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 Gregory D. Brenneman ("Executive").
Recitals:
WHEREAS, Company and Executive are parties to that certain
Amended and Restated Employment Agreement dated as of November 20,
1998, as amended by Amendment to Employment Agreement dated as of
May 19, 1999 (as so amended, the "Existing Agreement"); and
WHEREAS, the Human Resources Committee of the Board of
Directors, at its September 16, 1999 meeting, authorized the
amendment of the employment agreements of certain officers of the
Company, including Executive, as set forth herein; 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. Paragraph 3.5 of the Existing Agreement ("Supplemental
Executive Retirement Plan") is hereby amended to read in its
entirety as follows:
"3.5 Supplemental Executive Retirement Plan.
(i) Base Benefit. 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) 2.5% times (b) the number of
Executive's credited years of service (as defined below) under
the Plan (but not in excess of 30 years) 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 sum of (1) the number of
Executive's years of benefit service with Company, calculated
as set forth in the Continental Retirement Plan (the "CARP")
beginning at January 1, 1995 ("Actual Years of Service"), (2)
an additional three years of service for each one year of
service credited to Executive pursuant to clause (1) of this
sentence for the period beginning on January 1, 2000 and
ending on December 31, 2004, and (3) three additional years of
service if Executive is paid the Termination Payment under
this Agreement. For purposes hereof, Executive's final
average compensation shall be equal to the greater of (A)
$650,000.00 or (B) 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 Company) paid to Executive by Company during the
consecutive ten calendar years immediately preceding
Executive's 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, (ii) any Stay Bonus paid to Executive pursuant to
that certain Stay Bonus Agreement between Company and
Executive dated as of April 14, 1998, and (iii) any cash bonus
paid under a long term incentive plan or program adopted by
Company. Executive shall be vested immediately with respect
to benefits due under the Plan.
(ii) Offset for CARP Benefit. Any provisions of the
Plan to the contrary notwithstanding, the Base Benefit shall
be reduced by the actuarial equivalent (as defined below) of
the pension benefit, if any, paid or payable to Executive from
the CARP. In making such reduction, the Base Benefit and the
benefit paid or payable under the CARP shall be determined
under the provisions of each plan as if payable in the form of
an annual straight life annuity beginning on the Retirement
Date (as defined below). The net benefit payable under this
Plan shall then be actuarially adjusted based on the actuarial
assumptions set forth in paragraph 3.5(vii) for the actual
time and form of payments.
(iii) Normal and Early Retirement Benefits.
Executive's benefit under the Plan shall be payable in equal
monthly installments beginning on the first day of the month
following the Retirement Date (the "Normal Retirement
Benefit"). For purposes hereof, "Retirement Date" is defined
as the later of (a) the date on which Executive attains (or in
the event of Executive's earlier death, would have attained)
age 60 or (b) the date of Executive's retirement from
employment with Company. Notwithstanding the foregoing, if
Executive's employment with Company is terminated, for a
reason other than death, on or after the date Executive
attains age 55 or is credited with 10 Actual Years of Service
and prior to the Retirement Date, then Executive shall be
entitled to elect to commence to receive Executive's benefit
under the Plan as of the first day of any month coinciding
with or next following Executive's termination of employment,
or as the first day of any subsequent month preceding the
Retirement Date (an "Early Retirement Benefit"); provided,
however, that (1) written notice of such election must be
received by Company not less than 15 days prior to the
proposed date of commencement of the benefit, (2) each payment
under an Early Retirement Benefit shall be reduced to the
extent necessary to cause the value of such Early Retirement
Benefit (determined without regard to clause (3) of this
proviso) to be the actuarial equivalent of the value of the
Normal Retirement Benefit (in each case based on the actuarial
assumptions set forth in paragraph 3.5(vii) and adjusted for
the actual time and form of payments), and (3) each payment
under an Early Retirement Benefit that is made prior to the
Retirement Date shall be reduced by an additional 10% of the
amount of such payment as initially determined pursuant to
clause (2) of this proviso. The HR Committee may, in its sole
and absolute discretion, waive all or any part of the
reductions contemplated in clauses (2) and/or (3) of the
proviso of the preceding sentence.
(iv) Form of Retirement Benefit. If Executive is
not married on the date Executive's benefit under paragraph
3.5(iii) commences, then benefits under the Plan will be paid
to Executive in the form of a single life annuity for the life
of Executive. If Executive is married on the date Executive's
benefit under paragraph 3.5(iii) commences, then benefits
under the Plan will be paid in the form of a joint and
survivor annuity that is actuarially equivalent to the benefit
that would have been payable under the Plan to Executive if
Executive was not married on such date, with Executive's
spouse as of the date benefit payments commence being entitled
during such spouse's lifetime after Executive's death to a
benefit equal to 50% of the benefit payable to Executive
during their joint lifetimes.
(v) Death Benefit. Except as provided in this
paragraph 3.5(v), no benefits shall be paid under the Plan if
Executive dies prior to the date Executive's benefit commences
pursuant to paragraph 3.5(iii). In the event of Executive's
death prior to the commencement of Executive's benefit
pursuant to paragraph 3.5(iii), Executive's surviving spouse,
if Executive is married on the date of Executive's death, will
receive a single life annuity consisting of monthly payments
for the life of such surviving spouse determined as follows:
(a) if Executive dies on or before reaching the Retirement
Date, the death benefit such spouse would have received had
Executive terminated employment on the earlier of Executive's
actual date of termination of employment or Executive's date
of death, survived until the Retirement Date, began to receive
Executive's Plan benefit beginning immediately at the
Retirement Date, and died on the day after the Retirement
Date; or (b) if Executive dies after reaching the Retirement
Date, the death benefit such spouse would have received had
Executive begun to receive Executive's Plan benefit beginning
on the day prior to Executive's death. Payment of such
survivor annuity shall begin on the first day of the month
following the later of (1) Executive's date of death or (2)
the Retirement Date; provided, however, that if Executive was
eligible to elect an Early Retirement Benefit as of the date
of Executive's death, then Executive's surviving spouse shall
be entitled to elect to commence to receive such survivor
annuity as of the first day of the month next following the
date of Executive's death, or as the first day of any
subsequent month preceding the Retirement Date. Notice of
such election must be received by Company not less than 15
days prior to the proposed date of commencement of the
benefit, and each payment of such survivor annuity shall be
reduced based on the principles used for the reductions
described in clauses (2) and (3) of the proviso to the third
sentence of paragraph 3.5(iii).
(vi) Unfunded Benefit. The Plan is intended to
constitute an unfunded, unsecured plan of deferred
compensation. Further, it is the intention of Company that
the Plan be unfunded for purposes of the Internal Revenue Code
of 1986, as amended, and Title I of the Employee Retirement
Income Security Act of 1974, as amended. The Plan constitutes
a mere promise by Company to make benefit payments in the
future. Plan benefits hereunder provided are to be paid out
of Company's general assets, and Executive shall have the
status of, and shall have no better status than, a general
unsecured creditor of Company. Executive understands that he
must rely upon the general credit of Company for payment of
benefits under the Plan. Company shall establish a "rabbi"
trust to assist Company in meeting its obligations under the
Plan. The trustee of such trust shall be a nationally-
recognized and solvent bank or trust company that is not
affiliated with Company. Company shall transfer to the
trustee money and/or other property determined in the sole
discretion of the HR Committee based on the advice of the
Actuary (as defined below) on an as-needed basis in order to
assure that the benefit payable under the Plan is at all times
fully funded. The trustee shall pay Plan benefits to
Executive and/or Executive's spouse out of the trust assets if
such benefits are not paid by Company. Company shall remain
the owner of all assets in the trust, and the assets shall be
subject to the claims of Company creditors in the event (and
only in the event) Company ever becomes insolvent. Neither
Executive nor any beneficiary of Executive shall have any
preferred claim to, any security interest in, or any
beneficial ownership interest in any assets of the trust.
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.
(vii) Actuarial Equivalent. 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 the referenced different
type or payable at the referenced different age that can be
provided at the same cost as such specified benefit, as
computed by the Actuary and certified to Executive (or, in the
case of Executive's death, to his spouse) by the Actuary. The
actuarial assumptions used under the Plan to determine
equivalencies between different forms and times of payment
shall be the same as the actuarial assumptions then used in
determining benefits payable under the CARP. 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 Executive's spouse.
(viii) Medicare Payroll Taxes. 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."
2. 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 16th day of September, 1999.
CONTINENTAL AIRLINES, INC.
By: ____________________________
Name:
Title:
EXECUTIVE
_________________________________
Gregory D. Brenneman