EXHIBIT 10.19

 

 

February 20, 2008

[name and address of director]

RE: Continental Airlines Flight Benefits

Dear [first name],

At its November 27, 2007 meeting, the Board of Directors of Continental
Airlines, Inc. (the "Company"), acting pursuant to the recommendation of the
Corporate Governance Committee of the Board of Directors and resolutions duly
adopted by the Board, made certain adjustments to our flight benefits program in
order to comply with I.R.C. Section 409A ("409A"). This letter agreement sets
forth the contractual obligations of the parties with respect to the flight
benefits, as contemplated and authorized by such resolutions. This letter
agreement supersedes and replaces any prior agreements between you and the
Company relating to flight benefits.

Flight Benefits are provided for your lifetime subject to the terms and
conditions set forth in Exhibit A attached hereto. For purposes of Exhibit A,
you are referred to as "Non-Employee Director."

This letter agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including without limitation any
person, association, or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of the Company by any means, whether
director or indirect, by purchase, merger, consolidation, or otherwise. This
letter agreement and the benefits or obligations hereunder may not be assigned
by you.

If you are in agreement with the terms of this letter agreement and the terms of
the flight benefits set forth on Exhibit A, please execute the attached copy
hereof and return it to the Company at the above address, whereupon this letter
agreement will become a binding obligation of the parties hereto.

Very truly yours,

CONTINENTAL AIRLINES, INC. ACCEPTED AND AGREED

As of the date first above written

 

By: __________________________

Jennifer L. Vogel [name of director]

Senior Vice President,

General Counsel, Secretary and

Chief Compliance Officer

 

Continental Airlines, Inc.

Flight Benefits Effective January 1, 2008

 

1. Scope; Effectiveness. Effective January 1, 2008, Flight Benefits will be
provided for your lifetime subject to the terms set forth in this Exhibit A.
Non-Employee Director's accrued benefits and rights with respect to the Flight
Benefits under the terms of Non-Employee Director's existing agreement(s) with
Company are hereby surrendered and cancelled.

2. Definitions. As used in this Exhibit, the following terms shall have the
meanings assigned below.

(i) "Flight Benefits" shall mean lifetime flight benefits on each airline in the
CO System consisting of the following:

(a) space available flight passes, including appropriate flight pass
identification cards, for Non-Employee Director and Non-Employee Director's
Eligible Family Members;

(b) a Universal Air Travel Plan (UATP) card or, in the event of discontinuance
of the UATP program, a similar charge card or other authorization mechanism
permitting the purchase of air travel through direct billing to Company or any
successor or successors thereto (which successor card or mechanism shall be
deemed included as appropriate in all references herein to "UATP card") in
Non-Employee Director's name for charging (subject to the restrictions set forth
in paragraph 3 below) on an annual, calendar-year basis up to the Annual Travel
Limit, tickets on the CO System (in any fare class) for travel by Non-Employee
Director, Non-Employee Director's spouse, Non-Employee Director's family and
significant others as determined by Non-Employee Director;

(c) Platinum Elite OnePass Cards (or similar highest category successor frequent
flyer cards) in Non-Employee Director's and Non-Employee Director's spouse's
names;

(d) a membership for Non-Employee Director and Non-Employee Director's spouse in
Company's Presidents Club (or any successor program); and

(e) payment by Company to Non-Employee Director, while Non-Employee Director
serves as a member of the Board of Directors of Company (and, if Non-Employee
Director shall have five or more years of service on the Board of Directors of
Company, or retires from the Board after age 70, for the lifetime of
Non-Employee Director), of an annual (calendar year) amount up to the Annual
Gross Up Limit sufficient to pay, on an after tax basis (i.e., after the payment
by Non-Employee Director of all taxes on such amount), the U.S. federal, state
and local income taxes on imputed income resulting from flights purchased with
the UATP card or resulting from any other flight benefits extended to
Non-Employee Director as a result of Non-Employee Director's service to Company,
and any payment by Company to Former Director pursuant to this paragraph 2(e)
shall be made on or as soon as practicable following the day on which the
required tax is remitted by or on behalf of Non-Employee Director (but not later
than the end of the taxable year following the year in which such tax is
remitted).

(ii) "affiliates" means any entity controlled by, controlling, or under common
control with Company, it being understood that control of an entity shall
require the direct or indirect ownership of a majority of the outstanding
capital stock of such entity.

(iii) "Annual Travel Limit" means an amount granted annually (on a calendar-year
basis and effective January 1 of each year) by Company to Non-Employee Director
equal to the amount of the annual grant Non-Employee Director received for 2007,
which annual amount shall be adjusted upon any change in the valuation
methodology used by Company to calculate imputed income from flights for U.S.
federal income tax purposes so as to preserve such annual benefit level for
purchases of tickets on the CO System (e.g., if a change in the valuation
methodology results, on average, in such flights being valued 15% higher than
the valuation that would result using the prior valuation methodology, then the
Annual Travel Limit would be increased by 15%). In determining any adjustment,
Company shall be entitled to rely on its good faith calculation, as verified by
its internal audit department or independent auditors, which calculation will be
provided to Non-Employee Director upon request. Company will provide
Non-Employee Director an annual statement specifying the Annual Travel Limit and
will notify Non-Employee Director promptly of any adjustments to the Annual
Travel Limit described in this paragraph. Any portion of the Annual Travel Limit
that remains unused at the end of the calendar year for which it was awarded
shall expire and be of no further use or value.

(iv) "Annual Gross Up Limit" means an amount granted annually (on a
calendar-year basis and effective January 1 of each year) by Company to
Non-Employee Director in an amount equal to the amount of the annual grant
Non-Employee Director received for the flight benefits program year 2007, which
amount shall be adjusted upon any change in the valuation methodology used by
Company to calculate imputed income from flights for U.S. federal income tax
purposes so as to preserve such annual benefit level of tax gross up (e.g., if a
change in the valuation methodology results, on average, in such flights being
valued 15% higher than the valuation that would result using the prior valuation
methodology, then the Annual Gross Up Limit would be increased by 15%). In
determining any adjustment, Company shall be entitled to rely on its good faith
calculation, as verified by its internal audit department or independent
auditors, which calculation will be provided to Non-Employee Director upon
request. Company will provide Non-Employee Director an annual statement
specifying the Annual Gross Up Limit and will notify Non-Employee Director
promptly of any adjustments to the Annual Gross Up Limit described in this
paragraph. Any portion of the Annual Gross Up Limit that remains unused at the
end of the calendar year for which it was awarded shall expire and be of no
further use or value.

(v) "CO System" shall mean (a) flights operated by Company or any of its
affiliates or any successor or successors thereto and (b) flights operated on
behalf of Company by any third party under capacity purchase agreements with
Company; provided that, unless otherwise communicated to Non-Employee Director
and subject to clause (b), CO System shall not include flights on any other
carriers, including Continental Connection carriers and other alliance/codeshare
carriers.

(vi) "Eligible Family Members" means, with respect to each annual benefit year,
Non-Employee Director's spouse or travel companion, dependent unmarried children
through age 20 and through age 25 if full-time students, and a maximum of two
parents (which may be biological or step-parents); provided that an Eligible
Family Member shall not include any individual with respect to whom a benefit
described in paragraph 2(i)(a) is taxable.

3. Restrictions on Use; Consequences of Misuse.

(i) Personal Use Restriction. Non-Employee Director agrees that the Flight
Benefits are to be used solely for personal reasons and may not be used for
business purposes (other than business on behalf of Company), and that credit
availability on Non-Employee Director's UATP card may be suspended and
Non-Employee Director's UATP card may be revoked or cancelled if (A) such UATP
card is used for business purposes (other than business on behalf of Company)
and (B) after receiving written notice from Company to cease such usage,
Non-Employee Director again uses Non-Employee Director's UATP card for any
business purpose (other than business on behalf of Company).

(ii) Booking and Ticketing; Accounting; Reimbursement.

(a) No tickets issued on the CO System in connection with the Flight Benefits
may be purchased other than directly from Company or its successor or successors
(i.e., no travel agent or other fee or commission based distributor may be
used), nor may any such tickets be sold or transferred by Non-Employee Director
or any other person, nor may any such tickets be used by any person other than
the person in whose name the ticket is issued.

(b) Non-Employee Director shall be responsible for all charges on Non-Employee
Director's UATP card in excess of the Annual Travel Limit or that are not for
flights on the CO System. Non-Employee Director agrees to reimburse Company,
after receipt of an invoice or other accounting statement, for all charges on
Non-Employee Director's UATP card that are not for flights on the CO System and
that are not otherwise reimbursable to Non-Employee Director under the
applicable policies of Company for reimbursement of business expenses of
Non-Employee Directors of Company, or that are for tickets in excess of the
Annual Travel Limit or that violate the restrictions set forth in this Exhibit,
which reimbursement shall be made promptly (and in any event within 45 days
after receipt of such invoice or other accounting statement). Non-Employee
Director agrees that the credit availability under Non-Employee Director's UATP
card may be suspended if Non-Employee Director does not timely reimburse Company
as described in the foregoing sentence or if Non-Employee Director exceeds the
applicable Annual Travel Limit; provided, that, immediately upon Company's
receipt of Non-Employee Director's reimbursement in full (or, in the case of
exceeding the applicable Annual Travel Limit, beginning the next following year
and after such reimbursement), the credit availability under Non-Employee
Director's UATP card will be restored.

4. Imputed Income. The sole cost to Non-Employee Director of flights on the CO
System pursuant to use of Non-Employee Director's Flight Benefits will be the
imputed income with respect to flights on the CO System charged on Non-Employee
Director's UATP card, or as otherwise required by law, and reported to
Non-Employee Director as required by applicable law. For purposes of tax
reporting of Flight Benefits, it is the practice of Company to calculate taxable
amounts based on the fiscal period commencing November 1 and ending on the
following October 31 (for example, Flight Benefits utilized (i.e. "flown")
during the twelve-month period from November 1, 2007 to October 31, 2008 are
reported as a taxable benefit for year 2008). Company shall have sole discretion
to change this practice, including if additional reporting tools become
available to process Flight Benefits data or as required by law.

5. Section 409A Matters. It is intended that the Flight Benefits program
described in this Exhibit comply with the limitations and requirements of
Section 409A of the Internal Revenue Code (the "Code") to the extent applicable,
and all provisions herein shall be construed and interpreted in accordance with
such intent. If Company reasonably determines in good faith that any provision
of such program, when considered individually or in connection with the terms of
any other nonqualified deferred compensation plan maintained by Company or any
affiliate of Company, violates Section 409A of the Code, such provision will not
be effected but will instead be interpreted and amended to comply with Section
409A of the Code, and any corrections of operation or administration necessary
to comply with Section 409A of the Code shall be implemented; provided, however,
that no such interpretation, amendment or correction shall result in
Non-Employee Director being treated worse than other former non-management
members of the Board of Directors of Company who terminated service with flight
benefits substantially equivalent to those provided upon termination of service
by Non-Employee Director.

6. Survivor Benefits. Upon Non-Employee Director's death, in addition to the
lifetime benefits provided Non-Employee Director's spouse pursuant to paragraphs
2(i)(c) and (d) of this Exhibit, Non-Employee Director's surviving spouse and
children will be permitted to continue to use (in the proportions specified in
Non-Employee Director's last will and testament or, if not so specified or if
Non-Employee Director dies intestate, in equal proportions) Non-Employee
Director's Flight Benefits as follows) an annual survivor travel limit shall be
granted annually on January 1 of each calendar year during the ten calendar year
period beginning January 1st of the calendar year following Non-Employee
Director's death and ending on December 31st of the year of the tenth
anniversary of the Non-Employee Director's death (such annual survivor benefit
amount to be $10,000), which annual amount shall be adjusted upon any change in
the valuation methodology used by Company for imputed income from flights for
U.S. federal income tax purposes so as to preserve an annual benefit level for
purchase of tickets on the CO System at least as favorable as the benefit in
effect on January 1, 2008. In determining any adjustment pursuant to the first
sentence of this paragraph, Company shall be entitled to rely on its good faith
calculation as verified by its internal audit department or independent
auditors, which calculation will be provided to the Non-Employee Director's
surviving spouse and children upon request. Company will provide Non-Employee
Director's surviving spouse and children an annual statement specifying the
annual survivor benefit and any adjustments described in this paragraph. Any
portion of the annual survivor benefit described in this paragraph that remains
unused at the end of the calendar year for which it was awarded shall terminate
and be of no further use or value. All rights, duties and obligations of
Non-Employee Director, and all rights, duties and obligations of Company,
relating to Non-Employee Director's usage of Flight Benefits contained in this
Exhibit shall be applicable to usage of Non-Employee Director's Flight Benefits
by Non-Employee Director's surviving spouse and children, and the provision of
such Flight Benefits to Non-Employee Director's surviving spouse and children
shall be conditioned upon written acknowledgement of and agreement thereto by
Non-Employee Director's surviving spouse and children who may use such Flight
Benefits.