January 4, 2010 Mr. Jeffery A. Smisek Continental Airlines, Inc.
Exhibit
99.1
January
4, 2010
Xx.
Xxxxxxx X. Xxxxxx
Continental
Airlines, Inc.
0000
Xxxxx Xxxxxx, Xxxx. XXXXX
Xxxxxxx,
XX 00000
Dear
Xxxx:
The
purpose of this letter is to set forth your voluntary agreement to forego your
annual salary of $730,000 and any annual bonus that would otherwise be earned by
you pursuant to the Employment Agreement between you and Continental Airlines,
Inc. (the “Company”) effective October 15, 2007 (as amended, the “Employment
Agreement”) with respect to each calendar year beginning January 1, 2010 and
continuing during the term of the Employment Agreement (each such year, a
“Covered Year”) unless the Company achieves a profit for such Covered
Year. For purposes of this letter agreement, “profit” shall have the
same meaning as ascribed to the equivalent term used in the Company’s
broad-based employee profit sharing program applicable for such Covered
Year. If the Company does not have such a program in effect for a
Covered Year, then the term “profit” shall mean a positive net income of the
Company (before taxes) as shown on its audited consolidated financial statements
for such Covered Year, but calculated excluding any unusual or non-recurring
items, prepared in accordance with applicable accounting standards.
You agree
that (i) the Company will not pay you, and you shall have no right to, any
salary or annual bonus with respect to any Covered Year (which would otherwise
be earned by you as an employee of the Company with respect to your service)
unless the Company achieves a profit for such Covered Year, and (ii) the
voluntary salary and annual bonus waiver is provided by you in connection with
your promotion as successor Chairman and Chief Executive Officer and your
associated salary increase and the waiver shall not constitute a breach by the
Company of the Employment Agreement.
You
acknowledge that your ability to participate in, or to accrue benefits under,
the Continental Retirement Plan, the Continental 401(k) Plan, and the
Continental Employee Stock Purchase Plan are dependent upon your receipt of base
salary and will be impacted by this voluntary salary waiver. The
Company agrees that this voluntary salary and annual bonus waiver shall not
affect your rights under the Employment Agreement except as specifically set
forth in this letter, and those rights shall be determined for all other
purposes as if your salary and annual bonus continued to be paid at its
then-approved level, without regard to this waiver, including without limitation
your rights as reflected in the Employment Agreement in paragraphs 3.2(b), 3.3,
3.5 and 3.6, and the definition of “Termination Payment” in paragraph
4.8(xi). In addition, to the extent that the salary and annual bonus
waiver impacts your participation in, or the level of benefits provided under,
any welfare benefit plan provided by the Company, including without limitation
the disability plan or the life insurance plan, the Company shall provide an
equivalent benefit to you at no additional cost, of any kind, to
you. The Company will pay you an amount sufficient to make you whole
for any such additional costs as soon as practicable, but not later than the end
of the Covered Year following the Covered Year the cost is
incurred. This letter will not impact your right to participate in
any long term incentive program maintained by the Company as described in
paragraph 3.2(b) of the Employment Agreement.
If the
Company achieves a profit for any Covered Year, the Company will pay to you the
unpaid salary for such Covered Year upon determination by the Human Resources
Committee that a profit has been achieved for the Covered Year (and in no event
later than January 30th following the Covered Year). If a
determination has been made by the Human Resources Committee that a profit was
achieved for any Covered Year, you will be entitled to receive any annual bonus
for that year to which you would otherwise have been entitled, payable in
accordance with the terms otherwise applicable to that bonus. In
addition, notwithstanding the terms of this letter agreement, if your employment
is terminated (i) by the Company “without Cause” (as defined in the Employment
Agreement) or pursuant to paragraph 2.2(i) or 2.2(ii) of the Employment
Agreement, or (ii) by you for “Good Reason” (as defined in the
Employment Agreement), the Company shall pay to you (or, in the event of a
termination pursuant to paragraph 2.2(i) of the Employment Agreement, your
estate) on the effective date of such termination all salary and annual bonus
amounts that have not been paid to you during or with respect to any Covered
Year as a result of the terms of this letter agreement. If the
Company has not achieved a profit for any Covered Year, the Company will provide
written confirmation to you no later than March 1 following such Covered Year of
the amount of salary and any annual bonus to which you would otherwise have been
entitled for such Covered Year. Either party shall have the right to
terminate the salary and annual bonus waiver pursuant to this letter agreement
for any Covered Year by providing written notice to the other party prior to
January 1 of such Covered Year.
It is
intended that any payment pursuant to the terms of this letter agreement be
exempt from the application of Section 409A of the Internal Revenue Code of
1986, as amended, pursuant to the short term deferral exclusion and this letter
agreement shall be administered accordingly; provided, however, that Section
5.17 of the Employment Agreement shall apply to the terms of this letter
agreement to the extent applicable.
By
signing below, you agree that this letter agreement accurately reflects our
mutual understanding with respect to your desire to forego your salary and
annual bonus as described herein and shall be deemed to constitute an agreement
of the parties with respect to its terms for purposes of paragraph 5.12 of the
Employment Agreement.
Very
truly yours,
CONTINENTAL
AIRLINES, INC.
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By:
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/s/
Xxxxxxxx X. Xxxxx
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Name:
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Xxxxxxxx
X. Xxxxx
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Title:
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Senior
Vice President, General Counsel, Secretary and Chief Compliance
Officer
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APPROVED:
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/s/
Xxxxxxx Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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Chair,
Human Resources Committee
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ACKNOWLEDGED
AND AGREED:
XXXXXXX
X. XXXXXX
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/s/
Xxxxxxx X. Xxxxxx
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