Document:

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between CONTINENTAL AIRLINES, INC., a Delaware corporation ("Company" or "Continental"), and ZANE C. ROWE ("Executive"), effective as of the Effective Date (as defined below).

W I T N E S S E T H:

WHEREAS, Company and Executive are parties to that certain Employment Agreement dated as of December 1, 2007 (the "Existing Agreement"); and

WHEREAS, on May 13, 2008, Company announced the planned retirement of the current Executive Vice President and Chief Financial Officer of Company, Jeffrey J. Misner, effective August 31, 2008 and, in connection therewith, the Board of Directors of Company has elected and appointed Executive to the office of Executive Vice President and Chief Financial Officer of Company effective as of the day following the effective date of the retirement of Jeffrey J. Misner (or upon Mr. Misner's earlier death or incapacity) (the "Effective Date"); and

WHEREAS, the parties desire to enter into this Agreement to replace and supersede the Existing Agreement in its entirety, effective as of the Effective Date; and

WHEREAS, the Human Resources Committee of the Board of Directors of Company (the "HR Committee") has authorized the execution, delivery and performance by Company of this Agreement;

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

ARTICLE 1:EMPLOYMENT AND DUTIES

1.1Employment; Effective Date.  Company agrees to employ Executive and Executive agrees to be employed by Company, beginning as of the Effective Date and continuing for the period of time set forth in Article 2 of this Agreement, subject to the terms and conditions of this Agreement. 

1.2Positions.  Company shall employ Executive in the position of Executive Vice President and Chief Financial Officer of Company, or in such other positions as the parties may agree.  Neither the Board of Directors of Company (the "Board of Directors") nor any other officer or representative of Company shall assign to Executive any duties materially inconsistent with the duties associated with the positions described in this paragraph 1.2 as such duties are constituted as of the Effective Date.

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

ARTICLE 2:  TERM AND TERMINATION OF EMPLOYMENT

2.1Term.  Unless sooner terminated pursuant to other provisions hereof, Company agrees to employ Executive for the period beginning on the Effective Date and ending on September 1, 2009 (the "Initial Term").  Said term of employment shall be extended automatically for a successive one-year period as of the last day of the Initial Term and as of the last day of each successive one-year period of time thereafter that this Agreement is in effect (each such successive one-year extended term being referred to herein as an "Extended Term"); provided, however, that if, prior to the date which is six months before the last day of the Initial Term or any such Extended Term, as applicable, either party shall give written notice to the other that no such automatic extension shall occur, then Executive's employment shall terminate on the last day of the Initial Term or Extended Term, as applicable, during which such notice is given.

2.2Company's Right to Terminate.  Notwithstanding the provisions of paragraph 2.1, Company, acting pursuant to an express resolution of the Board of Directors, shall have the right to terminate Executive's employment under this Agreement at any time for any of the following reasons: 
(i)upon Executive's death;

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

(iii)Executive's gross negligence or willful misconduct in the performance of, or Executive's abuse of alcohol or drugs rendering Executive unable to perform, the material duties and services required of Executive pursuant to this Agreement;

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

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

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

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

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

2.3Executive's Right to Terminate.  Notwithstanding the provisions of paragraph 2.1, Executive shall have the right to terminate Executive's employment under this Agreement at any time for any of the following reasons:
(i)a material diminution in Executive's authority, duties, or responsibilities from those applicable to Executive as of the Effective Date, including a change in the reporting structure so that Executive reports other than to the Chief Executive Officer or President of Company; 

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

(iii)a material diminution in Executive's base salary; 

(iv)a material breach by Company of any provision of this Agreement (including, without limitation, paragraphs 1.2, 3.2, or 3.7 of this Agreement); or

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

For purposes of this Agreement, Executive's employment by Company will be considered to have been terminated by Executive for "Good Reason" if such termination of employment is by Executive for a reason encompassed by paragraphs 2.3(i), (ii), (iii), or (iv).  Further, notwithstanding the foregoing provisions of this paragraph 2.3 or any other provision in this Agreement to the contrary, any assertion by Executive of a termination of employment for Good Reason shall not be effective unless all of the following conditions are satisfied: (1) the condition described in paragraphs 2.3(i), (ii), (iii), or (iv) giving rise to Executive's termination of employment must have arisen without Executive's written consent; (2) Executive must provide written notice to Company of such condition in accordance with paragraph 5.2 within 90 days of the initial existence of the condition; (3) the condition specified in such notice must remain uncorrected for 30 days after receipt of such notice by Company; and (4) the date of Executive's termination of employment must occur within 180 days after the initial existence of the condition specified in such notice. 

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

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

ARTICLE 3:  COMPENSATION AND BENEFITS

3.1Base Salary.  During the period of this Agreement, Executive shall receive a minimum annual base salary equal to the greater of (i) $374,544 or (ii) such amount as the parties may agree upon from time to time.  Executive's annual base salary shall be paid in equal installments in accordance with Company's standard policy regarding payment of compensation to executives but no less frequently than semimonthly.

3.2Cash Bonus Programs.  Executive shall participate in each cash bonus program maintained by Company on and after the Effective Date (including, without limitation, any such program maintained for the year during which the Effective Date occurs) at a level that is not less than the highest participation level made available to any Company executive (other than Company's Chief Executive Officer and Company's President); provided that Company shall at all times maintain Executive's annual cash bonus opportunity as a percentage of Executive's annual base salary in an amount that is at least as great as that in effect on the Effective Date (i.e., an annual cash bonus opportunity of 0%, if entry level goal is not met, and if entry level goal is met, between 50% and 150% of annual base salary, depending on achievement of entry, target and stretch goals).  

3.3Life Insurance.  During the period of this Agreement, Company shall maintain one or more policies of life insurance on the life of Executive providing an aggregate death benefit in an amount not less than the Termination Payment (as such term is defined in paragraph 4.8, and based on a Severance Period (as such term is defined in paragraph 4.8) of 36 months).  Executive shall have the right to designate the beneficiary or beneficiaries of the death benefit payable pursuant to such policy or policies up to an aggregate death benefit in an amount equal to the Termination Payment (based on a Severance Period of 36 months), and may transfer ownership of such policy or policies (and any rights of Executive under this paragraph 3.3) to any life insurance trust, family trust or other trust.  To the extent that Company's purchase of, or payment of premiums with respect to, such policy or policies results in compensation income to Executive, Company shall pay to Executive on or as soon as practicable following the day on which the tax with respect to such income is remitted by or on behalf of Executive (but not later than the end of the taxable year following the year in which such tax is remitted) an additional payment (the "Policy Payment") in an amount such that after payment by Executive of all taxes imposed on Executive with respect to the Policy Payment, Executive retains an amount of the Policy Payment equal to the taxes imposed upon Executive with respect to such purchase or the payment of such premiums.  If for any reason Company fails to maintain the full amount of life insurance coverage required pursuant to the preceding provisions of this paragraph 3.3, Company shall, in the event of the death of Executive while employed by Company, pay Executive's designated beneficiary or beneficiaries within 30 days after the date of Executive's death an amount equal to the sum of (1) the difference between the Termination Payment (based on a Severance Period of 36 months) and any death benefit payable to Executive's designated beneficiary or beneficiaries under the policy or policies maintained by Company and (2) such additional amount as shall be required to hold Executive's estate, heirs, and such beneficiary or beneficiaries harmless from any additional tax liability resulting from the failure by Company to maintain the full amount of such required coverage.

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

3.5Supplemental Executive Retirement Plan.  

(i)Base Benefit.  Company agrees to pay Executive the deferred compensation benefits set forth in this paragraph 3.5 as a supplemental retirement plan (the "Plan").  The base retirement benefit under the Plan (the "Base Benefit") shall be an annual amount (that is payable as a monthly straight life annuity) equal to the product of (a) 2.5% times (b) the number of Executive's credited years of service (as defined below) under the Plan (but not in excess of 26 years) times (c) Executive's final average compensation (as defined below).  For purposes hereof, Executive's credited years of service under the Plan shall be equal to the sum of (1) the number of years (including partial years) beginning September 6, 2006, through the end of Executive's period of employment with Company, calculated as set forth in the Continental Retirement Plan (the "CARP") with respect to credited service ("Actual Years of Service"), and (2) if the Termination Payment (as such term is defined in paragraph 4.8) becomes payable to Executive under this Agreement or if Executive's employment is terminated for a reason encompassed by paragraphs 2.2(i) or 2.2(ii), an additional three years of service.  For purposes hereof, Executive's final average compensation shall be equal to the greater of (A) $[374,544] or (B) the average of the five highest annual cash compensation amounts paid to Executive by Company during the consecutive ten calendar years immediately preceding Executive's termination of employment.  For purposes hereof, cash compensation shall include base salary plus cash bonuses (including any amounts deferred pursuant to any deferred compensation plan of Company), but shall exclude (i) any Termination Payment paid to Executive under this Agreement, (ii) any payments received by Executive under Company's Officer Retention and Incentive Award Program, (iii) any proceeds to Executive from any awards under any option, stock incentive or similar plan of Company (including RSUs awarded under Company's Long Term Incentive and RSU Program (the "NLTIP/RSU Program")), and (iv) any cash bonus paid under a long term incentive plan or program adopted by Company.  Executive shall be vested immediately with respect to benefits due under the Plan.

(ii)Offset for CARP or Other Benefit.  Any provisions of the Plan to the contrary notwithstanding, the Base Benefit shall be reduced by the actuarial equivalent (as defined below) of the pension benefit, if any, paid or payable to Executive from the CARP or from any other defined benefit nonqualified supplemental retirement plan provided to Executive by Company.  In making such reduction, the Base Benefit and the benefit paid or payable under the CARP or any such other defined benefit nonqualified supplemental retirement plan shall be determined under the provisions of each plan as if payable in the form of a monthly straight life annuity beginning on the Retirement Date (as defined below).  The net benefit payable under this Plan shall then be actuarially adjusted based on the actuarial assumptions set forth in paragraph 3.5(vii) for the actual time of payment.

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

(iv)Early Retirement Benefits.  Notwithstanding the provisions of paragraph 3.5(iii), if Executive's employment with Company is terminated, for a reason other than death, on or after the date Executive attains age 55 or is credited with 10 Actual Years of Service and prior to the Retirement Date, then Company shall pay Executive the Normal Retirement Benefit on or within five business days following the first day of the month coinciding with or next following Executive's termination of employment (the "Earliest ERB Payment Date") or, if required to satisfy the provisions of Section 409A(a)(2)(B)(i) of the Code, on or within five business days after the Section 409A Payment Date (an "Early Retirement Benefit"); provided, however, that the amount of the benefit shall be reduced to the extent necessary to cause the value of such Early Retirement Benefit (determined as if payment would be made on the Earliest ERB Payment Date) to be the actuarial equivalent of the value of the Normal Retirement Benefit (based on the actuarial assumptions set forth in paragraph 3.5(vii) and adjusted for such time of payment).  If payment of the Early Retirement Benefit must be delayed beyond the Earliest ERB Payment Date to satisfy the provisions of Section 409A(a)(2)(B)(i) of the Code as provided in the preceding sentence, then payment of the Early Retirement Benefit (with interest on such benefit from the Earliest ERB Payment Date to the actual date of payment at the Aa Corporate Bond Rate) shall be paid by Company to Executive (or, in the event of Executive's death after the Earliest ERB Payment Date, Executive's Beneficiary) not earlier than but as soon as practicable on, and in any event within five business days after, the Section 409A Payment Date.

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

(vi)Unfunded Benefit.  The Plan is intended to constitute an unfunded, unsecured plan of deferred compensation.  Further, it is the intention of Company that the Plan be unfunded for purposes of the Code and Title I of the Employee Retirement Income Security Act of 1974, as amended.  The Plan constitutes a mere promise by Company to make benefit payments in the future.  Plan benefits hereunder provided are to be paid out of Company's general assets, and Executive shall have the status of, and shall have no better status than, a general unsecured creditor of Company.  Executive understands that Executive must rely upon the general credit of Company for payment of benefits under the Plan.  Company has established a "rabbi" trust to assist Company in meeting its obligations under the Plan.  The trustee of such trust shall be a nationally-recognized and solvent bank or trust company that is not affiliated with Company.  Company shall transfer to the trustee money and/or other property determined in the sole discretion of the HR Committee based on the advice of the Actuary (as defined below) on an as-needed basis in order to assure that the benefit payable under the Plan is at all times fully funded; provided, however, that (a) to the extent that the payment of any amount due under this paragraph 3.5 is or may be delayed by reason of Section 409A(a)(2)(B)(i) of the Code, Company shall, on or as soon as practicable after the date of Executive's termination of employment with Company, contribute to the trust the amount necessary to assure that the trust has sufficient funds to pay on the Section 409A Payment Date the amount payable pursuant to this paragraph 3.5 (including any interest provided for in this paragraph 3.5 based on the assumption that payment will be delayed for six months), and (b) notwithstanding the foregoing, in no event shall money and/or property be transferred to the trust during any period in which such transfer would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code.  The trustee shall pay Plan benefits to Executive and/or Executive's spouse out of the trust assets if such benefits are not paid by Company.  Company shall remain the owner of all assets in the trust, and the assets shall be subject to the claims of Company creditors in the event (and only in the event) Company ever becomes insolvent.  Neither Executive nor any beneficiary of Executive shall have any preferred claim to, any security interest in, or any beneficial ownership interest in any assets of the trust.  Company has not and will not in the future set aside assets for security or enter into any other arrangement which will cause the obligation created to be other than a general corporate obligation of Company or will cause Executive to be more than a general creditor of Company.

(vii)Actuarial Equivalent.  For purposes of the Plan, the terms "actuarial equivalent" or "actuarially equivalent" when used with respect to a specified benefit shall mean the amount of benefit of the referenced different type or payable at the referenced different age that can be provided at the same cost as such specified benefit, as computed by the Actuary and certified to Executive (or, in the case of Executive's death, to Executive's spouse) by the Actuary.  The actuarial assumptions used under the Plan to determine equivalencies between different forms and times of payment shall be the same as the actuarial assumptions then used in determining lump sum benefits payable under the CARP; provided, however, that with respect to the discount rate used to calculate benefits under the Plan, the discount rate shall be the Aa Corporate Bond Rate. The term "Actuary" shall mean the individual actuary or actuarial firm selected by Company to service its pension plans generally or if no such individual or firm has been selected, an individual actuary or actuarial firm appointed by Company and reasonably satisfactory to Executive and/or Executive's spouse.  The term "Aa Corporate Bond Rate" shall mean the average of the Moody's daily long-term corporate bond yield averages for Aa-rated corporate bonds published by Moody's Investors Service, for the three-month period ending on the last day of the second month preceding the date Executive (or, in the case of Executive's death, Executive's spouse) is to receive the lump sum payment (determined without regard to any delay in such payment that may be required by reason of Section 409A(a)(2)(B)(i) of the Code), as determined by the Actuary (or, if such yield information is no longer so published, then the average of the daily corporate bond yields for a comparable sample of Aa-rated corporate bonds of comparable tenor determined in good faith by the Actuary).  Upon request, Company shall cause the Actuary to compute the Aa Corporate Bond Rate for a specified period and the amount of the applicable lump sum payment for Executive (or, in the case of Executive's death, Executive's spouse) and shall deliver such information to Executive or such spouse.

(viii)Medicare Payroll Taxes.  Company shall indemnify Executive on a fully grossed-up, after-tax basis for any Medicare payroll taxes (plus any income taxes on such indemnity payments) incurred by Executive in connection with the accrual and/or payment of benefits under the Plan.  Any payment by Company to Executive pursuant to this paragraph 3.5(viii) shall be made on or as soon as practicable following the day on which the required tax is remitted by or on behalf of Executive (but not later than the end of the taxable year following the year in which such tax is remitted).

3.6Other Perquisites.  During Executive's employment hereunder, Executive shall be afforded the following benefits as incidences of Executive's employment:
(i)Automobile - Company will provide an automobile (including replacements therefor) of Executive's choice for Executive's use on terms at least as favorable to Executive as provided in the applicable policy adopted by the HR Committee that is in effect as of the Effective Date.  If the automobile is leased, then, except as provided in the following sentence, Company agrees to take such actions as may be necessary to permit Executive, at Executive's option, to acquire title to any automobile subject to such a lease at the completion of the lease term by Executive paying at such time the residual payment then owing under the lease.  If Executive's employment terminates (other than as a result of the reasons encompassed by paragraphs 2.2 (iii), (iv), (v) or (vi)), then:
(1)if the automobile is owned by Company, Company shall (A) transfer title to the automobile to Executive (or Executive's estate, as applicable), without cost to Executive (or Executive's estate), on the Section 409A Payment Date, and (B) to the extent the aggregate value of the use of the automobile and any other miscellaneous separation pay benefits subject to Section 409A of the Code that are provided to Executive during the period following Executive's termination of employment and preceding the Section 409A Payment Date have an aggregate value in excess of the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in which Executive's termination of employment occurs, Executive shall pay to Company, on a monthly basis until the end of such period, the fair market value of the use of the automobile for such month, and Company shall reimburse Executive or Executive's estate (as applicable) (with interest thereon at the Aa Corporate Bond Rate (as defined in paragraph 3.5(vii), but determined as of the last day of the second month preceding the first day of the month coinciding with or next following the date of Executive's termination of employment)) for any such payments not later than the fifth day following the date upon which title to the automobile is so transferred; or

(2)if the automobile is leased by Company, Company shall (A) transfer title to the automobile to Executive (or Executive's estate, as applicable), without cost to Executive (or Executive's estate), at the conclusion of the lease term (but in no event prior to the Section 409A Payment Date), and (B) continue to make all payments under the lease and permit Executive (or Executive's estate, as applicable) to use the automobile during the remainder of such lease term or, if later, until the automobile is so transferred to Executive (or Executive's estate, as applicable); provided, however, that to the extent the aggregate value of the use of the automobile and any other miscellaneous separation pay benefits subject to Section 409A of the Code that are provided to Executive during the period following Executive's termination of employment and preceding the Section 409A Payment Date have an aggregate value in excess of the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in which such termination occurs, Executive shall pay to Company, on a monthly basis until the end of such period, the fair market value of the use of the automobile (but in no event less than the payment required under the lease) for such month, and Company shall reimburse Executive or Executive's estate (as applicable) (with interest thereon at the Aa Corporate Bond Rate (as defined in paragraph 3.5(vii), but determined as of the last day of the second month preceding the first day of the month coinciding with or next following the date of Executive's termination of employment)) for any such payments not later than the fifth day following the end of such period.

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

(iii)Parking - Company shall provide at no expense to Executive a reserved parking place convenient to Executive's headquarters office and a reserved parking place at George Bush Intercontinental Airport in Houston, Texas consistent with past practice in a location that is the same as or equivalent to that regularly used by Company's senior executives.

(iv)Other Company Benefits - Executive and, to the extent applicable, Executive's family, dependents and beneficiaries, shall be allowed to participate in all benefits, plans and programs, including improvements or modifications of the same, which are now, or may hereafter be, available to similarly situated Company employees.  Such benefits, plans and programs may include, without limitation, profit sharing plan, thrift plan, annual physical examinations, health insurance or health care plan, life insurance, disability insurance, pension plan, pass privileges on Continental Airlines, Flight Benefits (as such term is defined in paragraph 4.8) and the like. Company shall not, however, by reason of this paragraph be obligated to institute, maintain, or refrain from changing, amending or discontinuing, any such benefit plan or program, so long as such changes are similarly applicable to executive employees generally; provided, however, that Company shall not change, amend or discontinue Executive's Flight Benefits without Executive's prior written consent.

3.7Corporate Amenities.  During the period of this Agreement, Company shall take no action that materially reduces the corporate amenities enjoyed by Executive below the level of corporate amenities enjoyed by any other executive of Company other than Company's Chief Executive Officer and President.

ARTICLE 4:  EFFECT OF TERMINATION ON COMPENSATION

4.1By Expiration.  If Executive's employment hereunder shall terminate upon expiration of the term provided in paragraph 2.1 hereof, then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with termination of Executive's employment, except that (A) (i) the benefits described in paragraph 3.5 shall continue to be payable, (ii) Executive shall be provided Flight Benefits for the remainder of Executive's lifetime, and the death benefit rights shall be provided as described in paragraphs 4.7 and 4.8, (iii) Executive and Executive's eligible dependents shall be provided Continuation Coverage (as such term is defined in paragraph 4.8) for the remainder of Executive's lifetime, (iv) Executive shall be paid on the effective date of such termination for Executive's accrued and unused vacation benefits up to a maximum of four weeks, (v) any amounts reimbursable but unpaid to Executive at the date of such termination shall be reimbursed to Executive pursuant to the provisions of paragraph 3.6 and any amounts owed but unpaid to Executive under any plan, policy or program of Company (other than Company's vacation policy, which is addressed in clause (iv) above) as of the date of termination shall be paid to Executive at the time and to the extent provided by, and in accordance with the terms of, such plan, policy or program and this Agreement, and (vi) Company shall perform its obligations with respect to the automobile then used by Executive as provided in subparagraph 3.6(i) (provided, however, that to the extent  any miscellaneous separation pay benefits subject to Section 409A of the Code that are provided to Executive during the first six-months following Executive's termination of employment have an aggregate value in excess of the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in which such termination occurs, Executive shall pay to Company, at the time such benefits are provided, the fair market value of such benefits, and Company shall reimburse Executive (with interest thereon at the Aa Corporate Bond Rate (as defined in paragraph 3.5(vii), but determined as of the last day of the second month preceding the first day of the month coinciding with or next following the date of Executive's termination of employment) for any such payment not later than the fifth day following the expiration of such six-month period), and (B) if such termination shall result from Company's delivery of the written notice described in paragraph 2.1, then Company shall (i) cause all options and shares of restricted stock awarded to Executive to vest immediately upon such termination and, with respect to options, be exercisable in full for 30 days after such termination (but in no event later than the earlier of the latest date upon which the option could have expired by its original terms under any circumstances or the tenth anniversary of the original date of grant of the option), (ii) if such termination occurs prior to the date upon which a Change in Control (as such term is defined in paragraph 4.8) occurs, pay to Executive, at the same time as Payment Amounts with respect to Awards are paid to other participants under the NLTIP/RSU Program (or, if a Change in Control occurs prior to such payment date and prior to the date for which a potential payment under the NLTIP/RSU Program ceases to exist for the relevant Award, on the date upon which such Change in Control occurs), all Payment Amounts with respect to Awards made to Executive under the NLTIP/RSU Program for which a potential payment under the NLTIP/RSU Program exists as of the date of Executive's termination of employment, as if Executive had remained employed by Company in Executive's current position through the date that would entitle Executive to the maximum payment with respect to such Awards under the NLTIP/RSU Program (calculated using the Base Amount of Executive in effect on the day immediately preceding such termination), (iii) if such termination occurs on or after the date upon which a Change in Control occurs, pay to Executive, within five business days after the date of such termination, all Payment Amounts with respect to Awards made to Executive under the NLTIP/RSU Program for which a potential payment under the NLTIP/RSU Program exists as of the date of Executive's termination of employment, as if Executive had remained employed by Company in Executive's current position through the date that would entitle Executive to the maximum payment with respect to such Awards under the NLTIP/RSU Program (calculated using the Base Amount of Executive in effect on the day immediately preceding such termination), (iv) pay Executive on the effective date of such termination a lump sum, cash payment in an amount equal to the Termination Payment (provided, however, that if the payment of the Termination Payment would be subject to additional taxes and interest under Section 409A of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then such amount shall be paid within five business days after the Section 409A Payment Date), and (v) provide Executive with Outplacement and Related Services (as such term is defined in paragraph 4.8 and for the time periods described therein; provided, however, that to the extent the benefits provided to Executive under clause (2) of the definition of Outplacement and Related Services and any other miscellaneous separation pay benefits subject to Section 409A of the Code that are provided to Executive during the first six-months following Executive's termination of employment have an aggregate value in excess of the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in which such termination occurs, Executive shall pay to Company, at the time such benefits are provided, the fair market value of such benefits, and Company shall reimburse Executive (with interest thereon at the Aa Corporate Bond Rate (as defined in paragraph 3.5(vii), but determined as of the last day of the second month preceding the first day of the month coinciding with or next following the date of Executive's termination of employment)) for any such payment not later than the fifth day following the expiration of such six-month period).  Capitalized terms used in clauses (ii) and (iii) of the preceding sentence that are not defined elsewhere in this Agreement have the meanings ascribed thereto in the NLTIP/RSU Program as in effect on the Effective Date.  If the payment of the Termination Payment is delayed as provided in the parenthetical set forth in clause (B)(iv) of the first sentence of this paragraph, then (1) interest on such delayed payment for the period beginning on the date of Executive's termination of employment and ending on the date of the payment of the Termination Payment at the Aa Corporate Bond Rate (as determined as provided in clause (B)(v) of the first sentence of this paragraph) shall also be paid by Company to Executive at the time of the payment of the Termination Payment, and (2) Company shall, on or as soon as practicable after the date of Executive's termination of employment, contribute cash in an amount equal to the Termination Payment plus the interest described in clause (1) of this sentence (based on the assumption that the payment will be delayed for six months) to an irrevocable grantor ("rabbi") trust of which Executive is the sole beneficiary and the trustee of which is a nationally-recognized and solvent bank or trust company that is not affiliated with Company (subject to the claims of Company's creditors, as required pursuant to applicable Internal Revenue Service guidance to prevent the imputation of income to Executive prior to distribution from the trust), pursuant to which the Termination Payment plus applicable interest shall be payable from the trust at the time provided herein, provided that (x) to the extent such amount is paid to Executive by Company, the trust shall pay such amount to Company, and (y) in no event shall cash be transferred to the trust during any period in which such transfer would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code.

4.2By Company.  If Executive's employment hereunder shall be terminated by Company prior to expiration of the term provided in paragraph 2.1 hereof then, upon such termination, regardless of the reason therefor, all compensation and all benefits to Executive hereunder shall terminate contemporaneously with the termination of such employment, except that Company shall provide Executive with the payments and benefits described in clause (A) of the first sentence of paragraph 4.1 (except that the automobile benefit described in clause (A)(vi) of such sentence shall not be provided if the reason for such termination is encompassed by paragraphs 2.2 (iii), (iv), (v) or (vi)), and:
(i)if such termination shall be without Cause, then Company shall provide Executive with the payments and benefits described in clause (B) of the first sentence of paragraph 4.1 and take the actions described in the last sentence of paragraph 4.1 (if applicable); and

(ii)if such termination shall be for a reason encompassed by paragraphs 2.2(i) or (ii), then Company shall (1) cause all options and shares of restricted stock awarded to Executive to vest immediately upon such termination and, with respect to options, be exercisable in full for 30 days after such termination (or such longer period as provided for under the circumstances in applicable option awards, but in no event later than the earlier of the latest date upon which the option could have expired by its original terms under any circumstances or the tenth anniversary of the original date of grant of the option), (2) if such termination occurs prior to the date upon which a Change in Control occurs, pay to Executive (or Executive's estate), at the same time as Payment Amounts with respect to Awards are paid to other participants under the NLTIP/RSU Program (or, if a Change in Control occurs prior to such payment date and prior to the date for which a potential payment under the NLTIP/RSU Program ceases to exist for the relevant Award, on the date upon which such Change in Control occurs), all Payment Amounts with respect to Awards made to Executive under the NLTIP/RSU Program for which a potential payment under the NLTIP/RSU Program exists as of the date of Executive's termination of employment, as if Executive had remained employed by Company in Executive's current position through the date that would entitle Executive to the maximum payment with respect to such Awards under the NLTIP/RSU Program (calculated using the Base Amount of Executive in effect on the day immediately preceding such termination), (3) if such termination occurs on or after the date upon which a Change in Control occurs, pay to Executive (or Executive's estate), within five business days after the date of such termination, all Payment Amounts with respect to Awards made to Executive under the NLTIP/RSU Program for which a potential payment under the NLTIP/RSU Program exists as of the date of Executive's termination of employment, as if Executive had remained employed by Company in Executive's current position through the date that would entitle Executive to the maximum payment with respect to such Awards under the NLTIP/RSU Program (calculated using the Base Amount of Executive in effect on the day immediately preceding such termination), and (4) if termination was due to Executive's death, provide Executive's designated beneficiary or beneficiaries with the benefits contemplated under paragraph 3.3.  Capitalized terms used in clauses (2) and (3) of the preceding sentence that are not defined elsewhere in this Agreement have the meanings ascribed thereto in the NLTIP/RSU Program as in effect on the Effective Date.

4.3By Executive.  If Executive's employment hereunder shall be terminated by Executive prior to expiration of the term provided in paragraph 2.1 hereof then, upon such termination, regardless of the reason therefor, all compensation and benefits to Executive hereunder shall terminate contemporaneously with the termination of such employment, except that Company shall provide Executive with the payments and benefits described in clause (A) of the first sentence of paragraph 4.1, and, if such termination shall be by Executive for Good Reason, then Company shall provide Executive with the payments and benefits described in clause (B) of the first sentence of paragraph 4.1 and take the actions described in the last sentence of paragraph 4.1 (if applicable). 

4.4Certain Additional Payments by Company.  Notwithstanding anything to the contrary in this Agreement, if any payment, distribution or provision of a benefit by Company to or for the benefit of Executive, whether paid or payable, distributed or distributable or provided or to be provided pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to an excise or other special additional tax that would not have been imposed absent such Payment (including, without limitation, any excise tax imposed by Section 4999 of the Code), or any interest or penalties with respect to such excise or other additional tax (such excise or other additional tax, together with any such interest or penalties, are hereinafter collectively referred to as the "Excise Tax"), Company shall pay to Executive on or as soon as practicable following the day on which the Excise Tax is remitted by or on behalf of Executive (but not later than the end of the taxable year following the year in which the Excise Tax is remitted) an additional payment (a "Gross-up Payment") in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any income taxes and Excise Taxes imposed on any Gross-up Payment, Executive retains an amount of the Gross-up Payment (taking into account any similar gross-up payments to Executive under any stock incentive or other benefit plan or program of Company) equal to the Excise Tax imposed upon the Payments; provided, however, that Company's obligation to pay Executive a Gross-up Payment with respect to an Excise Tax relating to Section 409A of the Code is conditioned on Executive having, on and after the Effective Date, cooperated with Company to execute any amendment to the provisions hereof or any other agreement or arrangement reasonably necessary to avoid the imposition of such Excise Tax, but only to the minimum extent necessary to avoid the application of such Excise Tax and only to the extent that Executive would not, as a result, suffer (i) any reduction in the total present value of the amounts otherwise payable to Executive, or the benefits otherwise to be provided to Executive, by Company or (ii) any material increase in the risk of Executive not receiving such amounts or benefits, it being agreed that, upon request of Executive, Company shall establish and fully fund (other than during any period in which such funding would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code) an irrevocable grantor ("rabbi") trust as described in the last sentence of paragraph 4.1 with respect to any amounts (plus interest thereon as so described) proposed to be deferred in payment to Executive under the terms of this proviso.  Company and Executive shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment. Executive shall notify Company in writing of any claim by the Internal Revenue Service which, if successful, would require Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined by Company and Executive) within ten business days after the receipt of such claim.  Company shall notify Executive in writing at least ten business days prior to the due date of any response required with respect to such claim if it plans to contest the claim.  If Company decides to contest such claim, Executive shall cooperate fully with Company in such action; provided, however, Company shall bear and pay directly or indirectly all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of Company's action.  If, as a result of Company's action with respect to a claim, Executive receives a refund of any amount paid by Company with respect to such claim, Executive shall promptly pay such refund to Company.  If Company fails to timely notify Executive whether it will contest such claim or Company determines not to contest such claim, then Company shall immediately pay to Executive the portion of such claim, if any, which it has not previously paid to Executive.

4.5Payment Obligations Absolute.  Company's obligation to pay Executive the amounts and to make the arrangements provided in this Article 4 shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set off, counterclaim, recoupment, defense or other right which Company (including its subsidiaries and affiliates) may have against Executive or anyone else; provided that all payments and other Company obligations under this Article 4 shall be subject to Executive's execution, within 50 days after the date of Executive's termination of employment, of a general release and waiver substantially in the form attached as Exhibit A to this Agreement, which has become irrevocable.   Company agrees to execute such form of release and waiver concurrently with the execution thereof by Executive.  All amounts payable by Company shall be paid without notice or demand.  Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Article 4, and, except as provided in paragraph 4.8 with respect to Continuation Coverage, the obtaining of any such other employment (or the engagement in any endeavor as an independent contractor, sole proprietor, partner, or joint venturer) shall in no event effect any reduction of Company's obligations to make (or cause to be made) the payments and arrangements required to be made under this Article 4.

4.6Liquidated Damages.  In light of the difficulties in estimating the damages upon termination of this Agreement, Company and Executive hereby agree that the payments and benefits, if any, to be received by Executive pursuant to this Article 4 shall be received by Executive as liquidated damages.  Payment of the Termination Payment pursuant to paragraphs 4.1, 4.2 or 4.3 shall be in lieu of any severance benefit Executive may be entitled to under any severance plan or policy maintained by Company.

4.7Flight Benefits.

(i)Scope; Effectiveness.  Paragraphs 4.7 and 4.8 set forth the terms and conditions of Flight Benefits provided to Executive; provided, however, that if Executive would be subject to additional taxes and interest under Section 409A of the Code if Executive's right to use Executive's annual allotment of Flight Benefits is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then, during the six-month period following Executive's termination of employment, Executive shall be able to use Executive's Annual Travel Limit and Annual Gross Up Limit (as such terms are defined in paragraph 4.8) until the time that such benefits used (together with any other miscellaneous separation pay benefits subject to Section 409A of the Code that are provided to Executive during such period) have an aggregate value equal to the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in which such termination of employment occurs.

(ii)Restrictions on Use; Consequences of Misuse.
(a)Personal Use Restriction.  Executive agrees that the Flight Benefits are to be used principally for personal reasons and may not be used for business purposes (other than business purposes on behalf of Company, and other than business usage that is incidental or de minimus, defined as amounting to less than 10% of the total value (valued as the usage of the Annual Travel Limit is calculated) of flights on the CO System charged to Executive's UATP card (as such terms are defined in paragraph 4.8) during any calendar year), and that credit availability on Executive's UATP card may be suspended if (A) such UATP card is used for business purposes other than as described above and (B) after receiving written notice from Company to cease such usage, Executive continues to use Executive's UATP card for such business purposes.

(b)Booking and Ticketing; Accounting; Reimbursement.  

(1) No tickets issued on the 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 Executive or any other person, nor may any such tickets be used by any person other than the person in whose name the ticket is issued.  

(2)Executive shall be responsible for all charges on Executive's UATP card in excess of the Annual Travel Limit or that are not for flights on the CO System.  Executive agrees to  reimburse Company, after receipt of an invoice or other accounting statement, for all charges on Executive's UATP card that are not for flights on the CO System and that are not otherwise reimbursable to Executive under the applicable policies of Company for reimbursement of business expenses of officers of Company, or that are for tickets in excess of the Annual Travel Limit or that violate the restrictions set forth in this paragraph 4.7, which reimbursement shall be made promptly (and in any event within 45 days after receipt of such invoice or other accounting statement).  Executive agrees that the credit availability under Executive's UATP card may be suspended if Executive does not timely reimburse Company as described in the foregoing sentence or if Executive exceeds the applicable Annual Travel Limit; provided, that, immediately upon Company's receipt of Executive'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 Executive's UATP card will be restored.

(iii)Imputed Income.  The sole cost to Executive of flights on the CO System pursuant to use of Executive's Flight Benefits will be the imputed income with respect to flights on the CO System charged on Executive's UATP card, or as otherwise required by law, and reported to Executive as required by applicable law.  For purposes of tax reporting of Flight Benefits, it is the practice of Company to calculate taxable amounts based on the fiscal period commencing November 1 and ending on the following October 31 (for example, Flight Benefits utilized (i.e. "flown") during the twelve-month period from November 1, 2007 to October 31, 2008 are reported as a taxable benefit for year 2008).  Company shall have sole discretion to change this practice, including if additional reporting tools become available to process Flight Benefits data or as required by law.  With respect to any period for which Company is obligated to provide the Annual Gross Up Limit, Executive will provide to Company, upon request, a calculation or other evidence of Executive's marginal tax rate sufficient to permit Company to calculate accurately the amount to be paid to Executive.

(iv)Section 409A Matters.  It is intended that the Flight Benefits program described in this Agreement comply with the limitations and requirements of Section 409A of the Code to the extent applicable, and all provisions herein shall be construed and interpreted in accordance with such intent.  If 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 Executive being treated worse than other Company officers in the same or a lower officer category than Executive. 

(v)Additional Survivor Benefits.  Upon Executive's death, in addition to the lifetime benefits provided pursuant to paragraphs 4.8(ix)(c) and (d), Executive's surviving spouse and children will be permitted to continue to use (in the proportions specified in Executive's last will and testament or, if not so specified or if Executive dies intestate, in equal proportions) an additional travel limit that 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 Executive's death and ending on December 31st of the year of the tenth anniversary of the Executive's death (such annual survivor benefit amount to be $15,000), 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.  Upon Executive's death, Company shall issue UATP cards in the names of Executive's surviving spouse and children, as applicable.  In determining any adjustment pursuant to the first sentence of this subparagraph, 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 Executive's surviving spouse and children upon request.  Company will provide Executive's surviving spouse and children an annual statement specifying the survivor benefit and any adjustments described in this subparagraph.  Any portion of the annual survivor benefit described in this subparagraph 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 restrictions, duties and obligations of Executive, and all rights of Company, relating to Executive's usage of Flight Benefits contained in this Agreement shall be applicable to usage of Executive's Flight Benefits by Executive's surviving spouse and children, and the provision of such Flight Benefits to Executive's surviving spouse and children shall be conditioned upon written acknowledgement of and agreement thereto by Executive's surviving spouse and children who may use such Flight Benefits.

4.8Certain Definitions and Additional Terms.  As used herein, the following terms shall have the meanings assigned below:
(i)"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;

(ii)"Annualized Compensation" shall mean an amount equal to the sum of (1) Executive's annual base salary pursuant to paragraph 3.1 in effect immediately prior to Executive's termination of employment hereunder and (2) an amount equal to 125% of the amount described in the foregoing clause (1);

(iii)"Annual Travel Limit" means an amount granted annually (on a calendar-year basis and effective January 1 of each year) by Company to Executive (such amount to be the same for each officer within an officer category and no less than the amount granted with respect to Executive for the flight benefits program year 2007; provided that, if Flight Benefits are provided to Executive after Executive's termination of employment pursuant to this Agreement, then each annual grant for a calendar year beginning after such termination of employment shall, subject to the remaining provisions of this subparagraph, be in an amount equal to the amount of the annual grant Executive received for the year in which such termination of employment occurred), which annual amount shall be adjusted upon any change in the valuation methodology used by 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 Executive upon request.  Company will provide Executive an annual statement specifying the Annual Travel Limit and will notify Executive promptly of any adjustments to the Annual Travel Limit described in this subparagraph.  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 Executive (such amount to be the same for each officer within an officer category and no less than the amount granted with respect to Executive for the flight benefits program year 2007; provided that, if Flight Benefits are provided to Executive after Executive's termination of employment pursuant to this Agreement, then each annual grant for a calendar year beginning after such termination of employment shall, subject to the remaining provisions of this subparagraph, be in an amount equal to the amount of the annual grant Executive received for the year in which such termination of employment occurred), which amount shall be adjusted upon any change in the valuation methodology used by 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 Executive upon request.  Company will provide Executive an annual statement specifying the Annual Gross Up Limit and will notify Executive promptly of any adjustments to the Annual Gross Up Limit described in this subparagraph.  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)"Change in Control" shall have the same meaning as is assigned to such term under the NLTIP/RSU Program as in effect on the Effective Date;

(vi)"Continuation Coverage" shall mean, subject to the limitations described in this paragraph 4.8(vi), the continued coverage of Executive and Executive's eligible dependents under the following Company welfare benefit plans available to a similarly situated Company executive who has not terminated employment (or the provision of similar benefits, which may include the provision of benefits under one or more insurance policies):  medical, dental, term life insurance (in an amount equal to one times Executive's annual base salary rate on the effective date of termination, without regard to the life insurance benefit that might otherwise be available under standard Company policy), vision care, accidental death and dismemberment, and prescription drug.  Such coverage shall be offered solely as an alternative to any COBRA continuation coverage applicable to any group health plan otherwise available to Executive (and each of Executive's dependents, if any) within the meaning of ERISA sections 601 through 608.  Further, any such coverage shall be subject to the application of any Medicare or other coordination of benefits provisions under a particular welfare benefit plan.  Such coverage shall be provided by Company at no greater contribution, deductible or co-pay cost to Executive than that applicable to a similarly situated Company executive who has not terminated employment.  The coverage described in this paragraph 4.8(vi) (or the receipt of similar benefits) shall be provided to Executive under one or more insurance policies so that reimbursement or payment of benefits to Executive thereunder shall not result in taxable income to Executive, and provided further that the coverage to Executive under a particular welfare benefit plan (or the receipt of similar benefits) shall be suspended during any period that Executive receives similar benefits from a subsequent employer, and shall be reinstated upon Executive ceasing to so receive similar benefits and notifying Company thereof;

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

(viii)"Eligible Family Members" means, with respect to each annual benefit year, Executive's spouse or travel companion, dependent unmarried children through age 20 and through age 25 if full-time students, and a maximum of two parents (which may be biological or step-parents); provided that, if Flight Benefits are provided to Executive after Executive's termination of employment pursuant to this Agreement, then, following such termination of employment, an Eligible Family Member shall not include any individual with respect to whom a benefit described in paragraph 4.8(ix)(a) is taxable;

(ix)"Flight Benefits" shall mean flight benefits on each airline in the CO System consisting of the following (and such flight benefits shall be provided and construed in accordance with the terms and conditions set forth in paragraphs 4.7 and 4.8):
(a)highest priority space available flight passes, including appropriate flight pass identification cards, for Executive and Executive'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 Executive's name for charging (subject to the restrictions set forth in paragraph 4.7(ii)) on an annual, calendar year basis up to the Annual Travel Limit the purchase of tickets on the CO System (in any fare class) for travel by Executive, Executive's spouse, Executive's family and significant others as determined by Executive;

(c)Platinum Elite OnePass Cards (or similar highest category successor frequent flyer cards) in Executive's and Executive's spouse's and children's names, such cards to be lifetime membership cards;

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

(e)payment by Company to Executive of an annual (calendar year) amount up to the Annual Gross Up Limit sufficient to pay, on an after tax basis (i.e., after the payment by Executive of all taxes on such amount), the U.S. federal, state and local income taxes on imputed income resulting from any flight benefits extended to Executive pursuant to paragraphs 4.8(ix)(a) through (d) or otherwise provided as a result of Executive's service as an employee of Company, and any payment by Company to Executive pursuant to this paragraph 4.8(ix)(e) shall be made on or as soon as practicable following the day on which the required tax is remitted by or on behalf of Executive (but not later than the end of the taxable year following the year in which such tax is remitted); 

(x)"Outplacement and Related Services" shall mean (1) outplacement services, at Company's cost and for a period of 12 months beginning on the date of Executive's termination of employment, to be rendered by an agency selected by Executive and approved by the Board of Directors or the HR Committee (with such approval not to be unreasonably withheld), and (2) a reserved parking place at George Bush Intercontinental Airport in Houston, Texas consistent with past practice, at Company's cost and for as long as Executive retains a residence in Houston, Texas;

(xi)"Severance Period" shall mean:
(1)in the case of a termination of Executive's employment with Company that occurs within two years after the date upon which a Change in Control occurs, a period commencing on the date of such termination and continuing for 36 months; or

(2)in the case of a termination of Executive's employment with Company that occurs prior to a Change in Control or after the date which is two years after a Change in Control occurs, a period commencing on the date of such termination and continuing for 24 months; and

(xii)"Termination Payment" shall mean an amount equal to Executive's Annualized Compensation multiplied by a fraction, the numerator of which is the number of months in the Severance Period and the denominator of which is 12.

ARTICLE 5:  MISCELLANEOUS

5.1Interest and Indemnification.  If any payment to Executive provided for in this Agreement is not made by Company when due, Company shall pay to Executive interest on the amount payable from the date that such payment should have been made until such payment is made, which interest shall be calculated at 3% plus the prime or base rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in Houston, Texas (but not in excess of the highest lawful rate), and such interest rate shall change when and as any such change in such prime or base rate shall be announced by such bank.  If Executive shall obtain any money judgment or otherwise prevail with respect to any litigation brought by Executive or Company to enforce or interpret any provision contained herein, Company, to the fullest extent permitted by applicable law, hereby indemnifies Executive for Executive's reasonable attorneys' fees and disbursements incurred in such litigation and hereby agrees (i) to pay in full all such fees and disbursements and (ii) to pay prejudgment interest on any money judgment obtained by Executive from the earliest date that payment to Executive should have been made under this Agreement until such judgment shall have been paid in full, which interest shall be calculated at the rate set forth in the preceding sentence.  Any reimbursement of attorneys' fees and disbursements required under this paragraph 5.1 and any reimbursement of costs and expenses required under paragraph 3.6(ii) or paragraph 4.4 shall be made by Company upon or as soon as practicable following receipt of supporting documentation reasonably satisfactory to Company (but in any event not later than the close of Executive's taxable year following the taxable year in which the fee, disbursement, cost or expense is incurred by Executive); provided, however, that, upon Executive's termination of employment with Company, in no event shall any additional reimbursement be made prior to the date that is six months after the date of Executive's termination of employment to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of the Code; provided that interest at the rate specified above in this Section 5.1 shall be paid to Executive with respect to any time period that reimbursement is so delayed and such interest shall be paid at the same time as the reimbursement.  In no event shall any reimbursement be made to Executive for such fees, disbursements, costs and expenses incurred after the later of (1) the tenth anniversary of the date of Executive's death or (2) the date that is ten years after the date of Executive's termination of employment with Company.

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

If to Company:Continental Airlines, Inc.
1600 Smith, Dept. HQSEO

Houston, Texas  77002

Attention:  General Counsel

If to Executive: At the most recent address on file with Company

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

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

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

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

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

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

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

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

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

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

5.12Entire Agreement.  Except as provided in the benefits, plans, and programs referenced in paragraph 3.6(iv) and any awards under Company's stock incentive plans or programs, Annual Executive Bonus Program, NLTIP/RSU Program or similar plans or programs, this Agreement, as of the Effective Date, will constitute the entire agreement of the parties with regard to the subject matter hereof, and will contain all the covenants, promises, representations, warranties and agreements between the parties with respect to employment of Executive by Company.  Effective as of the Effective Date, the Existing Agreement shall automatically terminate and no longer be of any force or effect, and neither party shall have any rights or obligations thereunder.  Any modification of this Agreement shall be effective only if it is in writing and signed by the party to be charged.

5.13Deemed Resignations.  Any termination of Executive's employment shall constitute an automatic resignation of Executive as an officer of Company and each affiliate of Company, and an automatic resignation of Executive from the Board of Directors (if applicable) and from the board of directors of any affiliate of Company, and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which Company or any affiliate holds an equity interest and with respect to which board or similar governing body Executive serves as Company's or such affiliate's designee or other representative.

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

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

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

5.17Delayed Payment Restriction.  Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A of the Code if Executive's receipt of such payment or benefit is not delayed until the Section 409A Payment Date, then such payment or benefit shall not be provided to Executive (or Executive's estate, if applicable) until the Section 409A Payment Date (and, at that time, Executive shall also receive interest thereon from the date such payment or benefit would have been provided in the absence of this paragraph until the date of receipt of such payment or benefit at the Aa Corporate Bond Rate (as defined in paragraph 3.5(vii), but determined as of the last day of the second month preceding the first day of the month coinciding with or next following the date of Executive's termination of employment)).  Upon request of Executive, Company shall establish and fully fund (other than during any period in which such funding would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code) an irrevocable grantor ("rabbi") trust as described in the last sentence of paragraph 4.1 with respect to any amounts (plus interest thereon) required to be deferred in payment to Executive pursuant to the preceding sentence.  This paragraph shall not apply to any payment or benefit otherwise described in the first sentence of this paragraph if another provision of this Agreement is intended to cause Executive's receipt of such payment or benefit to satisfy the requirements of Section 409A(a)(2)(B)(i) of the Code.

[Signatures begin on following page.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on August 29, 2008, to be effective as of the Effective Date. 

CONTINENTAL AIRLINES, INC.

 

By:/s/ Jennifer L. Vogel
Name:Jennifer L. Vogel

Title:Senior Vice President,

General Counsel, Secretary

and Chief Compliance Officer 

"EXECUTIVE"

 

/s/ Zane C. Rowe

Zane C. Rowe

 

APPROVED:

 

/s/ Charles Yamarone

Charles Yamarone

Chair, Human Resources Committee

 

 

 

EXHIBIT A

TO

EMPLOYMENT AGREEMENT

Form of Release Agreement

(to be executed by Company and Executive)

 

In consideration of the benefits provided by Company to Executive, Executive hereby releases Continental Airlines, Inc. ("Continental") and each of its subsidiaries and affiliates and their respective stockholders, officers, directors, employees, representatives, agents and attorneys from any and all claims or liabilities, known or unknown, of any kind, including, without limitation, any and all claims and liabilities relating to Executive's employment by, or services rendered to or for, Continental or any of its subsidiaries or affiliates, or relating to the cessation of such employment or under the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 1981, the Texas Commission on Human Rights Act, and any other statutory, tort, contract or common law cause of action, other than claims or liabilities arising from a breach by Continental of (i) its post-employment obligations under that certain Employment Agreement effective as of __________________ between Continental and Executive (the "Employment Agreement"), (ii) its obligations under the Continental Retirement Plan ("CARP"), under Executive's outstanding grants of stock options or restricted stock, under outstanding awards under the Continental Airlines, Inc. Annual Executive Bonus Program (the "Annual Bonus Program"), the NLTIP/RSU Program, or under any other compensation plan or program of Continental (such capitalized but undefined terms having the meanings attributed to them in the Employment Agreement), or (iii) its obligations under existing agreements governing Executive's flight benefits relating to other airlines.  Continental hereby releases Executive from any and all claims or liabilities, known or unknown, of any kind in any way relating to or pertaining to Executive's employment by, or services rendered to or for, Continental or any of its subsidiaries or affiliates, other than fraud or intentional malfeasance or claims arising from a breach by Executive of the Employment Agreement or of Executive's obligations under the CARP, under Executive's outstanding grants of stock options or restricted stock, under outstanding awards under the Annual Executive Bonus Program or the NLTIP/RSU Program, under any other compensation plan or program of Continental, or under existing agreements governing Executive's flight benefits relating to other airlines.  These releases are to be broadly construed in favor of the released persons.  These releases do not apply to any rights or claims that may arise after the date of execution of this Release Agreement by Executive and Continental.  Both parties agree that this Release Agreement is not and shall not be construed as an admission of any wrongdoing or liability on the part of either party.  Notwithstanding the foregoing, the post-employment obligations created by the Employment Agreement, the CARP, Executive's outstanding option grants and grants of restricted stock, outstanding awards under the Annual Executive Bonus Program and the NLTIP/RSU Program, or outstanding awards under any other compensation plan or program of Continental, or under existing agreements governing Executive's flight benefits relating to other airlines, are not released.

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

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

This Release Agreement will become effective, enforceable and irrevocable on the eighth day after the date on which it is executed by Executive (the "Effective Date").  During the seven-day period prior to the Effective Date, Executive may revoke Executive's agreement to accept the terms hereof by serving written notice in accordance with Section 5.2 of the Employment Agreement to Company of Executive's intention to revoke.  However, the Termination Payment provided for in the Employment Agreement will be delayed until the Effective Date.exv10w1

Exhibit 10.1

AGREEMENT

     THIS AGREEMENT made this                      day of                     , 2008 (the “Agreement”) by and between
                     (the “Executive”) and VF CORPORATION, a Pennsylvania corporation (the
“Corporation”). This Agreement amends, restates and supersedes the prior agreement dated
                    , 2004, and any amendments to and restatements thereof between the Executive and
the Corporation.

BACKGROUND

     The Board of Directors of the Corporation (the “Board”) considers the establishment and
maintenance of a sound and vital management to be essential to protecting and enhancing the best
interests of the Corporation and its shareholders. In this connection, the Corporation recognizes
that, as is the case with many publicly held corporations, the possibility of a change in control
may exist and that such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel to the detriment of
the Corporation and its shareholders. Accordingly, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and dedication of certain
members of the Corporation’s management, including the Executive, to their assigned duties without
distraction in the face of the potentially disturbing circumstances that could arise from the
possibility of a change in control of the Corporation.

     In order to induce the Executive to remain in the employ of the Corporation, the Corporation
wishes to provide the Executive with certain severance benefits in the event his employment with
the Corporation terminates subsequent to a change in control of the Corporation under the
circumstances described herein.

     NOW THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

 

 

     1. TERM. The term of this Agreement commences as of the date and year first above
written and shall continue until the second anniversary of the date set forth above. The prior
sentence notwithstanding, commencing on the first day after the second anniversary of the date set
forth above and on the first day of each subsequent twelve-month period
thereafter, the term of this Agreement shall automatically be extended for one additional
year beyond the then existing term. This Agreement shall terminate (except as set forth in the next
sentence) if (a) the Corporation gives the Executive notice that it wishes to terminate this
Agreement, in which case this Agreement shall terminate as of the date set forth in such
notice or (b) the Executive’s employment with the Corporation is terminated for any reason,
including transfer to a subsidiary company of the Corporation, in which case this Agreement shall
terminate on the last day of the Executive’s employment with the Corporation; provided, however,
that, if the Executive is transferred to a subsidiary company of the Corporation, the Corporation
may waive the termination of this Agreement, by a written amendment of this Agreement, executed by
both the Corporation and the Executive, which shall refer to this clause and shall be limited to
the Executive’s transfer to the subsidiary company of the Corporation named in the amendment,
unless another amendment is executed upon the Executive’s subsequent transfer to another subsidiary
company of the Corporation. The Corporation may not give such notice and this Agreement shall not
automatically terminate in the event the Executive’s employment with the Corporation terminates for
any reason, including a transfer to a subsidiary company of the Corporation, (x) at any time while
the Corporation has knowledge that any third person has taken steps or announced an intention to
take steps reasonably calculated to effect a “Change in Control” (as hereinafter defined) of the
Corporation, unless or until such third party has, in the reasonable opinion of the Corporation,
abandoned its efforts or intention to effect a Change in Control of the

2

 

Corporation or (y) within twenty-four months after the date a Change in Control occurs. It is
understood that the Corporation may terminate the Executive’s employment at any time, subject to
providing, if required to do so in accordance with the terms hereof, the severance benefits
hereinafter specified.

     2. CHANGE IN CONTROL. No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Corporation and the Executive’s employment by the Corporation shall
thereafter have been terminated by the Corporation or by the Executive under the circumstances
described in paragraph 3(iii) hereof.

          (i) Definition. For purposes of this Agreement, “Change in Control” shall mean the
first to occur of:

               (A) an individual, corporation, partnership, group, association or other entity or “person,”
as such term is defined in Section 14(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”) (a “Person”), other than (i) the Corporation, (ii) those certain trustees under Deeds of
Trust dated August 21, 1951 and under the Will of John E. Barbey, deceased (a “Trust” or the
“Trusts”), and (iii) any employee benefit plan of the Corporation or any subsidiary company of the
Corporation, or any entity holding voting securities of the Corporation for or pursuant to the
terms of any such plan (a “Benefit Plan” or the “Benefit Plans”), or any employee benefit plan(s)
sponsored by the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the
Corporation’s outstanding securities ordinarily having the right to vote at elections of directors;

               (B) individuals who constitute the Board on the effective date of this Agreement (the
“Incumbent Board”) cease for any reason to constitute at least a majority thereof,

3

 

provided that any Approved Director, as hereinafter defined, shall be, for purposes of this
subsection (B), considered as though such person were a member of the Incumbent Board. An
“Approved Director,” for purposes of this subsection (B), shall mean any person becoming a director
subsequent to the effective date of this Agreement whose election, or nomination for election by
the Corporation’s shareholders, was approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of
the Corporation in which such person is named as a nominee of the Corporation for director), but
shall not include any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board; or

               (C) the approval by the shareholders of the Corporation of a plan or agreement providing for
a merger or consolidation of the Corporation other than with a wholly-owned subsidiary and other
than a merger or consolidation that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more than 65% of the combined
voting power of the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or for a sale, exchange or other disposition of all
or substantially all of the assets of the Corporation.

               (ii) Exceptions. (A) Notwithstanding the foregoing, a Change in Control of the
Corporation shall not be deemed to have occurred for purposes of this Agreement (I) in the event of
a sale, exchange, transfer or other disposition of substantially all of the assets of the
Corporation to, or a merger, consolidation or other reorganization involving the Corporation and

4

 

the Executive, alone or with other officers of the Corporation, or any entity in which the
Executive (alone or with other officers) has, directly or indirectly, at least a 5% equity or
ownership interest or (II) in a transaction otherwise commonly referred to as a “management
leveraged buy-out.”

               (B) Clause 2(i)(A) above to the contrary notwithstanding, a Change in Control shall not be
deemed to have occurred if a Person becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting power of the
Corporation’s then outstanding securities solely as the result of an acquisition by the Corporation
or any subsidiary company of the Corporation of voting securities of the Corporation which, by
reducing the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the combined voting power of the Corporation’s
then outstanding securities; provided, however, that if a Person becomes the beneficial owner of
20% or more of the combined voting power of the Corporation’s then outstanding securities by reason
of share purchases by the Corporation or any subsidiary company of the Corporation and shall, after
such share purchases by the Corporation or a subsidiary company of the Corporation, become the
beneficial owner, directly or indirectly, of any additional voting securities of the Corporation,
then a Change in Control of the Corporation shall be deemed to have occurred with respect to such
Person under clause 2(i)(A)above. Notwithstanding the foregoing, in no event shall a Change in
Control of the Corporation be deemed to occur under clause 2(i)(A) above if the Person acquiring
such shares is the Trusts or Benefit Plans.

               (C) Clauses 2(i)(A) and 2(i)(B) to the contrary notwithstanding, the Board may, by resolution
adopted by at least two thirds of the directors comprising the Incumbent Board, declare that a
Change in Control described in clauses 2(i)(A)(a) or 2(i)(B) has become ineffective for purposes of
this Agreement if all of the following conditions then exist: (I) the

5

 

declaration is made prior to the death or termination of employment of the Executive and within 120
days following the Change in Control; and (II) no Person, except for (x) the Trusts, and (y) the
Benefit Plans, either is the beneficial owner, directly or indirectly, of securities of the
Corporation representing 10% or more of the combined voting power of the Corporation’s outstanding
securities or has the ability or power to vote securities representing 10% or more of the combined
voting power of the Corporation’s then outstanding securities. If such a declaration shall be
properly made, no benefits shall be payable hereunder as a result of such prior but now ineffective
Change in Control, but benefits shall remain payable and this Agreement shall remain enforceable as
a result of any other Change in Control unless it is similarly declared to be ineffective.

     3. TERMINATION FOLLOWING CHANGE IN CONTROL. The Executive shall be entitled to the
severance benefits provided in Section 4 hereof if his employment is terminated within the 24-month
period following a Change in Control of the Corporation (even if such 24-month period shall extend
beyond the term of this Agreement or any extension thereof) unless his termination is (i) because
of his death, (ii) by the Corporation for Cause or due to the Executive’s Disability or (iii) by
the Executive other than for Good Reason.

          (i) Disability. The Corporation may terminate the Executive’s employment due to the
Executive’s “Disability” if, as a result of the Executive’s incapacity due to physical or
mental illness, he shall have been absent from his duties with the Corporation on a full-time basis
for 26 consecutive weeks, and within 30 days after written notice of termination is given he shall
not have returned to the full-time performance of his duties.

          (ii) Cause. The Corporation may terminate the Executive’s employment for Cause. For
the purpose of this Agreement, the Corporation shall have “Cause” to terminate the Executive’s
employment hereunder upon (A) the willful and continued refusal by the Executive

6

 

substantially to perform his duties with the Corporation (other than any such refusal resulting
from his incapacity due to physical or mental illness), after a demand for substantial performance
is delivered to the Executive by the Board which specifically identifies the manner in which the
Board believes that the Executive has refused substantially to perform his duties or (B) the
willful engaging by the Executive in gross misconduct materially and demonstrably injurious to the
Corporation. For purposes of this paragraph, no act or failure to act on the Executive’s part
shall be considered “willful” unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in the best interest of the
Corporation. Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three quarters of the entire
members of the Board, at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the Executive was
guilty of conduct set forth above in clauses (A) or (B) of the second sentence of this paragraph
and specifying the particulars thereof in detail. 

          (iii) Good Reason. The Executive shall be entitled to terminate his employment, and
receive benefits hereunder, for Good Reason at any time within 24 months after the date of a
Change in Control of the Corporation. For purposes of this Agreement, “Good Reason” shall mean,
unless the Executive shall have consented in writing thereto, any of the following:

               (A) a material reduction in the Executive’s authority or responsibilities, as compared to his
authority or responsibilities immediately prior to the Change in Control or as the same may be
increased after the Change in Control;

7

 

               (B) a material diminution in the budget for which the Executive is responsible;

               (C) a material reduction by the Corporation in the Executive’s compensation as in effect
immediately prior to the Change in Control or as the same may be increased after the Change in
Control;

               (D) a material change in the geographic location where the Executive is to provide services;
or

               (E) a material breach of this Agreement on the part of the Corporation.

          (iv) Notice of Termination. Any termination by the Corporation pursuant to paragraph
3(i) or 3(ii) hereof, or otherwise, or by the Executive pursuant to paragraph 3(iii) hereof, which,
in any case, occurs within 24 months after a Change in Control of the Corporation, shall be
communicated by written Notice of Termination (as hereinafter defined) to the other party hereto;
provided that, in the case of a termination for Cause, there shall also have been delivered to the
Executive the resolution required to be delivered pursuant to paragraph 3(ii) hereof. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the Executive’s employment
under the provision so indicated. In the case of termination by the Executive for Good Reason
pursuant to paragraph 3(iii) hereof, the Corporation shall have 30 days from its receipt of the
Notice of Termination to remedy the facts and circumstances claimed to provide the basis for
termination of the Executive’s employment for Good Reason, and the Executive shall not be deemed to
have terminated employment for Good Reason unless and until the Corporation fails to remedy such
circumstances during the 30 days following its receipt of the Notice of Termination.

8

 

          (v) Date of Termination. “Date of Termination” shall mean (A) if this Agreement is
terminated for Disability, the 31st day after Notice of Termination is given (provided
that the Executive shall not have returned to the performance of his duties on a full-time basis
during the 30-day period preceding such 31st day), (B) if the Executive’s employment is
terminated pursuant to paragraph 3(ii) above, the date specified in the Notice of Termination, and
(C) if the Executive’s employment is terminated for any other reason, the date on which a Notice of
Termination is given, or, if the Corporation terminates the Executive’s employment without giving a
Notice of Termination, the date on which such termination is effective.

     4. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

          (i) During any period in which the Executive fails to perform his duties as a result of
incapacity due to physical or mental illness, he shall continue to receive his full base salary at
the rate then in effect until his employment is terminated pursuant to paragraph 3(i) hereof.
Thereafter, his benefits, if any, shall be determined in accordance with whatever disability income
insurance plan or plans the Corporation may then have in effect; provided, however, that, if at the
time Disability of the Executive is established the disability benefits then available are less
advantageous to the Executive than the disability benefits which were available on the date the
Change in Control became effective, then his termination of employment shall be deemed to have
occurred as a voluntary termination for Good Reason under paragraph 3(iii) hereof and not by reason
of Disability, and the provisions of paragraph 4(iii) hereof shall apply in lieu of the provisions
of this paragraph 4(i).

          (ii) If the Executive’s employment shall be terminated for Cause, the Corporation shall pay to
him his full base salary through the Date of Termination at the rate in

9

 

effect at the time Notice of Termination is given and the Corporation shall have no further
obligations to the Executive under this Agreement.

          (iii) If the Corporation shall terminate the Executive’s employment other than pursuant to
paragraph 3(i) or 3(ii) hereof within 24 months after a Change in Control of the Corporation, or if
the Executive shall terminate his employment for Good Reason pursuant to paragraph 3(iii) hereof
within 24 months after a Change in Control, then:

               (A) The Corporation shall pay to the Executive, not later than thirty (30) days following the
Date of Termination, the Executive’s accrued but unpaid base salary through the Date of Termination
plus compensation for current and carried-over unused vacation and compensation days in accordance
with the Corporation’s personnel policy.

               (B) In lieu of any further payments of salary to the Executive after the Date of Termination,
the Corporation shall pay to the Executive, not later than thirty (30) days following the Date of
Termination and notwithstanding any dispute between the Executive and the Corporation as to the
payment to the Executive of any other amounts under this Agreement or otherwise, a lump sum
severance payment (the “Severance Payment”) equal to 2.99 times an amount equal to the sum of (1)
the greater of the Executive’s highest annual base salary in effect at any time within the
twelve-month period preceding a Change in Control or the Date of Termination, and (2) the greater
of (I) the Target Incentive Award or Target Amount to which the Executive would have been entitled
under the Corporation’s Executive Incentive Compensation Plan (the “EICP”) or Annual Discretionary
Management Incentive Compensation Plan (the “ADMICP”), as applicable, and the base or target amount
to which the Executive would have been entitled under any other annual cash bonus program of the
Corporation, had he been employed by the Corporation at the end of the fiscal year in which the
Date of Termination occurs,

10

 

or (II) the highest amount awarded to the Executive under the EICP or ADMICP and under any other
annual cash bonus program of the Corporation during the last three fiscal years prior to the Date
of Termination.

               (C) In addition to the foregoing amounts payable under paragraph 4(iii)(A) and (B) above, the
Executive will be entitled to the following:

               (1) a pro rata bonus for the year of termination equal to the Target Incentive Award or
Target Amount under the EICP or ADMICP, as applicable, multiplied by a fraction, the
numerator of which is the number of calendar days that have elapsed from the beginning of
the fiscal year in which such termination occurs through the Date of Termination, and the
denominator of which is the number of calendar days in the fiscal year, payable not later
than thirty (30) days following the Date of Termination;

               (2) any stock option rights held by the Executive which were not fully exercisable on
the Date of Termination shall immediately become fully exercisable by the Executive and any
restricted stock rights held by the Executive which were not fully vested on the Date of
Termination shall immediately become fully vested;

               (3) the Corporation shall maintain in full force and effect, for the Executive’s
continued benefit, until the earlier of (I) 36 months after the Date of Termination or (II)
the Executive’s 65th birthday, all life, medical and dental insurance programs in which the
Executive was entitled to participate immediately prior to the Date of Termination; provided
that his continued participation is possible under the general terms and provisions of such
programs; provided, further, that, in the event the Executive’s participation in any such
program is barred, the Corporation shall arrange to provide the

11

 

Executive with benefits substantially similar to those which he was entitled to receive
under such programs;

               (4) in addition to the benefits to which the Executive is entitled under the
Corporation’s retirement plans in which he participates or any successor plans or programs
in effect on the Date of Termination, the Corporation shall pay to the Executive in one lump
sum in cash, an amount equal to the actuarial equivalent of the retirement pension to which
the Executive would have been entitled under the terms of such retirement plan or programs
had he accumulated 36 additional months of continuous service after the Date of Termination
(or, if less, the number of months between the Date of Termination and the date on which the
Executive attains normal retirement age under the plan) at his base salary rate in effect on
the Date of Termination reduced by the single sum actuarial equivalent of any amounts to
which the Executive is entitled pursuant to the provisions of said retirement plans and
programs, discounted to reflect its then present value, paid at the same time as the
Severance Payment; provided that, for purposes of this subparagraph (3), the actuarial
equivalents shall be determined, and all other calculations shall be made, using the same
methods and assumptions utilized under the Corporation’s retirement plan or programs;
provided, however, that such methods and assumptions shall be no less favorable to the
Executive than those in effect on the date of the Change in Control; and

               (5) the Executive shall become fully vested and have a nonforfeitable interest in any
benefit which he has accrued under the Corporation’s Amended and Restated Supplemental
Executive Retirement Plan (“SERP”), including any

12

 

Supplemental Annual Benefit Determinations or similar determinations or benefit grants under
the SERP adopted at any time prior to termination of the Executive’s employment.

          (D) (1) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Corporation to or for the
benefit of the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (a “Payment”), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”),
or similar section, or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to all Excise Tax imposed upon the Payments.
Notwithstanding the foregoing, if the value of the Payments that would be treated as
“parachute payments” under Section 280G of the Code (the “280G Parachute Value”) is greater
than the maximum amount that could be paid to the Executive without giving rise to the
Excise Tax (the “Parachute Limit”), but does not exceed 105% of the Parachute Limit, then
(i) no Gross-Up Payment shall be made and (ii) the Payments shall be reduced such that the
280G Parachute Value that the Executive is entitled to receive shall be one dollar ($1) less
than the 280G Parachute Limit, provided that the Payments shall not be so reduced if the
Executive elects to be subject to and pay the Excise Tax and so notifies the Company prior
to the date the Payments are made. Any reduction in the Payments

13

 

pursuant to the preceding sentence shall be first made, pro rata, from any cash Payments.
The Corporation’s obligation to make the Gross-Up Payment under this subsection (D) shall
not be conditioned upon the Executive’s termination of employment.

               (2) Subject to the provisions of subsection (D)(4) hereof, all determinations required
to be made under this subsection (D), including whether a Gross-Up Payment is required and
the amount of such Gross-Up Payment, shall be made by the firm of independent auditors
acting as such for the Corporation immediately prior to the Change in Control (the
“Accounting Firm”); provided, however, that, if the Accounting Firm has performed services
for the person, entity or group who caused the Change in Control, or an affiliate thereof,
the Executive may select an alternative accounting firm from any nationally recognized firm
of certified public accountants, which shall be treated as the Accounting Firm for purposes
hereof. The Accounting Firm shall provide detailed supporting calculations both to the
Corporation and the Executive within 30 days of termination of employment under this
Agreement, if applicable, or such earlier time as is requested by the Executive or the
Corporation. When calculating the amount of the Gross-Up Payment, the Executive shall be
deemed to pay:

(I) federal income taxes at the highest applicable marginal rate of federal
income taxation for the calendar year in which the Gross-Up Payment is to be
made, and

(II) any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal income

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taxes which could be obtained from deduction of such state and local taxes
if paid in such year.

               (3) If the Accounting Firm determines that no Excise Tax is payable by the Executive,
the Corporation shall request the Accounting Firm to furnish the Executive with an opinion
that the Executive has substantial authority not to report any Excise Tax on his federal
income tax return. Any determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made by the Corporation
should have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies pursuant to subsection
(D) (4) hereof, and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive, but in no event shall such payment be made later than the end of the year
after the year in which the obligation to pay the Underpayment was incurred.

               (4) The Executive shall notify the Corporation in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Corporation of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten business days after the Executive knows of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of

15

 

the thirty-day period following the date on which it gives such notice to the Corporation
(or such shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Corporation notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

(I) give the Corporation any information reasonably requested by the
Corporation relating to such claim,

(II) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Corporation,

(III) cooperate with the Corporation in good faith in order effectively to
contest such claim, and

(IV) permit the Corporation to participate in any proceedings relating to
such claim;

provided, however, that the Corporation shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this subsection, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either pay the tax claimed to the
appropriate

16

 

taxing authority on behalf of the Executive or direct the Executive to pay the tax claimed and
direct the Executive to sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that, if the Corporation directs the
Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis and the Corporation shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties, imposed with respect to such payment or advance, as the case
may be, or with respect to any imputed income with respect to such payment or advance, as the
case may be; and further provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Corporation’s control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

               (5) If after the receipt by the Executive of an amount advanced by the Corporation
pursuant to this subsection the Executive becomes entitled to receive any refund with
respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Corporation’s complying with the requirements of
subsection (D)(4)) promptly pay to the Corporation the amount of such refund (together with
any interest paid or credited thereon by the taxing authority after

17

 

deducting any taxes applicable thereto). If, after payment by the Corporation of an amount
on the Executive’s behalf or the receipt by the Executive of an amount advanced by the
Corporation, as the case may be, pursuant to subsection (D)(4), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty days after such determination, then such advance,
if any, shall be forgiven and shall not be required to be repaid and the amount of such
payment or such advance, as the case may be, shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid under subsection (D)(4). The forgiveness of such
advance shall be considered part of the Gross-Up Payment and subject to gross-up for any
taxes (including interest or penalties) associated therewith.

               (6) Any Gross-Up Payment, as determined pursuant to this subsection (D) shall be paid
by the Corporation to the Executive within thirty days of the receipt of the Accounting
Firm’s determination; provided that the Gross-Up Payment shall in all events be paid no
later than the end of the Executive’s taxable year next following the Executive’s taxable
year in which the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable
taxing authority or, in the case of amounts relating to a claim described in subsection (D)
that does not result in the remittance of any federal, state, local and foreign income,
excise, social security and other taxes, the calendar year in which the claim is finally
settled or otherwise resolved. Notwithstanding any other provisions of this subsection (D),
the Corporation may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of the

18

 

Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to
such withholding.

          (iv) The Executive’s right to receive payments under this Agreement shall not decrease the
amount of, or otherwise adversely affect, any other benefits payable to the Executive under any
plan, agreement or arrangement relating to employee benefits provided by the Corporation.

          (v) The Executive shall not be required to mitigate the amount of any payment provided for in
this paragraph 4 by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this paragraph 4 be reduced by any compensation earned by the Executive as
the result of employment by another employer or by reason of the Executive’s receipt of or right to
receive any retirement or other benefits after the date of termination of employment or otherwise.

          (vi) The Corporation may, but shall not be obligated to, provide security for payment of the
amounts set forth in this Agreement in a form that will cause such amounts to be includible in the
Executive’s gross income only for the taxable year or years in which such amounts are paid to the
Executive under the terms of this Agreement. The form of security may include a funded irrevocable
grantor trust established so as to satisfy any published Internal Revenue Service guidelines.

          (vii) the Corporation may withhold from any amounts payable under this Agreement such federal,
state and local taxes as may be required to be withheld pursuant to any applicable law or
regulation.

     5. FEES AND EXPENSES. The Corporation shall pay all reasonable legal fees and related
expenses (including the costs of experts, evidence and counsel and other such expenses

19

 

included in connection with any litigation or appeal) incurred by the Executive as a result of (i)
his termination of employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment) or (ii) his seeking to obtain or enforce any right
or benefit provided by this Agreement or by any other plan or arrangement maintained by the
Corporation under which he is or may be entitled to receive benefits. The Corporation further
agrees to pay prejudgment interest on any money judgment against the Corporation obtained by the
Executive in any arbitration or litigation against it to enforce such rights calculated at the
prime interest rate of Wachovia Bank, N.A., or its successor, in effect from time to time from the
date it is determined that payment(s) to him should have been made under this Agreement. In order
to comply with Section 409A of the Code, (i) in no event shall the payments by the Corporation
under this paragraph 5 be made later than the end of the calendar year next following the calendar
year in which such fees and expenses were incurred; provided that the Executive shall have
submitted an invoice for such fees and expenses at least 10 days before the end of the calendar
year next following the calendar year in which such fees and expenses were incurred, (ii) the
amount of such legal fees and expenses that the Corporation is obligated to pay in any given
calendar year shall not affect the legal fees and expenses that the Corporation is obligated to pay
in any other calendar year, (iii) the Executive’s right to have the Corporation pay such legal fees
and expenses may not be liquidated or exchanged for any other benefit and (iv) the fees and
expenses described herein shall be reimbursed until the 5th anniversary of the Change in
Control.

     6. SUCCESSORS; BINDING AGREEMENT.

          (i) This Agreement shall inure to the benefit of and be binding on any successor to all or
substantially all of the Corporation’s business and/or assets.

20

 

          (ii) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or,
if there be no such designee, to his estate.

     7. NOTICES. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed in the case of the Executive, to

and in the case of the Corporation, to its principal executive offices, provided that all notices
to the Corporation shall be directed to the attention of its Chief Executive Officer with copies to
the Secretary of the Corporation and to the Board, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.

     8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and a duly authorized officer of the Corporation. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements

21

 

or representations, oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this Agreement. This
Agreement shall not be assigned in whole or in part without the prior written consent of the
non-assigning party; provided, however, this sentence shall not be construed to relieve the
Corporation or any successor (whether direct or indirect) from liability hereunder as provided in
paragraph 6. The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws (but not the law of conflicts of laws) of the Commonwealth of Pennsylvania.
Whenever the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms.

     9. VALIDITY. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.

     10. SECTION 409A. The Agreement is intended to comply with the requirements of Section 409A
of the Code or an exemption or exclusion therefrom and shall in all respects be administered in
accordance with Section 409A of the Code. Notwithstanding any provision to the contrary in the
Agreement, if the Executive is deemed at the time of his separation from service to be a “specified
employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement
of any portion of the termination benefits to which Executive is entitled under this Agreement is
required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code,
such portion of Executive’s termination benefits shall not be provided to Executive prior to the
earlier of (a) the expiration of the six-month period measured from the date of the Executive’s
“separation from service” (as such term is defined in the Treasury Regulations issued under Section
409A of the Code) with the Corporation or (b) the date of the

22

 

Executive’s death (the “Delayed Payment Date”). Upon the expiration of the applicable Code
Section 409A(a)(2)(B)(i) deferral period (including, without limitation, upon the Delayed Payment
Date, where applicable), all payments deferred pursuant to this paragraph 10 shall be paid in a
lump sum and any remaining payments due under the Agreement shall be paid as otherwise provided
herein.

23

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.

	 	 	 	 	 	 	 
	 

	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	Witness:

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	(SEAL)
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	VF CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Attest:

	 	 	 	 	 	Eric C. Wiseman	 	 
	 

	 	 	 	 	 	Chairman, President and	 	 
	 

	 	 	 	 	 	Chief Executive Officer	 	 
	
 

	 	 	 	 	 	 
	 	 
	Candace S.
Cummings
	 	 	 	 	 	 	 	 
	Secretary
	 	 	 	 	 	 	 	 

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