Exhibit 10.6

Execution Copy

 

 

EMPLOYEE BENEFITS SEPARATION AGREEMENT

by and among

CONTINENTAL AIRLINES, INC.,

EXPRESSJET HOLDINGS, INC.,

XJT HOLDINGS, INC.

and

EXPRESSJET AIRLINES, INC.

 

Dated as of April 17, 2002

EMPLOYEE BENEFITS SEPARATION AGREEMENT

RECITALS

This EMPLOYEE BENEFITS SEPARATION AGREEMENT (this "Employee Benefits Separation
Agreement"), dated as of April 17, 2002, is by and among Continental Airlines,
Inc., a Delaware corporation ("Continental"), ExpressJet Holdings, Inc., a
Delaware corporation and a wholly owned subsidiary of Continental ("ExpressJet
Holdings"), XJT Holdings, Inc. (formerly ExpressJet Airlines, Inc.), a Delaware
corporation and a wholly owned subsidiary of ExpressJet Holdings ("XJT
Holdings"), and ExpressJet Airlines, Inc. (formerly New ExpressJet Airlines,
Inc.), a Delaware corporation and a wholly owned subsidiary of XJT Holdings
("ExpressJet Airlines").

WHEREAS, Continental, ExpressJet Holdings, XJT Holdings and ExpressJet Airlines
desire to enter into this Employee Benefits Separation Agreement with respect to
implementation of matters concerning employees and the separation of employee
benefits in connection with the contemplated Initial Public Offering and
subsequent divestiture and other matters set forth in the Initial Public
Offering Agreement by and between Continental and ExpressJet Holdings dated as
of April 17, 2002 (the "IPO Agreement");

NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter expressed, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

DEFINITIONS

ARTICLE I

DEFINITIONS

Capitalized terms used in this Employee Benefits Separation Agreement shall have
the same meanings as are ascribed to such terms under the IPO Agreement, except
as otherwise specifically indicated below:

1.1 401(k) Savings Plan, when immediately preceded by "Continental," means the
Continental Airlines, Inc. 401(k) Savings Plan. When immediately preceded by
"Holdings," 401(k) Savings Plan means the defined contribution plan to be
established by Holdings pursuant to Section 2.3.

1.2 Administrative Services Agreement means the Administrative Support and
Information Services Provisioning Agreement in effect among Continental,
ExpressJet Holdings, and ExpressJet Airlines.

1.3 ASO Contract means an administrative services only contract with a
third-party administrator that relates to any of the Continental Plans.

1.4 Capacity Purchase Period means the period of time during which that certain
Amended and Restated Capacity Purchase Agreement dated as of April 17, 2002,
among Continental, ExpressJet Holdings, XJT Holdings, and ExpressJet Airlines is
in effect.

1.5 CARP means the Continental Retirement Plan.

1.6 COBRA means the continuation coverage requirements for "group health plans"
under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and as codified in Section 4980B of the Code and Sections 601 through
608 of ERISA.

1.7 COBRA Continuee is defined in Section 5.5(a).

1.8 Committee means the Human Resources Committee of Continental's Board of
Directors.

1.9 Continental has the meaning set forth in the Preamble.

1.10 Continental Executive Benefit Plans means the following: the Turbo Program,
the Continental Management Bonus Program, the Long Term Incentive Program, and
the Retention Program.

1.11 Employee Benefits Separation Agreement has the meaning set forth in the
Preamble.

1.12 Enrolled Actuary means the enrolled actuary that is providing regular and
ongoing actuarial services in connection with a particular Continental Plan at
the time actuarial services are needed pursuant to this Employee Benefits
Separation Agreement with respect to such plan or a corresponding Holdings Plan;
provided, however, that if there is no such actuary, the enrolled actuary shall
mean Hewitt Associates.

1.13 ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time, together with the rules and regulations thereunder.

1.14 Exclusivity Ending Date means the day immediately preceding the earlier of
(a) January 1, 2006, and (b) the first date on which Continental is free to
utilize regional jet capacity of a carrier other than ExpressJet Airlines in or
out of Continental's hubs.

1.15 ExpressJet Airlines has the meaning set forth in the Preamble.

1.16 ExpressJet Holdings has the meaning set forth in the Preamble.

1.17 Flexible Benefits Plan, when immediately preceded by "Continental," means,
collectively or individually, as the context shall imply, the Continental
Airlines, Inc. Healthcare Reimbursement Program, the Continental Airlines, Inc.
Child and Dependent Care Reimbursement Program, any cafeteria plan or premium
conversion plan maintained by Continental pursuant to Section 125 of the Code,
and the Continental Vacation Buying and Selling Program. When immediately
preceded by "Holdings," Flexible Benefits Plan means the corresponding programs
to be established by Holdings pursuant to Section 2.3.

1.18 Flight Pass Privileges, when immediately preceded by "Continental," means
space-available flight privileges and vacation and buddy passes on each airline
operated by Continental or Continental Micronesia, Inc. (for so long as
Continental Micronesia, Inc. remains a wholly owned subsidiary of Continental).
When immediately preceded by "Holdings," Flight Pass Privileges means
space-available flight privileges and vacation and buddy passes on each airline
operated by Holdings or a Holdings Affiliate.

1.19 FMLA means the Family and Medical Leave Act of 1993, as amended.

1.20 Group Insurance Policy means a group insurance policy that provides insured
benefits under a Continental Welfare Plan.

1.21 HIPAA means the Health Insurance Portability and Accountability Act of
1996, as amended.

1.22 HIPAA Beneficiary is defined in Section 5.5(b).

1.23 HMO means a health maintenance organization that provides benefits under
the Continental Welfare Plans or the Holdings Welfare Plans.

1.24 HMO Agreements is defined in Section 8.3(c)(i).

1.25 Holdings means ExpressJet Holdings, XJT Holdings, and ExpressJet Airlines,
collectively.

1.26 Holdings 401(k) Participants is defined in Section 4.3.

1.27 Holdings 2002 Stock Incentive Plan means the stock incentive plan
established by ExpressJet Holdings pursuant to Section 2.3.

1.28 Holdings Administrative Employees is defined in Section 8.1.

1.29 Holdings Employee means any individual who, as of the IPO Date, is: (a)
either actively employed by or on Leave of Absence from Holdings or a Holdings
Affiliate; or (b) neither actively employed by, nor on a Leave of Absence from,
Holdings or a Holdings Affiliate, but whose most recent active employment (as
between Continental (and Continental Affiliates ) and Holdings (and Holdings
Affiliates)) was with Holdings or a Holdings Affiliate or a predecessor thereto.
Any individual employed by Holdings or a Holdings Affiliate after the IPO Date
shall also be a Holdings Employee. Further, an alternate payee under a QDRO, an
alternate recipient under a QMCSO, a beneficiary or a covered dependent, in each
case, of an employee or former employee described in either of the preceding two
sentences shall also be a Holdings Employee, but only in such capacity, and only
with respect to such employee's or former employee's benefit under the
Continental Plans.

1.30 Immediately preceding the IPO Date means 11:59 P.M. City of Houston time on
the day immediately preceding the IPO Date.

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

1.32 IPO means the Initial Public Offering.

1.33 IPO Agreement has the meaning set forth in the Preamble.

1.34 IPO Date means the date of consummation of the IPO.

1.35 Leave of Absence means any authorized leave of absence, including leaves of
absence for short-term disability, long-term disability and workers'
compensation.

1.36 Liabilities shall have the same meaning as is assigned to the term "Losses"
under the IPO Agreement.

1.37 Long Term Incentive Program means the Continental Airlines, Inc. Long Term
Incentive Performance Award Program adopted under the Incentive Plan 2000, as
amended from time to time.

1.38 Management Bonus Program, when immediately preceded by "Continental," means
the Continental Airlines, Inc. Management Bonus Program. When immediately
preceded by "Holdings," Management Bonus Program means the bonus program
established by Holdings pursuant to Section 2.3.

1.39 Medical Plan, when immediately preceded by "Continental," means the portion
of the Continental Welfare Plans that provides medical benefits to employees and
retirees (and their respective eligible dependents) of Continental and certain
Continental Affiliates established, maintained, agreed upon or assumed by
Continental or a Continental Affiliate. When immediately preceded by "Holdings,"
Medical Plan means the portion of the plan to be established by Holdings
pursuant to Section 2.3 that corresponds to the Continental Medical Plan.

1.40 On-Time Bonus Program, when immediately preceded by "Continental," means
the Continental Airlines, Inc. On-Time Bonus Program. When immediately preceded
by "Holdings," On-Time Bonus Program means the on-time bonus program to be
established by Holdings pursuant to Section 2.3.

1.41 Option, when immediately preceded by "Continental," means a compensatory
option to purchase Continental Common Stock. When immediately preceded by
"Holdings," Option means a compensatory option to purchase Holdings Common
Stock.

1.42 Participating Company means (a) Continental, and (b) any Person, other than
an individual, that is participating in a particular Continental Plan or has any
employees who are participating in such Continental Plan.

1.43 Perfect Attendance Program, when immediately preceded by "Continental,"
means the Continental Airlines, Inc. Perfect Attendance Program. When
immediately preceded by "Holdings," Perfect Attendance Program means the perfect
attendance program to be established by Holdings pursuant to Section 2.3.

1.44 Pilot LTD Plan, when immediately preceded by "Continental," means the
Continental Airlines, Inc. Long Term Disability Plan for Pilots. When
immediately preceded by "Holdings," Pilot LTD Plan means the corresponding long
term disability plan to be established by Holdings pursuant to Section 2.3.

1.45 Plan, when immediately preceded by "Continental" or "Holdings," means any
plan, policy, program, payroll practice, on-going arrangement, contract, trust,
annuity contract, insurance policy or other agreement or funding vehicle
providing benefits to employees, former employees, dependents of employees or
former employees, or directors of Continental and/or Holdings, as applicable.

1.46 Profit Sharing Plan, when immediately preceded by "Continental," means the
Continental Airlines, Inc. Profit Sharing Plan. When immediately preceded by
"Holdings," Profit Sharing Plan means the profit sharing plan to be established
by Holdings pursuant to Section 2.3.

1.47 QDRO means a domestic relations order which qualifies under Section 414(p)
of the Code and Section 206(d) of ERISA and which creates or recognizes an
alternate payee's right to, or assigns to an alternate payee, all or a portion
of the benefits payable to a participant under a Continental Plan.

1.48 QMCSO means a medical child support order which qualifies under Section
609(a) of ERISA and which creates or recognizes an alternate recipient's right
to, or assigns to an alternate recipient the right to, receive benefits for
which a participant or beneficiary is eligible under a Continental Medical Plan.

1.49 Retention Program means the Continental Airlines, Inc. Officer Retention
and Incentive Award Program adopted under the Incentive Plan 2000, as amended
from time to time.

1.50 Turbo Program means the Continental Airlines, Inc. Executive Bonus
Performance Award Program adopted under the Incentive Plan 2000, as amended from
time to time, and any other special bonus program adopted for participants in
the Executive Bonus Performance Award Program.

1.51 UATP means Universal Air Travel Plan benefits granted to certain employees
and directors and the cards issued for the exercise of such benefits (or, in the
event of discontinuance of the UATP program, a similar charge card) permitting
the purchase of air travel through direct billing to Continental or any
successor thereto or Holdings or any successors thereto, as applicable.

1.52 VEBA, when immediately preceded by "Continental," means the trust
established pursuant to the Trust Agreement Made as of the 12th Day of November,
1999 Between Continental Airlines, Inc. and Frank Russell Trust Company or any
successor trust established on behalf of the Continental Pilot LTD Plan. When
immediately preceded by "Holdings," VEBA means the corresponding trust to be
established by Holdings pursuant to Section 2.3.

1.53 Welfare Plans, when immediately preceded by "Continental," means the
employee welfare benefit plans, as defined in Section 3(1) of ERISA, sponsored
by Continental or a Continental Affiliate and any trust associated with one or
more of such plans. When immediately preceded by "Holdings," Welfare Plans means
the employee welfare benefit plans and associated trusts, if any, to be
established by Holdings pursuant to Section 2.3 that correspond to the
respective Continental Welfare Plans.

XJT Holdings

has the meaning set forth in the Preamble.

ARTICLE II

GENERAL PRINCIPLES

 

GENERAL PRINCIPLES

2.1 AAssumption of Liabilities. Except as otherwise provided herein and except
to the extent a Liability is satisfied through the Continental Plans and/or the
Holdings Plans, notwithstanding any other provision in the IPO Agreement to the
contrary, (a) all Liabilities related to employees (or any alleged employment
relationships), independent contractors, consultants, or advisers, of Holdings
Businesses arising from events occurring either before or after the IPO Date
shall be the responsibility of Holdings, including Liabilities incurred by
reason of the transactions contemplated under the IPO Agreement, but excluding
(i) any losses for which a party is entitled to indemnification pursuant to
Article 5 of the IPO Agreement, and (ii) Continental's obligations pursuant to
Section 5.1 and Section 6.1(f) of this Employee Benefits Separation Agreement,
and (b) Holdings hereby indemnifies and holds Continental harmless from and
against any and all such Liabilities described in the foregoing clause (a).
Continental, in its sole discretion, shall determine if and to what extent
Liabilities are related to the circumstances described in clause (a) of the
preceding sentence.

2.2 Holdings Participation in Continental Plans.

Period of Participation

. Except as otherwise provided herein, Holdings and each Holdings Affiliate
which is a Participating Company in a Continental Plan shall cease such
participation effective Immediately preceding the IPO Date, and neither Holdings
nor any Holdings Affiliate shall be a Participating Company in any Continental
Plan as of any time thereafter.

Holdings' General Obligations as Participating Company

. Holdings shall perform with respect to its participation in the Continental
Plans, and shall cause each Holdings Affiliate with respect to its participation
in the Continental Plans to perform, the duties of a Participating Company as
set forth in the Continental Plans or any procedures adopted pursuant thereto,
including: (i) assisting in the administration of claims to the extent requested
by the claims administrator of the applicable Continental Plan; (ii) cooperating
fully with Continental Plan auditors, benefit personnel, and benefit vendors;
(iii) preserving the confidentiality of all financial arrangements Continental
has or may have with any vendors, claims administrators, trustees or any other
entity or individual with whom Continental has entered into an agreement
relating to the Continental Plans; and (iv) preserving the confidentiality of
all participant health information.

Continental's General Obligations as Plan Sponsor

. Except as otherwise provided in the governing documents for each Continental
Plan, Continental shall retain the responsibility to administer, or cause to be
administered, in accordance with their terms and applicable law, the Continental
Plans, and at all times Continental shall have the sole discretion and authority
to interpret the Continental Plans as set forth therein.

2.3 Establishment of Holdings Plans. Subject to the terms and conditions set
forth in this Employee Benefits Separation Agreement and to the extent that
Holdings has not already done so prior to April 1, 2002, Holdings shall use
reasonable best efforts to adopt or cause to be adopted for the benefit of the
Holdings Employees, (a) effective as of January 1, 2002, the Holdings Management
Bonus Program and the Holdings Profit Sharing Plan, (b) effective as of the IPO
Date, the Holdings 2002 Stock Incentive Plan, the Holdings On-Time Bonus
Program, the Holdings Flexible Benefits Plan, the Holdings Welfare Plans, the
Holdings Pilot LTD Plan, the Holdings VEBA, and the Holdings Flight Pass
Privileges, (c) effective as of the date described in Section 4.2, the Holdings
401(k) Savings Plan, and (d) effective as of July 1, 2002, the Holdings Perfect
Attendance Program. Except as otherwise provided by any collective bargaining
agreements, Holdings shall use reasonable best efforts to cause the Holdings
Flexible Benefits Plan and the Holdings Welfare Plans as in effect as of the IPO
Date to be substantially similar in all material respects to the corresponding
Continental Plans in effect Immediately preceding the IPO Date.

2.4 Procedures for Amendments to Plans, Plan Designs, Administrative Practices
and Vendor Contracts. Continental shall at all times retain the authority to,
within its sole discretion and in accordance with the terms of the governing
Continental Plan documents: (a) amend all Continental Plans; (b) modify the
administration or operation of any Continental Plan; and (c) modify, adopt or
terminate any vendor or service provider contract subject to the terms of
Section 8.3.

2.5 Reasonable Best Efforts. Continental and Holdings shall use their reasonable
best efforts to enter into any necessary agreements and take such other actions
as are necessary (including maintaining necessary participant records) to
implement the arrangements contemplated by this Employee Benefits Separation
Agreement.

Regulatory Compliance

. Continental and Holdings shall, in connection with the actions taken pursuant
to this Employee Benefits Separation Agreement, use reasonable best efforts to
cooperate in making any and all appropriate filings required under the Code,
ERISA and any applicable securities laws, implementing all appropriate
communications with participants, transferring appropriate records and taking
all such other actions as may be necessary and appropriate to implement the
provisions of this Employee Benefits Separation Agreement in a timely manner.

 

 

 

DEFINED BENEFIT PLANSARTICLE III

DEFINED BENEFIT PLANS

3.1 CARP.

(a) Cessation of Credited Service. No participant in CARP shall receive credit
under such plan for purposes of eligibility, vesting, credited service, or
benefit accrual on account of service performed as an employee of Holdings or
any Holdings Affiliate after the IPO Date except to the extent and only to the
extent the crediting (i) is required pursuant to the Code or ERISA, (ii) is
required pursuant to enforceable terms of a collective bargaining agreement or
(iii) results from the limited continued coverage under CARP pursuant to
paragraph (b) below. Notwithstanding the foregoing, solely with respect to any
participant in CARP who is employed by Holdings or a Holdings Affiliate as of
the IPO Date, Continental shall use reasonable best efforts to cause CARP to
allow such individual to be eligible for a lump sum distribution under CARP in a
manner consistent with the age and service requirements of CARP.

(b) Limited Continued Participation. Notwithstanding the provisions of Section
2.2, the coverage by CARP of certain Holdings Employees pursuant to Section 2.24
of CARP as of Immediately preceding the IPO Date shall continue with respect to
such Holdings Employees from and after the IPO Date until the date that
Continental no longer owns, directly or indirectly, any ownership interest in
Holdings; provided, however, that such coverage may terminate at such earlier
date as Continental may determine in its sole discretion. During the period of
such continued coverage, such Holdings Employees shall continue to be credited
with service and accrue benefits under CARP in the same manner as prior to the
IPO Date.

(c) Holdings Reimbursement. From time to time as determined by Continental,
Holdings shall reimburse Continental for (1) the cost of benefits accruing under
CARP with respect to the continued coverage of Holdings Employees pursuant to
paragraph (b) above, to the extent that such benefit accrual is attributable to
credited service arising from employment with Holdings or a Holdings Affiliate
during such period of time and (2) the cost associated with the lump sum
eligibility described in paragraph (a) above. The cost of the items described in
the preceding sentence shall be computed and certified by the Enrolled Actuary
for CARP (whose determination shall be binding and conclusive on the parties
hereto), and such cost as computed (together with the cost of such actuarial
computations) shall be borne solely by Holdings.

.

ARTICLE IV
DEFINED CONTRIBUTION PLAN

4.1 Continental 401(k) Savings Plan. Holdings Employees shall continue to
participate in the Continental 401(k) Savings Plan without gap or interruption
until October 1, 2002; provided, however, that such participation may be
extended beyond such date with the consent of Continental. For the period from
and after the IPO Date of such continued participation, unless Continental and
Holdings have mutually agreed to an alternative administrative arrangement,
Holdings shall remit directly to the trustee of the Continental 401(k) Savings
Plan, (a) the contributions to such plan made by or on behalf of Holdings
Employees and (b) the loan repayments made by such employees with respect to
their outstanding loans under the Continental 401(k) Savings Plan.

4.2 Holdings 401(k) Savings Plan. Effective as of the date the participation in
the Continental 401(k) Savings Plan of the Holdings Employees terminates as
provided in Section 4.1, Holdings shall use reasonable best efforts to adopt or
cause to be adopted the Holdings 401(k) Plan for the benefit of eligible
Holdings Employees.

Asset Transfer

.

As soon as administratively feasible after the adoption by Holdings pursuant to
Section 4.2 of the Holdings 401(k) Savings Plan, Continental shall use
reasonable best efforts to cause the trustee of the trust funding the
Continental 401(k) Savings Plans to transfer to the trustee of the trust funding
the Holdings 401(k) Savings Plan an amount equal to the aggregate account
balances under the Continental 401(k) Savings Plan (determined as of the
transfer date in accordance with the methods of valuation set forth in the
Continental 401(k) Savings Plan) of the individuals who are Holdings Employees
(the "Holdings 401(k) Participants"). The transfer of such accounts shall be
made (a) in kind, to the extent the assets thereof consist of loans from such
plan to a Holdings 401(k) Participant, and (b) otherwise in cash, securities,
other property or a combination thereof, as determined by Continental in its
sole discretion. From and after the time of such transfer, the Holdings 401(k)
Savings Plan shall assume and be solely responsible for all Liabilities under
the Continental 401(k) Savings Plan to or relating to the Holdings 401(k)
Participants. Continental and Holdings shall use reasonable best efforts to
cooperate and take such actions as are necessary to permit the continuation of
loan repayments by Holdings 401(k) Participants to the Continental 401(k)
Savings Plan by payroll deductions during the period beginning with the adoption
by Holdings pursuant to Section 4.2 of the Holdings 401(k) Savings Plan and
ending on the date of the transfer described in this Section. Continental
represents, covenants and agrees with respect to the Continental 401(k) Savings
Plan, and Holdings represents, covenants and agrees with respect to the Holdings
401(k) Savings Plan, that, as of the date of the transfer described in this
Section, such plan will satisfy the requirements of Sections 401(a), (k) and (m)
of the Code.

 

ARTICLE V

HEALTH AND WELFARE PLANS

 

5.1 Holdings Participation in Continental Welfare Plans. Effective Immediately
preceding the IPO Date, Holdings shall cease participation in all Continental
Welfare Plans, and, effective as of the IPO Date, Holdings shall use reasonable
best efforts to cause eligible Holdings Employees to commence participation in
the Holdings Welfare Plans. Claims for benefits by Holdings Employees arising
out of occurrences on or subsequent to the IPO Date shall be covered by and the
sole liability of the Holdings Welfare Plans in accordance with the terms of
such plans. Claims for benefits by Holdings Employees arising out of occurrences
prior to the IPO Date shall be covered by and the sole liability of the
Continental Welfare Plans in accordance with the terms of such plans; provided
however, that Holdings shall be liable for any premiums, payments and other
costs with respect to such claims under the Continental Welfare Plans. For this
purpose, (a) claims for medical, dental, prescription drug, and vision benefits
by Holdings Employees shall be considered to have occurred on the date of
purchase or the date service or treatment was rendered, as applicable, (b)
claims for life insurance and accidental death and dismemberment insurance
benefits shall be considered to have occurred on the date of death or the date
the accident occurred, and (c) claims for disability benefits shall be
considered to have occurred on the date the disability occurred.

5.2 Pilot LTD Plan and VEBA. Notwithstanding the provisions of Section 5.1 above
to the contrary, effective as of the IPO Date, Holdings and Continental shall
use reasonable best efforts to cause the Holdings Pilot LTD Plan to assume all
liabilities of the Continental Pilot LTD Plan with respect to Holdings
Employees. In connection with the foregoing, the following actions shall be
taken:

(a) Effective as of the IPO Date, Holdings shall use reasonable best efforts to
establish, or shall use reasonable best efforts to cause to be established, the
Holdings VEBA for the purpose of funding long-term disability benefits under the
Holdings Pilot LTD Plan. Holdings shall use reasonable best efforts to ensure
such trust meets applicable requirements of Sections 419, 419A, 501(a) and
501(c)(9) of the Code and, within fifteen months following the end of the month
in which the Holdings VEBA is established, shall file with the Internal Revenue
Service an application for a determination with respect to the exempt status of
the Holdings VEBA.

(b) At the times and in the manners set forth in paragraph (c) below,
Continental shall cause to be transferred to the Holdings VEBA (i) a portion of
the assets of the Continental VEBA in an amount sufficient to fund three months
of projected benefit payments of the Continental Pilot LTD Plan with respect to
Holdings Employees as of Immediately preceding the IPO Date (as determined by
the Enrolled Actuary for the Continental VEBA, whose determination shall be
binding and conclusive on the parties hereto) and (ii) a pro-rata portion of the
assets of the Continental VEBA Immediately preceding the IPO Date in an amount
equal to (A) the total assets of the Continental VEBA as of such date multiplied
by (B) the aggregate present value of future benefit obligations of the
Continental Pilot LTD Plan with respect to Holdings Employees as of such date
divided by (C) the aggregate present value of the total future benefit
obligations of the Continental Pilot LTD Plan as of such date, with such amount
to be reduced by the amount determined pursuant to clause (i) above.

(c) For purposes of paragraph (b) above, the present value of the future benefit
obligations shall be determined by the Enrolled Actuary for the Continental VEBA
(whose determinations shall be binding and conclusive on the parties hereto)
using methods and assumptions consistent with those used to produce the
Actuarial Report for the Continental Pilot LTD Plan dated December 31, 2001. The
transfer of assets pursuant to clause (i) of paragraph (b) above shall take
place on the IPO Date or as soon as administratively practicable thereafter, and
the transfer of assets pursuant to clause (ii) of paragraph (b) above shall take
place as soon as administratively practicable after the completion of the
calculation. The total amount to be transferred shall be determined as of
Immediately preceding the IPO Date, and any amount transferred shall also
include interest with respect to such amount for the period beginning at such
time and ending on the day immediately preceding the date such amount is
transferred based on the interest rate used by the Enrolled Actuary for the
Continental VEBA for determining the present value of the benefit obligations
pursuant to paragraph (b). The assets shall be transferred in cash, securities,
other property or a combination thereof, as determined by Continental in its
sole discretion.

(d) For the period beginning on the IPO Date and ending on the date of the
transfer of assets described in clause (ii) of paragraph (b) above, in the event
that the assets of the Holdings VEBA are not sufficient to satisfy its payment
obligations with respect to Holdings Employees, such payment obligations shall
be satisfied by the Continental VEBA. The amount of any such payment obligation
so satisfied by the Continental VEBA, adjusted for applicable interest, shall be
deducted from the amount required to be transferred to the Holdings VEBA
pursuant to paragraph (b).

(e) Following the transfer of assets described in clause (ii) of paragraph (b)
above, Holdings shall assume all Liabilities of Continental under the
Continental LTD Plan with respect to Holdings Employees, and Continental shall
have no further liability to Holdings or any Holdings Employee with respect
thereto.

(f) In the event that Holdings fails to file with the Internal Revenue Service
for a determination with respect to the exempt status of the Holdings VEBA by
the last day of the fifteen month period described in paragraph (a) above,
Holdings shall cause to be returned to the Continental VEBA all assets held by
the Holdings VEBA reduced by the sum of (i) the dollar amount of any assets
attributable to Holdings' contributions to the Holdings VEBA on or after the IPO
Date and (ii) the dollar amount of the total of all payments made to Holdings
Employees from the Holdings VEBA on or after the IPO Date, with such return
transfer to be made as soon as administratively practicable after such date.
Upon the return of assets pursuant to the preceding sentence, Continental shall
reassume the Liabilities assumed by Holdings pursuant to paragraph (e) above.

5.3 Effect of Change in Rates. Until such time as Continental shall determine in
its sole discretion, Continental and Holdings shall use their reasonable best
efforts to cause each of the insurance companies, HMOs and third-party
administrators providing services and benefits under the Continental Plans and
the Holdings Plans to maintain the premium and/or administrative rates based on
the aggregate number of participants in both the Continental Plans and the
Holdings Plans. To the extent they are not successful in such efforts,
Continental and Holdings shall each bear the revised premium or administrative
rates attributable to the individuals covered by their respective plans.

5.4 Continental Guarantee Reimbursements. To assist Holdings in implementing
Holdings Welfare Plans, Continental may have entered into agreements with
insurance companies, HMOs or third-party administrators providing services and
benefits under the Holdings Welfare Plans pursuant to which Continental has
agreed on a temporary basis to assume responsibility for or otherwise guarantee
payments by or obligations of Holdings for premiums, bank account transfers and
other fees. To the extent that Continental is required to tender payment of any
monies to any such insurance company, HMO or third-party administrator pursuant
to any such assumption of responsibility or guarantee agreement, Holdings will
reimburse Continental for the full amount of such payment within thirty (30)
days of receipt from Continental of a written request for such reimbursement.

5.5 COBRA and HIPAA.

(a) COBRA Continuation Coverage. Continental shall be responsible for providing
continuation coverage as required by COBRA under a Continental Welfare Plan to
any employee, officer, director, consultant, or agent of Continental, any
Continental Affiliate, Holdings, and each Holdings Affiliate, and other
qualified beneficiaries under COBRA with respect to such individuals, who have a
COBRA qualifying event (due to termination of employment with any of the
foregoing entities or otherwise) ("COBRA Continuee") prior to the IPO Date.
Holdings shall be responsible for providing continuation coverage as required by
COBRA under a Holdings Welfare Plan to any employee, officer, director,
consultant, or agent of Holdings and each Holdings Affiliate, and other
qualified beneficiaries under COBRA with respect to such individuals, who have a
COBRA qualifying event (due to termination of employment with Holdings or a
Holdings Affiliate or otherwise) on or after the IPO Date.

(b) HIPAA Certificates of Creditable Coverage. For all periods prior to the IPO
Date, Continental shall be responsible for providing certificates of creditable
coverage as required under HIPAA regarding any Continental Welfare Plan to any
employee of Continental, Holdings, or their Affiliates, or any dependent of such
an employee (a "HIPAA Beneficiary"). Further, Continental shall provide
certificates of creditable coverage regarding any Continental Welfare Plan to
any COBRA Continuee to whom Continental provides continuation coverage in
accordance with Section 5.5(a) at the time such continuation coverage ceases,
and upon request made by, or on behalf of, any HIPAA Beneficiary, within twenty
four (24) months after his or her coverage under a Continental Health Plan
ceases. As of the IPO Date, Holdings shall be responsible for providing
certificates of creditable coverage as required under HIPAA under any Holdings
Welfare Plan to any employee of Holdings or a Holdings Affiliate, or any
dependent of such employee.

5.6 Continental Workers' Compensation Program. Continental shall be responsible
for the administration of all workers' compensation claims that are, or have
been, incurred before the IPO Date with respect to Holdings Employees. From and
after the IPO Date, Holdings shall bear sole responsibility for the
administration of all workers' compensation claims that are incurred on or after
the IPO Date with respect to Holdings Employees. Through and after the IPO Date
and for so long as both parties mutually desire, and to the extent permissible
by applicable law, both parties shall fully cooperate with the other with
respect to the administration and reporting of any workers' compensation claims
and the defense of any such claims whether on behalf of Continental or Holdings
or both parties, including the sharing of records and such other information as
may be useful for any such defense. From the IPO Date until the last day of the
Capacity Purchase Period, (a) Holdings (on behalf of itself and the Holdings
Affiliates), and, to the extent permissible under applicable law or under the
terms of any applicable insurance contract or any workers' compensation programs
maintained by Holdings or a Holdings Affiliate, hereby waives any right to seek
workers' compensation subrogation recovery from Continental or any Continental
Plans or Continental Affiliates with respect to any workers' compensation claim
made by an employee covered under the workers' compensation programs of
Holdings, and (b) Continental (on behalf of itself and the Continental
Affiliates), and, to the extent permissible under applicable law or under the
terms of any applicable insurance contract or any workers' compensation programs
maintained by Continental or a Continental Affiliate, herby waives any right to
seek workers' compensation subrogation recovery from Holdings or any Holdings
Plan or Holdings Affiliates with respect to any workers' compensation claim made
by an employee covered under the workers' compensation programs of Continental.

5.7 Post-IPO Transitional Arrangements.

(a) Continuance of Elections, Co-Payments and Maximum Benefits.

(i) Holdings shall use reasonable best efforts to cause the Holdings Welfare
Plans to recognize and maintain all coverage and contribution elections made by
Holdings Employees under the Continental Welfare Plans and apply such elections
under the Holdings Welfare Plans to the extent applicable for the remainder of
the period or periods for which such elections are by their terms applicable.

(ii) Holdings shall use reasonable best efforts to cause the Holdings Welfare
Plans to recognize and give credit for (A) all amounts applied to deductibles,
out-of-pocket maximums, and other applicable benefit coverage limits with
respect to which such expenses have been incurred by Holdings Employees under
the Continental Welfare Plans for the remainder of the year in which the IPO
Date occurs, and (B) all benefits paid to Holdings Employees under the
Continental Welfare Plans for purposes of determining when such persons have
reached their lifetime maximum benefits under the Holdings Welfare Plans. In
addition, and for purposes of retiree medical benefits, Holdings shall use
reasonable best efforts to cause the appropriate Holdings Welfare Plan to
recognize and credit, on behalf of any retiree who is a Holdings Employee, such
individual's sick bank credits under the corresponding Continental Welfare Plan
as of Immediately preceding the IPO Date.

(iii) Holdings shall use reasonable best efforts to provide continuing
uninterrupted group life insurance coverage to participating Holdings Employees
under the Holdings Welfare Plans without the need to undergo a physical
examination or otherwise provide evidence of insurability. Notwithstanding
anything herein to the contrary, Holdings Employees who elect a change in life
insurance coverage may be subject to rules of the insurer, including physical
examination or other evidence of insurability.

(iv) To the extent that Holdings is unable, despite reasonable best efforts, to
achieve the foregoing provisions of this Section 5.7(a), Holdings shall be
solely responsible for any Liability associated therewith, and Holdings may take
any such steps with respect thereto as Holdings deems necessary or advisable in
its sole discretion.

(b) Other Post-IPO Transitional Matters.

(i) Flexible Benefits Plan. Continental and Holdings shall use reasonable best
efforts to take all steps necessary or appropriate so that the account balances,
accruals, and/or service credit, to the extent applicable, under each
Continental Flexible Benefits Plan of each Holdings Employee who has elected to
participate therein in the year in which the IPO Date occurs shall be
transferred, as soon as practicable after the IPO Date, from such Continental
Flexible Benefits Plan to the corresponding Holdings Flexible Benefits Plan, and
so that the contribution elections of each such Holdings Employee as in effect
Immediately preceding the IPO Date remain in effect under the Holdings Flexible
Benefits Plan immediately after such transfer. If the aggregate amount of the
transferred account balances of Holdings Employees is negative, then Holdings
shall pay Continental the amount of such aggregate negative balance promptly
following such account balance transfer.

(ii) Health and Welfare Plans Subrogation Recovery. As soon as administratively
feasible following the collection of any such recovery, Holdings shall pay to
Continental or the Continental Welfare Plan or the Holdings Welfare Plan, as
appropriate, any amounts Holdings recovers from time to time through subrogation
or otherwise for claims incurred by or reimbursed to any participant of the
Continental Welfare Plan or the Holdings Welfare Plan that paid such claim. As
soon as administratively feasible following the collection of any such recovery,
Continental shall pay to Holdings or the Holdings Welfare Plan or the
Continental Welfare Plan, as appropriate, any amounts Continental recovers from
time to time through subrogation or otherwise for claims incurred by or
reimbursed to any participant of the Continental Welfare Plan or the Holdings
Welfare Plan that paid such claim.

(iii) Exchange of Historical Data. With respect to Holdings Employees, after the
IPO Date, both Continental and Holdings shall have access to claims data
configured on any applicable database or archives, and to eligibility,
disability, medical and demographic data configured on any database, or
archives, for all historical periods up to the IPO Date, including eligibility,
incurred claims and other data for purposes of administering the medical and
disability benefits of Continental and Holdings and their Affiliates.

INCENTIVE PROGRAMS AND EXECUTIVE BENEFITS

ARTICLE VI

INCENTIVE PROGRAMS AND EXECUTIVE BENEFITS

6.1 Continental Executive Benefit Plans.

((a) Long Term Incentive Program. Holdings Employees shall cease participation
in the Long Term Incentive Program effective as of the IPO Date. On or before
the IPO Date, Continental and Holdings shall use reasonable best efforts to
cause the Holdings Employees who are participants in the Long Term Incentive
Program as of such date to agree that they shall forfeit and receive no payments
under such plan with respect to awards thereunder for which the "Performance
Period" (as such term is defined in the Long Term Incentive Program) has not
ended on or before such date.

(b) Turbo Program. Holdings Employees shall cease participation in the Turbo
Program effective as of 11:59 P.M. City of Houston time December 31, 2001.

(c) Retention Program. Holdings Employees shall cease participation in the
Retention Program effective as of the IPO Date; provided, however, that a
Holdings Employee shall continue to be eligible to participate in the Retention
Program on and after the IPO Date with respect to awards in which such employee
has a vested interest as of such date to the extent of such vested interest, as
well as with respect to vested interests in "Follow-up Investments" (as such
term is defined in the Retention Program) that relate to such awards.
Continental shall retain liability for payments to Holdings Employees with
respect to the vested interests in such awards and the vested interests in any
"Follow-up Investments" that relate to any such awards under the Retention
Program.

(d) Management Bonus Program. Holdings Employees shall cease participation in
the Continental Management Bonus Program effective as of December 31, 2001.
Holdings established the Holdings Management Bonus Program effective as of
January 1, 2002, for the benefit of certain executives and other employees of
Holdings subject to such terms and conditions specified by Holdings. The
Holdings Management Bonus Program provides for the payment of bonuses solely in
the event that the target operating income for Holdings for the year ended
December 31, 2002, is at least 90% of the budget approved for Holdings for such
year by the "Committee" (as such term is defined in such Holdings Plan) and, if
such minimum condition is satisfied, the bonus payable will be based on a
sliding scale of between 90% and 110% of the targeted percentages of annual base
salary described below. With respect to the year ended December 31, 2002, the
following are the targeted percentages of annual base salary under the Holdings
Management Bonus Program for the following officers of ExpressJet Airlines: (a)
Chief Executive Officer, 60%; (b) Chief Operating Officer and Chief Financial
Officer, 45% each; (c) Vice Presidents, 40% each; (d) senior director level
employees, 25 % each; and (e) director level employees, 20% each.

(e) Notice of Cessation of Eligibility/Participation. Continental shall use
reasonable best efforts to cause its Chief Executive Officer or the Committee,
as applicable under the terms of the particular Continental Executive Benefit
Plan, to make a determination that Holdings Employees shall not be eligible to
receive awards under or otherwise participate in each such Continental Executive
Benefit Plan after the applicable dates identified above with respect to
cessation of eligibility and/or participation of Holdings Employees in each such
Continental Executive Benefit Plan, and Continental shall provide affected
Holdings Employees with a written notice of such determination as soon as
practicable after such dates to the extent such notice is required under the
Continental Executive Benefit Plans.

(f) Supplemental Bonuses. In connection with and as consideration for their
cessation of participation in Continental's benefit programs in general and as
contemplated herein, Continental shall reimburse Holdings for amounts paid as
supplemental bonuses to its officers under their respective employment
agreements entered into in connection with the IPO.

6.2 Other Continental Incentive Plans

(a) 1997 Employee Stock Purchase Plan. Holdings and each Holdings Affiliate, as
applicable, shall continue as a Participating Company consistent with past
practice in Continental's 1997 Employee Stock Purchase Plan until the first day
of the calendar quarter in which Continental ceases to own at least 50% of the
common stock of ExpressJet Holdings (subject to applicable legal requirements).
Effective as of such date, such participation shall cease, all participating
employees of Holdings and the Holdings Affiliates shall automatically be deemed
to have withdrawn from such plan as of such date without further action by such
employees, and any contributions made by such employees to such plan during such
calendar quarter shall be returned to such employees in accordance with the
terms of such plan.

(b) Continental Profit Sharing Plan. The participation in the Continental Profit
Sharing Plan by Holdings and each Holdings Affiliate that is a Participating
Company in the Continental Profit Sharing Plan shall cease effective as of
January 1, 2002. Holdings shall use reasonable best efforts to adopt or cause to
be adopted the Holdings Profit Sharing Plan effective as of January 1, 2002, for
the benefit of eligible Holdings Employees. The terms and conditions of the
Holdings Profit Sharing Plan shall be determined by Holdings.

(c) Continental On-Time Bonus Program. Effective Immediately preceding the IPO
Date, the participation of Holdings and each Holdings Affiliate that is a
Participating Company in the Continental On-Time Bonus Program shall cease.
Effective as of the IPO Date, Holdings shall use reasonable best efforts to
adopt or cause to be adopted the Holdings On-Time Bonus Program for the benefit
of eligible Holdings Employees subject to terms and conditions to be determined
by Holdings. The Holdings On-Time Bonus Program shall provide (i) credit for
performance prior to the IPO Date to the extent necessary to achieve equity and
(ii) a payment schedule similar to that set forth in the Continental On-Time
Bonus Program.

(d) Continental Perfect Attendance Program. Holdings and each Holdings
Affiliate, as applicable, shall continue as a Participating Company consistent
with past practice in the Continental Perfect Attendance Program through June
30, 2002. The participation in the Continental Perfect Attendance Program by
Holdings and each Holdings Affiliate that is a Participating Company in the
Continental Perfect Attendance Program shall cease effective as of 11:59 P.M.
City of Houston time June 30, 2002. Holdings shall be liable for the full amount
of any and all payments and/or awards under the Continental Perfect Attendance
Program that are owed to Holdings Employees in connection with the plan
participation described in the first sentence of this Section 6.2(d). Effective
as of July 1, 2002, Holdings shall use reasonable best efforts to adopt or cause
to be adopted the Holdings Perfect Attendance Program for the benefit of
eligible Holdings Employees subject to terms and conditions to be determined by
Holdings.

6.3 Continental Deferred Compensation Plan. Effective Immediately preceding the
IPO Date, the participation of each eligible Holdings Employee in the
Continental Deferred Compensation Plan shall cease. As soon as administratively
feasible thereafter, each participating Holdings Employee shall receive a
payment in an amount equal to the sum of (a) the value of his or her deferral
accounts under such plan and (b) an additional amount that, in the sole
discretion of Holdings, is sufficient to compensate such Holdings Employee for
any additional federal income tax due solely because such distribution caused
such Holdings Employee to be taxed at a higher marginal federal income tax rate
than would otherwise have applied to such Holdings Employee upon his termination
of employment with Holdings and the Holdings Affiliates. Such payment shall be
made in a single lump sum payment and shall be paid by Holdings to the extent,
if any, that the subtrust established in connection with Holdings' participation
in such plan does not have sufficient funds to make such payment in full.
Notwithstanding the foregoing, in the event any Holdings Employee participating
in the Continental Deferred Compensation Plan would be treated as having a
"Retirement Date" (as defined in such plan) in the event such individual
terminated from service Immediately preceding the IPO Date, Continental shall
cause the Continental Deferred Compensation Plan to treat such individual as
having incurred a "Termination of Service" (as defined in such plan) at such
time (provided such individual remains continuously employed by Holdings or a
Holdings Affiliate through the IPO Date). In such case, Holdings shall pay to
such Holdings Employee the benefits owed to him or her under the Continental
Deferred Compensation Plan to the extent, if any, that the subtrust established
in connection with Holdings' participation in such plan does not have sufficient
funds to pay such benefits.

6.4 Continental Options. Each Continental Option outstanding as of the IPO Date
that is held by a Holdings Employee shall be governed by the terms of the plan
and the option agreement under which such option was granted.

6.5 Holdings Options. ExpressJet Holdings has established and adopted the
Holdings 2002 Stock Incentive Plan for the award of stock options and restricted
stock to selected employees and non-employee directors of Holdings. The Holdings
2002 Stock Incentive Plan was adopted by the ExpressJet Holdings Board of
Directors, and became effective on March 27, 2002. Continental, the sole
stockholder of ExpressJet Holdings, approved the Holdings 2002 Stock Incentive
Plan on March 28, 2002. The Holdings 2002 Stock Incentive Plan has terms and
conditions substantially similar to the Continental Airlines, Inc. 1998 Stock
Incentive Plan, except that such Holdings Plan provides for all stock-based
awards to be based upon the Holdings Common Stock and appropriate revisions were
made to reflect that ExpressJet Holdings is the sponsor of such plan. The
Holdings 2002 Stock Incentive Plan provides that the maximum number of shares of
Holdings Common Stock that may be issued under such plan is equal to 3,200,000
shares, subject to adjustment as provided in such plan.

OTHER BENEFITS

ARTICLE VII

OTHER BENEFITS

7.1 Flight Pass Privileges. As of the IPO Date, Holdings shall use reasonable
best efforts to establish the Holdings Flight Pass Privileges with terms and
conditions substantially similar in all material respects to the Continental
Flight Pass Privileges as in effect Immediately preceding the IPO Date. During
the period beginning on the IPO Date and ending on and including the Exclusivity
Ending Date, (a) employees and retirees of Holdings and Holdings Affiliates will
have Continental Flight Pass Privileges on the same terms and conditions as
similarly-situated employees and retirees of Continental, and (b) employees and
retirees of Continental and Continental Affiliates will have Holdings Flight
Pass Privileges on the same terms and conditions as similarly-situated employees
and retirees of Holdings. Continental and Holdings will meet and confer to
determine what, if any, Flight Pass Privileges each of their employees and
retirees will have on the other after the Exclusivity Ending Date.

7.2 UATP Benefits. From and after the IPO Date, Holdings Employees who are
officers of Holdings or a Holdings Affiliate and who hold a UATP card issued by
Continental pursuant to their employment agreements in effect as of the date
hereof shall continue to have the right (including any post-employment right set
forth in such employment agreements as of the date hereof) to use the UATP
benefits associated with such cards (and the pass classifications and benefits
set forth in such employment agreements) on Continental and Continental
Affiliates, without cost (other than applicable taxes) to such officers or to
Holdings or the applicable Holdings Affiliate. From and after the IPO Date,
Continental shall use reasonable best efforts to grant to Holdings, upon its
request, up to five additional UATP cards, three of which shall have an annual
travel limit of $18,750 and two of which shall have an annual travel limit of
$25,000, for use by officers hired by Holdings or a Holdings Affiliate on or
after the IPO Date, on flights operated by Continental or a Continental
Affiliate without cost (other than applicable taxes) to such officers or
Holdings or the applicable Holdings Affiliate; provided, however, that such
officers' rights to use such UATP cards shall terminate on the date their
employment with Holdings and all Holdings Affiliates terminates for any reason
whatsoever; and provided further that such UATP cards shall only be valid during
the Capacity Purchase Period. From and after the IPO Date, Holdings shall use
reasonable best efforts to cause all UATP cards issued by Continental to
officers or members of the Board of Directors of Continental (or their
respective spouses) pursuant to employment or other agreements with such
officers or members of the Board of Directors (whether entered into or issued
before or after the IPO Date) to be able to be used (together with the pass
classifications and benefits set forth in such employment or other agreements)
on any and all flights operated by Holdings or a Holdings Affiliate, without
cost (other than applicable taxes) to Continental or such persons.

7.3 Non-Employee Director Passes. During the period beginning on the IPO Date
and ending on and including the Exclusivity Ending Date, Continental shall use
reasonable best efforts to provide Holdings with 12 positive space, round-trip,
first class/business class passes on Continental and Continental Affiliates per
year for each non-employee director of ExpressJet Holdings (up to a maximum of
five such non-employee directors) for use by such individuals while they serve
on the Board of Directors of ExpressJet Holdings.

7.4 Employee Senior Director Passes. During the period beginning on the IPO Date
and ending on and including the Exclusivity Ending Date, Continental shall use
reasonable best efforts to provide Holdings on behalf of each Employee Senior
Director, 4 positive space, round-trip, first class/business class passes on
Continental and Continental Affiliates per year for each such Employee Senior
Director for use by such individuals while they are employed in the position of
Employee Senior Director. To the extent that such Employee Senior Director's
immediate family (including self, spouse, and qualifying dependents) exceeds
four persons, an additional such pass for each such family member in excess of 4
shall be provided on behalf of such director. Notwithstanding anything in the
foregoing to the contrary, for purposes of determining the number of qualifying
members in an Employee Senior Director's immediate family, the then prevailing
policies and practices of Continental shall control at all times. Further, for
purposes of this Section 7.4, Employee Senior Director shall mean only those
individual persons currently serving as a Senior Director at the time of the
IPO. In the event any such individual terminates employment or no longer serves
in the capacity of an Employee Senior Director, Continental's obligations under
this Section 7.4 shall cease with respect to such individual. Further,
Continental shall not provide any passes under this Section 7.4 on behalf any
individual who does not, at the time of the IPO, qualify as an Employee Senior
Director.

GENERAL AND ADMINISTRATIVE

ARTICLE VIII

GENERAL AND ADMINISTRATIVE

8.1 Administrative Personnel. A schedule of the individuals employed in certain
Continental corporate business functions who have been designated to become
employees of Holdings or a Holdings Affiliate (the "Holdings Administrative
Employees") has been agreed to by Continental and Holdings in a separate
agreement between Continental and Holdings. The Holdings Administrative
Employees shall become employees of Holdings on or before the IPO Date.

8.2 Payment of Plan Expenses.

(a) General Provisions. With respect to any period during which Holdings or a
Holdings Affiliate is a Participating Company in a Continental Plan or to the
extent that any Holdings Plan is maintained, operated, or administered in
conjunction with any Continental Plan under the same ASO Contract, Group
Insurance Policy, or other agreement or arrangement, Holdings shall pay its
allocable share of (i) any contributions made to any trust maintained in
connection with such plan, (ii) any premiums or other payments to fund benefits
paid under such plan, and (iii) any maintenance or administrative expenses
arising from or with respect to such plan. In addition, Continental and Holdings
shall each be responsible for their respective allocable share of costs and
expenses incurred in the maintenance, operation, and administration of
Continental Plans and Holdings Plans, including, (1) all cost of benefits, (2)
all internal administrative costs of benefits and the employee benefits services
personnel, (3) all external administrative costs for management of assets,
recordkeeping, communications, benefit delivery, insurance fees and commissions,
consultant, actuarial, accounting, legal, printing, photocopying, mailing and
other expenses, and (4) all COBRA administrative expenses.

(b) Determination of Allocable Share. Holdings' allocable share of the costs set
forth in Section 8.2(a) shall be equal to the total of any such costs that are
attributable to Holdings and the Holdings Affiliates as determined by
Continental under and consistent with the intercompany billing process in place
immediately before the IPO Date. With respect to any costs or additional
unanticipated expenses that were not billed through the intercompany billing
process, Holdings shall pay to Continental its allocable share of such costs as
determined by Continental based on a head count of the individuals or
participants participating in such benefit, or, in the event such costs cannot
be allocated on such basis, Holdings' share shall be determined by Continental
in such other manner as Continental deems appropriate. Continental's
determinations under the foregoing provisions of this Section 8.2 shall be made
from time to time in its discretion, and such determinations shall be binding
and conclusive on Holdings.

(c) Payment of Allocable Share. Effective from and after the IPO Date, to the
extent that Holdings' share of the costs set forth in Section 8.2(a) is not paid
directly by Holdings, but instead is initially paid by Continental, Holdings
shall reimburse Continental for such costs as soon as administratively feasible
(but no later than 60 days) following the receipt of an invoice from Continental
providing the amount and description of such costs.

(d) Administrative Services Agreement. Additional detail on certain services to
be provided by Continental to Holdings and Holdings' obligation to pay for such
services is set forth in the Administrative Services Agreement. In the event of
any conflict between the provisions of this Section 8.2 and the express
provisions of the Administrative Services Agreement, the Administrative Services
Agreement shall control.

8.3 Vendor Contracts.

(a) Third-Party ASO Contracts.

(i) Unless otherwise requested by Holdings, Continental and Holdings shall use
commercially reasonable efforts to cause each ASO Contract that is entered into
or renewed on or after the IPO Date and prior to any date determined by
Continental in its sole discretion to provide that Holdings shall be eligible
for a mirror contract with substantially the same terms and conditions as are
contained in the ASO Contract to which Continental is a party. Such terms and
conditions shall include the financial and termination provisions, performance
standards, methodology, auditing policies, quality measures and reporting
requirements.

(ii) To the extent that Continental and Holdings are not successful in
negotiating contract language that will permit compliance with the foregoing
paragraph and to the extent an ASO contract is not addressed in such paragraph,
Holdings shall be responsible for negotiating its own ASO Contracts effective on
or before the IPO Date.

(b) Group Insurance Policies.

(i) Unless otherwise requested by Holdings, Continental and Holdings shall use
commercially reasonable efforts to cause each Group Insurance Policy that is
entered into or renewed on or after the IPO Date and prior to any date
determined by Continental in its sole discretion to provide that Holdings shall
be eligible for a mirror policy with substantially the same terms and conditions
as are contained in the Group Insurance Policy which Continental has obtained.
Such terms and conditions shall include the financial and termination
provisions, performance standards and target claims.

(ii) To the extent Continental and Holdings are not successful in negotiating
policy provisions that will permit compliance with foregoing paragraph and to
the extent that a Group Insurance Policy is not addressed in such paragraph,
Holdings shall be responsible for procuring its own Group Insurance Policies
effective on or before the IPO Date.

(c) HMO Agreements.

(i) Unless otherwise requested by Holdings, Continental and Holdings shall use
commercially reasonable efforts to cause all agreements with HMOs ("HMO
Agreements") that provide medical services under a Continental Welfare Plan
entered and that are entered into or renewed on or after the IPO Date and prior
to any date determined by Continental in its sole discretion to provide that
Holdings shall be eligible for a mirror HMO Agreement effective as of the IPO
Date with substantially the same terms and conditions as are contained in the
HMO Agreement to which Continental is a party; provided that such arrangements
shall be mutually beneficial to both Continental and Holdings. Such terms and
conditions shall include the financial and termination provisions of the HMO
Agreements.

(ii) If Continental and Holdings determine that they will not be successful in
negotiating arrangements that will permit compliance with the foregoing
paragraph and to the extent that such an HMO Agreement is not addressed in such
paragraph, Holdings will be responsible for procuring its own HMO Agreements
effective on or before the IPO Date.

8.4 Sharing of Participant Information. Continental and Holdings shall use
reasonable best efforts to share, Continental shall use reasonable best efforts
to cause each applicable Continental Affiliate to share, and Holdings shall use
reasonable best efforts to cause each applicable Holdings Affiliate to share,
with each other and their respective agents and vendors, without obtaining
releases, all participant information necessary for the efficient and accurate
administration of each of the Continental Plans and the Holdings Plans in
accordance with the terms of this Employee Benefits Separation Agreement.
Continental and Holdings and their respective authorized agents shall, subject
to applicable laws on confidentiality, be given reasonable and timely access to,
and may make copies of, all information relating to the subjects of this
Employee Benefits Separation Agreement in the custody of the other party, to the
extent necessary for such administration.

8.5 Reporting and Disclosure and Communications to Participants. While Holdings
is a Participating Company in a Continental Plan, Holdings shall use reasonable
best efforts to take, and shall use reasonable best efforts to cause each other
applicable Holdings Affiliate to take, all actions necessary or appropriate to
facilitate the distribution of all Continental Plan-related communications and
materials to employees, participants and beneficiaries, including summary plan
descriptions, summaries of material modification, summary annual reports,
investment information, prospectuses, notices and enrollment material for the
Continental Plan. For periods beginning on or after the IPO date, Holdings shall
pay Continental the cost relating to the copies of all such documents provided
to Holdings. On or after the IPO Date and prior to any date determined by
Continental in its sole discretion, Continental and Holdings shall assist each
other in complying with all reporting and disclosure requirements of ERISA,
including the preparation of Form 5500 annual reports for the Continental Plans
and the Holdings Plans, where applicable.

8.6 Successors; Parties in Interest. This Employee Benefits Separation Agreement
shall be binding upon and inure solely to the benefit of each party hereto and
their successors, and nothing in this Employee Benefits Separation Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Employee Benefits Separation Agreement.

8.7 Beneficiary Designations. Holdings shall use reasonable best efforts to
cause all beneficiary designations made by Holdings Employees for Continental
Plans to be deemed as valid beneficiary designations under the corresponding
Holdings Plans until such beneficiary designations are replaced or revoked by
the Holdings Employee who made the beneficiary designation.

8.8 Consent of Third Parties. If any provision of this Employee Benefits
Separation Agreement is dependent on the consent of any third party (for
example, a vendor) and such consent is withheld, Continental and Holdings shall
use reasonable best efforts to implement the applicable provisions of this
Employee Benefits Separation Agreement to the full extent practicable. If any
provision of this Employee Benefits Separation Agreement cannot be implemented
due to the failure of such third party to consent, Continental and Holdings
shall negotiate in good faith to implement the provision in a mutually
satisfactory manner.

MISCELLANEOUS

ARTICLE IX

MISCELLANEOUS

9.1 Effect If IPO Does Not Occur. If the IPO does not occur, then all actions
and events that are, under this Employee Benefits Separation Agreement, to be
taken or occur effective as of Immediately preceding the IPO Date, as of the IPO
Date, or otherwise in connection with the IPO, shall not be taken or occur
except to the extent specifically agreed by Holdings and Continental.

9.2 Complete Agreement. Except as otherwise set forth in this Employee Benefits
Separation Agreement, this Employee Benefits Separation Agreement shall
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all prior agreements and
understandings, whether written or oral, between the parties with respect to
such subject matter.

9.3 Relationship of Parties. Nothing in this Employee Benefits Separation
Agreement shall be deemed or construed by the parties or any third party as
creating the relationship of principal and agent, partnership or joint venture
between the parties, it being understood and agreed that no provision contained
herein, and no act of the parties, shall be deemed to create any relationship
between the parties other than the relationship set forth herein.

9.4 Affiliates. Each of Continental and Holdings shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Employee Benefits Separation Agreement to be
performed by a Continental Affiliate or a Holdings Affiliate, respectively.

9.5 Consent to Exclusive Jurisdiction. Any action, suit or proceeding arising
out of any claim that the parties cannot settle through good faith negotiations
shall be litigated exclusively in the state courts of Harris County of the State
of Texas. Each of the parties hereto hereby irrevocably and unconditionally (a)
submits to the jurisdiction of the state courts of Texas for any such action,
suit or proceeding, (b) agrees not to commence any such action, suit or
proceeding except in the state courts of Texas, (c) waives, and agrees not to
plead or to make, any objection to the venue of any such action, suit or
proceeding in the state courts of Texas, (d) waives, and agrees not to plead or
to make, any claim that any such action, suit or proceeding brought in the state
courts of Texas has been brought in an improper or otherwise inconvenient forum,
(e) waives, and agrees not to plead or to make, any claim that the state courts
of Texas lack personal jurisdiction over it, and (f) waives its right to remove
any such action, suit or proceeding to the federal courts except when such
courts are vested with sole and exclusive jurisdiction by statute. Continental
and Holdings shall cooperate with each other in connection with any such action,
suit or proceeding to obtain reliable assurances that confidential treatment
will be accorded any information that any party shall reasonably deem to be
confidential or proprietary. Each of the parties hereto further covenants and
agrees that, until the expiration of all applicable statutes of limitations
relating to potential claims under this Employee Benefits Separation Agreement,
each such party shall maintain a duly appointed agent for the service of
summonses and other legal process in the State of Texas.

9.6 Notices. All notices made pursuant to this Employee Benefits Separation
Agreement shall be in writing and shall be deemed given upon (a) a transmitter's
confirmation of a receipt of a facsimile transmission (but only if followed by
confirmed delivery of a standard overnight courier the following Business Day or
if delivered by hand the following Business Day), or (b) confirmed delivery of a
standard overnight courier or delivered by hand, to the parties at the following
addresses:

if to Continental:

Continental Airlines, Inc.

1600 Smith Street, HQSCD

Houston, Texas 77002

Attention: Senior Vice President - Corporate Development

Telecopy No.: (713) 324-3229

with a copy to:

Continental Airlines, Inc.

1600 Smith Street, HQSLG

Houston, Texas 77002

Attention: General Counsel

Telecopy No.: (713) 324-5161

 

if to ExpressJet Holdings, XJT Holdings or ExpressJet Airlines to:

ExpressJet Holdings, Inc.

1600 Smith Street, HQSCE

Houston, Texas 77002

Attention: Chief Financial Officer

Telecopy No.: (713) 324-4420

or to such other address as either party hereto may have furnished to the other
party by a notice in writing in accordance with this Section 9.6.

9.7 Amendment and Termination. This Employee Benefits Separation Agreement may
not be amended or modified in any respect except by a written agreement signed
by all of the parties hereto.

9.8 Counterparts. This Employee Benefits Separation Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Employee
Benefits Separation Agreement may be executed by facsimile signature.

9.9 Waiver. The observance of any term of this Employee Benefits Separation
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such term, but
such waiver shall be effective only if it is in writing signed by the party
against which such waiver is to be asserted. Unless otherwise expressly provided
in this Employee Benefits Separation Agreement, no delay or omission on the part
of any party in exercising any right or privilege under this Employee Benefits
Separation Agreement shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right or privilege under this Employee Benefits
Separation Agreement operate as a waiver of any other right or privilege under
this Employee Benefits Separation Agreement nor shall any single or partial
exercise of any right or privilege preclude any other or further exercise
thereof or the exercise of any other right or privilege under this Employee
Benefits Separation Agreement. No failure by a party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.

9.10 Severability. Any provision of this Employee Benefits Separation Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

9.11 Remedies. Except as otherwise provided herein, each of the parties hereto
shall be entitled to enforce its rights under this Employee Benefits Separation
Agreement specifically, to recover damages and costs (including reasonable
attorneys' fees) caused by any breach of any provision of this Employee Benefits
Separation Agreement and to exercise all other rights existing in its favor.
Each party hereto acknowledges and agrees that under certain circumstances the
breach by Continental or any Continental Affiliates or Holdings or any Holdings
Affiliates of a term or provision of this Employee Benefits Separation Agreement
will materially and irreparably harm another party, that money damages will
accordingly not be an adequate remedy for such breach and that the
non-defaulting party or parties, in its or their sole discretion and in addition
to its or their rights under this Employee Benefits Separation Agreement and any
other remedies it or they may have at law or in equity, may apply to any court
of law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Employee Benefits Separation
Agreement.

9.12 References; Construction. The section and other headings and subheadings
contained in this Employee Benefits Separation Agreement are solely for the
purpose of reference, are not part of the agreement of the parties hereto, and
shall not in any way affect the meaning or interpretation of this Employee
Benefits Separation Agreement. All references to days or months shall be deemed
references to calendar days or months. All references to "$" shall be deemed
references to United States dollars. Unless the context otherwise requires, any
reference to a "Section" shall be deemed to refer to a section of this Employee
Benefits Separation Agreement. The words "hereof," "herein" and "hereunder" and
words of similar import referring to this Employee Benefits Separation Agreement
refer to this Employee Benefits Separation Agreement as a whole and not to any
particular provision of this Employee Benefits Separation Agreement. Whenever
the words "include," "includes" or "including" are used in this Employee
Benefits Separation Agreement, unless otherwise specifically provided, they
shall be deemed to be followed by the words "without limitation." This Employee
Benefits Separation Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing the document to be drafted.

9.13 Governing Law. To the extent not preempted by applicable Federal law, this
Employee Benefits Separation Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the laws regarding
choice of laws and conflicts of laws that would apply the substantive laws of
any other jurisdiction) as to all matters, including matters of validity,
construction, effect, performance and remedies.

IN WITNESS WHEREOF, the parties have caused this Employee Benefits Separation
Agreement to be duly executed as of the date first above written.

CONTINENTAL AIRLINES, INC.

By:

Name: Jeffery A. Smisek

Title: Executive Vice President - Corporate

EXPRESSJET HOLDINGS, INC.

By:

Name: James B. Ream

Title: President and Chief Executive Officer

XJT HOLDINGS, INC.

By:

Name: James B. Ream

Title: President and Chief Executive Officer

EXPRESSJET AIRLINES, INC.

By:

Name: James B. Ream

Title: President and Chief Executive Officer