Exhibit 10.21

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and among UAL CORPORATION (to
be re-named UNITED CONTINENTAL HOLDINGS, INC.), a Delaware corporation (the
“Company”), CONTINENTAL AIRLINES, INC., a Delaware corporation (“Continental”),
UNITED AIR LINES, INC., a Delaware corporation (“United”) (the Company,
Continental and United are hereinafter collectively referred to as the
“Employers”), and JEFFERY A. SMISEK (“Executive”), and is dated and effective as
of the date (the “Effective Date”) on which occurs the Closing, as such term is
defined in that certain Agreement and Plan of Merger (“Merger Agreement”) among
the Company, Continental and JT Merger Sub Inc. dated as of May 2, 2010.

W I T N E S S E T H:

WHEREAS, Continental and Executive are parties to that certain Employment
Agreement (as amended, the “Existing Agreement”) dated as of October 15, 2007,
as amended by that certain Compensation Reduction Agreement between Continental
and Executive dated May 30, 2008 (the “2008 Reduction Letter Agreement”), that
certain Letter Agreement between Continental and Executive dated September 30,
2009, and that certain Compensation Reduction Letter Agreement between
Continental and Executive dated January 4, 2010 (the “2010 Reduction Agreement”)
(the 2008 Reduction Agreement and 2010 Reduction Agreement being referred to
herein collectively as the “Existing Compensation Reduction Agreements”); and

WHEREAS, Continental and Executive are parties to that certain Confidentiality
and Non-Competition Agreement between Continental and Executive dated as of
April 23, 2009 (the “Confidentiality and Non-Competition Agreement”).

WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, the Employers and Executive desire to enter into this Agreement to
replace and supersede the Existing Agreement in its entirety, except as
otherwise provided herein, effective as of the Effective Date; and

WHEREAS, both the Human Resources Committee of the Board of Directors of
Continental and the Human Resources Subcommittee (the “Compensation Committee”)
of the Board of Directors of the Company (the “Board”), in each case as in
effect immediately prior to the Effective Date, have reviewed and approved the
terms and conditions of Executive’s employment with the Employers, and the
Compensation Committee has authorized the execution, delivery and performance by
the Employers of this Agreement;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, the Employers and Executive agree as follows:

ARTICLE 1: EMPLOYMENT AND DUTIES

1.1 Employment; Effective Date. The Employers agree to employ Executive and
Executive agrees to be employed by the Employers, beginning as of the Effective
Date and continuing for the period of time set forth in Article 2 of this
Agreement, subject to the terms and conditions of this Agreement. For the sake
of clarity, in the event the Closing does not occur, this Agreement shall be
null and void and of no further force and effect.

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1.2 Positions and Authority. Executive shall serve in the positions of President
and Chief Executive Officer of the Company, or in such other positions as the
parties may agree. The Company shall appoint Executive as a member of the Board
as of the Effective Date and, for the full term of Executive’s employment
hereunder, cause Executive to be nominated for election as a member of the Board
and use its best efforts to secure such election. Executive shall be appointed
Chairman of the Board effective upon the later to occur of (a) the date which is
the second anniversary of the Closing, or (b) January 1, 2013; provided that if
Glenn F. Tilton ceases to serve as non-Executive Chairman of the Board prior to
such date, then Executive shall be appointed Chairman of the Board on the date
on which Glenn F. Tilton ceases to serve as non-Executive Chairman of the Board.
Executive agrees to relinquish his position as Chairman of the Board upon the
Board’s written request if such relinquishment would be required by the rules of
the exchange(s) on which the Company’s stock is then listed, or by other
applicable law.

Except as may be otherwise agreed to by Executive, Executive shall also serve as
Chief Executive Officer, Chairman of the board of directors and President of
each airline operating subsidiary of the Company (collectively, the “Airline
Operating Subsidiaries”), and as Chairman of the board of directors of Mileage
Plus Holdings, LLC, a subsidiary of the Company. Executive shall cease to serve
as President of the Company and the Airline Operating Subsidiaries when an
individual other than Executive is appointed by the Board to serve in such
capacity (the “New President”). The Company agrees to consult in good faith with
Executive prior to appointing the New President. The New President shall report
directly to Executive.

Without limiting the general authority associated with the positions described
in this paragraph 1.2, neither the Board nor any committee thereof may
(i) terminate the employment of any officer who directly reports to Executive (a
“Direct Report”) without having consulted in good faith with Executive in
advance regarding such termination or (ii) appoint a replacement to any such
Direct Report without having consulted in good faith with Executive in advance
regarding such replacement; provided, that the foregoing clause (i) shall not
apply if such termination would constitute a termination for “cause,” as such
term is defined in the applicable Direct Report’s employment agreement or
applicable employment or human resources policy maintained by the Company as of
the date of such termination.

Neither the Board nor any other officer or representative of the Company shall
assign to Executive any duties materially inconsistent with the duties
associated with the positions described in this paragraph 1.2. The Company shall
not permit the occurrence of acts or conduct on the part of the Company, the
Board, or the Company’s officers, representatives or stockholders which prevent
Executive from, or substantively hinder Executive in, performing his duties or
responsibilities pursuant to this Agreement.

1.3 Duties and Services. Executive agrees to serve in the officer positions
referred to in paragraph 1.2 and, if elected, as a director of the Company, and
to perform diligently and to the best of his abilities the duties and services
appertaining to such offices as set forth in the Bylaws of the Company in effect
on the Effective Date, as well as such additional duties and services
appropriate to such offices that the parties may agree upon from time to time.

 

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ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT

2.1 Term. Unless sooner terminated pursuant to other provisions hereof, the
Employers agree to employ Executive for the period beginning on the Effective
Date and continuing for three (3) years thereafter (the “Initial Term”). Said
term of employment shall be extended automatically for successive one-year
periods as of the last day of the Initial Term and each anniversary thereof (the
“Extended Term”); provided, however, that if, prior to the date which is six
months before the last day of the Initial Term or Extended Term, as applicable,
the Company or the Executive shall give written notice to the other that no such
automatic extension shall occur, then Executive’s employment shall terminate on
the last day of the Initial Term or Extended Term, as applicable, determined as
of the date on which such notice is given.

2.2 The Employers’ Right to Terminate. Notwithstanding the provisions of
paragraph 2.1, the Company, acting pursuant to an express resolution of the
Board and on behalf of Continental and United, shall have the right to terminate
Executive’s employment under this Agreement at any time for any of the following
reasons:

(i) upon Executive’s death;

(ii) upon Executive’s becoming incapacitated for a period of at least 180 days
by accident, sickness or other circumstance that renders him mentally or
physically incapable of performing the material duties and services required of
him hereunder on a full-time basis during such period;

(iii) if, in carrying out his duties hereunder, Executive engages in conduct
that constitutes willful gross neglect or willful gross misconduct resulting in
material economic harm to the Company, which neglect or misconduct, if
remediable, remains unremedied for 30 days following written notice of such by
the Company to Executive;

(iv) upon the conviction or plea of nolo contendre of Executive for a felony or
any crime involving moral turpitude;

(v) upon Executive committing an act of deceit or fraud intended to result in
personal and unauthorized enrichment of Executive at the Company’s expense;

(vi) upon Executive’s material breach of a material obligation of Executive
under this Agreement which, if correctable, remains uncorrected for 30 days
following written notice of such breach by the Company to Executive; or

(vii) for any other reason whatsoever, in the sole discretion of the Board.

For purposes of this Agreement, if Executive’s employment is terminated by the
Company pursuant to clauses (iii), (iv), (v) or (vi) above, then such
termination shall be for “Cause,” and if Executive’s employment is terminated by
the Company pursuant to clause (vii) above, then such termination shall be
“without Cause.”

 

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2.3 Executive’s Right to Terminate. Notwithstanding the provisions of paragraph
2.1, Executive shall have the right to terminate his employment under this
Agreement at any time for any of the following reasons:

(i) a material diminution in Executive’s authority, duties, or responsibilities
from those applicable to him as of the Effective Date;

(ii) a material change in the geographic location at which Executive must
perform services, which for purposes of this Agreement shall mean the Employers
requiring Executive to be permanently based in a location that is more than 50
miles outside the city limits of both Houston, Texas and Chicago, Illinois;

(iii) a diminution in Executive’s base salary, except as permitted by paragraph
3.1;

(iv) the failure to appoint Executive as Chairman of the Board in accordance
with paragraph 1.2 or removal of Executive from such position (other than as
permitted by paragraph 1.2);

(v) expiration of the Initial Term or the Extended Term by reason of a notice of
non-renewal of this Agreement given by the Company pursuant to paragraph 2.1; or

(vi) a material breach by the Employers of any provision of this Agreement
(including, without limitation, paragraphs 1.2, 3.2, or 3.8 of this Agreement);

(vii) for any other reason whatsoever, in the sole discretion of Executive.

For purposes of this Agreement, Executive’s employment by the Employers will be
considered to have been terminated by Executive for “Good Reason” if such
termination of employment is by Executive for a reason encompassed by paragraphs
2.3(i), (ii), (iii), (iv), (v) or (vi). Further, notwithstanding the foregoing
provisions of this paragraph 2.3 or any other provision in this Agreement to the
contrary, any assertion by Executive of a termination of employment for Good
Reason shall not be effective unless all of the following conditions are
satisfied: (1) the condition described in paragraphs 2.3(i), (ii), (iii), (iv),
(v) or (vi) giving rise to Executive’s termination of employment must have
arisen without Executive’s written consent; (2) Executive must provide written
notice to the Company of such condition in accordance with paragraph 5.2 within
90 days of the initial existence of the condition; (3) the condition specified
in such notice must remain uncorrected for 30 days after receipt of such notice
by the Company; and (4) the date of Executive’s termination of employment must
occur within two years after the initial existence of the condition specified in
such notice.

2.4 Notice of Termination. If the Employers or Executive desire to terminate
Executive’s employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, the Company, on behalf of itself,
Continental and United, or the Executive shall do so by giving written notice to
the other in accordance with paragraph 5.2 that it or he has elected to
terminate Executive’s employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder.

 

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2.5 Certain Determinations under Section 409A of the Internal Revenue Code. For
all purposes of this Agreement, Executive shall be considered to have terminated
employment with the Employers when Executive incurs a “separation from service”
with the Employers within the meaning of Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the “Code”) and applicable
administrative guidance issued thereunder; provided, however, that whether such
a separation from service has occurred shall be determined based upon a
reasonably anticipated permanent reduction in the level of bona fide services to
be performed to no more than 20% (or 49% if Executive will no longer serve as an
officer of the Employers) of the average level of bona fide services provided to
the Employers in the immediately preceding 36 months. Executive hereby agrees to
be bound by the Company’s determination of its “specified employees” (as such
term is defined in Section 409A of the Code) provided such determination is in
accordance with any of the methods permitted under the regulations issued under
Section 409A of the Code.

ARTICLE 3: COMPENSATION AND BENEFITS

3.1 Base Salary. During the period of this Agreement, Executive shall receive a
minimum annual base salary equal to $975,000. Such base salary shall be subject
to annual review by the Compensation Committee and may be increased but not
decreased from time to time by the Compensation Committee in its sole
discretion; provided, that Executive’s base salary may be decreased as part of
an across-the-board reduction in base salaries of all executives of the
Employers so long as the percentage reduction in Executive’s base salary is not
greater than the percentage reduction applicable to other executives.
Executive’s annual base salary shall be paid in equal installments in accordance
with the Company’s standard policy regarding payment of compensation to
executives but no less frequently than semi-monthly.

The waiver of base salary agreed to by Executive in the Existing Compensation
Reduction Agreements shall cease to be effective, as of the Effective Date, with
regard to base salary for the calendar year 2011 and for all calendar years
following 2011. Executive shall be entitled to receive accrued but unpaid salary
under the Existing Agreement in accordance with the terms of the 2010 Reduction
Agreement if Continental achieves a profit (as defined in the 2010 Reduction
Agreement) for the 2010 calendar year.

3.2 Bonuses; Integration Award; Incentive Grants.

(a) Annual Cash Bonus Programs. Executive shall participate in each annual cash
bonus program maintained for senior management of the Company on and after the
Effective Date. Executive shall be eligible for an annual cash bonus equal to a
percentage of his annual base salary, based on achievement of applicable
performance goals determined by the Compensation Committee. The target amount of
Executive’s bonus shall be 150% of base salary. Executive’s bonus may range
between 75% and 200% of base salary, depending on achievement of entry, target
and stretch goals, with zero to be earned if performance falls below entry
goals. Executive’s annual bonus, if payable, shall be paid no later than
March 15 of the year following the end of the applicable performance period,
provided that Executive remains employed by the Employers as of such payment
date, except as otherwise provided in Article 4 below.

 

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The waiver of annual bonus agreed to by Executive in the Existing Compensation
Reduction Agreements shall cease to be effective with regard to the annual bonus
for the performance period ending in 2011 and for all calendar years following
2011. Executive shall be entitled to an annual bonus for 2010 in accordance with
the terms of the 2010 Reduction Agreement if Continental achieves a profit (as
defined in the 2010 Reduction Agreement) for the 2010 calendar year; provided,
however that Executive agrees that such 2010 annual bonus shall be calculated
without regard to any change in Executive’s base salary on or after the
Effective Date.

(b) Integration Award. As soon as reasonably practicable following the Effective
Date, the Compensation Committee shall grant to the Executive a special
integration award (the “Integration Award”) with a target value of $4,000,000,
based on achievement of integration goals as determined by the Compensation
Committee; provided that, except as otherwise provided in Article 4 below,
Executive remains employed by the Employers as of the payment date of such
award. Except as provided in this Agreement, the terms of the Integration Award
shall be consistent with the terms of the integration awards made to other
senior executives of the Company.

(c) Long-Term Incentive Grants.

(i) Annual Grants. No later than February 28, 2011, the Compensation Committee
shall grant to Executive a long-term incentive award with a grant date value (at
target) of not less than $8,400,000. Thereafter during the period of this
Agreement, (A) Executive shall participate in each long-term incentive program
maintained for senior management of the Company at a level which is not less
than the highest participation level made available to any other senior Company
executive and (B) it is the Employers’ intention to provide to Executive, on an
annual basis, a long-term incentive award the grant date value of which (at
target), when combined with Executive’s base salary and target annual bonus,
provides Executive with annualized total compensation at least at the 50%
percentile of the range of annualized total compensation provided by the
Company’s peer group companies (as determined by the Compensation Committee with
respect to its analysis of competitiveness of annualized total compensation
provided to the Company’s senior officers) to their respective chief executive
officers. (The grants referred to in this subparagraph (i) are hereinafter
collectively referred to as the “Annual Grants”). Except as otherwise provided
in this Agreement, the terms of the Annual Grants to Executive shall be
consistent with the terms of long-term incentive grants made to other senior
executives of the Company, it being understood that a greater portion of the
Annual Grants to Executive may be performance-based when compared to grants made
to other senior executives of the Company.

(ii) Pre-Closing Long-Term Incentive Grants. Except as otherwise provided
herein, long-term incentive grants made to Executive by Continental which are
outstanding immediately prior to the Effective Date shall be subject to the
terms of the applicable plan, program and/or grant agreement under which the
awards were granted, as modified by the

 

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terms of the Merger Agreement. Notwithstanding the foregoing, Executive hereby
waives the accelerated vesting and payment of Executive’s restricted stock unit
and other long-term incentive awards granted under Continental’s Incentive Plan
2000 or Incentive Plan 2010 and applicable programs thereunder (collectively,
“Pre-Merger Awards”) which would otherwise occur by reason of Executive’s
eligibility for retirement under the terms of such awards. For purposes of
clarification, it is understood that (a) the vesting of the Pre-Merger Awards
shall be subject to Executive’s continued employment with the Employers to the
date on which the Pre-Merger Awards would otherwise vest absent Executive’s
retirement eligibility; provided, however, that the Pre-Merger Awards shall be
subject to accelerated vesting and payment upon termination of Executive’s
employment pursuant to paragraph 2.2(i) or 2.2(ii) of this Agreement, or without
Cause or for Good Reason (as such terms are defined in paragraphs 2.2 and 2.3,
respectively, of this Agreement), (b) satisfaction of performance-based
conditions relating to the transactions contemplated by the Merger Agreement is
not being waived by Executive and such conditions shall be deemed achieved in
accordance with the terms of the plans, programs and grant agreements applicable
to the Pre-Merger Awards and (c) with respect to those long-term incentive
grants constituting part of the Pre-Merger Awards the payment of which is
determined, in whole or in part, by a grantee’s salary at the end of the
performance period, Executive acknowledges and agrees that payment will instead
be based on Executive’s base salary as in effect immediately prior to the
Effective Date.

3.3 Life Insurance. During the period of this Agreement, the Employers shall
maintain one or more policies of life insurance on the life of Executive
providing an aggregate death benefit in an amount not less than the Termination
Payment (as such term is defined in paragraph 4.7(x)). Executive shall have the
right to designate the beneficiary or beneficiaries of the death benefit payable
pursuant to such policy or policies up to an aggregate death benefit in an
amount equal to such Termination Payment, and may transfer ownership of such
policy or policies (and any rights of Executive under this paragraph 3.3) to any
life insurance trust, family trust or other similar trust. To the extent that
the Employers’ purchase of, or payment of premiums with respect to, such policy
or policies results in compensation income to Executive, the Employers shall pay
to Executive on or as soon as practicable following the day on which the tax
with respect to such income is remitted by or on behalf of Executive (but not
later than the end of the taxable year following the year in which such tax is
remitted) an additional payment (the “Policy Payment”) in an amount such that
after payment by Executive of all taxes imposed on Executive with respect to the
Policy Payment, Executive retains an amount of the Policy Payment equal to the
taxes imposed upon Executive with respect to such purchase or the payment of
such premiums. If for any reason the Employers fail to maintain the full amount
of life insurance coverage required pursuant to the preceding provisions of this
paragraph 3.3, the Employers shall, in the event of the death of Executive while
employed by the Employers, pay Executive’s designated beneficiary or
beneficiaries within 30 days after the date of Executive’s death an amount equal
to the sum of (1) the difference between such Termination Payment and any death
benefit payable to Executive’s designated beneficiary or beneficiaries under the
policy or policies maintained by the Employers and (2) such additional amount as
shall be required to hold Executive’s estate, heirs, and such beneficiary or
beneficiaries harmless from any additional tax liability resulting from the
failure by the Employers to maintain the full amount of such required coverage.

 

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3.4 Vacation and Sick Leave. During each year of his employment, Executive shall
be entitled to vacation and sick leave benefits at the maximum level available
to any Company executive, determined without regard to the period of service
that might otherwise be necessary to entitle Executive to such vacation or sick
leave under standard Company policy.

3.5 Supplemental Executive Retirement Plan.

(i) Base Benefit. The Employers agree 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 an annual amount (that is payable as a monthly straight life annuity) 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 years (including partial years), beginning
January 1, 1995 and ending December 31, 2010, of Executive’s employment with the
Employers (which shall include all credited years of service with Continental),
calculated as set forth in the Continental Retirement Plan (the “CARP”) with
respect to credited service (“Actual Years of Service”), and (2) an additional
two 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. For purposes hereof, Executive’s final average
compensation shall be equal to the greater of (A) $720,000 or (B) the average of
the five highest annual cash compensation amounts paid to Executive by
Continental and/or the Company during the consecutive ten calendar years through
and including calendar year 2010. 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 Continental or the Company), but shall exclude (i) any Stay Bonus paid
to Executive pursuant to that certain Stay Bonus Agreement between Continental
and Executive dated as of April 14, 1998, (ii) any Termination Payment paid to
Executive under this Agreement, (iii) any payments received by Executive under
Continental’s Officer Retention and Incentive Award Program, (iv) any proceeds
to Executive from any awards under any option, stock incentive or similar plan
of Continental or the Company (including RSUs awarded under Continental’s
Incentive Plan 2000, Incentive Plan 2010 or any plans or programs thereunder),
and (v) any cash bonus paid under a long term incentive plan or program adopted
by Continental or the Company. Executive shall be vested immediately with
respect to benefits due under the Plan.

(ii) Offset for CARP or Other 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 or from any other defined benefit nonqualified
supplemental retirement plan provided to Executive by Continental or the
Company. In making such reduction, the Base Benefit and the benefit paid or
payable under the CARP or any such other defined benefit nonqualified
supplemental retirement plan shall be determined under the provisions of each
plan as if payable in the form of a monthly 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 of payment.

 

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(iii) Normal Retirement Benefits. Executive’s benefit under the Plan shall be
paid only in a lump sum payment in an amount that is the actuarial equivalent,
based on the actuarial assumptions set forth in paragraph 3.5(vii), of the Base
Benefit for the life of Executive paying equal monthly installments beginning on
the Retirement Date (the “Normal Retirement Benefit”). The portion of the Normal
Retirement Benefit equal to the Grandfathered Benefit shall be paid to Executive
on or within 10 business days following the Retirement Date. The portion of the
Normal Retirement Benefit in excess of the Grandfathered Benefit shall be paid
to Executive on or within 10 business days following the Retirement Date or, if
later and if required to satisfy the provisions of Section 409A(a)(2)(B)(i) of
the Code, on or within five business days after the Section 409A Payment Date.
If the Section 409A Payment Date is after the Retirement Date, then payment of
the portion of the Normal Retirement Benefit in excess of the Grandfathered
Benefit (with interest on such portion of the benefit from the Retirement Date
to the actual date of payment at the Aa Corporate Bond Rate (as defined in
paragraph 3.5(vii)) shall be paid by the Employers to Executive (or, in the
event of Executive’s death, Executive’s Beneficiary) not earlier than but as
soon as practicable on, and in any event within five business days after, the
Section 409A Payment Date. For purposes hereof: (a) “Beneficiary” is defined as
(1) Executive’s surviving spouse, if Executive is married on the date of
Executive’s death, or (2) Executive’s estate, if Executive is not married on the
date of Executive’s death; (b) “Grandfathered Benefit” is defined in paragraph
3.5(ix); (c) “Retirement Date” is defined as the first day of the month
coincident with or next following the later of (1) the date on which Executive
attains (or in the event of Executive’s earlier death, would have attained) age
60 or (2) the date of Executive’s retirement from employment with the Employers;
and (d) “Section 409A Payment Date” is defined as the earlier of (1) the date of
Executive’s death or (2) the date which is six months after the date of
termination of Executive’s employment with the Employers.

(iv) Early Retirement Benefits. As of the Effective Date, Executive is eligible
to retire and receive an Early Retirement Benefit (as defined below).
Accordingly, notwithstanding the provisions of paragraph 3.5(iii), if
Executive’s employment with the Employers is terminated prior to the Retirement
Date, for a reason other than death, then the Employers shall pay Executive the
Normal Retirement Benefit on or within 10 business days following the first day
of the month coinciding with or next following Executive’s termination of
employment (the “Earliest ERB Payment Date”) or, if required to satisfy the
provisions of Section 409A(a)(2)(B)(i) of the Code, the Employers shall pay
Executive the portion of the Normal Retirement Benefit equal to the
Grandfathered Benefit on or within 10 business days following the Earliest ERB
Payment Date and the Employers shall pay Executive the portion of the Normal
Retirement Benefit in excess of the Grandfathered Benefit on or within five
business days after the Section 409A Payment Date (an “Early Retirement
Benefit”); provided, however, that the amount of the benefit shall be reduced to
the extent necessary to cause the value of such Early Retirement Benefit
(determined as if payment would be made on the Earliest ERB Payment Date) to be
the actuarial equivalent of the value of the Normal Retirement Benefit (based on
the actuarial assumptions set forth in paragraph 3.5(vii) and adjusted for such
time of payment). If payment of the portion of the Early Retirement Benefit in
excess of the Grandfathered Benefit must be delayed beyond the Earliest ERB
Payment Date to satisfy the provisions of Section 409A(a)(2)(B)(i) of the Code
as provided in the preceding sentence, then payment of such portion of the Early
Retirement Benefit (with interest on such portion of the benefit from the
Earliest ERB Payment Date to the actual date of payment at the Aa Corporate Bond
Rate) shall be paid by the Employers to Executive (or, in the event of
Executive’s death after the Earliest ERB Payment Date, Executive’s Beneficiary)
not earlier than but as soon as practicable on, and in any event within five
business days after, the Section 409A Payment Date.

 

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(v) Death Benefit. Except (a) as provided in paragraph 3.5(iii) with respect to
the portion of the Normal Retirement Benefit in excess of the Grandfathered
Benefit if the Section 409A Payment Date is after the Retirement Date, (b) as
provided in paragraph 3.5(iv) if the payment of the portion of the Early
Retirement Benefit in excess of the Grandfathered Benefit must be delayed beyond
the Earliest ERB Payment Date to satisfy the provisions of
Section 409A(a)(2)(B)(i) of the Code, and (c) as provided in the remaining
provisions of this paragraph 3.5(v), no benefits shall be paid under the Plan if
Executive dies prior to the date Executive’s benefit is paid pursuant to
paragraphs 3.5(iii) or 3.5(iv), as applicable. In the event of Executive’s death
prior to payment of Executive’s benefit pursuant to paragraphs 3.5(iii) or
3.5(iv) (other than under the circumstances and with respect to the portion of
the benefit described in clauses (a) or (b) of the preceding sentence, in which
case the benefits described in paragraphs 3.5(iii) or 3.5(iv), as applicable,
shall be paid in full), Executive’s surviving spouse, if Executive is married on
the date of Executive’s death, will receive a death benefit payable only as a
lump sum payment in an amount that is the actuarial equivalent of 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,
been entitled to elect and elected a joint and 50% survivor annuity and begun 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 been entitled to elect and elected a joint and 50% survivor
annuity and begun to receive Executive’s Plan benefit beginning on the day prior
to Executive’s death. Such benefit shall be paid on or within 10 business days
following the first day of the month coincident with or next following the date
of Executive’s death; provided, however, that if Executive dies prior to
reaching age 60, then the amount of such benefit shall be reduced based on the
principles used for the reductions described in the proviso to the first
sentence of paragraph 3.5(iv).

(vi) Unfunded Benefit. The Plan is intended to constitute an unfunded, unsecured
plan of deferred compensation. Further, it is the intention of the Employers
that the Plan be unfunded for purposes of the Code and Title I of the Employee
Retirement Income Security Act of 1974, as amended. The Plan constitutes a mere
promise by the Employers to make benefit payments in the future. Plan benefits
hereunder provided are to be paid out of the Employers’ general assets, and
Executive shall have the status of, and shall have no better status than, a
general unsecured creditor of the Employers. Executive understands that he must
rely upon the general credit of the Employers for payment of benefits under the
Plan. The Employers have 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 the Employers or will
cause Executive to be more than a general creditor of the Employers.

(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

 

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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 Executive’s
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 lump sum benefits
payable under the CARP; provided, however, that with respect to the discount
rate used to calculate benefits under the Plan, the discount rate shall be the
Aa Corporate Bond Rate. The term “Actuary” shall mean the individual actuary or
actuarial firm selected by the 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 the Company and reasonably satisfactory to Executive
and/or Executive’s spouse. The term “Aa Corporate Bond Rate” shall mean the
average of the Moody’s daily long-term corporate bond yield averages for
Aa-rated corporate bonds published by Moody’s Investors Service, for the
three-month period ending on the last day of the second month preceding the date
Executive (or, in the case of Executive’s death, Executive’s spouse) is to
receive the lump sum payment (determined without regard to any delay in such
payment that may be required by reason of Section 409A(a)(2)(B)(i) of the Code),
as determined by the Actuary (or, if such yield information is no longer so
published, then the average of the daily corporate bond yields for a comparable
sample of Aa-rated corporate bonds of comparable tenor determined in good faith
by the Actuary). Upon request, the Company shall cause the Actuary to compute
the Aa Corporate Bond Rate for a specified period and the amount of the
applicable lump sum payment for Executive (or, in the case of Executive’s death,
Executive’s spouse) and shall deliver such information to Executive or such
spouse.

(viii) Medicare Payroll Taxes. The Employers 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. Any payment by the
Employers to Executive pursuant to this paragraph 3.5(viii) shall be made on or
as soon as practicable following the day on which the required tax is remitted
by or on behalf of Executive (but not later than the end of the taxable year
following the year in which such tax is remitted).

(ix) Section 409A Grandfathered Benefit. For purposes hereof, “Grandfathered
Benefit” means the present value of the amount to which Executive would have
been entitled under the Plan (based on the terms of the Plan set forth in the
Existing Agreement as in effect on October 3, 2004) if Executive had voluntarily
terminated employment with Continental without cause on December 31, 2004, and
received a payment of the benefits available from the Plan on the earliest
possible date allowed under the Plan to receive a payment of benefits following
such termination of employment; provided, however, that (a) for any taxable year
of Executive after 2004, the Grandfathered Benefit shall increase to equal the
present value of the benefit Executive actually becomes entitled to, in the form
and at the time actually paid, determined under the terms of the Plan set forth
in the Existing Agreement as in effect on October 3, 2004, without regard to
(1) any services rendered by Executive after December 31, 2004, or (2) any other
events affecting the amount of or the entitlement to benefits, and (b) in no
event shall the Grandfathered Benefit be greater than the maximum grandfathered
benefit permitted with respect to the Plan determined under the provisions of
Section 409A of the Code (and the administrative guidance thereunder that is
applicable to the determination of amounts deferred under a nonaccount balance
plan prior to January 1, 2005, and the earnings thereon, including Treasury
regulation Section 1.409A-6(a)(3)(i) and (iv)). For purposes of making any
present value

 

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calculations required in accordance with this paragraph 3.5(ix) as of
December 31, 2004, or any other date the benefit is valued for purposes of
determining the Grandfathered Benefit, the actuarial assumptions and methods
that were used under the Plan as of December 31, 2004, pursuant to the terms of
the Employment Agreement between Executive and Continental dated as of
August 12, 2004, shall be used. Specifically, such actuarial assumptions as of
December 31, 2004 were the 1994 Group Annuity Mortality Table (as prescribed in
Section 417(e) of the Code as of that date) and 5.76% (the average of the
Moody’s daily long-term corporate bond yield averages for Aa-rated corporate
bonds, published by Moody’s Investors Service, for the three-month period ending
on the last day of the second month preceding December 31, 2004).

3.6 Disability Insurance.

If Executive shall begin to receive long-term disability insurance benefits
pursuant to a plan maintained by the Company and if such benefits cease prior to
Executive’s attainment of age 65 and while Executive remains disabled, then the
Employers shall pay Executive on the date Executive attains age 65 a lump sum,
cash payment in an amount equal to the Termination Payment (together with
interest thereon at the Aa Corporate Bond Rate (as defined in paragraph
3.5(vii), but determined as of the last day of the second month preceding the
first day of the month coinciding with or next following the cessation of such
long-term disability insurance benefits) for the period beginning on the date of
the cessation of such long-term disability insurance benefits and ending on the
date of the payment of the Termination Payment). If Executive receives payment
of a Termination Payment pursuant to the provisions of Article 4, then the
provisions of this paragraph 3.6 shall terminate. If Executive shall be disabled
at the time his employment with the Employers terminates and if Executive shall
not be entitled to the payment of a Termination Payment pursuant to the
provisions of Article 4 upon such termination, then Executive’s right to receive
the payment upon the occurrence of the circumstances described in this paragraph
3.6 shall be deemed to have accrued as of the date of such termination and shall
survive the termination of this Agreement.

3.7 Other Perquisites. During his employment hereunder, Executive shall be
afforded the following benefits as incidences of his employment:

(i) Automobile - The Employers will provide an automobile, at a cost to the
Employers consistent with Continental’s policy in effect immediately prior to
the Effective Date (including replacements therefor), of Executive’s choice for
Executive’s use on terms at least as favorable to Executive as provided in the
applicable policy adopted by the Continental Human Resources Committee that was
in effect immediately prior to the Effective Date.

(ii) Business and Entertainment Expenses - Subject to the Company’s standard
policies and procedures with respect to expense reimbursement as applied to its
executive employees generally, the Employers shall reimburse Executive for, or
pay on behalf of Executive, reasonable and appropriate expenses incurred by
Executive for business related purposes, including dues and fees to industry and
professional organizations, costs of entertainment and business development, and
costs reasonably incurred as a result of Executive’s spouse accompanying
Executive on business travel to the extent such business specifically includes
spouses. The Employers shall also pay on behalf of Executive the expenses of one
athletic club selected by Executive.

 

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(iii) Parking - The Employers shall provide at no expense to Executive (1) one
reserved parking space convenient to the Company’s corporate offices in Houston,
Texas; (2) two reserved, covered parking spaces at each of (a) George Bush
Intercontinental Airport in Houston, Texas and (b) O’Hare International Airport
in Chicago, Illinois, in a location that is the same as or equivalent to that
regularly used by the Company’s (or, prior to the Effective Date, Continental’s)
senior executives; (3) one reserved, covered parking space convenient to Willis
Tower in Chicago, Illinois; and (4) one reserved, covered parking space
convenient to the United Airlines Building located on West Wacker Drive in
Chicago, Illinois.

(iv) Tax, Accounting and Legal Services - The Employers shall either provide
directly or reimburse Executive for the reasonable costs incurred for tax,
accounting and legal assistance in connection with the preparation of
Executive’s income tax, gift tax, trust and other federal, state and local tax
filings (including, for this purpose, costs incurred for tax assistance in
connection with Executive’s relocation to Chicago). In addition, the Employers
shall pay or reimburse Executive for all reasonable legal, consulting and other
fees and expenses incurred by Executive in connection with the preparation,
negotiation and execution of this Agreement.

(v) Other Company Benefits - Executive and, to the extent applicable,
Executive’s family, dependents and beneficiaries, shall be allowed to
participate in all benefits, plans and programs, including improvements or
modifications of the same, which are now, or may hereafter be, available to
similarly situated employees of the Employers. Such benefits, plans and programs
may include, without limitation, profit sharing plans, thrift plans, annual
physical examinations, health insurance or health care plans, life insurance,
disability insurance, pension plans, pass privileges on the Company Airlines,
Flight Benefits (as such term is defined in paragraph 4.7) and the like. The
Employers shall not, however, by reason of this paragraph be obligated to
institute, maintain, or refrain from changing, amending or discontinuing, any
such benefit plans or programs, so long as such changes are similarly applicable
to executive employees generally; provided, however, that the Employers shall
not change, amend or discontinue Executive’s Flight Benefits or Executive’s
current disability insurance coverage without his prior written consent.

3.8 Corporate Amenities. During the period of this Agreement, the Employers
shall provide Executive with appropriate office space and an assistant at the
Company’s Chicago, Illinois headquarters office and at its offices in Willis
Tower in Chicago, Illinois. For so long as reasonably necessary during the
period of this Agreement, the Employers shall also provide Executive with
appropriate office space and an assistant at the Company’s Houston, Texas
corporate office. During the period of this Agreement, the Employers shall take
no action that reduces the corporate amenities enjoyed by Executive below the
level of corporate amenities enjoyed by any other senior executive of the
Company.

 

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3.9 Relocation Benefits. The Employers shall provide Executive with the
following relocation benefits in connection with his relocation from Houston,
Texas to Chicago, Illinois:

(i) The Employers shall (A) if requested by Executive at any time within 24
months following the Closing, itself or through a relocation assistance company,
purchase Executive’s current residence in Houston, Texas (the “Residence”) for a
purchase price equal to the value of the Residence as appraised by a reputable
appraisal firm acceptable to Executive and the Company, and (B) compensate
Executive for any loss incurred upon the sale of the Residence, subject to and
in accordance with the terms and conditions of the Company’s relocation policy
implemented in connection with the transactions contemplated by the Merger
Agreement and applicable to senior executives of the Company and Continental;

(ii) For a period ending on the earliest to occur of (1) the second anniversary
of the Effective Date, (2) the relocation of Executive’s family to Chicago,
Illinois, and (3) the date of Executive’s purchase of a permanent residence in
Chicago, an aggregate housing allowance of up to $15,000 per month shall be
provided to Executive for the purpose of securing (A) housing in Houston, Texas
following the sale of the Residence and/or (B) temporary housing in Chicago,
Illinois; and

(iii) The Employers shall pay or reimburse Executive for all reasonable moving
and related expenses incurred in connection with his relocation from Houston,
Texas to Chicago, Illinois.

3.10 Indemnification. Executive shall be indemnified by the Employers as
provided in Company’s by-laws and Certificate of Incorporation, the Merger
Agreement and pursuant to applicable law. The obligations under this paragraph
shall survive termination of the Initial Term and Extended Term, as applicable.

3.11 Confidentiality and Non-Competition Agreement. The parties agree that the
Confidentiality and Non-Competition Agreement shall remain in effect in
accordance with its terms, except that references therein to the “Company” shall
hereafter refer to the Company (as defined herein) and references to the
employment agreement between Executive and the Company shall hereafter refer to
this Agreement, as amended from time to time.

ARTICLE 4: EFFECT OF TERMINATION ON COMPENSATION

4.1 Termination for Any Reason during or following Initial or Extended Term. If
Executive’s employment hereunder shall terminate for any reason during or
following the Initial or Extended Term, then all compensation and all benefits
to Executive hereunder shall terminate contemporaneously with termination of his
employment, except that:

(A) the benefits described in paragraph 3.5 shall continue to be payable,

 

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(B) unless Executive’s employment is terminated for Cause, Executive shall be
provided Flight Benefits for the remainder of Executive’s lifetime, and the
death benefit rights shall be provided as described in paragraphs 4.6 and 4.7,

(C) unless Executive’s employment is terminated for Cause, Executive and his
eligible dependents shall be provided Continuation Coverage (as such term is
defined in paragraph 4.7) until Executive becomes eligible for Medicare coverage
under applicable law (but in no event beyond age 65),

(D) Executive shall be paid on the effective date of such termination for his
accrued and unused vacation benefits up to a maximum of four weeks,

(E) any amounts reimbursable but unpaid to Executive at the date of such
termination shall be reimbursed to Executive pursuant to the provisions of
paragraph 3.7 and any amounts owed but unpaid to or in respect of Executive
under any plan, policy or program of the Company (other than the Company’s
vacation policy, which is addressed in clause (D) above, but including, without
limitation, payment of life insurance benefits in the event of Executive’s
death, payment of disability benefits (including the continuation of any
disability policy and payment of premiums) in the event of Executive’s
termination pursuant to paragraph 2.2(ii), and payment of accrued salary) as of
the date of termination shall be paid to Executive at the time and to the extent
provided by, and in accordance with the terms of, such plan, policy or program
and this Agreement, and

(F) unless Executive’s employment is terminated for Cause, Executive shall
continue to be provided, at no expense to Executive, for the remainder of
Executive’s lifetime, the parking spaces referred to in paragraph 3.7(iii)(2).

4.2 Termination without Cause or for Good Reason. If Executive’s employment
hereunder shall be terminated by the Company without Cause, or by Executive for
Good Reason (and, with respect to the awards referred to in subparagraphs (A),
(D), (E) and (F) below, in the case of a termination of Executive’s employment
pursuant to paragraph 2.2(i) or 2.2(ii) of this Agreement), then in addition to
the payments and benefits described in paragraph 4.1, the Employers shall
provide Executive with the following:

The Employers shall:

(A) cause all Pre-Merger Awards then outstanding to become fully vested and
payable upon such termination in accordance with the terms of such awards
(taking into account the provisions of paragraph 3.2(c)(ii) hereof);

(B) pay Executive on the effective date of such termination a lump sum, cash
payment in an amount equal to the Termination Payment (provided, however, that
if the payment of the Termination Payment would be subject to additional taxes
and interest under Section 409A of the Code because the timing of such payment
is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the
regulations thereunder, then such amount shall be paid within five business days
after the Section 409A Payment Date);

 

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(C) provide Executive with Outplacement and Related Services (as such term is
defined in paragraph 4.7 and for the time periods described therein; provided,
however, that to the extent the benefits provided to Executive under clauses
(2) and (3) of the definition of Outplacement and Related Services and any other
miscellaneous separation pay benefits subject to Section 409A of the Code that
are provided to Executive during the first six-months following Executive’s
termination of employment have an aggregate value in excess of the applicable
dollar amount under Section 402(g)(1)(B) of the Code for the year in which such
termination occurs, Executive shall pay to the Employers, at the time such
benefits are provided, the fair market value of such benefits, and the Employers
shall reimburse Executive (with interest thereon at the Aa Corporate Bond Rate
(as defined in paragraph 3.5(vii), but determined as of the last day of the
second month preceding the first day of the month coinciding with or next
following the date of Executive’s termination of employment)) for any such
payment not later than the fifth day following the expiration of such six-month
period);

If the payment of the Termination Payment is delayed as provided in paragraph
4.2(B), then interest on such delayed payment for the period beginning on the
date of Executive’s termination of employment and ending on the date of the
payment of the Termination Payment at the Aa Corporate Bond Rate (as determined
as provided in paragraph 4.2(C)) shall also be paid by the Employers to
Executive at the time of the payment of the Termination Payment.

(D) (i) With respect to the Annual Grant described in the first sentence of
Section 3.2(c)(i), if such Annual Grant is outstanding immediately prior to the
date of termination: (x) the portion of such Annual Grant which is not then
vested and which is subject only to time-based vesting shall immediately vest
and become immediately payable in full, and (y) the portion of such Annual Grant
which is not then vested and which is subject to performance-based vesting shall
vest and become payable (without proration) at the same time as payments are
made to other participants under the applicable programs, based on actual
achievement of performance targets (as if Executive had remained employed
through the end of the applicable performance period);

(ii) With respect to all other Annual Grants made outstanding immediately prior
to the date of termination: (x) the portion of each such Annual Grant which is
not then vested and which is subject only to time-based vesting shall vest and
become immediately payable on a pro rata basis, based on the number of full
months in the vesting period that had elapsed immediately prior to the date of
such termination, and (y) the portion of each such Annual Grant which is not
then vested and which is subject to performance-based vesting shall vest and
become payable at the same time as payments are made to other participants under
the applicable programs, based on actual achievement of performance targets (as
if Executive had remained employed through the end of the applicable performance
period), subject, however, to pro ration based on the number of full months in
the applicable performance period that had elapsed immediately prior to the date
of such termination;

(E) The Integration Award, if outstanding at the date of such termination, shall
vest and become payable (without proration) at the same time as payments are
made to

 

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other participants under the applicable program, based on actual achievement of
integration goals (as if Executive had remained employed through the end of the
applicable performance period); and

(F) Executive shall be entitled to receive an annual cash bonus for the year of
termination, payable at the same time as annual cash bonuses are paid to senior
management, based on actual achievement of performance targets (as if Executive
had remained employed through the end of the applicable performance period),
subject, however, to pro ration based on the number of days in the applicable
performance period that had elapsed prior to the date of termination.

4.3 Section 409A Compliance; Certain Additional Payments by the Employers.

(a) The Employers acknowledge that they (and, prior to the Effective Date,
Continental) have controlled the documentation of compensation arrangements for
Executive subject to Section 409A of the Code and have been and shall be in
control of the administration of each such arrangement, and the Employers hereby
represent and warrant that each payment, distribution or provision of a benefit
by the Company, United or Continental to or for the benefit of Executive,
whether paid or payable, distributed or distributable or provided or to be
provided pursuant to the terms of this Agreement or otherwise, is in documentary
and operational compliance with Section 409A of the Code, and the Employers
covenant that all such payments, distributions and provisions of benefits will
continue to be in documentary and operational compliance with Section 409A of
the Code, in each case except where any noncompliance would not result in any
liability to Executive.

(b) Notwithstanding anything to the contrary in this Agreement, if any payment,
distribution or provision of a benefit by the Employers to or for the benefit of
Executive, whether paid or payable, distributed or distributable or provided or
to be provided pursuant to the terms of this Agreement or otherwise (a
“Payment”), would be subject to an excise tax imposed by Section 4999 of the
Code, or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest or penalties, are hereinafter collectively
referred to as the “Excise Tax”), the Employers shall pay to Executive on or as
soon as practicable following the day on which the Excise Tax is remitted by or
on behalf of Executive (but not later than the end of the taxable year following
the year in which the Excise Tax is remitted) an additional payment (a “Gross-up
Payment”) in an amount such that after payment by Executive of all taxes
(including any interest of penalties imposed with respect to such taxes),
including any income taxes and Excise Taxes imposed on any Gross-up Payment,
Executive retains an amount of the Gross-up Payment (taking into account any
similar gross-up payments to Executive under any stock incentive or other
benefit plan or program of the Company) equal to the Excise Tax imposed upon the
Payments; provided, however that the Employers’ obligation to pay Executive a
Gross-up Payment with respect to the Excise Tax shall apply only to Payments in
connection the transactions contemplated by the Merger Agreement and shall not
apply to Payments in connection with any other transaction described in
Section 280G(b)(2)(A)(i) of the Code (any such other transaction, an “Excluded
Transaction”).

(c) In the case of Payments made to Executive in connection with an Excluded
Transaction (all such Payments, the “Total Payments”), the cash payments payable
pursuant to

 

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paragraph 4.1 or 4.2 that do not constitute deferred compensation within the
meaning of Section 409A of the Code shall first be reduced, all other payments
payable pursuant to paragraph 4.1 or 4.2 that do not constitute deferred
compensation within the meaning of Section 409A shall be next reduced, and all
other payments payable pursuant to paragraph 4.1 or 4.2 that do constitute
deferred compensation within the meaning of Section 409A shall thereafter be
reduced (beginning with those payments last to be paid), to the extent necessary
so that no portion of the Total Payments is subject to the Excise Tax imposed by
Section 4999 of the Code but only if (A) the net amount of such Total Payments,
as so reduced (and after subtracting the net amount of federal, state and local
income taxes on such reduced Total Payments and after taking into account the
phase out of itemized deductions and personal exemptions attributable to such
reduced Total Payments) is greater than or equal to (B) the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Payments and the amount of
Excise Tax to which Executive would be subject in respect of such unreduced
Total Payments and after taking into account the phase out of itemized
deductions and personal exemptions attributable to such unreduced Total
Payments).

(d) The Company and Executive shall make an initial determination as to whether
a Gross-up Payment is required under subparagraph (b) above and the amount of
any such Gross-up Payment, and whether a reduction is required under
subparagraph (c) above. Executive shall notify the Company in writing of any
claim by the Internal Revenue Service which, if successful, would require the
Employers to make a Gross-up Payment (or a Gross-up Payment in excess of that,
if any, initially determined by the Company and Executive) within ten business
days after the receipt of such claim. The Company shall notify Executive in
writing at least ten business days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If the
Company decides to contest such claim, Executive shall cooperate fully with the
Company in such action; provided, however, the Employers shall bear and pay
directly or indirectly all costs and expenses (including additional interest and
penalties) incurred in connection with such action and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax, or income tax,
including interest and penalties with respect thereto, imposed as a result of
the Company’s action. If, as a result of the Company’s action with respect to a
claim, Executive receives a refund of any amount paid by the Employers with
respect to such claim, Executive shall promptly pay such refund to the
Employers. If the Company fails to timely notify Executive whether it will
contest such claim or the Company determines not to contest such claim, then the
Employers shall immediately pay to Executive the portion of such claim, if any,
which it has not previously paid to Executive.

4.4 Payment Obligations Absolute. The Employers’ obligation to pay Executive the
amounts and to make the arrangements provided in this Article 4 shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set off, counterclaim, recoupment, defense or
other right which the Employers (including their subsidiaries and affiliates)
may have against him or anyone else; provided that all payments and other
obligations of the Employers under paragraphs 4.1(B), 4.1(C), 4.1(F) and 4.2
shall be subject to Executive’s execution, within 52 days after the date of
Executive’s termination of employment, of a general release and waiver
substantially in the form attached as Exhibit A to this Agreement, which has
become irrevocable. The Company agrees to execute such form of release and
waiver concurrently with the execution thereof by Executive. All amounts payable
by the Employers shall be paid without notice or demand. Executive shall not be
obligated to

 

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seek other employment in mitigation of the amounts payable or arrangements made
under any provision of this Article 4, and, except as provided in paragraph 4.7
with respect to Continuation Coverage, the obtaining of any such other
employment (or the engagement in any endeavor as an independent contractor, sole
proprietor, partner, or joint venturer) shall in no event effect any reduction
of the Employers’ obligations to make (or cause to be made) the payments and
arrangements required to be made under this Article 4.

4.5 Liquidated Damages. In light of the difficulties in estimating the damages
upon termination of this Agreement, the Employers and Executive hereby agree
that the payments and benefits, if any, to be received by Executive pursuant to
paragraph 4.2 shall be received by Executive as liquidated damages. Payment of
the Termination Payment pursuant to paragraph 4.2 shall be in lieu of any
severance benefit Executive may be entitled to under any severance plan or
policy maintained by the Employers.

4.6 Flight Benefits.

(i) Scope; Effectiveness. Paragraphs 4.6 and 4.7 set forth the terms and
conditions of Flight Benefits provided to Executive. Executive’s Flight Benefits
include Grandfathered Flight Benefits (as such term is defined in paragraph
4.7), which Executive shall retain in accordance with the terms and conditions
of this paragraph 4.6 and the other terms of this Agreement. The Grandfathered
Flight Benefits shall be used in a calendar year only after Executive has used
the annual Flight Benefits allotted to Executive for such year and then shall be
used in accordance with the terms and conditions of this paragraph 4.6;
provided, however, that if Executive would be subject to additional taxes and
interest under Section 409A of the Code if Executive’s right to use Executive’s
annual allotment of Flight Benefits is not delayed as provided in
Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then,
during the six-month period following Executive’s termination of employment,
Executive shall be able to use (a) first, Executive’s Annual Travel Limit and
Annual Gross Up Limit (as such terms are defined in paragraph 4.7) that are not
part of Executive’s Grandfathered Flight Benefits until the time that such
benefits used (together with any other miscellaneous separation pay benefits
subject to Section 409A of the Code that are provided to Executive during such
period) have an aggregate value equal to the applicable dollar amount under
Section 402(g)(1)(B) of the Code for the year in which such termination of
employment occurs, and (b) then, Executive’s Grandfathered Flight Benefits.

 

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(ii) Restrictions on Use; Consequences of Misuse.

(a) Personal Use Restriction. Executive agrees that the Flight Benefits are to
be used principally for personal reasons and may not be used for business
purposes (other than business purposes on behalf of the Company, and other than
business usage that is incidental or de minimis, defined as amounting to less
than 10% of the total value (valued as the usage of the Annual Travel Limit is
calculated) of flights on the UA System charged to Executive’s UATP card (as
such terms are defined in paragraph 4.7) during any calendar year), and that
credit availability on Executive’s UATP card may be suspended if (A) such UATP
card is used for business purposes other than as described above and (B) after
receiving written notice from the Company to cease such usage, Executive
continues to use Executive’s UATP card for such business purposes.

(b) Booking and Ticketing; Accounting; Reimbursement.

(1) No tickets issued on the UA System in connection with the Flight Benefits
may be purchased other than directly from the Employers or their 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 Executive 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.

(2) Executive shall be responsible for all charges on Executive’s UATP card in
excess of the Annual Travel Limit (and, if available, the Grandfathered Flight
Benefits) or that are not for flights on the UA System. Executive agrees to
reimburse the Employers, after receipt of an invoice or other accounting
statement, for all charges on Executive’s UATP card that are not for flights on
the UA System and that are not otherwise reimbursable to Executive under the
applicable policies of the Company for reimbursement of business expenses of
officers of the Company, or that are for tickets in excess of the Annual Travel
Limit (and, if available, the Grandfathered Flight Benefits) or that violate the
restrictions set forth in this paragraph 4.6, which reimbursement shall be made
promptly (and in any event within 45 days after receipt of such invoice or other
accounting statement). Executive agrees that the credit availability under
Executive’s UATP card may be suspended if Executive does not timely reimburse
the Employers as described in the foregoing sentence or if Executive exceeds the
applicable Annual Travel Limit (and, if available, the Grandfathered Flight
Benefits); provided, that, immediately upon the Employers’ receipt of
Executive’s reimbursement in full (or, in the case of exceeding the applicable
Annual Travel Limit (and, if available, the Grandfathered Flight Benefits),
beginning the next following year and after such reimbursement), the credit
availability under Executive’s UATP card will be restored.

(iii) Imputed Income. The sole cost to Executive of flights on the UA System
pursuant to use of Executive’s Flight Benefits will be the imputed income with
respect to flights on the UA System charged on Executive’s UATP card, or as
otherwise required by law, and reported to Executive as required by applicable
law. For purposes of tax reporting of Flight Benefits, it is the practice of the
Employers to calculate taxable amounts based on the fiscal period commencing
November 1 and ending on the following October 31 (for example, Flight

 

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Benefits utilized (i.e. “flown”) during the twelve-month period from November 1,
2010 to October 31, 2011 are reported as a taxable benefit for year 2011). The
Employers 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. With respect to any period for which the Employers are
obligated to provide the Annual Gross Up Limit, Executive will provide to the
Employers, upon request, a calculation or other evidence of Executive’s marginal
tax rate sufficient to permit the Employers to calculate accurately the amount
to be paid to Executive.

(iv) Section 409A Matters. It is intended that the Flight Benefits program
described in this Agreement comply with the limitations and requirements of
Section 409A of the Code to the extent applicable, and all provisions herein
shall be construed and interpreted in accordance with such intent. If the
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 the Company or any
affiliate of the 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 (a) no such interpretation, amendment or correction
shall result in Executive being treated worse than other Company senior
executives and (b) the Employers may not modify or amend the Grandfathered
Flight Benefits without Executive’s prior written consent.

(v) Additional Survivor Benefits. Upon Executive’s death, in addition to the
lifetime benefits provided pursuant to paragraphs 4.7(vii)(c) and (d),
Executive’s surviving spouse and children will be permitted to continue to use
(in the proportions specified in Executive’s last will and testament or, if not
so specified or if Executive dies intestate, in equal proportions) Executive’s
Grandfathered Flight Benefits (but only in such amounts as were unused by
Executive at the date of Executive’s death), which amounts shall be adjusted
upon any change in the valuation methodology used by the Employers for imputed
income for U.S. federal income tax purposes from flights so as to preserve (a) a
benefit level for purchase of tickets on the UA System at least as favorable as
the amount available at the date of Executive’s death and (b) a benefit level of
tax gross up at least as favorable as the tax gross up benefit level available
at the date of Executive’s death. Upon Executive’s death, the Employers shall
issue UATP cards in the names of Executive’s surviving spouse and children, as
applicable. In determining any adjustment pursuant to the first sentence of this
paragraph 4.6(v), the Employers shall be entitled to rely on their good faith
calculation as verified by their internal audit department or independent
auditors, which calculation will be provided to the Executive’s surviving spouse
and children upon request. The Employers will provide Executive’s surviving
spouse and children with an annual statement specifying the survivor benefit and
any adjustments described in this subparagraph. Executive’s spouse and children
will provide, upon request, a calculation or other evidence of their respective
marginal tax rates sufficient to permit the Employers to calculate accurately
the amount of any Annual Gross Up Limit that is part of the Grandfathered Flight
Benefits and which is to be paid to such individual. All rights, duties and
obligations of Executive, and all rights, duties and obligations of the
Employers, relating to Executive’s usage of Flight Benefits contained in this
Agreement shall be applicable to usage of Executive’s Flight Benefits by
Executive’s surviving spouse and children, and the provision of such Flight
Benefits to Executive’s surviving spouse and children shall be conditioned upon
written acknowledgement of and agreement thereto by Executive’s surviving spouse
and children who may use such Flight Benefits.

 

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4.7 Certain Definitions and Additional Terms. As used herein, the following
capitalized terms shall have the meanings assigned below:

(i) “affiliates” means any entity controlled by, controlling, or under common
control with the 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;

(ii) “Annual Travel Limit” means an amount, not less than $40,000, granted
annually (on a calendar-year basis and effective January 1 of each year) by the
Employers to Executive (provided that, if Flight Benefits are provided to
Executive after Executive’s termination of employment pursuant to this
Agreement, then each annual grant for a calendar year beginning after such
termination of employment shall, subject to the remaining provisions of this
subparagraph 4.7(ii), be in an amount equal to the amount of the annual grant
Executive received for the year in which such termination of employment
occurred), which annual amount shall be adjusted upon any change in the
valuation methodology used by the Employers 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 UA 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, the Employers shall be entitled to rely on their
good faith calculation, as verified by their internal audit department or
independent auditors, which calculation will be provided to Executive upon
request. The Employers will provide Executive with an annual statement
specifying the Annual Travel Limit and will notify Executive promptly of any
adjustments to the Annual Travel Limit described in this subparagraph 4.7(ii).
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;

(iii) “Annual Gross Up Limit” means an amount, not less than $27,500, granted
annually (on a calendar-year basis and effective January 1 of each year) by the
Employers to Executive (provided that, if Flight Benefits are provided to
Executive after Executive’s termination of employment pursuant to this
Agreement, then each annual grant for a calendar year beginning after such
termination of employment shall, subject to the remaining provisions of this
subparagraph 4.7(iii), be in an amount equal to the amount of the annual grant
Executive received for the year in which such termination of employment
occurred), which amount shall be adjusted upon any change in the valuation
methodology used by the Employers 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, the Employers shall
be entitled to rely on their good faith calculation, as verified by their
internal audit department or independent auditors, which

 

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calculation will be provided to Executive upon request. The Employers will
provide Executive with an annual statement specifying the Annual Gross Up Limit
and will notify Executive promptly of any adjustments to the Annual Gross Up
Limit described in this subparagraph 4.7(iii). 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;

(iv) [Intentionally Omitted].

(v) “Continuation Coverage” shall mean, subject to the limitations described in
this paragraph 4.7(v), the continued coverage of Executive and his eligible
dependents under the welfare benefit plans of the Employers available to
executives of the Company who have not terminated employment (or the provision
of equivalent benefits), including, without limitation, medical, health, dental,
life insurance, vision care, accidental death and dismemberment, and
prescription drug (but excluding disability). Such coverage shall be offered
solely as an alternative to any COBRA continuation coverage applicable to any
group health plan otherwise available to Executive (and each of Executive’s
dependents, if any) within the meaning of ERISA sections 601 through 608.
Further, any such coverage shall be subject to the application of any Medicare
or other coordination of benefits provisions under a particular welfare benefit
plan. Such coverage shall be provided by the Employers at no greater
contribution, deductible or co-pay cost to Executive than that applicable to a
similarly situated Company executive who has not terminated employment. The
coverage described in this subparagraph 4.7(v) (or the receipt of equivalent
benefits) shall be provided to Executive on a self-insured basis. To the extent
such coverage results in taxable income to Executive, then the Employers shall
pay to Executive an amount as shall be required to hold Executive harmless from
any tax liability resulting from such coverage, and any such payment by the
Employers to Executive shall be made on or as soon as practicable following the
day on which the required tax is remitted by or on behalf of Executive (but not
later than the end of the taxable year following the year in which such tax is
remitted). The coverage to Executive under a particular welfare benefit plan (or
the receipt of equivalent benefits) shall be suspended during any period that
Executive receives comparable benefits from a subsequent employer, and shall be
reinstated upon Executive ceasing to so receive comparable benefits and
notifying the Company thereof;

(vi) “Eligible Family Members” means, with respect to each annual benefit year,
Executive’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, if Flight Benefits are
provided to Executive after Executive’s termination of employment pursuant to
this Agreement, then, following such termination of employment, an Eligible
Family Member shall not include any individual with respect to whom a benefit
described in paragraph 4.7(vii)(a) is taxable;

(vii) “Flight Benefits” shall, to the extent Executive is entitled to such
benefits under the terms of this Agreement, mean flight benefits on each airline
in the UA System consisting of the following (and such flight benefits shall be
provided and construed in accordance with the terms and conditions set forth in
paragraphs 4.6 and 4.7):

(a) highest priority space available flight passes, including appropriate flight
pass identification cards, for Executive and Executive’s Eligible Family
Members;

 

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(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 the Employers 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
Executive’s name for charging (subject to the restrictions set forth in
paragraph 4.6(ii)) the purchase of tickets on the UA System (in any fare class)
for travel by Executive, Executive’s spouse, Executive’s family and significant
others as determined by Executive. The UATP card may be used up to the amount of
any Grandfathered Flight Benefits and, on an annual, calendar-year basis, up to
the Annual Travel Limit;

(c) Global Services Cards (or similar highest category successor frequent flyer
cards) in Executive’s and Executive’s spouse’s and children’s names, such cards
to be lifetime membership cards;

(d) a membership for Executive and Executive’s spouse and children in the
Employers’ Red Carpet Club (or any successor program), such memberships to be
lifetime memberships (subject to the terms and conditions of membership,
including minimum age requirements);

(e) payment by the Employers to Executive 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 Executive 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
Executive as a result of Executive’s service as an employee of the Employers,
and any payment by the Employers to Executive pursuant to this subparagraph
4.7(vii)(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 Executive (but not later
than the end of the taxable year following the year in which such tax is
remitted); and

(f) the Grandfathered Flight Benefits (including the use of the UATP card with
respect thereto);

(viii) “Grandfathered Flight Benefits” shall mean Executive’s (1) accrued but
unused “Annual Travel Limit” and “Annual Gross Up Limit” as determined pursuant
to the terms of the Existing Agreement and as reflected on the records of
Continental as of the date immediately preceding the Effective Date (which
amounts represent (a) Executive’s balances as of December 31, 2004 that were
earned and vested as of such date, plus (b) additions to such balances for the
period from January 1, 2005 through December 31, 2007 (the right to which were
earned and vested as of December 31, 2004),

 

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reduced by (c) the portion of such balances used by Executive on or before
December 31, 2007), and (2) upon the death of Executive, the death benefit
rights provided to Executive’s surviving spouse and children with respect to the
Grandfathered Flight Benefits as set forth in paragraph 4.6, each of which the
Employers and Executive believe are “grandfathered” under Section 409A of the
Code. Grandfathered Flight Benefits shall not include any portion of the annual
Flight Benefits provided to Executive by Continental for a calendar year
beginning after December 31, 2007, and shall be reduced when and to the extent
used by Executive (and after Executive’s death, by his surviving spouse and
children) pursuant to the terms of paragraph 4.6;

(ix) “Outplacement and Related Services” shall mean (1) outplacement services,
at the Employers’ cost and for a period of twelve months beginning on the date
of Executive’s termination of employment, to be rendered by an agency selected
by Executive and approved by the Board (with such approval not to be
unreasonably withheld), and (2) other incidental perquisites (such as free or
discount air travel, car rental, phone or similar service cards) enjoyed by
Executive immediately prior to the Effective Date as a result of his position,
to the extent then available for use by Executive, for Executive’s lifetime or a
shorter period if such perquisites become unavailable to the Employers for use
by Executive;

(x) “Termination Payment” shall mean an amount equal to the product of (I) if
the date of Executive’s termination of employment is on or prior to the second
anniversary of the Effective Date, two and three-fourths (2.75), and if the date
of Executive’s termination of employment is subsequent to such anniversary, two
(2), and (II) the sum of (A) Executive’s annual base salary pursuant to
paragraph 3.1 in effect immediately prior to Executive’s termination of
employment hereunder and (B) an amount equal to 150% of the amount described in
the foregoing clause (A).

(xi) “UA System” shall mean (1) flights operated by the Company or any of its
affiliates (including United and Continental) or any successor or successors
thereto, and (2) flights operated on behalf of the Company or any of its
affiliates (including United and Continental) or any successor or successors
thereto by any third party under capacity purchase agreements with the Company
or any of its affiliates (including United and Continental); provided that,
unless otherwise communicated to Executive and subject to clause (2), UA System
shall not include flights on any other carriers, including alliance/codeshare
carriers.

ARTICLE 5: MISCELLANEOUS

5.1 Interest and Indemnification. If any payment to Executive provided for in
this Agreement is not made by the Employers when due, the Employers shall pay to
Executive interest on the amount payable from the date that such payment should
have been made until such payment is made, which interest shall be calculated at
3% plus the prime or base rate of interest announced by JPMorgan Chase Bank (or
any successor thereto) at its principal office in New York, New York (but not in
excess of the highest lawful rate), and such interest rate shall

 

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change when and as any such change in such prime or base rate shall be announced
by such bank. If Executive shall obtain any money judgment or otherwise prevail
with respect to any litigation brought by Executive or the Employers to enforce
or interpret any provision contained herein, the Employers, to the fullest
extent permitted by applicable law, hereby indemnify Executive for his
reasonable attorneys’ fees and disbursements incurred in such litigation and
hereby agree (i) to pay in full all such fees and disbursements and (ii) to pay
prejudgment interest on any money judgment obtained by Executive from the
earliest date that payment to him should have been made under this Agreement
until such judgment shall have been paid in full, which interest shall be
calculated at the rate set forth in the preceding sentence. Any reimbursement of
attorneys’ fees and disbursements required under this paragraph 5.1 and any
reimbursement of costs and expenses required under paragraph 3.7(ii) shall be
made by the Employers upon or as soon as practicable following receipt of
supporting documentation reasonably satisfactory to the Company (but in any
event not later than the close of Executive’s taxable year following the taxable
year in which the fee, disbursement, cost or expense is incurred by Executive);
provided, however, that, upon Executive’s termination of employment with the
Employers, in no event shall any additional reimbursement be made prior to the
date that is six months after the date of Executive’s termination of employment
to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of
the Code; provided that interest at the rate specified above in this paragraph
5.1 shall be paid to Executive with respect to any time period that
reimbursement is so delayed and such interest shall be paid at the same time as
the reimbursement. In no event shall any reimbursement be made to Executive for
such fees, disbursements, costs and expenses incurred after the later of (1) the
tenth anniversary of the date of Executive’s death or (2) the date that is ten
years after the date of Executive’s termination of employment with the
Employers. The rights to indemnification provided herein shall not be construed
to limit any rights to indemnification Executive is entitled to pursuant to the
Company’s certificate of incorporation and bylaws and the terms of the Merger
Agreement, to the maximum extent permitted by applicable law.

5.2 Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by the United
States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

If to the Employers to:   

United Continental Holdings, Inc.

  

77 W. Wacker Dr.

  

Chicago, IL 60601

  

Attention: General Counsel

If to Executive to:   

Mr. Jeffery A. Smisek

  

At his address on the books of the Company

or to such other address as the Employers or the Executive, as applicable, may
furnish to the other in writing in accordance herewith, except that notices of
changes of address shall be effective only upon receipt.

5.3 Applicable Law. This contract is entered into under, and shall be governed
for all purposes by, the laws of the State of Illinois.

 

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5.4 No Waiver. No failure by any party hereto at any time to give notice of any
breach by any other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

5.5 Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.

5.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

5.7 Withholding of Taxes and Other Employee Deductions. The Employers may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to the Employers’ employees generally.

5.8 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

5.9 Gender and Plurals. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.

5.10 Successors. This Agreement shall be binding upon and inure to the benefit
of the Employers and any successor or successors of any of the Employers,
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 any of the Employers by any means whether direct or indirect, by
purchase, merger, consolidation, or otherwise. Except as provided in the
preceding sentence or in paragraph 3.3 (regarding assignment of life insurance
benefits), this Agreement, and the rights and obligations of the parties
hereunder, are personal and neither this Agreement, nor any right, benefit or
obligation of any party hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or otherwise,
without the prior written consent of the applicable other party. The parties
intend that the provisions of this Agreement benefiting Executive’s estate or
his surviving spouse and children shall be enforceable by them.

5.11 Term. This Agreement has a term co-extensive with the term of employment as
set forth in paragraph 2.1. Termination shall not affect any right or obligation
of any party which is accrued or vested prior to or upon such termination.

5.12 Entire Agreement. Except as provided in (i) the benefits, plans, and
programs referenced in paragraph 3.7(iv) and any awards outstanding immediately
prior to the Effective Date under Continental’s Incentive Plan 2000 and any
plans or programs established thereunder, Continental’s Incentive Plan 2010 and
any plans or programs established thereunder, or under any equity, incentive or
cash bonus plans or programs of the Company or similar plans or programs,
(ii) separate agreements governing Executive’s flight benefits relating to other
airlines, and (iii) the Confidentiality and Non-Competition Agreement, as
amended hereby, this

 

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Agreement, as of the Effective Date, will constitute the entire agreement of the
parties with regard to the subject matter hereof, and will contain all the
covenants, promises, representations, warranties and agreements between the
parties with respect to employment of Executive by the Company. Effective as of
the Effective Date, the Existing Agreement (including the Existing Compensation
Reduction Agreements, except as contemplated hereby) shall automatically
terminate and no longer be of any force or effect, and no party shall have any
rights or obligations thereunder. Any modification of this Agreement shall be
effective only if it is in writing and signed by the applicable party to be
charged.

5.13 Deemed Resignations. Any termination of Executive’s employment shall
constitute an automatic resignation of Executive as an officer of the Employers
and each affiliate of the Employers, and an automatic resignation of Executive
from the Board and from the board of directors of the Employers and any
affiliate of the Employers, and from the board of directors or similar governing
body of any corporation, limited liability company or other entity in which the
Employers or any affiliates hold an equity interest and with respect to which
board or similar governing body Executive serves as the designee or other
representative of one or more of the Employers or any affiliates.

5.14 No Solicitation. During Executive’s employment hereunder and for a period
of two years following the date of Executive’s termination of employment,
Executive hereby agrees not to, directly or indirectly, solicit or hire or
assist any other person or entity in soliciting or hiring any employee of the
Employers or any of their subsidiaries to perform services for any entity (other
than the Employers or their subsidiaries), or attempt to induce any such
employee to leave the employ of the Employers or their subsidiaries.

5.15 Confidentiality. During Executive’s employment hereunder and thereafter,
Executive shall hold in strict confidence any Proprietary or Confidential
Information related to the Employers or their subsidiaries, except that
Executive may disclose such information as required by law, court order,
regulation or similar order. For purposes of this Agreement, the term
“Proprietary or Confidential Information” shall mean all information relating to
the Employers, their subsidiaries or affiliates (such as business plans, trade
secrets, or financial information of strategic importance to the Employers or
their subsidiaries or affiliates) that is not generally known in the airline
industry, that was learned, discovered, developed, conceived, originated or
prepared during Executive’s employment with the Employers and the disclosure of
which would be harmful to the business prospects, financial status or reputation
of the Employers or their subsidiaries or affiliates at the time of any
disclosure by Executive.

5.16 Injunctive Relief. Executive hereby agrees that it is impossible to measure
in money the damages which will accrue to the Employers by reason of a failure
by Executive to perform any of Executive’s obligations under paragraphs 5.14 and
5.15. Accordingly, if the Employers or any of their affiliates institute any
action or proceeding to enforce paragraphs 5.14 or 5.15, to the extent permitted
by applicable law, Executive hereby waives the claim or defense that the
Employers or their affiliates have an adequate remedy at law, and Executive
shall not urge in any such action or proceeding the claim or defense that any
such remedy at law exists.

5.17 Delayed Payment Restriction. Notwithstanding any provision in this
Agreement to the contrary, if any payment or benefit provided for herein would
be subject to additional

 

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taxes and interest under Section 409A of the Code if Executive’s receipt of such
payment or benefit is not delayed until the Section 409A Payment Date, then such
payment or benefit shall not be provided to Executive (or Executive’s estate, if
applicable) until the Section 409A Payment Date (and, at that time, Executive
shall also receive interest thereon from the date such payment or benefit would
have been provided in the absence of this paragraph until the date of receipt of
such payment or benefit at the Aa Corporate Bond Rate (as defined in paragraph
3.5(vii), but determined as of the last day of the second month preceding the
first day of the month coinciding with or next following the date of Executive’s
termination of employment)). This paragraph shall not apply to any payment or
benefit otherwise described in the first sentence of this paragraph if another
provision of this Agreement is intended to cause Executive’s receipt of such
payment or benefit to satisfy the requirements of Section 409A(a)(2)(B)(i) of
the Code.

5.18 Joint and Several Liability of Employers. Each of the Employers agrees to
perform the obligations to Executive set forth herein and shall bear joint and
several liability with respect to such obligations.

5.19 Survival of Obligations. Except as otherwise provided in this Agreement or
in the applicable plan, program, policy or agreement, all covenants, agreements,
representations and warranties made in this Agreement by any party shall survive
the termination of the Initial Term and Extended Term, as applicable.

[Signatures begin on following page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and to be
effective as of the Effective Date.

 

“UAL CORPORATION”

By:

 

/s/ Michael P. Bonds

 

Name:

 

Michael P. Bonds

 

Title:

 

Executive Vice President Human

   

Resources and Labor Relations

“CONTINENTAL AIRLINES, INC.”

By:

 

/s/ Michael P. Bonds

 

Name:

 

Michael P. Bonds

 

Title:

 

Executive Vice President Human

   

Resources and Labor Relations

“UNITED AIR LINES, INC.”

By:

 

/s/ Michael P. Bonds

 

Name:

 

Michael P. Bonds

 

Title:

 

Executive Vice President Human

   

Resources and Labor Relations

“EXECUTIVE”

/s/ Jeffery A. Smisek

JEFFERY A. SMISEK

 

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EXHIBIT A

TO

EMPLOYMENT AGREEMENT

Form of Release Agreement

(to be executed by the Company and Executive)

In consideration of the benefits provided by the Employers to Executive,
pursuant to paragraphs 4.1(B), 4.1(C), 4.1(F) and 4.2 of the Employment
Agreement among Jeffery A. Smisek (“Executive”), UAL Corporation (to be re-named
United Continental Holdings, Inc.) (the “Company”), Continental Airlines, Inc
(“Continental”), and United Air Lines Inc. (“United”) (the Company, Continental
and United are hereinafter collectively referred to as the “Employers”), dated
[DATE] (the “Employment Agreement”), Executive hereby releases the Employers and
each of their subsidiaries and affiliates and their respective stockholders,
officers, directors, employees, representatives, agents and attorneys from any
and all claims or liabilities, known or unknown, of any kind, in any way
relating to Executive’s employment by, or services rendered to or for, the
Employers or any of their subsidiaries or affiliates, or relating to the
cessation of such employment or under the Age Discrimination in Employment Act,
the Americans with Disabilities Act, the Family and Medical Leave Act, Title VII
of the Civil Rights Act of 1964, 42 U.S.C. Section 1981, the Illinois Human
Rights Act, and any other statutory, tort, contract or common law cause of
action, other than claims or liabilities arising from a breach by the Employers
or any of their subsidiaries or affiliates of (i) their post-employment
obligations under the Employment Agreement, (ii) their obligations under any
compensation or benefit plan, policy or program of the Company or its affiliates
in which Executive participates, (iii) their obligations under existing
agreements governing Executive’s flight benefits relating to other airlines, and
(iv) any of Executive’s rights to be indemnified and/or advanced expenses under
the Employment Agreement, any corporate document of the Employers, any other
written agreement (including the Merger Agreement (as defined in the Employment
Agreement)), or pursuant to applicable law or any rights to be covered under any
applicable directors’ and officers’ liability insurance policies. The Company,
on behalf of itself and its subsidiaries and affiliates, hereby releases
Executive from any and all claims or liabilities, known or unknown, of any kind
in any way relating to or pertaining to Executive’s employment by, or services
rendered to or for, the Employers or any of their subsidiaries or affiliates,
other than (A) fraud, (B) intentional malfeasance (C) claims arising from a
breach by Executive of (i) the Employment Agreement, (ii) any compensation or
benefit plan, policy or program of the Company or its affiliates in which
Executive participates, or (iii) existing agreements governing Executive’s
flight benefits relating to other airlines, or (D) the Employers’ right to
recoupment of compensation paid to Executive, in accordance with and only to the
extent required by the rules of the exchange(s) on which the Company’s stock is
then listed, or by other applicable law. These releases are to be broadly
construed in favor of the released persons. These releases do not apply to any
rights or claims that may arise after the date of execution of this Release
Agreement by Executive and the Company. Both parties agree that this Release
Agreement is not and shall not be construed as an admission of any wrongdoing or
liability on the part of any party. Notwithstanding the foregoing, the
post-employment obligations created by the

 

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Employment Agreement, any compensation plan or program of Company or its
affiliates, or under existing agreements governing Executive’s flight benefits
relating to other airlines, are not released.

Executive acknowledges that, by Executive’s free and voluntary act of signing
below, Executive agrees to all of the terms of this Release Agreement and
intends to be legally bound thereby.

Executive acknowledges that Executive has received a copy of this Release
Agreement on [date that Executive receives Release Agreement]. Executive
understands that Executive may consider whether to agree to the terms contained
herein for a period of [twenty-one] [forty-five] days after the date Executive
has received this Release Agreement. Accordingly, Executive may execute this
Release Agreement by [date [21] [45] days after Release Agreement is given to
Executive], to acknowledge Executive’s understanding of and agreement with the
foregoing. [Add if 45 days applies: Executive acknowledges that attached to this
Release Agreement are (i) a list of the positions and ages of those employees
selected for termination (or participation in the exit incentive or other
employment termination program) and (ii) a list of the ages of those employees
not selected for termination (or participation in such program).] Executive
acknowledges that Executive has been and is hereby advised to consult with an
attorney prior to executing this Release Agreement.

This Release Agreement will become effective, enforceable and irrevocable on the
eighth day after the date on which it is executed by Executive (the “Effective
Date”). During the seven-day period prior to the Effective Date, Executive may
revoke Executive’s agreement to accept the terms hereof by serving written
notice in accordance with paragraph 5.2 of the Employment Agreement to the
Company of Executive’s intention to revoke. However, the Termination Payment
provided for in the Employment Agreement will be delayed until the Effective
Date.

 

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