General Counsel Employment Agreement

EXHIBIT 10.5


AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this "Agreement") is made by and between ExpressJet Holdings, Inc. , a Delaware corporation ("Company"), and Scott R. Peterson ( ?Executive").

W I T N E S S E T H:

WHEREAS, Company and Executive previously entered into that certain Employment Agreement, dated as of October 16, 2003 (the "Original Agreement"), setting forth the terms of Executive's employment with Company;

WHEREAS, the parties amended and restated the Original Agreement in its entirety with an Agreement dated as of March 14, 2005 (the "Existing Agreement"); and

WHEREAS, the parties now desire to have this Agreement amend and restate the Existing Agreement in its entirety and supersede the Existing Agreement in all respects effective as of the date hereof (the "Effective Date ?), except for provisions relevant to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), which provisions shall be effective as of January 1, 2005;

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

ARTICLE I: EMPLOYMENT AND DUTIES

1.1 Employment; Effective Date . Beginning as of the Effective Date, Company agrees to employ Executive and Executive agrees to be employed by Company, at will of both Company and Executive, subject to the terms and conditions of this Agreement.

1.2 Position . From and after the Effective Date, Executive shall be employed in the position of Vice President, General Counsel and Secretary of Company and ExpressJet Airlines, Inc. and/or any successor to substantially all of the assets of ExpressJet Airlines, Inc. (ExpressJet Airlines, Inc. and any such successor shall be collectively referred to herein as "ExpressJet"), or Company shall employ, or cause a subsidiary of Company to employ, Executive in such other position or positions as the parties may mutually agree.




1.3 Duties and Services . Executive agrees to serve in the positions referred to in paragraph 1.2 and to perform diligently and to the best of his abilities the duties and services appertaining to such offices as determined by Company or ExpressJet, as applicable, as well as such additional duties and services which Executive from time to time may be reasonably directed to perform by Company or ExpressJet, as applicable.

ARTICLE II: AT-WILL EMPLOYMENT RELATIONSHIP

2.1 Employment At-Will . The employment relationship between Executive and Company is at-will. Each of Executive and Company shall have the right to terminate the employment relationship at any time and for any reason whatsoever, with or without cause, and without any liability or obligation except as may be expressly provided in this Agreement.

2.2 Notice of Termination . If Company or Executive desires to terminate Executive's employment hereunder, it or he shall do so by giving written notice to the other party that it or he 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.

ARTICLE III: COMPENSATION AND BENEFITS

3.1 Base Salary . During the period of this Agreement, Executive shall receive a minimum annual base salary equal to the greater of (i) $200,000.00 or (ii) such amount as Company and Executive mutually 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 semi-monthly.

3.2 Bonus Programs . Executive shall participate in each cash bonus program maintained by Company or ExpressJet 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 which is not less than the participation level made available to similarly situated employees of the Company or ExpressJet.




3.3 Other Company Benefits . Executive shall be entitled to no less than four weeks of vacation benefits annually. During his employment hereunder, 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 employees of Company or ExpressJet. 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, Inc. ("Continental") or ExpressJet flights, flight privileges 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 similarly situated employees generally; provided, however, that Company shall not change, amend or discontinue Executive's Flight Privileges (as defined below) without his prior written consent. Executive will be eligible to receive restricted stock and stock option grants under the Company's equity incentive plans in accordance with Company policy and Executive's position within the Company. For all purposes, including without limitation compensation, benefits and perquisites, Executive shall be given credit for all time spent in the employment of Continental. Company shall use its reasonably commercial best efforts to provide Platinum Elite OnePass Cards (or similar highest category successor frequent flyer cards) in Executive's and Executive's spouse's names for use on the System and a membership for Executive and Executive's spouse in Continental's Presidents Club (or any successor program maintained in the System).

ARTICLE IV: TERMINATION OF EMPLOYMENT

4.1 Company's Right to Terminate . Company, acting pursuant to an express resolution of the Board of Directors of Company (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 which renders him mentally or physically incapable of performing the material duties and services required of him hereunder on a full-time basis during such period;




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

(iv) for Executive's material breach of any provision of this Agreement which, if correctable, remains uncorrected for 30 days following receipt by Executive of written notice by Company of such breach; or

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

4.2 Executive's Right to Terminate . Executive shall have the right to terminate his employment under this Agreement at any time for any of the following reasons:

(i) the assignment to Executive of duties materially inconsistent with the duties associated with the positions described in paragraph 1.2 as such duties are constituted as of the Effective Date;

(ii) a material diminution in nature or scope of Executive's authority, responsibilities, or title from those applicable to him as of the Effective Date;

(iii) the occurrence of material acts or conduct on the part of Company or ExpressJet or their respective officers or representatives which prevent Executive from performing his duties and responsibilities pursuant to this Agreement;

(iv) Company or ExpressJet requiring Executive to be permanently based anywhere outside a major urban center in Texas;

(v) the taking of any action by Company or ExpressJet that would materially adversely affect the corporate amenities enjoyed by Executive on the Effective Date;

(vi) a material breach by Company of any provision of this Agreement which, if correctable, remains uncorrected for 30 days following receipt by Company of written notice of such breach by Executive; or




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

4.3 Payment Obligations Absolute . Except as otherwise provided in this Agreement, Company's obligation to pay Executive the amounts and to make the arrangements provided in Article Vshall 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 him or anyone else. 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 Article V, and, except as provided in paragraph 5.4 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, joint venturer, or otherwise) 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 Article V.

ARTICLE V: EFFECT OF TERMINATION

5.1 Effect on Compensation. Upon termination of the employment relationship by either Executive or Company, regardless of the reason therefor, all compensation and all benefits to Executive hereunder shall terminate contemporaneously with termination of his employment, except that:

(i) if such termination shall constitute an Involuntary Termination prior to a Change in Control or after the date that is eighteen months after a Change in Control (as such terms are defined in paragraph 5.4), then, subject to the provisions of paragraphs 5.2 and 5.3, (1) Company shall provide Executive with Flight Privileges (as such term is defined in paragraph 5.4) for the remainder of Executive's lifetime, (2) Company shall provide Executive and his eligible dependents with Continuation Coverage (as such term is defined in paragraph 5.4) for the Severance Period (as such term is defined in paragraph 5.4), (3) Company shall pay Executive the Monthly Severance Amount (as such term is defined in paragraph 5.4) each month during the Severance Period, (4) Company may, in the sole discretion of the Board of Directors or the Human Resources Committee of the Board of Directors pay Executive a pro rata target bonus as soon as administratively practicable after the decision to pay the pro rata target bonus is made but in no event later than two and one half months after the end of the calendar year in which the decision is made, and (5) Company shall provide Executive with Outplacement Services (as such term is defined in paragraph 5.4); and




(ii) if such termination shall constitute an Involuntary Termination or a termination by Executive of Executive ?s employment with Company for any reason encompassed by paragraph 4.2 and such termination occurs within eighteen months after a Change in Control, then, subject to the provisions of paragraphs 5.2 and 5.3, (1) Company shall provide Executive with Flight Privileges (as such term is defined in paragraph 5.4) for the remainder of Executive's lifetime, (2) Company shall provide Executive and his eligible dependents with Continuation Coverage (as such term is defined in paragraph 5.4) for the Severance Period (as such term is defined in paragraph 5.4), (3) Company shall pay Executive on the effective date of such termination a lump-sum cash payment in an amount equal to the sum of (A) a pro rata bonus payment (notwithstanding any contrary provision in Company's cash bonus program) equal to the amount of Executive's annual base salary pursuant to paragraph 3.1 at the rate in effect immediately prior to Executive's termination of employment, multiplied by the target rate under Company's cash bonus program at the rate in effect for the year of termination, and further multiplied by a fraction, the numerator of which is the number of days which have elapsed in the calendar year during which the date of termination falls, and the denominator of which is three hundred sixty-five (365), plus (B) two times the Executive's base salary pursuant to paragraph 3.1 at the rate in effect immediately prior to Executive's termination of employment, plus (C) two times the amount of Executive's annual base salary pursuant to paragraph 3.1 at the rate in effect immediately prior to Executive's termination of employment, multiplied by the target rate under Company's cash bonus program in effect for the year of termination, and (4) Company shall provide Executive with Outplacement Services (as such term is defined in paragraph 5.4). Notwithstanding anything contained herein, if Executive's employment with Company is terminated by reason of an Involuntary Termination and a Change in Control occurs within six months following such Involuntary Termination, then Executive shall, in lieu of the payments and benefits described in paragraph 5.1(i) above, be entitled to the payments and additional benefits described in this paragraph 5.1(ii), with such additional payments and increased benefits to be delivered as if such Involuntary Termination had occurred on the same date as, and immediately following, the Change in Control; and

(iii) if such termination is a result of Executive's retirement under Company's retirement policy or program generally applicable to similarly situated employeesof Company, then Company shall, subject to the provisions of paragraph 5.3, provide Executive with Flight Privileges for the remainder of Executive's lifetime.




No remuneration or wages earned by Executive during or with respect to the Severance Period (whether earned as an employee, independent contractor, sole proprietor, joint venturer, or otherwise) shall reduce Company's obligation to pay the Monthly Severance Amount each month during the Severance Period. Company may set off any amounts owed by Executive to Company or any of its affiliates against any obligation to pay the Monthly Severance Amount.

5.2 Liquidated Damages . In light of the difficulties in estimating the damages to Executive in the event Executive's employment is subject to an Involuntary Termination, Company and Executive hereby agree (for themselves and for the express and directly enforceable benefit of Company's affiliates) that the payments and benefits, if any, to be received by Executive pursuant to paragraph 5.1 shall be received by Executive as liquidated damages. Payment of the compensation and benefits to Executive pursuant to paragraph 5.1 shall be offset against any amounts to which Executive may otherwise be entitled under any and all severance plans and policies maintained by Company or its affiliates.

5.3 Certain Post-Termination Obligations . As part of the consideration for the compensation to be paid under this Agreement, to protect the trade secrets and confidential information of Company and its affiliates that have been and will in the future be disclosed or entrusted to Executive, the business opportunities of Company and its affiliates that have been and will in the future be disclosed or entrusted to Executive, the relationships with customers of Company and its affiliates that have been and will in the future be developed in Executive, the special training and knowledge relevant to Executive's employment responsibilities and duties, or the business goodwill of Company and its affiliates that has been and will in the future be developed in Executive, and as an additional incentive for Company to enter into this Agreement, Company and Executive agree to the post-termination obligations set forth in this Agreement. All payments and benefits to Executive hereunder shall be subject to Executive's compliance with the following provisions for two full years after the termination of Executive's employment hereunder:

(i) Executive shall, upon reasonable notice, furnish such information and proper assistance to Company and its affiliates as may reasonably be required in connection with any litigation in which it or any of its affiliates is, or may become, a party;




(ii) Executive will not, directly or indirectly for Executive or for others, in any geographic area or market where Company or any of its affiliates are conducting any business or have during the previous 12 months conducted such business:

(a) engage in any Competitive Business (as defined below);

(b) render advice or services to, or ot ...