Exhibit
10.20
 
 
 
 [FORM
LETTER FOR NON-EMPLOYEE DIRECTOR ELECTED PRIOR TO MAY 27, 2009]
 
 February
20, 2008
 
 [name and
address of director]
 
 RE:           Continental
Airlines Flight Benefits
 
 Dear
[first name],
 
 At its
November 27, 2007 meeting, the Board of Directors of Continental Airlines, Inc.
(the “Company”), acting pursuant to the recommendation of the Corporate
Governance Committee of the Board of Directors and resolutions duly adopted by
the Board, made certain adjustments to our flight benefits program in order to
comply with I.R.C. Section 409A (“409A”).  This letter agreement sets
forth the contractual obligations of the parties with respect to the flight
benefits, as contemplated and authorized by such resolutions.  This
letter agreement supersedes and replaces any prior agreements between you and
the Company relating to flight benefits.
 
 Flight
Benefits are provided for your lifetime subject to the terms and conditions set
forth in Exhibit
A attached hereto.  For purposes of Exhibit A, you are
referred to as “Non-Employee Director.”
 
 This
letter agreement shall be binding upon and inure to the benefit of the Company
and any successor of the Company, including without limitation any person,
association, or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of the Company by any means, whether
director or indirect, by purchase, merger, consolidation, or
otherwise.  This letter agreement and the benefits or obligations
hereunder may not be assigned by you.
 
 If you
are in agreement with the terms of this letter agreement and the terms of the
flight benefits set forth on Exhibit A, please
execute the attached copy hereof and return it to the Company at the above
address, whereupon this letter agreement will become a binding obligation of the
parties hereto.
 
 Very
truly yours,
 
 CONTINENTAL
AIRLINES,
INC.                                                               ACCEPTED AND AGREED
 As
of the date first above written
 
 
 By:           __________________________
 [name]                                
                                                      [name of
director]
 [title]
 
 
 
 
 
 
 
 
 
 
 
 [FORM
LETTER FOR NON-EMPLOYEE DIRECTOR ELECTED AFTER MAY 27, 2009]
 
 
 
 [date]
 
 [name and
address of director]
 
 RE:           Continental
Airlines Flight Benefits
 
 Dear
[first name],
 
 This
letter agreement sets forth the contractual obligations with respect to the
flight benefits, as set forth on Exhibit A, provided by Continental Airlines,
Inc. (the “Company”) to you in connection with your service as a member of the
Board of Directors of the Company.  For purposes of Exhibit A, you are
referred to as “Non-Employee Director.”
 
 This
letter agreement shall be binding upon and inure to the benefit of the Company
and any successor of the Company, including without limitation any person,
association, or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of the Company by any means, whether
direct or indirect, by purchase, merger, consolidation, or
otherwise.  This letter agreement and the benefits or obligations
hereunder may not be assigned by you.
 
 If you
are in agreement with the terms of this letter agreement and the terms of the
flight benefits set forth on Exhibit A, please
execute the attached copy hereof and return it to the Company at the above
address, whereupon this letter agreement will become a binding obligation of the
parties hereto.
 
 Very
truly yours,
 
 CONTINENTAL
AIRLINES,
INC.                                                               ACCEPTED
AND AGREED
 As of the date first above
written
 
 
 By:           __________________________
 [name]                                                                                      [name of
director]
 [title]
 
 
 
  Exhibit
A
  
 Continental
Airlines, Inc.
 Flight
Benefits Effective January 1, 2008
 
 
 1.           Scope;
Effectiveness.  Effective January 1, 2008 [Insert for
Non-Employee Directors first elected after January 1, 2008: or the date of your
first election to the Board, if later], Flight Benefits will be provided for
your lifetime subject to the terms set forth in this Exhibit
A.  [Insert for Non-Employee Directors elected prior to January 1,
2008:  Non-Employee Director’s accrued benefits and rights with
respect to the Flight Benefits under the terms of Non-Employee Director’s
existing agreement(s) with Company are hereby surrendered and
cancelled.]
 
 2.           Definitions.  As used in this
Exhibit, the following terms shall have the meanings assigned
below.
 
 (i)           “Flight Benefits”
shall mean lifetime flight benefits on each airline in the CO System consisting
of the following:
 
 (a)           space
available flight passes, including appropriate flight pass identification cards,
for Non-Employee Director and Non-Employee Director’s Eligible Family
Members;
 
 (b)           a
Universal Air Travel Plan (UATP) card or, in the event of discontinuance of the
UATP program, a similar charge card or other authorization mechanism permitting
the purchase of air travel through direct billing to Company or any successor or
successors thereto (which successor card or mechanism shall be deemed included
as appropriate in all references herein to “UATP card”) in Non-Employee
Director’s name for charging (subject to the restrictions set forth in paragraph
3 below) on an annual, calendar-year basis up to the Annual Travel Limit,
tickets on the CO System (in any fare class) for travel by Non-Employee
Director, Non-Employee Director’s spouse, Non-Employee Director’s family and
significant others as determined by Non-Employee Director;
 
 (c)           Platinum
Elite OnePass Cards (or similar highest category successor frequent flyer cards)
in Non-Employee Director’s and Non-Employee Director’s spouse’s
names;
 
 (d)           a
membership for Non-Employee Director and Non-Employee Director’s spouse in
Company’s Presidents Club (or any successor program); and
 
 (e)           payment
by Company to Non-Employee Director, while Non-Employee Director serves as a
member of the Board of Directors of Company [Insert for Non-Employee Directors
serving on the Board prior to May 27, 2009: (and, if Non-Employee
Director shall have five or more years of service on the Board of Directors of
Company, or retires from the Board after age 70, for the lifetime of
Non-Employee Director)], of an annual (calendar year) amount up to the Annual
Gross Up Limit sufficient to pay, on an after tax basis (i.e., after the payment
by Non-Employee Director of all taxes on such amount), the U.S. federal, state
and local income taxes on imputed income resulting from flights purchased with
the UATP card or resulting from any other flight benefits extended to
Non-Employee Director as a result of Non-Employee Director’s service to Company,
and any payment by Company to Non-Employee Director pursuant to this paragraph
2(e) shall be made on or as soon as practicable following the day on which the
required tax is remitted by or on behalf of Non-Employee Director (but not later
than the end of the taxable year following the year in which such tax is
remitted).
 
 (ii)           “affiliates” means any
entity controlled by, controlling, or under common control with Company, it
being understood that control of an entity shall require the direct or indirect
ownership of a majority of the outstanding capital stock of such
entity.
 
 (iii)           “Annual Travel Limit”
means an amount granted annually (on a calendar-year basis and effective January
1 of each year) by Company to Non-Employee Director equal to the amount of the
annual grant Non-Employee Director received for 2007 [Insert for Non-Employee
Directors first elected after January 1, 2008: (or, if your first election to
the Board is after January 1, 2008, an amount equal to the annual grant provided
to each other Non-Employee Director for such year)], which annual amount shall be
adjusted upon any change in the valuation methodology used by Company to
calculate imputed income from flights for U.S. federal income tax purposes so as
to preserve such annual benefit level for purchases of tickets on the CO System
(e.g., if a change in the valuation methodology results, on average, in such
flights being valued 15% higher than the valuation that would result using the
prior valuation methodology, then the Annual Travel Limit would be increased by
15%).  In determining any adjustment, Company shall be entitled to
rely on its good faith calculation, as verified by its internal audit department
or independent auditors, which calculation will be provided to Non-Employee
Director upon request.  Company will provide Non-Employee Director an
annual statement specifying the Annual Travel Limit and will notify Non-Employee
Director promptly of any adjustments to the Annual Travel Limit described in
this paragraph.  Any portion of the Annual Travel Limit that remains
unused at the end of the calendar year for which it was awarded shall expire and
be of no further use or value.
 
 (iv)           “Annual Gross Up
Limit” means an amount granted annually (on a calendar-year basis and
effective January 1 of each year) by Company to Non-Employee Director in an
amount equal to the amount of the annual grant Non-Employee Director received
for the flight benefits program year 2007 [Insert for Non-Employee Directors
first elected after January 1, 2008: (or, if your first election to the Board is
after January 1, 2008, an amount equal to the annual grant provided to each
other Non-Employee Director for such year)], which amount shall be adjusted upon
any change in the valuation methodology used by Company to calculate imputed
income from flights for U.S. federal income tax purposes so as to preserve such
annual benefit level of tax gross up (e.g., if a change in the valuation
methodology results, on average, in such flights being valued 15% higher than
the valuation that would result using the prior valuation methodology, then the
Annual Gross Up Limit would be increased by 15%).  In determining any
adjustment, Company shall be entitled to rely on its good faith calculation, as
verified by its internal audit department or independent auditors, which
calculation will be provided to Non-Employee Director upon
request.  Company will provide Non-Employee Director an annual
statement specifying the Annual Gross Up Limit and will notify Non-Employee
Director promptly of any adjustments to the Annual Gross Up Limit described in
this paragraph.  Any portion of the Annual Gross Up Limit that remains
unused at the end of the calendar year for which it was awarded shall expire and
be of no further use or value.
 
 (v)           “CO System” shall mean
(a) flights operated by Company or any of its affiliates or any successor or
successors thereto and (b) flights operated on behalf of Company by any third
party under capacity purchase agreements with Company; provided that, unless
otherwise communicated to Non-Employee Director and subject to clause (b), CO
System shall not include flights on any other carriers, including Continental
Connection carriers and other alliance/codeshare carriers.
 
 (vi)           “Eligible Family
Members” means, with respect to each annual benefit year, Non-Employee
Director’s spouse or travel companion, dependent unmarried children through age
20 and through age 25 if full-time students, and a maximum of two parents (which
may be biological or step-parents); provided that an Eligible Family Member
shall not include any individual with respect to whom a benefit described in
paragraph 2(i)(a) is taxable.
 
 3.           Restrictions
on Use; Consequences of Misuse.
 
 (i)           Personal Use
Restriction.  Non-Employee Director agrees that the Flight
Benefits are to be used solely for personal reasons and may not be used for
business purposes (other than business on behalf of Company), and that credit
availability on Non-Employee Director’s UATP card may be suspended and
Non-Employee Director’s UATP card may be revoked or cancelled if (A) such UATP
card is used for business purposes (other than business on behalf of Company)
and (B) after receiving written notice from Company to cease such usage,
Non-Employee Director again uses Non-Employee Director’s UATP card for any
business purpose (other than business on behalf of Company).
 
 (ii)           Booking and Ticketing;
Accounting; Reimbursement.
 
 (a)           No
tickets issued on the CO System in connection with the Flight Benefits may be
purchased other than directly from Company or its successor or successors (i.e.,
no travel agent or other fee or commission based distributor may be used), nor
may any such tickets be sold or transferred by Non-Employee Director or any
other person, nor may any such tickets be used by any person other than the
person in whose name the ticket is issued.
 
 (b)           Non-Employee
Director shall be responsible for all charges on Non-Employee Director’s UATP
card in excess of the Annual Travel Limit or that are not for flights on the CO
System.  Non-Employee Director agrees to reimburse Company, after
receipt of an invoice or other accounting statement, for all charges on
Non-Employee Director’s UATP card that are not for flights on the CO System and
that are not otherwise reimbursable to Non-Employee Director under the
applicable policies of Company for reimbursement of business expenses of
Non-Employee Directors of Company, or that are for tickets in excess of the
Annual Travel Limit or that violate the restrictions set forth in this Exhibit,
which reimbursement shall be made promptly (and in any event within 45 days
after receipt of such invoice or other accounting
statement).  Non-Employee Director agrees that the credit availability
under Non-Employee Director’s UATP card may be suspended if Non-Employee
Director does not timely reimburse Company as described in the foregoing
sentence or if Non-Employee Director exceeds the applicable Annual Travel Limit;
provided, that, immediately upon Company’s receipt of Non-Employee Director’s
reimbursement in full (or, in the case of exceeding the applicable Annual Travel
Limit, beginning the next following year and after such reimbursement), the
credit availability under Non-Employee Director’s UATP card will be
restored.
 
 4.           Imputed
Income.  The sole cost to Non-Employee Director of flights on
the CO System pursuant to use of Non-Employee Director’s Flight Benefits will be
the imputed income with respect to flights on the CO System charged on
Non-Employee Director’s UATP card, or as otherwise required by law, and reported
to Non-Employee Director as required by applicable law.  For purposes
of tax reporting of Flight Benefits, it is the practice of Company to calculate
taxable amounts based on the fiscal period commencing November 1 and ending on
the following October 31 (for example, Flight Benefits utilized (i.e. “flown”)
during the twelve-month period from November 1, 2007 to October 31, 2008 are
reported as a taxable benefit for year 2008).  Company shall have sole
discretion to change this practice, including if additional reporting tools
become available to process Flight Benefits data [Insert for Non-Employee
Directors first elected after January 1, 2008: , the tax withholding process
changes,] or as required by law.
 
 5.           Section
409A Matters.  It is intended that the Flight Benefits program
described in this Exhibit comply with the limitations and requirements of
Section 409A of the Internal Revenue Code (the “Code”) to the extent applicable,
and all provisions herein shall be construed and interpreted in accordance with
such intent.  If Company reasonably determines in good faith that any
provision of such program, when considered individually or in connection with
the terms of any other nonqualified deferred compensation plan maintained by
Company or any affiliate of Company, violates Section 409A of the Code, such
provision will not be effected but will instead be interpreted and amended to
comply with Section 409A of the Code, and any corrections of operation or
administration necessary to comply with Section 409A of the Code shall be
implemented; provided, however, that no such interpretation, amendment or
correction shall result in Non-Employee Director being treated worse than other
former non-management members of the Board of Directors of Company who
terminated service with flight benefits substantially equivalent to those
provided upon termination of service by Non-Employee Director.
 
 6.           Survivor
Benefits.  Upon Non-Employee Director’s death, in addition to
the lifetime benefits provided Non-Employee Director’s spouse pursuant to
paragraphs 2(i)(c) and (d) of this Exhibit, Non-Employee Director’s surviving
spouse and children will be permitted to continue to use (in the proportions
specified in Non-Employee Director’s last will and testament or, if not so
specified or if Non-Employee Director dies intestate, in equal proportions)
Non-Employee Director’s Flight Benefits as follows: an annual survivor travel
limit shall be granted annually on January 1 of each calendar year during the
ten calendar year period beginning January 1st of the calendar year following
Non-Employee Director’s death and ending on December 31st of the year of the
tenth anniversary of the Non-Employee Director’s death (such annual survivor
benefit amount to be $10,000), which annual amount shall be adjusted upon any
change in the valuation methodology used by Company for imputed income from
flights for U.S. federal income tax purposes so as to preserve an annual benefit
level for purchase of tickets on the CO System at least as favorable as the
benefit in effect on January 1, 2008 [Insert for Non-Employee Directors first
elected after January 1, 2008: (or, if your first election to the Board is after
January 1, 2008, an annual benefit level at least as favorable as the benefit in
effect on the date of your first election to the Board)].  In
determining any adjustment pursuant to the first sentence of this paragraph,
Company shall be entitled to rely on its good faith calculation as verified by
its internal audit department or independent auditors, which calculation will be
provided to the Non-Employee Director’s surviving spouse and children upon
request.  Company will provide Non-Employee Director’s surviving
spouse and children an annual statement specifying the annual survivor benefit
and any adjustments described in this paragraph.  Any portion of the
annual survivor benefit described in this paragraph that remains unused at the
end of the calendar year for which it was awarded shall terminate and be of no
further use or value.  All rights, duties and obligations of
Non-Employee Director, and all rights, duties and obligations of Company,
relating to Non-Employee Director’s usage of Flight Benefits contained in this
Exhibit shall be applicable to usage of Non-Employee Director’s Flight Benefits
by Non-Employee Director’s surviving spouse and children, and the provision of
such Flight Benefits to Non-Employee Director’s surviving spouse and children
shall be conditioned upon written acknowledgement of and agreement thereto by
Non-Employee Director’s surviving spouse and children who may use such Flight
Benefits.