Exhibit 10.3
EMPLOYMENT AGREEMENT
AMENDMENT NO. 4
This Amendment No. 4 (this “Amendment”) to the Employment Agreement, dated
September 5, 2002, among UAL Corporation, a Delaware corporation (“UAL”), United
Air Lines, Inc., a Delaware corporation (“UA”, UAL and UA sometimes collectively
referred to herein as “United”), and Glenn F. Tilton (the “Executive”), as
amended on December 8, 2002, February 17, 2003 and September 29, 2006 (as so
amended, the “Employment Agreement”), is made as of this 25th day of September,
2008.
WHEREAS United desires to continue the employment of the Executive as Chairman
of the Board, President and Chief Executive Officer of United, and the Executive
desires to continue such employment, on the terms and conditions hereinafter set
forth;
WHEREAS United and the Executive wish to amend the Employment Agreement in order
to address the requirements of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”);
WHEREAS pursuant to Section 10(f) of the Employment Agreement, the Employment
Agreement may be modified or amended by a writing signed by United and the
Executive; and
WHEREAS pursuant to Section 10(o) of the Employment Agreement, upon the release
of final regulations promulgated under Section 409A of the Code, the Executive
and United agreed to negotiate further amendments to the Employment Agreement in
good faith to preserve, to the maximum extent reasonably practicable, the
intended after-tax benefits to the Executive;
NOW THEREFORE, for good and valuable consideration, which is hereby acknowledged
and agreed by the undersigned, each of UAL, UA and the Executive (each a
“party”) agrees as follows (capitalized terms not otherwise defined herein shall
have the meaning assigned thereto in the Employment Agreement):
1. Amendment to Section 1(b). The last sentence of Section 1(b) of the
Employment Agreement shall be amended and restated in its entirety to read as
follows:
“The Executive shall perform such duties at United headquarters located in the
metropolitan Chicago, Illinois area.”
2. Amendment to Section 3(c). The fourth sentence of Section 3(c) of the
Employment Agreement shall be amended and restated in its entirety to read as
follows:
“The Target Bonus and the Extraordinary Bonus will be paid at such time and in
such manner as set forth in the applicable annual incentive compensation plan
documents.”

 

 

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3. Amendment to 3(h). Section 3(h) of the Employment Agreement shall be amended
by inserting the following text at the end thereof:
“To the extent payments under any perquisite program or policy are subject to
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the
reimbursement of expenses or in-kind benefits provided thereunder during a year
will not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year. In no event shall such an expense be
reimbursed after the last day of the year following the year in which the
expense was incurred. The right to such reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit.”
4. Amendment to Section 3(j). Section 3(j) of the Employment Agreement shall be
amended by inserting the following text at the end thereof:
“The reimbursement of expenses during a year will not affect the expenses
eligible for reimbursement in any other year. In no event shall such an expense
be reimbursed after the last day of the year following the year in which the
expense was incurred. The right to such reimbursement is not subject to
liquidation or exchange for another benefit.”
5. Amendment to Section 3(k). Section 3(k) of the Employment Agreement shall be
amended by inserting the following text at the end thereof:
“The retiree travel benefits provided during a year will not affect the retiree
travel benefits provided in any other taxable year. The right to such retiree
travel benefits is not subject to liquidation or exchange for another benefit.”
6. Amendment to Section 4(d)(ii). Section 4(d)(ii) of the Employment Agreement
shall be amended by deleting the following text contained therein:
“and which is remedied by United within thirty (30) days after receipt of a
notice thereof given by the Executive.”
7. Amendment to Section 4(d)(iii). Section 4(d)(iii) of the Employment Agreement
shall be amended by deleting the following text at the end thereof:
“and which is remedied by United promptly after receipt of notice thereof given
by the Executive.”
8. Amendment to Section 4(d). Section 4(d) of the Employment Agreement shall be
amended by inserting the following text at the end thereof:
“Notwithstanding the foregoing, the Executive must give notice to United within
120 days of the occurrence of the event giving rise, or events which in the
aggregate give rise (or within 120 days after the date he learns or reasonably
should have learned of such event or events, if later), to the Good Reason event
to terminate his employment for Good Reason based on such event(s). During the
notice period (which shall not be less than 30 days), United shall have the
opportunity to substantially correct the condition that caused Good Reason, in
which case Good Reason shall no longer exist with respect to such condition.”

 

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9. Amendment to Section 5(d)(iv). Section 5(d)(iv) of the Employment Agreement
shall be amended by inserting the following text at the end thereof:
“, and provided that (A) no reimbursement of expenses or in-kind benefit that
the Executive becomes entitled to receive pursuant to this Section 5(d)(iv)
shall be subject to liquidation or exchange for another benefit, (B) the
reimbursement of expenses or in-kind benefits provided hereunder during a year
will not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year, and (C) any such reimbursements shall be
made no later than the end of the year following the year in which the relevant
expenses were incurred.”
10. Amendment to Section 5(e)(iv). Section 5(e)(iv) of the Employment Agreement
shall be amended by inserting the following text at the end thereof:
“, and provided that (A) no reimbursement of expenses or in-kind benefit that
the Executive becomes entitled to receive pursuant to this Section 5(e)(iv)
shall be subject to liquidation or exchange for another benefit, (B) the
reimbursement of expenses or in-kind benefits provided hereunder during a year
will not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year, and (C) any such reimbursements shall be
made no later than the end of the year following the year in which the relevant
expenses were incurred.”
11. Amendment to Section 5(g). Section 5(g) of the Employment Agreement shall be
amended by inserting the following text at the end thereof:
“In no event shall any Gross-Up Payment hereunder be made later than the end of
the year following the year in which the Executive pays (or United remits) the
applicable tax.”
12. Amendment to Section 10(h). Section 10(h) of the Employment Agreement shall
be amended by adding the following as the last sentence thereto:
“Any such reimbursement of attorneys’ fees and costs to the Executive under the
preceding sentences will be made no later than the end of the year following the
year in which the Executive prevails in such arbitration or litigation, as
applicable.”

 

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13. Amendment and Restatement of Section 10(o). Section 10(o) of the Employment
Agreement shall be amended and restated in its entirety to read as follows:
“It is the intention of United and the Executive that the provisions of this
Agreement comply with Section 409A of the Code (“Section 409A”) in a manner that
does not impose additional taxes, interest or penalties upon the Executive
pursuant to Section 409A, and all provisions of this Agreement will be construed
and interpreted in a manner consistent with Section 409A and this Section 10(o).
Each of the payments of severance and continued benefits under Section 5 above
are designated as separate payments for purposes of the short-term deferral
rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F), the exemption for
involuntary terminations under separation pay plans under Treasury Regulation
Section 1.409A-1(b)(9)(iii), and the exemption for medical expense
reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B). As a
result, (A) payments that are made on or before the 15th day of the third month
of the calendar year following the applicable year of termination, (B) any
additional payments that are made on or before the last day of the second
calendar year following the year of Executive’s termination of employment and do
not exceed the lesser of two times his rate of pay or two times the limit under
Code Section 401(a)(17) then in effect, and (C) any payments of continued
medical benefits that are made during the applicable COBRA continuation period,
are exempt from the requirements of Code Section 409A. As Executive is
designated as a “specified employee” within the meaning of Code Section 409A, to
the extent the payments to be made during the first six month period following
Executive’s separation from service (within the meaning of Section 409A) exceed
such exempt amounts, the payments shall be withheld and the amount of the
payments withheld will be paid in a lump sum, without interest, during the
seventh month after Executive’s termination of employment. In the event a
benefit is to be provided during the first six month period following
Executive’s separation from service and the provision of such benefit would be
treated as a payment of nonqualified deferred compensation in violation of Code
Section 409A(a)(2)(B)(i), then the continuation of such benefit during that
period shall be conditioned upon the payment by Executive for the premiums or
other cost of coverage and United shall reimburse the Executive, without
interest, for the premiums or other cost of coverage paid by the Executive
during the seventh month after Executive’s termination of employment. Any
payment or benefit that would be considered deferred compensation subject to,
and not exempt from, Section 409A, payable or provided upon a termination of
employment shall only be paid or provided to the Executive to the extent such
termination constitutes a separation from service (within the meaning of
Section 409A). Except as specifically provided in Sections 3(i) and 5(g), the
Executive is solely responsible and liable for the satisfaction of all taxes and
penalties that may arise in connection with this Agreement (including any taxes
arising under Section 409A), and United shall not have any obligation to
indemnify or otherwise hold the Executive harmless from any or all of such
taxes.”
14. Representation by United. United represents and warrants that this Amendment
has been duly considered and authorized by the Human Resources Subcommittee of
the Board of Directors of UAL and is binding on United in accordance with its
terms.
15. Reimbursement of Professional Fees. United will pay on the Executive’s
behalf all reasonable bills rendered to the Executive by the Executive’s
attorneys, accountants and other advisors in connection with the negotiation of
this Amendment.
16. Full Force and Effect. For the avoidance of doubt, except to the extent
expressly modified by this Amendment, all terms of the Employment Agreement will
remain in full force and effect.
17. Governing Law. The laws of the State of Delaware will govern the validity,
construction and performance of this Amendment (without regard to conflict of
laws principles).

 

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18. Entire Agreement. This Amendment, together with the Employment Agreement,
contains the entire agreement between United and the Executive concerning the
subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between
United and the Executive with respect hereto. The Executive acknowledges and
agrees that this Amendment constitutes an amendment to the Employment Agreement
in respect of the Executive’s participation and rights to any benefits
thereunder. This Amendment may not be modified or amended except by a writing
signed by each of the parties hereto.
19. Successors and Assigns. This Amendment will be binding on (a) the Executive
and the Executive’s estate and legal representatives and (b) United and its
successors and assigns.
20. Counterparts. This Amendment may be executed in two or more counterparts
(including via facsimile), each of which will be deemed an original but all of
which together will be considered one and the same agreement.
IN WITNESS WHEREOF, United and the Executive have executed this Amendment as of
the date first above written.

                  UAL CORPORATION       EXECUTIVE:    
 
               
By:
  /s/ Paul R. Lovejoy        /s/ Glenn F. Tilton     
 
 
 
Name: Paul R. Lovejoy      
 
Glenn F. Tilton    
 
  Title:   Senior Vice President, General
            Counsel and Secretary            
 
                UNITED AIR LINES, INC.            
 
               
By:
  /s/ Paul R. Lovejoy             
 
 
 
Name: Paul R. Lovejoy            
 
  Title:   Senior Vice President, General
            Counsel and Secretary            

 

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