Early Retirement Agreement

EXHIBIT 10.4


EARLY RETIREMENT AGREEMENT


This Early Retirement Agreement ("Agreement") is entered into between C.D. MCLEAN ("Executive") and Continental Airlines, Inc. ("Continental" or the "Company"), and is effective on the Effective Date as defined below.


WHEREAS, Executive desires to retire; and


WHEREAS, the Company has determined that it is in the best interests of the Company that Executive retire; and


WHEREAS, the Company and Executive are parties to that certain Employment Agreement dated as of July 25, 2000, as amended by letter agreement dated April 9, 2002, between the Company and Executive (the "Employment Agreement"); and


WHEREAS, Executive is desirous of receiving additional consideration upon his retirement beyond that provided for in his Employment Agreement, and the Company is desirous of obtaining the retirement of Executive and the releases and other agreements of Executive contained in this Agreement;


NOW, THEREFORE, IT IS AGREED between Executive and Continental as follows:


The terms of this Agreement are in addition to the terms contained in the Employment Agreement, and nothing herein shall affect any of Executive's or Continental's rights or obligations under the Employment Agreement, except as expressly set forth herein. Each of Executive and Continental agree that Executive's separation from employment with Continental is voluntary and shall be treated as a resignation by Executive pursuant to paragraph 2.3(vii) under the Employment Agreement, and as a retirement under Executive's outstanding stock option, restricted stock and Officer Retention and Incentive Award Program ("Retention Program") awards, with the date of such retirement being the Effective Date, but not as a retirement under the Continental Retirement Plan, unless Executive is otherwise eligible for retirement thereunder. Accordingly, pursuant to the Employment Agreement, Executive shall, subject to the terms of the Employment Agreement, be provided Flight Benefits (as such term is de fined in the Employment Agreement) for Executive's lifetime, Executive and his eligible dependents shall be provided Continuation Coverage (as such term is defined in the Employment Agreement) for the remainder of Executive's lifetime, and Company shall perform its obligations with respect to the automobile currently used by Executive as provided in subparagraph 3.7(i) of the Employment Agreement. Moreover, Continental hereby transfers to Executive ownership of the painting by Bruce Brainard currently in Executive's office. Notwithstanding the provisions of the Employment Agreement, Executive's resignation shall not function as a resignation from his position as a member of the board of directors of ExpressJet Holdings, Inc.


In addition, Continental shall pay Executive the amount of Executive's current annual base salary ($625,000.00) in a lump sum on the Effective Date (less applicable taxes).


In addition, Continental shall pay Executive a pro-rated annual bonus for 2003 (based on the bonus program currently applicable to Executive and the number of days Executive was employed by Continental during calendar year 2003), less applicable taxes, payable only if and when the Company's 2003 annual bonus is paid.


In addition, Continental shall provide Executive with credited years of service under the supplemental executive retirement plan described in paragraph 3.5 of the Employment Agreement ("SERP"), as if Executive had worked at Continental one additional year after the Effective Date. This will result in Executive receiving a total of three additional credited years of service under the SERP. Executive hereby elects, pursuant to paragraph 3.5(iii) of the Employment Agreement, to take an Early Retirement Benefit under the SERP in the form of a Lump-Sum Payment (as such terms are defined in the SERP) payable on the first day of the month following the Effective Date, and the Company hereby waives (i) the requirement that it receive such written election from Executive at least 15 days prior to the date of payment, and (ii) the 10% reduction in the amount of such payment otherwise provided for in the SERP.


In addition, Continental shall provide at no expense to Executive during his lifetime a parking place at IAH and RDU for as long as Continental serves IAH and RDU, respectively, and has such parking available to it.


Executive agrees that all his outstanding option grants, restricted stock grants and PARs awards under the Retention Program are listed on Exhibit A hereto. As provided in the applicable option grant documents, all options will vest effective on the Effective Date and Executive will have until the close of business one year after the Effective Date (or, if earlier, the expiration of the relevant option period) to exercise his options. At the close of business on the date that is one year after the Effective Date (or, if earlier, on the expiration of the relevant option period), all of Executive's options will expire whether or not exercised.


As provided in the applicable grant documents with respect to Executi ...