EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment") is
made by and between Continental Airlines, Inc., a Delaware
corporation ("Company"), and Xxxxxxx X. Xxxxxxxxx ("Executive").
Recitals:
WHEREAS, Company and Executive are parties to that certain
Amended and Restated Employment Agreement dated as of November 20,
1998 (the "Existing Agreement"); and
WHEREAS, the Board of Directors of the Company, and the Human
Resources Committee of the Board of Directors of the Company, by
resolutions duly adopted on May 18, 1999, have authorized the
execution and delivery of this Amendment; and
WHEREAS, Company and Executive desire to amend the Existing
Agreement as hereinafter set forth;
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. Section 4.7(iii) of the Existing Agreement (the
definition of "Flight Benefits") is hereby amended to
read in its entirety as follows:
""Flight Benefits" shall mean flight benefits on each
airline operated by the Company or any of its affiliates
or any successor or successors thereto (the "CO system"),
consisting of the highest priority space available flight
passes for Executive and Executive's eligible family
members (as such eligibility is in effect on May 18,
1999), a Universal Air Travel Plan (UATP) card (or, in
the event of discontinuance of the UATP program, a
similar charge card permitting the purchase of air travel
through direct billing to the Company or any successor or
successors thereto (a "Similar Card")) in Executive's
name for charging on an annual basis up to the applicable
Annual Travel Limit (as hereinafter defined) with respect
to such year in value (valued identically to the
calculation of imputed income resulting from such flight
benefits described below) of flights (in any fare class)
on the CO system for Executive, Executive's spouse,
Executive's family and significant others as determined
by Executive, a Platinum Elite OnePass Card (or similar
highest category successor frequent flyer card) in
Executive's name for use on the CO system, a membership
for Executive and Executive's spouse in the Company's
President's Club (or any successor program maintained in
the CO system) and payment by the Company to Executive of
an annual amount (not to exceed in any year the
applicable Annual Gross Up Limit (as hereinafter defined)
with respect to such year) sufficient to pay, on an after
tax basis (i.e., after the payment by Executive of all
taxes on such amount), the U.S. federal, state and local
income taxes on imputed income resulting from such
flights (such imputed income to be calculated during the
term of such Flight Benefits at the lowest published fare
(i.e., 21 day advance purchase coach fare, lowest
negotiated consolidator net fare, or other lowest
available fare) for the applicable itinerary (or similar
flights on or around the date of such flight), regardless
of the actual fare class booked or flown, or as otherwise
required by law) or resulting from any other flight
benefits extended to Executive as a result of Executive's
service as an executive of the Company;"
2. The last paragraph of Section 4.7 (Certain Definitions
and Additional Terms), which immediately follows the last
numbered subsection of Section 4.7, is hereby deleted and
replaced in its entirety as follows:
"As used for purposes of Flight Benefits, with respect to
any year, the term "Annual Travel Limit" shall mean an
amount (initially $50,000), which amount shall be
adjusted (i) annually (beginning with the year 2000) by
multiplying such amount by a fraction, the numerator of
which shall be the Company's average fare per revenue
passenger for its jet operations (excluding regional
jets) with respect to the applicable year as reported in
its Annual Report on Form 10-K (or, if not so reported,
as determined by the Company's independent auditors) (the
"Average Fare") for such year, and the denominator of
which shall be the Average Fare for the prior year, (ii)
annually to add thereto any portion of such amount unused
since the year 1999, and (iii) after adjustments
described in clauses (i) and (ii) above, automatically
upon any change in the valuation methodology for imputed
income from flights (as compared with the valuation
methodology for imputed income from flights used by the
Company as of May 18, 1999), so as to preserve the
benefit of $50,000 annually (adjusted in accordance with
clauses (i) and (ii) above) of flights relative to the
valuations resulting from the valuation methodology used
by the Company as of May 18, 1999 (e.g., if a change in
the valuation methodology results, on average, in such
flights being valued 15% higher than the valuation that
would result using the valuation methodology used by the
Company as of May 18, 1999, then the Annual Travel Limit
would be increased by 15% to $57,500, assuming no other
adjustments pursuant to clauses (i) and (ii) above). In
determining any adjustment pursuant to clause (iii)
above, the Company shall be entitled to rely on a good
faith calculation performed by its independent auditors
based on a statistically significant random sampling of
flight valuations compared with the applicable prior
valuations of identical flights, which calculation (and
the basis for any adjustments pursuant to clauses (i) or
(ii) above) will be provided to Executive upon request.
The Company will promptly notify Executive in writing of
any adjustments to the Annual Travel Limit described in
this paragraph.
As used for purposes of Flight Benefits, with respect to
any year, the term "Annual Gross Up Limit" shall mean an
amount (initially $10,000), which amount shall be
adjusted (i) annually (beginning with the year 2000) by
multiplying such amount by a fraction, the numerator of
which shall be the Average Fare for such year, and the
denominator of which shall be the Average Fare for the
prior year, (ii) annually to add thereto any portion of
such amount unused since the year 1999, and (iii) after
adjustments described in clauses (i) and (ii) above,
automatically upon any change in the valuation
methodology for imputed income from flights (as compared
with the valuation methodology for imputed income from
flights used by the Company as of May 18, 1999), so as to
preserve the benefit of $10,000 annually (adjusted in
accordance with clauses (i) and (ii) above) of tax gross
up relative to the valuations resulting from the
valuation methodology used by the Company as of May 18,
1999 (e.g., if a change in the valuation methodology
results, on average, in flights being valued 15% higher
than the valuation that would result using the valuation
methodology used by the Company as of May 18, 1999, then
the Annual Gross Up Limit would be increased by 15% to
$11,500, assuming no other adjustments pursuant to
clauses (i) and (ii) above). In determining any
adjustment pursuant to clause (iii) above, the Company
shall be entitled to rely on a good faith calculation
performed by its independent auditors based on a
statistically significant random sampling of flight
valuations compared with the applicable prior valuations
of identical flights, which calculation (and the basis
for any adjustments pursuant to clauses (i) or (ii)
above) will be provided to Executive upon request. The
Company will promptly notify Executive in writing of any
adjustments to the Annual Gross Up Limit described in
this paragraph.
As used for purposes of Flight Benefits, a year may
consist of twelve consecutive months other than a
calendar year, it being the Company's practice as of May
18, 1999 for purposes of Flight Benefits for a year to
commence on December 1 and end on the following November
30 (for example, the twelve-month period from December 1,
1998 to November 30, 1999 is considered the year 1999 for
purposes of Flight Benefits); provided that all
calculations for purposes of clause (i) in the prior two
paragraphs shall be with respect to fiscal years of the
Company.
As used for purposes of Flight Benefits, the term
"affiliates" of the Company means any entity controlled
by, controlling, or under common control with the
Company, it being understood that control of an entity
shall require the direct or indirect ownership of a
majority of the outstanding capital stock of such entity.
No tickets issued on the CO system in connection with the
Flight Benefits may be purchased other than directly from
the Company or its successor or successors (i.e., no
travel agent or other fee or commission based distributor
may be used), nor may any such tickets be sold or
transferred by Executive or any other person, nor may any
such tickets be used by any person other than the person
in whose name the ticket is issued. Executive agrees
that, after receipt of an invoice or other accounting
statement therefor, he will promptly (and in any event
within 45 days after receipt of such invoice or other
accounting statement) reimburse the Company for all
charges on his UATP card (or Similar Card) which are not
for flights on the CO system and which are not otherwise
reimbursable to Executive under the provisions of
paragraph 3.7(ii) hereof, or which are for tickets in
excess of the applicable Annual Travel Limit. Executive
agrees that the credit availability under Executive's
UATP card (or Similar Card) may be suspended if Executive
does not timely reimburse the Company as described in the
foregoing sentence or if Executive exceeds the applicable
Annual Travel Limit with respect to a year; provided,
that, immediately upon the Company's receipt of
Executive's reimbursement in full (or, in the case of
exceeding the applicable Annual Travel Limit, beginning
the next following year and after such reimbursement),
the credit availability under Executive's UATP card (or
Similar Card) will be restored.
The sole cost to Executive of flights on the CO system
pursuant to use of Executive's Flight Benefits will be
the imputed income with respect to flights on the CO
system charged on Executive's UATP card (or Similar
Card), calculated throughout the term of Executive's
Flight Benefits at the lowest published fare (i.e., 21
day advance purchase coach fare, lowest negotiated
consolidator net fare or other lowest available fare) for
the applicable itinerary (or similar flights on or around
the date of such flight), regardless of the actual fare
class booked or flown, or as otherwise required by law,
and reported to Executive as required by applicable law.
With respect to any period for which the Company is
obligated to provide the tax gross up described above,
Executive will provide to the Company, upon request, a
calculation or other evidence of Executive's marginal tax
rate sufficient to permit the Company to calculate
accurately the amount to be paid to Executive.
Executive will be issued a UATP card (or Similar Card),
a Platinum Elite OnePass Card (or similar highest
category successor frequent flyer card), a membership
card in the Company's Presidents Club (or any successor
program maintained in the CO system) for Executive and
Executive's spouse, and an appropriate flight pass
identification card, each valid at all times during the
term of Executive's Flight Benefits."
3. 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 19th day of May, 1999.
CONTINENTAL AIRLINES, INC.
By: ____________________________
Xxxxxxx X. Xxxxxx
Executive Vice President
EXECUTIVE
_________________________________
Xxxxxxx X. Xxxxxxxxx
