EXHIBIT 10.11

CONTINENTAL AIRLINES, INC.

LONG TERM INCENTIVE AND RSU PROGRAM

 

I. PURPOSE OF PROGRAM

This Continental Airlines, Inc. Long Term Incentive and RSU Program (the
"Program") has been adopted by the Human Resources Committee of the Board of
Directors of Continental Airlines, Inc., a Delaware corporation (the "Company"),
to implement in part the Performance Award provisions of the Continental
Airlines, Inc. Incentive Plan 2000 (as amended from time to time, the "Incentive
Plan 2000") adopted by the Board of Directors of the Company, and is intended to
provide a method for attracting, motivating, and retaining key employees to
assist in the development and growth of the Company and its Subsidiaries. The
Program and Awards hereunder shall be subject to the terms of the Incentive Plan
2000, including (a) with respect to RSU Awards, the limitations on the maximum
number of shares of stock that may be subject to awards granted under the
Incentive Plan 2000 to any one individual during any calendar year, and (b) with
respect to NLTIP Awards, the limitations on the maximum value of Awards
contained in Section 5(a)(iii) of the Incentive Plan 2000.

II. DEFINITIONS AND CONSTRUCTION

Definitions

.
Where the following words and phrases are used in the Program, they shall have
the respective meanings set forth below, unless the context clearly indicates to
the contrary:

(a) "Administrator" means (i) in the context of Awards made to, or the
administration (or interpretation of any provision) of the Program as it relates
to, any person who is subject to Section 16 of the Securities Exchange Act of
1934, as amended (including any successor section to the same or similar effect,
"Section 16"), the Committee, or (ii) in the context of Awards made to, or the
administration (or interpretation of any provision) of the Program as it relates
to, any person who is not subject to Section 16, the Chief Executive Officer of
the Company (or, if the Chief Executive Officer is not a director of the
Company, the Committee), unless the Program specifies that the Committee shall
take specific action (in which case such action may only be taken by the
Committee) or the Committee (as to any Award described in this clause (ii) or
the administration or interpretation of any specific provision of the Program)
specifies that it shall serve as Administrator.

(b) "Annual Executive Bonus Program" means the Continental Airlines, Inc. Annual
Executive Bonus Program, or any successor to such program.

(c) "Award" means, with respect to each Participant for a Performance Period,
such Participant's opportunity to earn a Payment Amount for such Performance
Period, upon the satisfaction of the terms and conditions of the Program. Awards
shall relate to an NLTIP Performance Target ("NLTIP Awards") or an RSU
Performance Target ("RSU Awards"). Awards hereunder constitute Performance
Awards (as such term is defined in the Incentive Plan 2000) under the Incentive
Plan 2000.

(d) "Award Notice" means a written notice issued by the Company to a Participant
evidencing such Participant's receipt of an Award with respect to a Performance
Period.

"Base Amount" means the sum of (i) the annual base rate of pay paid or payable
in cash by the Company and the Subsidiaries to or for the benefit of a
Participant for services rendered or labor performed, plus (ii) an additional
amount equal to (1) for all Participants other than those described in Section
2.1(bb)(vi), 2.1(bb)(vii) or 2.1(bb)(viii) below, 125% of the amount described
in clause (i), and (2) for all Participants described in Section 2.1(bb)(vi),
2.1(bb)(vii) or 2.1(bb)(viii) below, 37.5% of the amount described in clause
(i). Base Amount shall be determined without reduction for amounts a Participant
could have received in cash in lieu of (A) elective deferrals under any deferred
compensation plan of the Company or (B) elective contributions made on such
Participant's behalf by the Company or a Subsidiary pursuant to a qualified cash
or deferred arrangement (as defined in section 401(k) of the Code) or pursuant
to a plan maintained under section 125 of the Code.

"Basis Point" means one one-hundredth of one percent (0.01%).

"Board" means the Board of Directors of the Company

"Cash Hurdle" means, with respect to an NLTIP Performance Period, the dollar
amount specified by the Committee as the Cash Hurdle with respect to such
Performance Period as provided in Section 3.1, and achievement of the Cash
Hurdle means that the Company's cash flow over such Performance Period is such
that the Company's cash, cash equivalents and short term investments (excluding
restricted cash, cash equivalents and short term investments) at the end of such
Performance Period, as reflected on the regularly prepared and publicly
available balance sheet of the Company and its consolidated subsidiaries
prepared in accordance with GAAP, is equal to or greater than that dollar amount
so specified by the Committee as the Cash Hurdle.

"Cause" means (i) in the case of a Participant with an employment agreement with
the Company or a Subsidiary, the involuntary termination of such Participant's
employment by the Company (or, if applicable, a Subsidiary) under circumstances
that do not require the Company (or such Subsidiary) to pay to such Participant
a "Termination Payment" or "Monthly Severance Amount," as such terms are defined
in such Participant's employment agreement, and (ii) in the case of a
Participant who does not have an employment agreement with the Company or a
Subsidiary, the involuntary termination of such Participant's employment by the
Company (or, if applicable, a Subsidiary) based upon a determination by the
Administrator or an authorized officer of the Company (or such Subsidiary) that
such Participant has engaged in gross negligence or willful misconduct in the
performance of, or such Participant has abused alcohol or drugs rendering him or
her unable to perform, the material duties and services required of him or her
in his or her employment.

"Change in Control" shall have the same meaning as is assigned to such term
under the Incentive Plan 2000, as in effect on March 12, 2004, taking into
account amendments effected on that date.

"Change Year" means the calendar year during which a Change in Control occurs.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" means a committee of the Board comprised solely of two or more
outside directors (within the meaning of the term "outside directors" as used in
section 162(m) of the Code). Such committee shall be the Human Resources
Committee of the Board unless and until the Board designates another committee
of the Board to serve as the Committee.

"Company" means Continental Airlines, Inc., a Delaware corporation.

"Company Stock" means the Class B common stock, par value $0.01 per share, of
the Company.

"Disability" or "Disabled" means, with respect to a Participant, such
Participant's disability entitling him or her to benefits under the Company's
group long-term disability plan; provided, however, that if such Participant is
not eligible to participate in such plan, then such Participant shall be
considered to have incurred a "Disability" if and when the Administrator
determines in its discretion that such Participant has become incapacitated for
a period of at least 180 days by accident, sickness, or other circumstance which
renders such Participant mentally or physically incapable of performing the
material duties and services required of him or her in his or her employment on
a full-time basis during such period.

"EBITDAR" means, with respect to the Company and each company in the Industry
Group and each NLTIP Performance Period, the aggregate earnings of the Company
or such company and its consolidated subsidiaries during the Performance Period,
determined prior to the charges, costs, and expenses associated with interest,
income taxes, depreciation, amortization, and aircraft rent. EBITDAR shall be
determined based on the regularly prepared and publicly available statements of
operations of the Company and each company in the Industry Group prepared in
accordance with GAAP (and if necessary to determine certain items, based on Form
41 data filed by the Company or such company with the Department of
Transportation); provided, however, that EBITDAR shall be adjusted to exclude
(i) non-operating income or expense, (ii) write-offs of assets (including
aircraft and associated parts), (iii) one-time gains or losses from the disposal
of assets, and (iv) any other item of gain, loss, or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence, in each case
under clauses (i), (ii), (iii) and (iv) as determined by the Committee in
accordance with GAAP. If the fiscal year of a company in the Industry Group is
not the calendar year, then such company's EBITDAR for an NLTIP Performance
Period shall be determined based upon the fiscal quarters of such company that
coincide with the fiscal quarters contained in such Performance Period. Further,
if a company in the Industry Group provides publicly available statements of
operations with respect to its airline business that are separate from the
statements of operations provided with respect to its other businesses, then
such company's EBITDAR shall be determined based solely upon the separately
provided statements of operations pertaining to its airline business.

"EBITDAR Margin" means, with respect to the Company and each company in the
Industry Group and each NLTIP Performance Period, the cumulative EBITDAR for the
Company or such company for such Performance Period divided by the Company's or
such company's cumulative revenues (determined on a consolidated basis based on
the regularly prepared and publicly available statements of operations of the
Company or such company prepared in accordance with GAAP) over such Performance
Period. If the fiscal year of a company in the Industry Group is not the
calendar year, then such company's EBITDAR Margin for an NLTIP Performance
Period shall be determined based upon the fiscal quarters of such company that
coincide with the fiscal quarters contained in such Performance Period. Further,
if a company in the Industry Group provides publicly available statements of
operations with respect to its airline business that are separate from the
statements of operations provided with respect to its other businesses, then
such company's EBITDAR Margin shall be determined based solely upon the
separately provided statements of operations pertaining to its airline business.

"Eligible Employee" means any individual who is a staff vice president or more
senior officer of the Company or a Subsidiary.

"Entry EBITDAR Margin" means, with respect to each NLTIP Performance Period, the
percentage determined by calculating the simple average of the EBITDAR Margins
of the companies in the Industry Group with respect to such Performance Period.

"GAAP" means United States generally accepted accounting principles,
consistently applied.

"Incentive Plan 2000" means the Continental Airlines, Inc. Incentive Plan 2000,
as amended from time to time.

"Industry Group" means, with respect to each NLTIP Performance Period, the
companies determined in accordance with the provisions of Article V for such
Performance Period.

"Market Value per Share" means, as of any specified date, the simple average of
the closing sales prices of Company Stock in the principal securities market in
which the Company Stock is then traded over the 20 most recent consecutive
Trading Days ending on the last Trading Day preceding the specified date,
adjusted appropriately by the Committee for any stock splits, stock dividends,
reverse stock splits, special dividends or other similar matters occurring
during or with respect to any relevant measurement period.

"NLTIP Performance Period" means: (i) as to the first NLTIP Performance Period
under the Program, the period commencing on April 1, 2004 and ending on December
31, 2006, and (ii) each three-year period commencing on the first day of a
calendar year that begins on or after January 1, 2005. Notwithstanding the
foregoing, no new NLTIP Performance Period shall commence on or after the date
upon which a Change in Control occurs, unless otherwise determined by the
Committee.

"Participant" means an Eligible Employee who has received an Award under the
Program with respect to a Performance Period pursuant to Section 4.1.

"Payment Amount" (A) with respect to RSU Awards means, with respect to each
Participant and each RSU Performance Period with respect to which the RSU
Performance Target is satisfied, an amount equal to 100% of the RSU Value,
determined as of the last day of the relevant RSU Performance Period (or, in the
event of a Change in Control, as of the date of the Change in Control, or in the
event of death, Disability or Retirement of a Participant, as of the date of
such death, Disability or Retirement), and (B) with respect to NLTIP Awards
means, with respect to each Participant and each NLTIP Performance Period for
which the NLTIP Performance Target is satisfied, an amount equal to (i) such
Participant's Base Amount in effect as of the earlier of (1) the last day of
such NLTIP Performance Period, (2) the date of such Participant's death,
Disability or Retirement, or (3) the day immediately preceding the date upon
which such Participant suffers a Qualifying Event in connection with, after, or
in contemplation of a Change in Control, multiplied by (ii) the Payout
Percentage applicable to such Participant for such NLTIP Performance Period.
Notwithstanding the foregoing, a Payment Amount may be pro-rated as provided in
the Program.

"Payout Percentage" means, with respect to each NLTIP Performance Period for
which the NLTIP Performance Target is satisfied:

(i) In the case of a Participant who is the Company's Chief Executive Officer as
of the earlier of (1) the last day of such Performance Period, (2) the date of
such Participant's death, Disability or Retirement, or (3) the day immediately
preceding the date upon which such Participant suffers a Qualifying Event in
connection with, after, or in contemplation of a Change in Control, 75% plus (A)
if the Company's EBITDAR Margin with respect to such Performance Period exceeds
the Entry EBITDAR Margin with respect to such Performance Period, an additional
percentage equal to (x) 25 divided by (y) the difference between the Target
EBITDAR Margin with respect to such Performance Period and the Entry EBITDAR
Margin with respect to such Performance Period (expressed in Basis Points), for
each Basis Point that the Company's EBITDAR Margin with respect to such
Performance Period exceeds the Entry EBITDAR Margin with respect to such
Performance Period, up to and including the Target EBITDAR Margin with respect
to such Performance Period, and (B) if the Company's EBITDAR Margin with respect
to such Performance Period exceeds the Target EBITDAR Margin with respect to
such Performance Period, an additional percentage equal to (x) 50 divided by (y)
the difference between the Stretch EBITDAR Margin with respect to such
Performance Period and the Target EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Target EBITDAR Margin with respect to such Performance Period, up to and
including the Stretch EBITDAR Margin with respect to such Performance Period;

(ii) In the case of a Participant who is the Company's President as of the
earlier of (1) the last day of such Performance Period, (2) the date of such
Participant's death, Disability or Retirement, or (3) the day immediately
preceding the date upon which such Participant suffers a Qualifying Event in
connection with, after, or in contemplation of a Change in Control, 70% plus (A)
if the Company's EBITDAR Margin with respect to such Performance Period exceeds
the Entry EBITDAR Margin with respect to such Performance Period, an additional
percentage equal to (x) 20 divided by (y) the difference between the Target
EBITDAR Margin with respect to such Performance Period and the Entry EBITDAR
Margin with respect to such Performance Period (expressed in Basis Points), for
each Basis Point that the Company's EBITDAR Margin with respect to such
Performance Period exceeds the Entry EBITDAR Margin with respect to such
Performance Period, up to and including the Target EBITDAR Margin with respect
to such Performance Period, and (B) if the Company's EBITDAR Margin with respect
to such Performance Period exceeds the Target EBITDAR Margin with respect to
such Performance Period, an additional percentage equal to (x) 45 divided by (y)
the difference between the Stretch EBITDAR Margin with respect to such
Performance Period and the Target EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Target EBITDAR Margin with respect to such Performance Period, up to and
including the Stretch EBITDAR Margin with respect to such Performance Period;

(iii) In the case of a Participant who is an Executive Vice President of the
Company as of the earlier of (1) the last day of such Performance Period, (2)
the date of such Participant's death, Disability or Retirement, or (3) the day
immediately preceding the date upon which such Participant suffers a Qualifying
Event in connection with, after, or in contemplation of a Change in Control, 50%
plus (A) if the Company's EBITDAR Margin with respect to such Performance Period
exceeds the Entry EBITDAR Margin with respect to such Performance Period, an
additional percentage equal to (x) 25 divided by (y) the difference between the
Target EBITDAR Margin with respect to such Performance Period and the Entry
EBITDAR Margin with respect to such Performance Period (expressed in Basis
Points), for each Basis Point that the Company's EBITDAR Margin with respect to
such Performance Period exceeds the Entry EBITDAR Margin with respect to such
Performance Period, up to and including the Target EBITDAR Margin with respect
to such Performance Period, and (B) if the Company's EBITDAR Margin with respect
to such Performance Period exceeds the Target EBITDAR Margin with respect to
such Performance Period, an additional percentage equal to (x) 25 divided by (y)
the difference between the Stretch EBITDAR Margin with respect to such
Performance Period and the Target EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Target EBITDAR Margin with respect to such Performance Period, up to and
including the Stretch EBITDAR Margin with respect to such Performance Period;

(iv) In the case of a Participant who is a Senior Vice President of the Company
(or the President of a Subsidiary) as of the earlier of (1) the last day of such
Performance Period, (2) the date of such Participant's death, Disability or
Retirement, or (3) the day immediately preceding the date upon which such
Participant suffers a Qualifying Event in connection with, after, or in
contemplation of a Change in Control, 30% plus (A) if the Company's EBITDAR
Margin with respect to such Performance Period exceeds the Entry EBITDAR Margin
with respect to such Performance Period, an additional percentage equal to (x)
20 divided by (y) the difference between the Target EBITDAR Margin with respect
to such Performance Period and the Entry EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Entry EBITDAR Margin with respect to such Performance Period, up to and
including the Target EBITDAR Margin with respect to such Performance Period, and
(B) if the Company's EBITDAR Margin with respect to such Performance Period
exceeds the Target EBITDAR Margin with respect to such Performance Period, an
additional percentage equal to (x) 20 divided by (y) the difference between the
Stretch EBITDAR Margin with respect to such Performance Period and the Target
EBITDAR Margin with respect to such Performance Period (expressed in Basis
Points), for each Basis Point that the Company's EBITDAR Margin with respect to
such Performance Period exceeds the Target EBITDAR Margin with respect to such
Performance Period, up to and including the Stretch EBITDAR Margin with respect
to such Performance Period;

(v) In the case of a Participant (other than a Participant described in any of
clauses (i), (ii), (iii) or (iv) above) who is a participant in the Annual
Executive Bonus Program as of the earlier of (1) the last day of such
Performance Period, (2) the date of such Participant's death, Disability or
Retirement, or (3) the day immediately preceding the date upon which such
Participant suffers a Qualifying Event in connection with, after, or in
contemplation of a Change in Control, 25% plus (A) if the Company's EBITDAR
Margin with respect to such Performance Period exceeds the Entry EBITDAR Margin
with respect to such Performance Period, an additional percentage equal to (x)
15 divided by (y) the difference between the Target EBITDAR Margin with respect
to such Performance Period and the Entry EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Entry EBITDAR Margin with respect to such Performance Period, up to and
including the Target EBITDAR Margin with respect to such Performance Period, and
(B) if the Company's EBITDAR Margin with respect to such Performance Period
exceeds the Target EBITDAR Margin with respect to such Performance Period, an
additional percentage equal to (x) 15 divided by (y) the difference between the
Stretch EBITDAR Margin with respect to such Performance Period and the Target
EBITDAR Margin with respect to such Performance Period (expressed in Basis
Points), for each Basis Point that the Company's EBITDAR Margin with respect to
such Performance Period exceeds the Target EBITDAR Margin with respect to such
Performance Period, up to and including the Stretch EBITDAR Margin with respect
to such Performance Period;

In the case of a Participant who is designated as a Category 1 officer by the
Administrator and is not described in any of clauses (i), (ii), (iii), (iv) or
(v) above as of the earlier of (1) the last day of such Performance Period, (2)
the date of such Participant's death, Disability or Retirement, or (3) the day
immediately preceding the date upon which such Participant suffers a Qualifying
Event in connection with, after, or in contemplation of a Change in Control, 40%
plus (A) if the Company's EBITDAR Margin with respect to such Performance Period
exceeds the Entry EBITDAR Margin with respect to such Performance Period, an
additional percentage equal to (x) 15 divided by (y) the difference between the
Target EBITDAR Margin with respect to such Performance Period and the Entry
EBITDAR Margin with respect to such Performance Period (expressed in Basis
Points), for each Basis Point that the Company's EBITDAR Margin with respect to
such Performance Period exceeds the Entry EBITDAR Margin with respect to such
Performance Period, up to and including the Target EBITDAR Margin with respect
to such Performance Period, and (B) if the Company's EBITDAR Margin with respect
to such Performance Period exceeds the Target EBITDAR Margin with respect to
such Performance Period, an additional percentage equal to (x) 30 divided by (y)
the difference between the Stretch EBITDAR Margin with respect to such
Performance Period and the Target EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Target EBITDAR Margin with respect to such Performance Period, up to and
including the Stretch EBITDAR Margin with respect to such Performance Period;

In the case of a Participant who is designated as a Category 2 officer by the
Administrator and is not described in any of clauses (i), (ii), (iii), (iv), (v)
or (vi) above as of the earlier of (1) the last day of such Performance Period,
(2) the date of such Participant's death, Disability or Retirement, or (3) the
day immediately preceding the date upon which such Participant suffers a
Qualifying Event in connection with, after, or in contemplation of a Change in
Control, 30% plus (A) if the Company's EBITDAR Margin with respect to such
Performance Period exceeds the Entry EBITDAR Margin with respect to such
Performance Period, an additional percentage equal to (x) 10 divided by (y) the
difference between the Target EBITDAR Margin with respect to such Performance
Period and the Entry EBITDAR Margin with respect to such Performance Period
(expressed in Basis Points), for each Basis Point that the Company's EBITDAR
Margin with respect to such Performance Period exceeds the Entry EBITDAR Margin
with respect to such Performance Period, up to and including the Target EBITDAR
Margin with respect to such Performance Period, and (B) if the Company's EBITDAR
Margin with respect to such Performance Period exceeds the Target EBITDAR Margin
with respect to such Performance Period, an additional percentage equal to (x)
25 divided by (y) the difference between the Stretch EBITDAR Margin with respect
to such Performance Period and the Target EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Target EBITDAR Margin with respect to such Performance Period, up to and
including the Stretch EBITDAR Margin with respect to such Performance Period;
and

In the case of a Participant who is designated as a Category 3 officer by the
Administrator and is not described in any of clauses (i), (ii), (iii), (iv),
(v), (vi) or (vii) above as of the earlier of (1) the last day of such
Performance Period, (2) the date of such Participant's death, Disability or
Retirement, or (3) the day immediately preceding the date upon which such
Participant suffers a Qualifying Event in connection with, after, or in
contemplation of a Change in Control, 15% plus (A) if the Company's EBITDAR
Margin with respect to such Performance Period exceeds the Entry EBITDAR Margin
with respect to such Performance Period, an additional percentage equal to (x) 5
divided by (y) the difference between the Target EBITDAR Margin with respect to
such Performance Period and the Entry EBITDAR Margin with respect to such
Performance Period (expressed in Basis Points), for each Basis Point that the
Company's EBITDAR Margin with respect to such Performance Period exceeds the
Entry EBITDAR Margin with respect to such Performance Period, up to and
including the Target EBITDAR Margin with respect to such Performance Period, and
(B) if the Company's EBITDAR Margin with respect to such Performance Period
exceeds the Target EBITDAR Margin with respect to such Performance Period, an
additional percentage equal to (x) 10 divided by (y) the difference between the
Stretch EBITDAR Margin with respect to such Performance Period and the Target
EBITDAR Margin with respect to such Performance Period (expressed in Basis
Points), for each Basis Point that the Company's EBITDAR Margin with respect to
such Performance Period exceeds the Target EBITDAR Margin with respect to such
Performance Period, up to and including the Stretch EBITDAR Margin with respect
to such Performance Period.

"Performance Period" means an NLTIP Performance Period or an RSU Performance
Period, as applicable or as the context requires.

"Performance Target" means (A) with respect to an NLTIP Performance Period, that
(1) the Cash Hurdle with respect to such Performance Period has been achieved,
and (2) the Company's EBITDAR Margin with respect to such Performance Period
equals or exceeds the Entry EBITDAR Margin with respect to such Performance
Period (clauses (A)(1) and (2) together, the "NLTIP Performance Target"), or (B)
with respect to an RSU Performance Period, that the Market Value per Share at
any date during the Performance Period has been equal to or greater than the
Target Price with respect to such Performance Period (clause (B), the "RSU
Performance Target").

"Program" means this Continental Airlines, Inc. Long Term Incentive and RSU
Program, as amended from time to time.

"Qualifying Event" means, with respect to a Participant, (i) the termination of
such Participant's employment with the Company, (ii) the assignment to such
Participant by the Board or the Administrator or other officers or
representatives of the Company (or, if applicable, a Subsidiary) of duties
materially inconsistent with the duties associated with his or her position as
such duties are constituted as of the first day of the Change Year, (iii) a
material diminution in the nature or scope of such Participant's authority,
responsibilities, or title from those applicable to him or her as of the first
day of the Change Year, (iv) the occurrence of material acts or conduct on the
part of the Company (or, if applicable, a Subsidiary) or its officers or
representatives which prevent such Participant from performing his or her duties
and responsibilities as they existed on the first day of the Change Year, (v)
the Company (or, if applicable, a Subsidiary) requiring such Participant to be
permanently based anywhere outside a major urban center in the state (or, if
applicable, foreign country, U.S. territory or other applicable sovereign
entity) in which he or she was based as of the first day of the Change Year, or
(vi) the taking of any action by the Company (or, if applicable, a Subsidiary)
that would materially adversely affect the corporate amenities enjoyed by such
Participant on the first day of the Change Year, except in each case if such
Participant's employment with the Company is terminated (1) for Cause, (2) upon
such Participant's death, Disability or Retirement, or (3) upon the voluntary
resignation of such Participant (other than in connection with circumstances
which would permit such Participant to receive severance benefits (including a
"Termination Payment" or "Monthly Severance Amount," as such terms are defined
in such Participant's employment agreement) pursuant to any contract of
employment between such Participant and the Company or any Subsidiary).

"Retirement," "Retires" or "Retired" means retirement of a Participant from
employment with the Company pursuant to the provisions of the Continental
Retirement Plan, as amended from time to time.

"RSUs" means the method of denominating RSU Awards, which shall be granted in
whole numbers. The number of RSUs subject to an outstanding RSU Award shall be
subject to appropriate adjustment by the Committee for any stock splits, stock
dividends, reverse stock splits, special dividends or other similar matters
relating to Company Stock occurring after the date of grant of such Award and
during or with respect to the applicable Performance Period.

"RSU Value" of an RSU Award, as of a specified date, means the dollar amount
calculated by multiplying the number of RSUs subject to the RSU Award as of the
specified date times the Market Value per Share as of the specified date.

"RSU Performance Period" means: (i) as to the first RSU Performance Period under
the Program, the period commencing on April 1, 2004 and ending on June 30, 2005,
(ii) as to the second RSU Performance Period under the Program, the period
commencing on April 1, 2004 and ending on March 31, 2006, (iii) as to the third
RSU Performance Period under the Program, the period commencing on April 1, 2004
and ending on December 31, 2007, and (iv) each four-year period commencing on
the first day of a calendar year that begins on or after January 1, 2005.
Notwithstanding the foregoing, no new RSU Performance Period shall commence on
or after the date upon which a Change in Control occurs, unless otherwise
determined by the Committee.

"Stretch EBITDAR Margin" means, with respect to an NLTIP Performance Period, the
percentage determined by the Committee to be the Stretch EBITDAR Margin with
respect to such Performance Period as provided in Section 3.1 hereof, which
shall be expressed as the Target EBITDAR Margin plus that number of Basis Points
determined by the Committee as provided in Section 3.1.

"Subsidiary" for purposes of participation in this Program means any entity
(other than the Company) with respect to which the Company, directly or
indirectly through one or more other entities, owns equity interests possessing
50 percent or more of the total combined voting power of all equity interests of
such entity (excluding voting power that arises only upon the occurrence of one
or more specified events).

"Target EBITDAR Margin" means, with respect to an NLTIP Performance Period, the
percentage determined by the Committee to be the Target EBITDAR Margin with
respect to such Performance Period as provided in Section 3.1 hereof, which
shall be expressed as the Entry EBITDAR Margin plus that number of Basis Points
determined by the Committee as provided in Section 3.1.

"Target Price" with respect to an RSU Performance Period means the dollar value
per share of Company Stock specified by the Committee as the Target Price for
such RSU Performance Period as provided in Section 3.1, which Target Price shall
be appropriately adjusted by the Committee for any stock splits, stock
dividends, reverse splits, special dividends or other similar events occurring
during or with respect to the RSU Performance Period.

"Trading Day" means a day during which trading in securities generally occurs in
the principal securities market in which Company Stock is traded.

2.2 Number, Gender, Headings, and Periods of Time

. Wherever appropriate herein, words used in the singular shall be considered to
include the plural, and words used in the plural shall be considered to include
the singular. The masculine gender, where appearing in the Program, shall be
deemed to include the feminine gender. The headings of Articles, Sections, and
Paragraphs herein are included solely for convenience. If there is any conflict
between such headings and the text of the Program, the text shall control. All
references to Articles, Sections, and Paragraphs are to this Program unless
otherwise indicated. Any reference in the Program to a period or number of days,
weeks, months, or years shall mean, respectively, calendar days, calendar weeks,
calendar months, or calendar years unless expressly provided otherwise.

 

III. ADMINISTRATION

3.1 Administration by the Administrator.

The Program shall be administered by the Administrator, so that (i) Awards made
to, and the administration (or interpretation of any provision) of the Program
as it relates to, any person who is subject to Section 16, shall be made or
effected by the Committee, and (ii) Awards made to, and the administration (or
interpretation of any provision) of the Program as it relates to, any person who
is not subject to Section 16, shall be made or effected by the Chief Executive
Officer of the Company (or, if the Chief Executive Officer is not a director of
the Company, the Committee), unless the Program specifies that the Committee
shall take specific action (in which case such action may only be taken by the
Committee) or the Committee (as to any Award described in this clause (ii) or
the administration or interpretation of any specific provision of the Program)
specifies that it shall serve as Administrator. The action of a majority of the
members of the Committee will be the act of the Committee.

The Committee shall, promptly upon adoption of the Program in the case of all
Performance Periods commencing on April 1, 2004, and prior to the commencement
of each Performance Period beginning on or after January 1, 2005, establish in
writing (for NLTIP Awards) the applicable Target EBITDAR Margin and Stretch
EBITDAR Margin (such that at all times the Stretch EBITDAR Margin shall be
higher than the Target EBITDAR Margin, which in turn shall be higher than the
Entry EBITDAR Margin) and the Cash Hurdle for each such Performance Period, and
(for RSU Awards) the applicable Target Price for each such Performance Period,
in each case for purposes of this Program.

3.2

Powers of the Administrator. The Administrator shall supervise the
administration and enforcement of the Program according to the terms and
provisions hereof and shall have the sole discretionary authority and all of the
powers necessary to accomplish these purposes. The Administrator (which shall be
limited solely to the Committee with respect to clauses (e), (f), (g), and (h)
below and as described in clause (c) below) shall have all of the powers
specified for it under the Program, including, without limitation, the power,
right, or authority: (a) to designate an Eligible Employee as a Participant with
respect to a Performance Period at any time prior to the last day of such
period, (b) from time to time to establish rules and procedures for the
administration of the Program, which are not inconsistent with the provisions of
the Program or the Incentive Plan 2000, and any such rules and procedures shall
be effective as if included in the Program, (c) to construe in its discretion
all terms, provisions, conditions and limitations of the Program and any Award,
and to determine the number of RSUs subject to an RSU Award to a Participant
(which determination with respect to any person who is subject to Section 16
shall be made only by the Committee), (d) to correct any defect or to supply any
omission or to reconcile any inconsistency that may appear in the Program in
such manner and to such extent as the Administrator shall deem appropriate, (e)
to determine the Target Price, the Target EBITDAR Margin and the Stretch EBITDAR
Margin with respect to each relevant Performance Period, (f) to determine the
Cash Hurdle for each relevant Performance Period, (g) to make determinations as
to whether the Performance Targets for the various Performance Periods were
satisfied, (h) to certify in writing, prior to the payment of any amount under
the Program with respect to a Performance Period, whether the Performance
Targets relating to such Performance Period and any other material terms of the
Program have in fact been satisfied, and (i) to make all other determinations
necessary or advisable for the administration of the Program. The Administrator
may correct any defect or supply any omission or reconcile any inconsistency in
the Program or in any Award or Award Notice in the manner and to the extent it
shall deem expedient to carry it into effect.

3.3

Administrator Decisions Conclusive; Standard of Care. The Administrator shall,
in its sole discretion exercised in good faith (which, for purposes of this
Section 3.3, shall mean the application of reasonable business judgment), make
all decisions and determinations and take all actions necessary in connection
with the administration of the Program. All such decisions, determinations, and
actions by the Administrator shall be final, binding, and conclusive upon all
persons. However, in the event of any conflict in any such determination as
between the Committee and the Chief Executive Officer of the Company, each
acting in its or his capacity as Administrator of the Plan, the determination of
the Committee shall be conclusive. The Administrator shall not be liable for any
action or determination taken or made in good faith or upon reliance in good
faith on the records of the Company or information presented to the
Administrator by the Company's officers, employees, or other persons (including
the Company's outside auditors) as to matters the Administrator reasonably
believes are within such other person's professional or expert competence. If a
Participant disagrees with any decision, determination, or action made or taken
by the Administrator, then the dispute will be limited to whether the
Administrator has satisfied its duty to make such decision or determination or
take such action in good faith. No liability whatsoever shall attach to or be
incurred by any past, present or future stockholders, officers or directors, as
such, of the Company or any of its Subsidiaries, under or by reason of the
Program or the administration thereof, and each Participant, in consideration of
receiving benefits and participating hereunder, expressly waives and releases
any and all claims relating to any such liability.

 

IV. PARTICIPATION AND AWARD NOTICES

4.1

Participation. Each individual who is an Eligible Employee on the first day of a
Performance Period shall automatically be a Participant and receive an Award
with respect to such Performance Period, unless otherwise determined by the
Administrator prior to the first day of the relevant Performance Period. NLTIP
Awards shall be made with respect to NLTIP Performance Periods, and RSU Awards
shall be made with respect to RSU Performance Periods. Each individual who
becomes an Eligible Employee after the first day of a Performance Period shall
become a Participant and receive an Award with respect to such Performance
Period only if such individual is selected prior to the last day of such
Performance Period by the Administrator in its sole discretion for participation
in the Program with respect to such Performance Period. Payment Amounts with
respect to an individual who becomes a Participant with respect to a Performance
Period after the first day of such Performance Period shall be pro-rated based
on a fraction, the numerator of which is (except as otherwise provided in
Section 6.3 or Section 6.4) the number of days during the period beginning on
the date of such Participant's commencement of participation in the Program for
such Performance Period and ending on the last day of such Performance Period,
and the denominator of which is the total number of days in such Performance
Period.

4.2 Award Notices.

The Company shall provide an Award Notice to each Eligible Employee who becomes
a Participant with respect to a Performance Period within 30 days after such
Eligible Employee becomes such a Participant; provided, however, that Award
Notices for the Performance Periods that begin on April 1, 2004 shall be
provided on or before May 15, 2004. With respect to RSU Awards to a Participant,
the Administrator shall determine in each case the number of RSUs subject to the
RSU Award as of the date of grant of the RSU Award. Each Award Notice with
respect to an RSU Award shall specify (a) the Performance Period to which the
Award relates, (b) the applicable Target Price, and (c) the number of RSUs
subject to the Award as of the date of grant of the Award. Each Award Notice
with respect to an NLTIP Award shall specify (a) the Performance Period to which
the Award relates, (b) the applicable Cash Hurdle, Target EBITDAR Margin and
Stretch EBITDAR Margin, and (c) the applicable Payout Percentages set forth in
Section 2.1(bb) hereof with respect to the Participant applicable upon the date
of grant of the Award.

V. INDUSTRY GROUP

5.1 Initial Designation.

The Industry Group shall consist of Alaska Air Group, Inc., America West
Holdings Corporation, AMR Corporation, Delta Air Lines, Inc., Northwest Airlines
Corporation, Southwest Airlines Co., UAL Corporation, and US Airways Group,
Inc.; provided, however, that (a) within 90 days after the first day of each
NLTIP Performance Period that begins on or after January 1, 2005, the Committee
may in its discretion add any United States certificated scheduled mainline air
carrier to, or remove any such company from, the Industry Group for such
Performance Period and (b) the Industry Group for each NLTIP Performance Period
shall be subject to adjustment as provided in Section 5.2.

5.2 Adjustments to the Industry Group During an NLTIP Performance Period.

Except as provided in clause (a) of the proviso to Section 5.1, no company shall
be added to, or removed from, the Industry Group for an NLTIP Performance Period
during such period; provided, however, that a company shall be removed from the
Industry Group for an NLTIP Performance Period if (a) during such period, (i)
such company ceases to maintain publicly available statements of operations
prepared in accordance with GAAP, (ii) such company is not the surviving entity
in any merger, consolidation, or other non-bankruptcy reorganization (or
survives only as a subsidiary of an entity other than a previously wholly owned
subsidiary of such company), (iii) such company sells, leases, or exchanges all
or substantially all of its assets to any other person or entity (other than a
previously wholly owned subsidiary of such company), or (iv) such company is
dissolved and liquidated, or (b) more than 20% of such company's revenues
(determined on a consolidated basis based on the regularly prepared and publicly
available statements of operations of such company prepared in accordance with
GAAP) for any fiscal year of such company that ends during such Performance
Period are attributable to the operation of businesses other than such company's
airline business and such company does not provide publicly available statements
of operations with respect to its airline business that are separate from the
statements of operations provided with respect to its other businesses.

VI. AWARD PAYMENTS

6.1 Determinations and Certification by the Committee.

As soon as administratively feasible after the end of each NLTIP Performance
Period and RSU Performance Period, as the case may be, the Committee shall
determine whether the applicable Performance Target for such Performance Period
has been met and whether any other material terms relating to the payment of the
related Awards have been satisfied. The Committee's determination as to whether
the applicable Performance Target for a Performance Period and any other
material terms relating to the payment of the related Awards have been satisfied
shall be certified by the Committee in writing and delivered to the Secretary of
the Company. For purposes of the preceding sentence, approved minutes of the
Committee meeting in which the certification is made shall be treated as a
written certification.

6.2

Eligibility for Payment of Awards. Upon the Committee's written certification in
accordance with Section 6.1 that the applicable NLTIP Performance Target for an
NLTIP Performance Period or the applicable RSU Performance Target for an RSU
Performance Period and any other material terms relating to the payment of the
related Awards have been satisfied, each Participant who has received an Award
with respect to the relevant Performance Period for which the related
Performance Target and other material terms have been satisfied and who has
remained continuously employed by the Company from the date he or she received
such Award until the last day of such Performance Period shall be entitled to
the Payment Amount applicable to such Participant's Award for such Performance
Period. Except as provided in Section 6.3 and Section 6.4, if a Participant's
employment with the Company terminates for any reason whatsoever prior to the
last day of a Performance Period, then such Participant shall not be entitled to
receive any payment under the Program with respect to his or her Award for such
Performance Period, unless otherwise determined by the Administrator or
otherwise provided in the Participant's employment agreement with the Company.
Payment of the amount to which a Participant becomes entitled pursuant to this
Section 6.2 shall be made by the Company within five business days after the
Committee's written certification of the satisfaction of the applicable
Performance Target.

6.3

Death, Disability or Retirement. Except as provided in Section 6.4 and except as
specifically provided in a Participant's employment agreement or retirement
agreement with the Company, if during a Performance Period with respect to which
a Participant has received an Award, such Participant dies or becomes Disabled
or Retires, then as to such Participant only (a) the Administrator, with respect
to each RSU Performance Period that began prior to the date of such
Participant's death, Disability or Retirement and which has not ended as of such
date, shall as promptly as practicable determine whether the Market Value per
Share at any date during such Performance Period that is on or before the date
of such death, Disability or Retirement has been equal to or greater than the
Target Price with respect to such Performance Period (in which case the RSU
Performance Target shall be deemed to have been met, as to such Participant
only), (b) the Administrator, with respect to each NLTIP Performance Period that
began prior to the date of such Participant's death, Disability or Retirement
and which has not ended as of such date, shall as promptly as practicable
determine (based on publicly available data with respect to each NLTIP
Performance Period that began prior to the date of such Participant's death,
Disability or Retirement and which has not ended as of such date) the Company's
EBITDAR Margin and the Entry EBITDAR Margin through the most recent practicable
date and the Company's cash flow through the most recent practicable date, and
the Company's resulting cash, cash equivalents and short term investments,
excluding restricted cash, cash equivalents and short term investments at the
most recent practicable date, and shall determine, based on such data and
publicly available data with respect to the companies contained in the Industry
Group (and, if deemed appropriate by the Administrator, annualizing or otherwise
making assumptions with respect to any relevant data), whether the Company has
achieved the relevant NLTIP Performance Target through such most recent
practicable date (and if so, the NLTIP Performance Target shall be deemed to
have been met, as to such Participant only), and (c) the provisions of Sections
6.1 and 6.2 shall cease to apply with respect to each such Performance Period.
Except as provided in Section 6.4 and except as specifically provided in a
Participant's employment agreement or retirement agreement with the Company,
with respect to each such RSU Performance Period that began prior to the date of
such Participant's death, Disability or Retirement and which has not ended as of
such date that the Market Value per Share has been equal to or greater than the
Target Price with respect to such Performance Period as described in clause (a)
of the preceding sentence, such Participant (or, in the case of death, such
Participant's estate) shall (i) receive a payment from the Company, within five
business days after the determination by the Administrator referred to in clause
(a) of the foregoing sentence, equal to the relevant Payment Amount applicable
to such Participant's RSU Award for such RSU Performance Period, and (ii) not be
entitled to any additional payment under the program with respect to such RSU
Performance Period, and with respect to each NLTIP Performance Period that began
prior to the date of such Participant's death, Disability or Retirement and
which has not ended as of such date with respect to which the NLTIP Performance
Target has been satisfied in the manner described in clause (b) of the preceding
sentence, such Participant (or, in the case of death, such Participant's estate)
shall (i) receive a payment from the Company, within five business days after
the determination by the Administrator referred to in clause (b) of the
foregoing sentence, equal to the relevant Payment Amount applicable to such
Participant's NLTIP Award for such NLTIP Performance Period multiplied by a
fraction, the numerator of which is the number of days during the period
beginning on the date of such Participant's commencement of participation in the
Program for such NLTIP Performance Period and ending on the date such
Participant died, became Disabled or Retired, and the denominator of which is
the number of days in the entire NLTIP Performance Period, and (ii) not be
entitled to any additional payment under the Program with respect to such NLTIP
Performance Period.

6.4 Change in Control.

Upon the occurrence of a Change in Control, with respect to each Participant who
is employed by the Company on the day immediately preceding the date of such
Change in Control (or whose employment is terminated in connection therewith or
in contemplation thereof), (a) the Performance Targets, including achievement of
the Stretch EBITDAR Margin, for each Performance Period that began prior to the
date of such Change in Control and which has not ended as of such date shall be
deemed to have been satisfied, and (b) the provisions of Sections 6.1, 6.2 and
6.3 shall cease to apply with respect to each such Performance Period.

If a Change in Control occurs and thereafter (or in connection therewith or in
contemplation thereof) during an RSU Performance Period described in the first
paragraph of this Section 6.4 a Participant who has received an RSU Award with
respect to such RSU Performance Period suffers a Qualifying Event or subsequent
to the Change in Control dies, becomes Disabled, or Retires, then, with respect
to each such RSU Performance Period, such Participant (or, in the case of death,
such Participant's estate) shall (i) within five business days after the
occurrence of the Qualifying Event, death, Disability or Retirement, receive a
payment from the Company equal to the Payment Amount applicable to such
Participant's RSU Award for such RSU Performance Period, and (ii) not be
entitled to any additional payment under the Program with respect to such RSU
Performance Period.

If a Change in Control occurs and thereafter (or in connection therewith or in
contemplation thereof) during an NLTIP Performance Period described in the first
paragraph of this Section 6.4 a Participant who has received an NLTIP Award with
respect to such NLTIP Performance Period suffers a Qualifying Event or
subsequent to the Change in Control dies, becomes Disabled, or Retires, then,
with respect to each such NLTIP Performance Period, such Participant (or, in the
case of death, such Participant's estate) shall (i) within five business days
after the occurrence of the Qualifying Event, death, Disability or Retirement,
receive a payment from the Company equal to the Payment Amount applicable to
such Participant's NLTIP Award for such NLTIP Performance Period multiplied by a
fraction, the numerator of which is the number of days during the period
beginning on the date of such Participant's commencement of participation in the
Program for such NLTIP Performance Period and ending on the date such
Participant died, became Disabled, Retired or suffered the Qualifying Event, and
the denominator of which is the number of days in the entire NLTIP Performance
Period, and (ii) not be entitled to any additional payment under the Program
with respect to such NLTIP Performance Period.

If a Change in Control occurs and a Participant who has received an Award with
respect to a Performance Period described in the first paragraph of this Section
6.4 did not die, become Disabled, Retire or suffer a Qualifying Event during
such Performance Period and such Participant remained continuously employed by
the Company from the date he or she received such Award until the last day of
such Performance Period, then, with respect to each such Performance Period,
such Participant shall receive a payment from the Company within five business
days after the last day of such Performance Period in an amount equal to the
Payment Amount applicable to such Participant's Award for such Performance
Period.

6.5 Form of Payment of Awards.

All payments to be made under the Program to a Participant with respect to an
Award shall be paid in a single lump sum payment in cash. If at a future date
the Company's stockholders approve the use of shares of Company Stock for
payment of RSU Awards, then from and after the date of such stockholder
approval, the Committee may, in its sole discretion, direct that payment of RSU
Awards be made either (a) in shares of Company Stock (subject to any limitations
contained in the stockholder approved plan or program authorizing such payment),
but if and only if at the time of payment the Company has an effective
registration statement under the Securities Act of 1933, as amended, covering
the issuance of Company Stock under the Program, or (b) in a combination of cash
and/or shares of Company Stock. If the Committee elects to direct the Company to
pay all or a portion of a payment due for RSU Awards in shares of Company Stock,
then the number of shares of Company Stock shall be determined by dividing the
amount of such payment to be paid in shares of Company Stock by the Market Value
per Share as of the date used to determine the Payment Amount with respect to
such payment, and rounding such number down to the nearest whole share.

VII. TERMINATIONAND AMENDMENT OF PROGRAM

 

7.1 Termination and Amendment.

Subject to the terms of this Section 7.1, the Committee may amend the Program at
any time and from time to time, and the Committee may at any time terminate the
Program (in its entirety or as it applies to one or more specified Subsidiaries)
with respect to Performance Periods that have not commenced as of the date of
such Committee action; provided, however, that the Program may not be amended in
a manner that would impair the rights of any Participant with respect to any
outstanding Award without the consent of such Participant. No Participant's
participation herein may be terminated in contemplation of or in connection with
a Change in Control. This Program may not be amended or terminated in
contemplation of or in connection with a Change in Control unless adequate and
effective provision for the making of all payments otherwise payable pursuant to
Section 6.4 of this Program (as in effect on the date of initial adoption of the
Program by the Committee) with respect to such Change in Control shall be made
in connection with any such amendment or termination. The Committee shall remain
in existence after the termination of the Program for the period determined
necessary by the Committee to facilitate the termination of the Program and the
payment of any outstanding Awards hereunder, and all provisions of the Program
that are necessary, in the opinion of the Committee, for equitable operation of
the Program during such period shall remain in force.

 

VIII. MISCELLANEOUS PROVISIONS

8.1 No Effect on Employment Relationship.

Except as expressly provided otherwise herein, for all purposes of the Program,
a Participant shall be considered to be in the employment of the Company as long
as he or she remains employed on a full-time basis by the Company or any
Subsidiary. Nothing in the adoption of the Program, the grant of Awards, or the
payment of amounts under the Program shall confer on any person the right to
continued employment by the Company or any Subsidiary or affect in any way the
right of the Company (or a Subsidiary, if applicable) to terminate such
employment at any time. Unless otherwise provided in a written employment
agreement, the employment of each Participant shall be on an at-will basis, and
the employment relationship may be terminated at any time by either the
Participant or the Participant's employer for any reason whatsoever, with or
without cause. Any question as to whether and when there has been a termination
of a Participant's employment for purposes of the Program, and the reason for
such termination, shall be determined solely by and in the discretion of the
Administrator, and its determination shall be final, binding, and conclusive on
all parties.

8.2 Prohibition Against Assignment or Encumbrance.

No Award or other right, title, interest, or benefit hereunder shall ever be
assignable or transferable, or liable for, or charged with any of the torts or
obligations of a Participant or any person claiming under a Participant, or be
subject to seizure by any creditor of a Participant or any person claiming under
a Participant. No Participant or any person claiming under a Participant shall
have the power to anticipate or dispose of any Award or other right, title,
interest, or benefit hereunder in any manner until the same shall have actually
been distributed free and clear of the terms of the Program. Payments with
respect to an Award shall be payable only to the Participant (or (a) in the
event of a Disability that renders such Participant incapable of conducting his
or her own affairs, any payment due under the Program to such Participant shall
be made to his or her duly appointed legal representative and (b) in the event
of the death of a Participant, any payment due under the Program to such
Participant shall be made to his or her estate). Notwithstanding the preceding
provisions of this paragraph, the Administrator shall comply with the terms of
any qualified domestic relations order (as defined in the Incentive Plan 2000)
providing for the transfer or assignment of all or any portion of a
Participant's interest under the Program. The provisions of the Program shall be
binding on all successors and permitted assigns of a Participant, including
without limitation the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.

8.3 Unfunded, Unsecured Program.

The Program shall constitute an unfunded, unsecured obligation of the Company to
make payments of incentive compensation to certain individuals from its general
assets in accordance with the Program. Each Award granted under the Program
merely constitutes a mechanism for measuring such incentive compensation and
does not constitute a property right or interest in the Company, any Subsidiary,
or any of their assets. Neither the establishment of the Program, the granting
of Awards, nor any other action taken in connection with the Program shall be
deemed to create an escrow or trust fund of any kind.

8.4 No Rights of Participant.

No Participant shall have any security or other interest in any assets of the
Company or any Subsidiary or in Company Stock as a result of participation in
the Program (except after payment thereof to the Participant). Participants and
all persons claiming under Participants shall rely solely on the unsecured
promise of the Company set forth herein, and nothing in the Program, an Award or
an Award Notice shall be construed to give a Participant or anyone claiming
under a Participant any right, title, interest, or claim in or to any specific
asset, fund, entity, reserve, account, or property of any kind whatsoever owned
by the Company or any Subsidiary or in which the Company or any Subsidiary may
have an interest now or in the future; but each Participant shall have the right
to enforce any claim hereunder in the same manner as a general creditor. Neither
the establishment of the Program nor participation hereunder shall create any
right in any Participant to make any decision, or provide input with respect to
any decision, relating to the business of the Company or any Subsidiary.

8.5 Tax Withholding.

The Company and the Subsidiaries shall deduct and withhold, or cause to be
withheld, from a Participant's payment, including the delivery of Company Stock,
made under the Program, or from any other payment to such Participant, an amount
necessary to satisfy any and all tax withholding obligations arising under
applicable local, state, federal, or foreign laws associated with such payment.
The Company and the Subsidiaries may take any other action as may in their
opinion be necessary to satisfy all obligations for the payment and withholding
of such taxes.

8.6 No Effect on Other Compensation Arrangements

. Nothing contained in the Program or any Participant's Award or Award Notice
shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements affecting any Participant.
Nothing in the Program shall be construed to affect the provisions of any other
compensation plan or program maintained by the Company or any Subsidiary.

8.7 Subsidiaries

. The Company may require any Subsidiary employing a Participant to assume and
guarantee the Company's obligations hereunder to such Participant, either at all
times or solely in the event that such Subsidiary ceases to be a Subsidiary.

8.8 Governing Law

. The Program shall be construed in accordance with the laws of the State of
Texas.

 

*******

IN WITNESS WHEREOF,

the undersigned officer of the Company acting pursuant to authority granted to
him by the Committee has executed this instrument effective as of April 9, 2004.

CONTINENTAL AIRLINES, INC.

 

By: /s/ Jeffery A. Smisek

Jeffery A. Smisek

Executive Vice President