EXHIBIT 10.5(a)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is
made by and between Continental Airlines, Inc., This Amendment to
Employment Agreement (this "Amendment") is made by and between
Continental Airlines, Inc., a Delaware corporation ("Company"), and
Xxxxxxxx X. Xxxxxxx ("Executive").
Recitals:
WHEREAS, Company and Executive are parties to that certain
Amended and Restated Employment Agreement dated as of November 15,
1995, as amended by Amendment to Employment Agreement dated as of
April 19, 1996 and Amendment to Employment Agreement dated as of
September 30, 1996 (as so amended, the "Existing Agreement"); and
WHEREAS, Air Partners, L.P., its partners and certain
affiliates have entered into an Investment Agreement dated as of
January 25, 1998, as amended, with Northwest Airlines Corporation
and its affiliate (the "Investment Agreement"), which investment
agreement provides for the acquisition by an affiliate of Northwest
Airlines Corporation of beneficial ownership of the Class A common
stock and warrants held by Air Partners, L.P., subject to certain
conditions; and
WHEREAS, the acquisition by an affiliate of Northwest Airlines
Corporation of beneficial ownership of the Class A common stock
held by Air Partners, L.P. contemplated by the Investment Agreement
(the "Acquisition") will, upon the closing thereof, constitute a
Change in Control for purposes of the Company's 1994 Incentive
Equity Plan, as amended, the Company's 1997 Stock Incentive Plan,
as amended, the Company's Executive Bonus Program and the Existing
Agreement; and
WHEREAS, the Human Resources Committee and the Board of
Directors of the Company have deemed it advisable and in the best
interests of the Company and its stockholders to assure management
continuity for the Company and, consistent therewith, have
authorized the execution, delivery and performance by the Company
of this Amendment;
NOW THEREFORE, in consideration of the premises, the mutual
agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Paragraph 1.2 of the Existing Agreement is hereby amended to
read in its entirety as follows:
"1.2 Position. Company shall employ Executive in the
position of Executive Vice President and Chief Financial
Officer, or in such other position or positions as the parties
may mutually agree."
2. Paragraph 2.1 of the Existing Agreement is hereby amended to
read in its entirety as follows:
"2.1 Term. Unless sooner terminated pursuant to other
provisions hereof, Company agrees to employ Executive through
the date which is two years and a day after the date of
closing of the acquisition by an affiliate of Northwest
Airlines Corporation of beneficial ownership of the Class A
common stock held by Air Partners, L.P. (the "Acquisition")
contemplated by the Investment Agreement dated as of January
25, 1998, as amended, among Air Partners, L.P., its partners
and certain affiliates and Northwest Airlines Corporation and
its affiliate (the "Investment Agreement")."
3. For purposes of Paragraph 2.3 of the Existing Agreement only,
the term "Effective Date" shall be construed to mean the date of
this Amendment.
4. A new Paragraph 3.5 is hereby added to the Existing Agreement
to read in its entirety as follows:
"3.5 Supplemental Executive Retirement Plan.
(i) Company agrees to pay Executive the deferred
compensation benefits set forth in this paragraph 3.5 as a
supplemental retirement plan (the "Plan"). The base
retirement benefit under the Plan (the "Base Benefit") shall
be in the form of an annual straight life annuity in an amount
equal to the product of (a) 1.6% times (b) the number of
Executive's credited years of service (as defined below) under
the Plan times (c) the Executive's final average compensation
(as defined below). For purposes hereof, Executive's credited
years of service under the Plan shall be equal to the number
of Executive's years of benefit service with Company,
calculated as set forth in the Continental Airlines Retirement
Plan beginning at January 1, 1995; provided, however, that if
Executive is paid the Termination Payment under this
Agreement, Executive shall be further credited with three (3)
additional years of service under the Plan. For purposes
hereof, Executive's final average compensation shall be equal
to the greater of (1) $420,000.00 or (2) the average of the
five highest annual cash compensation amounts (or, if
Executive has been employed less than five years by Company,
the average over the full years employed by the Company) paid
to Executive by Company during the consecutive ten calendar
years immediately preceding his termination of employment at
retirement or otherwise. For purposes hereof, cash
compensation shall include base salary plus cash bonuses
(including any amounts deferred (other than Stay Bonus amounts
described below) pursuant to any deferred compensation plan of
the Company), but shall exclude (i) any cash bonus paid on or
prior to March 31, 1995, and (ii) any Stay Bonus paid to
Executive pursuant to that certain Stay Bonus Agreement
between Company and Executive dated as of April 14, 1998. All
benefits under the Plan shall be payable in equal monthly
installments beginning on the first day of the month following
the Retirement Date. For purposes hereof, "Retirement Date"
is defined as the later of (A) the date on which Executive
attains (or in the event of his earlier death, would have
attained) age 65 or (B) the date of his retirement from
employment with Company. If Executive is not married on the
Retirement Date, benefits under the Plan will be paid to
Executive during his lifetime in the form of the Base Benefit.
If Executive is married on the Retirement Date, benefits under
the Plan will be paid in the form of a joint and survivor
annuity that is actuarially equivalent (as defined below) to
the Base Benefit, with Executive's spouse as of the Retirement
Date being entitled during her lifetime after Executive's
death to a benefit (the "Survivor's Benefit") equal to 50% of
the benefit payable to Executive during their joint lifetimes.
In the event of Executive's death prior to the Retirement
Date, his surviving spouse, if he is married on the date of
his death, will receive beginning on the Retirement Date an
amount equal to the Survivor's Benefit calculated as if
Executive had retired with a joint and survivor annuity on the
date before his date of death. The amount of any benefits
payable to Executive and/or his spouse under the Continental
Airlines Retirement Plan shall be offset against benefits due
under the Plan. Executive shall be vested immediately with
respect to benefits due under the Plan. If Executive's
employment with Company terminates for any reason prior to the
date which is the fifth anniversary of Executive's first date
of employment by the Company, Company shall provide further
benefits under the Plan to ensure that Executive is treated
for all purposes as if he were fully vested under the
Continental Airlines Retirement Plan.
(ii) Executive understands that he must rely upon the
general credit of Company for payment of benefits under the
Plan. Company has not and will not in the future set aside
assets for security or enter into any other arrangement which
will cause the obligation created to be other than a general
corporate obligation of Company or will cause Executive to be
more than a general creditor of Company.
(iii) For purposes of the Plan, the terms "actuarial
equivalent," or "actuarially equivalent" when used with
respect to a specified benefit shall mean the amount of
benefit of a different type or payable at a different age that
can be provided at the same cost as such specified benefit, as
computed by the Actuary. The actuarial assumptions used to
determine equivalencies between different forms of annuities
under the Plan shall be the 1984 Unisex Pensioners Mortality
50% male, 50% female calculation (with males set back one year
and females set back five years), with interest at an annual
rate of 7%. The term "Actuary" shall mean the individual
actuary or actuarial firm selected by Company to service its
pension plans generally or if no such individual or firm has
been selected, an individual actuary or actuarial firm
appointed by Company and reasonably satisfactory to Executive
and/or his spouse.
(iv) Company shall indemnify Executive on a fully grossed-
up, after-tax basis for any Medicare payroll taxes (plus any
income taxes on such indemnity payments) incurred by Executive
in connection with the accrual and/or payment of benefits
under the Plan."
5. Paragraph 4.1 of the Existing Agreement is hereby amended to
read in its entirety as follows:
"4.1 By Expiration. If Executive's employment hereunder
shall terminate upon expiration of the term provided in
paragraph 2.1 hereof, then all compensation and all benefits
to Executive hereunder shall terminate contemporaneously with
termination of his employment; provided, however, that
Executive shall be provided with Flight Benefits for the
remainder of Executive's lifetime, the benefits described in
paragraph 3.5 shall continue to be payable, the benefits
described in clauses (2) through (4) of paragraph 4.7(vi)
shall be provided for the time periods specified therein and
Company shall cause all options and shares of restricted stock
awarded to Executive, including, without limitation, any such
awards under Company's 1998 Stock Incentive Plan (the "1998
Plan"), and other Awards (as defined in the 1998 Plan) made to
Executive under the 1998 Plan, to vest immediately upon such
termination and, with respect to options, be exercisable in
full for 30 days after such termination."
6. Paragraph 4.2 of the Existing Agreement is hereby amended to
read in its entirety as follows:
"4.2 By Company. If Executive's employment hereunder shall
be terminated by Company prior to expiration of the term
provided in paragraph 2.1 hereof then, upon such termination,
regardless of the reason therefor, all compensation and all
benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment,
except the benefits described in paragraph 3.5 shall continue
to be payable, and if such termination shall be for any reason
other than those encompassed by paragraphs 2.2(i), (ii), (iii)
or (iv), then Company shall (a) pay Executive on or before the
effective date of such termination a lump-sum, cash payment in
an amount equal to the Termination Payment (as such term is
defined in paragraph 4.7) and cause all options and shares of
restricted stock awarded to Executive, including, without
limitation, any such awards under Company's 1998 Plan, and
other Awards (as defined in the 1998 Plan) made to Executive
under the 1998 Plan, to vest immediately upon such termination
and, with respect to options, be exercisable in full for 30
days after such termination, (b) provide Executive with Flight
Benefits (as such term is defined in paragraph 4.7) for the
remainder of Executive's lifetime, (c) provide Executive with
Outplacement Services (as such term is defined in
paragraph 4.7), and (d) provide Executive and his eligible
dependents with Continuation Coverage (as such term is defined
in paragraph 4.7) for the Severance Period."
7. Paragraph 4.3 of the Existing Agreement is hereby amended to
read in its entirety as follows:
"4.3 By Executive. If Executive's employment hereunder
shall be terminated by Executive prior to expiration of the
term provided in paragraph 2.1 hereof then, upon such
termination, regardless of the reason therefor, all
compensation and benefits to Executive hereunder shall
terminate contemporaneously with the termination of
employment, except Executive shall be provided Flight Benefits
(as such term is defined in paragraph 4.7) for the remainder
of Executive's lifetime, the benefits described in paragraph
3.5 shall continue to be payable, and if such termination
shall be pursuant to paragraphs 2.3(i), (ii), (iii), (iv),
(v), or (vi), then Company shall provide Executive with the
payments and benefits described in clauses (a), (c) and (d) of
paragraph 4.2."
8. Paragraph 4.7(ii) of the Existing Agreement is hereby amended
to read in its entirety as follows:
"(ii) "Change in Control" shall have the meaning assigned to
such term in the 1998 Plan (as adopted by the Board of
Directors on April 14, 1998 and in effect on such date, it
being understood that such term shall be the new Change in
Control term contained in the 1998 Plan, and not the alternate
Change in Control term (identical to that contained in the
1997 Stock Incentive Plan) also set forth in the 1998 Plan for
the eventuality that the Acquisition does not close);
provided, however, that Company and Executive agree that the
Acquisition will, upon the closing thereof, constitute a
Change in Control (as defined in this Agreement prior to the
amendment to this Agreement dated as of November 20, 1998) and
will be considered to be, and to have the effect of, a Change
in Control under this Agreement."
9. Paragraph 4.7(vi) of the Existing Agreement is hereby amended
to read in its entirety as follows:
"(vi) "Outplacement Services" shall mean (1) outplacement
services, at Company's cost and for a period of twelve months
beginning on the date of Executive's termination of
employment, to be rendered by an agency selected by Executive
and approved by the Board of Directors or HR Committee (with
such approval not to be unreasonably withheld), (2)
appropriate and suitable office space at the Company's
headquarters (although not on its executive office floor) or
at a comparable location in downtown Houston for use by
Executive, together with appropriate and suitable secretarial
assistance, at Company's cost and for a period of three years
beginning on the date of Executive's termination of
employment, (3) a reserved parking place convenient to the
office so provided and a reserved parking place at Xxxxxx Xxxx
Intercontinental Airport in Houston, Texas consistent with
past practice, at Company's cost and for as long as Executive
retains a residence in Houston, Texas, and (4) other
incidental perquisites (such as free or discount air travel,
car rental, phone or similar service cards) currently enjoyed
by Executive as a result of his position, to the extent then
available for use by Executive, for a period of three years
beginning on the date of Executive's termination of employment
or a shorter period if such perquisites become unavailable to
the Company for use by Executive;"
10. This Amendment shall be dated as of the date set forth below,
but shall be effective as of the date of closing of the Acquisition
as contemplated by the Investment Agreement.
11. The Existing Agreement, as amended by this Amendment, is
hereby ratified and confirmed and shall continue in full force and
effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the 20th day of November, 1998.
CONTINENTAL AIRLINES, INC.
By:____________________________
Name:
Title:
EXECUTIVE
________________________________
Xxxxxxxx X. Xxxxxxx
APPROVED:
_______________________________
Xxxxxx X. Xxxxxxx, Xx.
Chair, Human Resources Committee
