transfers contemplated by the Assignment and Assumption Agreements,  the Trustee
of each Class shall (without any further act) be deemed to have  transferred all
of its rights, title and interest in and to this Agreement to the trustee of the
Successor Trust of the same Class and, thereafter, the trustee of each Successor
Trust  shall be deemed to be the  "Trustee"  of such  Successor  Trust  with the
rights and  obligations of a "Trustee"  hereunder and under the other  Operative
Agreements  and each  reference to a Trust of any Class herein shall be deemed a
reference to the Successor Trust of such Class.

<PAGE>

            SECTION  10.7.  HEADINGS.  The headings of the various  Articles and
Sections  herein  and in the table of  contents  hereto are for  convenience  of
reference  only and  shall not  define  or limit any of the terms or  provisions
hereof.

            SECTION 10.8.  COUNTERPART  FORM.  This Agreement 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 agreement.

            SECTION 10.9. SUBORDINATION. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
and as among the Trustees  and the related  Certificateholders,  this  Agreement
shall be a  subordination  agreement  for  purposes of Section 510 of the United
States Bankruptcy Code, as amended from time to time.

            (b)  Notwithstanding  the provisions of this Agreement,  if prior to
the payment in full to the Liquidity Providers of all Liquidity Obligations then
due  and  payable,   any  party  hereto  shall  have  received  any  payment  or
distribution  in  respect  of  Equipment  Notes or any  other  amount  under the
Indentures or other Operative Agreements which, had the subordination provisions
of this Agreement been properly  applied to such payment,  distribution or other
amount,  would not have been  distributed  to such  Person,  then such  payment,
distribution  or other amount shall be received and held in trust by such Person
and paid  over or  delivered  to the  Subordination  Agent  for  application  as
provided herein.

            (c) If any  Trustee,  any  Liquidity  Provider or the  Subordination
Agent receives any payment in respect of any obligations owing hereunder (or, in
the case of the Liquidity Providers,  in respect of the Liquidity  Obligations),
which is  subsequently  invalidated,  declared  preferential,  set aside  and/or
required to be repaid to a trustee, receiver or other party, then, to the extent
of such payment,  such obligations (or, in the case of the Liquidity  Providers,
such  Liquidity  Obligations)  intended  to be  satisfied  shall be revived  and
continue in full force and effect as if such payment had not been received.

            (d) The  Trustees  (on  behalf  of  themselves  and the  holders  of
Certificates),  the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances,  notwithstanding  the  fact  that  the  obligations  owed  to the
Trustees and the holders of  Certificates  are secured by certain assets and the
Liquidity  Obligations may not be so secured.  The Trustees  expressly agree (on
behalf of themselves  and the holders of  Certificates)  not to assert  priority
over the  holders  of  Liquidity  Obligations  due to their  status  as  secured
creditors in any bankruptcy, insolvency or other legal proceeding.

            (e) Each of the Trustees (on behalf of themselves and the holders of
Certificates),  the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:

            (i) obtain a Lien on any property to secure any amounts  owing to it
      hereunder,  including,  in  the  case  of  the  Liquidity  Providers,  the
      Liquidity Obligations,

<PAGE>

            (ii) obtain the primary or secondary obligation of any other obligor
      with respect to any amounts owing to it hereunder,  including, in the case
      of the Liquidity Providers, any of the Liquidity Obligations,

            (iii) renew, extend,  increase,  alter or exchange any amounts owing
      to it hereunder, including, in the case of the Liquidity Providers, any of
      the Liquidity Obligations,  or release or compromise any obligation of any
      obligor with respect thereto,

            (iv)  refrain  from  exercising  any  right or  remedy,  or delay in
      exercising such right or remedy, which it may have, or

            (v) take any other action which might discharge a subordinated party
      or a surety under applicable law;

PROVIDED,  HOWEVER,  that the taking of any such actions by any of the Trustees,
the  Liquidity  Providers or the  Subordination  Agent shall not  prejudice  the
rights or  adversely  affect  the  obligations  of any other  party  under  this
Agreement.

            SECTION 10.10.  GOVERNING LAW. THIS AGREEMENT  SHALL IN ALL RESPECTS
BE GOVERNED BY, AND  CONSTRUED IN ACCORDANCE  WITH,  THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

            SECTION  10.11.  SUBMISSION TO  JURISDICTION;  WAIVER OF JURY TRIAL;
WAIVER OF IMMUNITY.

            (a)   Each   of  the   parties   hereto   hereby   irrevocably   and
      unconditionally:

            (i)  submits  for itself  and its  property  in any legal  action or
      proceeding relating to this Agreement or any other Operative Agreement, or
      for  recognition  and  enforcement  of any  judgment in respect  hereof or
      thereof,  to the  nonexclusive  general  jurisdiction of the courts of the
      State of New York,  the  courts of the United  States of  America  for the
      Southern District of New York, and the appellate courts from any thereof;

            (ii) consents  that any such action or proceeding  may be brought in
      such courts, and waives any objection that it may now or hereafter have to
      the venue of any such action or  proceeding in any such court or that such
      action or proceeding was brought in an  inconvenient  court and agrees not
      to plead or claim the same;

            (iii)  agrees  that  service  of  process  in  any  such  action  or
      proceeding  may be effected  by mailing a copy  thereof by  registered  or
      certified  mail  (or any  substantially  similar  form of  mail),  postage
      prepaid,  to each party  hereto at its address  set forth in Section  10.3
      hereof,  or at such other  address of which the other  parties  shall have
      been notified pursuant thereto; and

<PAGE>

            (iv) agrees that  nothing  herein  shall  affect the right to effect
      service of process in any other manner permitted by law or shall limit the
      right to sue in any other jurisdiction.

            (b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS  AGREEMENT  AND THE  RELATIONSHIP  THAT IS  BEING  ESTABLISHED,  including,
without limitation,  contract claims, tort claims, breach of duty claims and all
other  common  law and  statutory  claims.  Each  of the  parties  warrants  and
represents that it has reviewed this waiver with its legal counsel,  and that it
knowingly and voluntarily  waives its jury trial rights  following  consultation
with such legal  counsel.  THIS  WAIVER IS  IRREVOCABLE,  AND CANNOT BE MODIFIED
EITHER  ORALLY OR IN  WRITING,  AND THIS WAIVER  SHALL  APPLY TO ANY  SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

            (c) Each Liquidity  Provider  hereby waives any immunity it may have
from the  jurisdiction  of the courts of the United  States of America or of any
State and waives any immunity any of its properties located in the United States
of America may have from attachment or execution upon a judgment  entered by any
such court under the United States Foreign  Sovereign  Immunities Act of 1976 or
any similar successor legislation.

<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective  officers thereunto duly authorized,  as of
the day and year first above written,  and  acknowledge  that this Agreement has
been made and delivered in the City of New York,  and this  Agreement has become
effective only upon such execution and delivery.

                                          WILMINGTON TRUST COMPANY,
                                              not in its individual capacity
                                              but solely as Trustee for each
                                              of the Trusts

                                          By_________________________________
                                            Name:
                                            Title:

                                          CREDIT SUISSE FIRST  BOSTON,
                                              NEW YORK BRANCH
                                              as   Class    A-1    Liquidity
                                              Provider,  Class A-2 Liquidity
                                              Provider and Class B Liquidity
                                              Provider

                                          By_________________________________
                                            Name:
                                            Title:

                                          By_________________________________
                                            Name:
                                            Title:

                                          MORGAN STANLEY CAPITAL
                                              SERVICES INC.,
                                              as   Class    C-1    Liquidity
                                              Provider    and    Class   C-2
                                              Liquidity Provider

                                          By_________________________________
                                            Name:
                                            Title:

                                          WILMINGTON TRUST  COMPANY,
                                              not in its individual capacity
                                              except as expressly  set forth
                                              herein     but    solely    as
                                              Subordination     Agent    and
                                              trustee

                                          By_________________________________
                                            Name:
                                            Title:

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