EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT dated as of May 20, 1993 is entered into by and
between CONTINENTAL AIRLINES, INC. (the "Company"), a Delaware corporation, and
DANIEL P. GARTON, (the "Executive"). The Company and the Executive are referred
to herein individually as a "Party" and collectively as the "Parties".
The Company wishes to assure itself of the continued services of the Executive,
and the Executive is willing to continue employment with the Company on a full-
time basis, and upon the other terms and conditions hereinafter provided.
In consideration of the mutual covenants contained herein, the Parties agree as
follows:
1. Employment - The Company agrees to employ the Executive, and the Executive
agrees to remain in the employ of the Company under the terms and conditions
herein provided.
2. Position - During his employment hereunder, the Executive agrees to serve
the Company and the Company shall employ the Executive in such capacity or
capacities as may be specified from time to time by the Board of Directors of
the Company, subject to the provisions of Section 5(a)(ii) hereof and that such
Executive shall not be required to work at a location other than one within the
contiguous 48 states of the United States of America.
3. Term - The Executive's employment shall be one at will, to-wit: either the
Executive or the Company shall have the right to terminate it at any time, with
or without cause, and without any liability or obligation of either Party to the
other except as may be expressly specified in this Agreement.
4. Compensation - The Company will pay the Executive a base salary at an
initial annual rate of $350,000, payable in substantially equal semi-monthly
installments. During his employment with the Company, the Executive's salary
shall be reviewed periodically in accordance with Company policy and such review
may result in an increase in said salary which such amount shall be substituted
for the specified amount set forth in this Section.
5. Termination of Employment
(a) A "Termination of Employment" shall be defined as any one of the
following: (i) the termination of the Executive's employment by the Company
for any reason other than (A) willful misconduct or gross neglect of duty by the
Executive, (B) retirement under the ordinary retirement program of the Company,
(C) disability of the Executive resulting in compensated absence from his duties
to the Company on a full-time basis for over 180 days or (D) death of the
Executive; (ii) the termination of the Executive's employment by the Executive
after providing the Company with ten business days' prior written notice that
the executive is terminating employment because of (A) a material reduction in
the responsibilities or title of the Executive or the corporate amenities to
which he was entitled immediately prior thereto or (B) a reduction of the
Executive's cash compensation by more than 10% below the highest annual salary
from time to time in effect for the Executive; provided, however, that no
Termination of Employment shall occur pursuant to the preceding clause (ii) if
the circumstances described in the preceding clauses (ii)(A) and (ii) (B) are
corrected prior to the expiration of ten business days from the date the
Executive provided notice to the Company of his intent to terminate employment.
(b) Upon a Termination of Employment, or upon the expiration of long term
disability insurance benefits (prior to the Executive's regular retirement date)
while Executive remains disabled, the Company will pay the Executive, (subject
to the provisions of Section 9 hereof) as severance pay or liquidated damages,
or both, a lump sum amount equal to (i) 200% of his then current Annual
Compensation from the Company; plus, (ii) that amount due to such Executive
under his previous Employment Agreement due to 1992 pay reduction in excess of
ten percent of Executive's stated compensation under such previous Employment
Agreement; plus, (iii) that cumulated amount of pay reductions permitted by
Section 5(f) hereof in excess of 10% of the Executive's annual base salary set
forth in Section 4 of this Agreement, from the date of this Agreement until the
date of Termination of Employment. "Annual Compensation" shall mean:
Annualized rate of pay as set forth in Section 4 hereof plus a Deemed Annual
Bonus. "Deemed Annual Bonus" shall be 25% of the amount set forth in Section 4
hereof.
(c) Executive shall be under no obligation to mitigate damage to the
Company hereunder and no future earnings by Executive from any source shall be
payable to the Company or be subject to offset pursuant to this Agreement.
(d) For a period of two and one-half years following Termination of
Employment, the Executive shall continue in the Company's group insurance
programs, including long-term disability insurance (or be provided substantially
comparable benefits), provided he has not accepted other employment that
provides comparable benefits. The Executive's entitlement to benefit
continuation pursuant to the Consolidated Omnibus Budget Reconciliation Act
shall commence at the end of such period.
(e) For two and one-half years following Termination of Employment, and
provided all annual pass cards in the possession of the Executive have been
surrendered to the Company, the Executive and his eligible family members shall
be entitled to pass privileges on Continental Airlines of the same type and
priority as the Executive received prior to the Termination of Employment,
subject to any changes in policy generally applicable to officers of Continental
Airlines still in the employ thereof. Passes shall be issued upon individual
requests directly to the Continental Airlines pass bureau.
(f) The Company shall be entitled to continue pay reductions in effect on
the date of this Agreement for so long as, and to the extent that, such pay
reductions are in effect for the Company's work force in general. Such
continuation of previous pay reductions shall not constitute a violation of
Section 5(a)(ii)(B) hereof.
6. Indemnification - The Company shall indemnify the Executive against all
losses, including legal fees and expenses, arising from claims against the
Executive in connection with the Executive's good-faith execution of his
employment hereunder, to the fullest extent permitted by the Corporation Code
of the State of Delaware.
7. Tax Indemnity - The Company shall indemnify Executive on a fully grossed-up
after-tax basis against any tax liability (including, without limitation, excise
taxes incurred pursuant to IRC Section 4999) resulting from the payment of
severance or the provision of other benefits following Termination of Employment
pursuant to this Agreement, to the extent that Executive's tax payments are at
a higher percentage of total income than they would have been absent such
payment of severance or provision of benefits.
8. Life Insurance - The Company shall maintain life insurance for the
Executive in the amount of the severance payable to Executive pursuant to
Section 5 hereof. In the absence of such life insurance, the Company shall pay
Executive's beneficiary or beneficiaries an amount equal to such severance in
the event of the death of Executive while employed by the Company. The Company
shall hold the Executive harmless from any tax liability accruing to Executive
as a result of the purchase of such insurance, and likewise shall hold
Executive's estate, heirs and assigns harmless from any tax liability accruing
because of the failure to maintain such insurance.
9. Post-Termination Obligations - All payments and benefits due to the
Executive hereunder shall be subject to the Executive's compliance with the
following provisions during the applicability of this Agreement and for one full
year after the expiration of termination hereof:
(a) The Executive shall, upon reasonable notice, furnish such information
and proper assistance to the Company and its affiliates as may reasonably be
required in connection with any litigation in which it or any of its affiliates
is, or may become, a party.
(b) The Executive will not discuss with any other employee of the Company
or its affiliates the formation or operations of any business intended to
compete with the Company or its affiliates, or the possible future employment
of such other employee by any business.
(c) Any public statements made by the Executive concerning the Company or
its affiliates, officers, directors or employees shall be submitted for approval
in writing from the Company's public relations and legal departments.
If the Executive fails to comply with the above obligations, the Company
may cease extending benefits to the Executive and may recover by appropriate
action instituted in any court of competent jurisdiction any severance payments
theretofore paid to the Executive.
10. Consolidation, Merger, Sale of Assets - This Agreement shall be binding
upon and inure to the benefit of the Executive and the Company and its
successors and assigns, including without limitation any corporation with or
into which the company may be consolidated, merged or to which the Company sells
or transfers all or substantially all of its assets.
11. Notices - Written notices required or furnished under this Agreement shall
be sent to the following addresses:
to the Company: Continental Airlines, Inc.
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
Attention: Corporate Secretary
to the Executive: 3100 Cumberland Court
Colleyville, Texas 76034
Notices shall be effective on the first business day following receipt thereof.
Notices sent by mail shall be deemed received on the date of delivery shown on
the return receipt.
12. Amendments - This Agreement may not be amended or changed, orally or in
writing except by the written agreement of the Parties.
13. Governing Law - This Agreement, and any dispute arising under or relating
to any provision of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
14. Confidentiality - Except as provided by law, all information provided by
either Party to the other hereunder, including the terms and conditions of the
Agreement, shall be treated by the Party receiving such information as
confidential, and shall not be disclosed by such Party to any party without the
prior written consent of the Party from which the information was obtained.
This obligation of confidentiality shall survive termination of this Agreement.
15. Severability - If any one or more of the provisions contained in this
Agreement are held to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
16. Previous Agreements - This Agreement, once it becomes effective and
enforceable, will replace and supersede any and all previous employment
agreements, either written or verbal, between the Parties. The Company will,
however, remain obligated to make the payment specified in Section 5(b)(ii)
hereof in the event of a Termination of Employment, and will remain obligated
on its commitment to indemnify the Executive pursuant to Executive's previous
employment agreement with the Company affirmed by order of the Delaware
Bankruptcy Court dated August 21, 1991.
17. Captions - All Section titles or captions contained in this Agreement are
for convenience only and shall not be deemed as part of this Agreement.
The parties hereto have executed this Agreement as of the date and year first
above written.
CONTINENTAL AIRLINES, INC.
(The Company)
_________________________________
_______________________________
DANIEL P. GARTON ("Executive")