Continental Retirement Plan Summary Plan Description - ALTA United

Continental Retirement PlanKey #3: The Benefit You Receive from the Plan is Based on a FormulaIf you are eligible for the Plan – and vested in the Plan – you will receive a benefit from the Plan.The benefit you receive will be calculated based on three important elements.First Element: Final Average CompensationThrough the years, Continental pays you compensation. The Plan uses an average of your eligiblecompensation when calculating your benefit.Eligible CompensationThe chart below shows the types of compensation eligible for use in the Final AverageCompensation portion of the pension formula.Included as Eligible CompensationNot Included as Eligible Compensation Regular payBefore-tax 401(k) Plan contributionsBefore-tax contributions for regular orflexible benefitsShift differentials*Gainsharing*Overtime pay after 1998 Bonuses or commissionsOvertime paid prior to 1999Severance payReimbursements, allowances oradvancements for expenses (per diem)Taxable (imputed) income gained throughgroup life insuranceNon-cash or incentive compensationProfit sharingWelfare or qualified plan benefitsOn-time bonuses*As defined by payroll policy in effect on December 28, 1988.Calculating the AverageFinal Average Compensation refers to the average of the highest five consecutive years out of thefinal 10 years you work for the Company. For many employees, the “highest five” years are the finalfive years of employment.Specifically, final average compensation is the greater of: The highest average of the eligible compensation you received during the five consecutivefull calendar years (at least 48 weeks of pay) out of your last 10 years of employment withthe Company after January 1, 1984. (If you have less than five full calendar years of eligibleemployment, your final average compensation will be the average for all your full calendaryears of such employment.)OR 5The highest average of the eligible compensation you received during any five consecutivecalendar years of pay (regardless of whether they are full years or not) out of your last 10 yearsof employment with the Company after January 1, 1984.

Continental Retirement PlanSecond Element: Benefit ServiceThe Plan uses your service with Continental to calculate your benefit. How you earn years of benefitservice changed in 1999.Before February 1, 1999After January 31, 1999Beginning December 28, 1988:You earned a full year of benefit service creditYou earned one day of benefit service credit for for every calendar year in which you wereevery day counted as service – as described on credited with at least 2,000 hours of service.page 2.You earned a fractional year of benefit serviceIf you were employed on December 28, 1988:(equal to your hours of service divided byYou earned benefit service credit beginning on 2,000) for calendar years in which you had lessSeptember 1, 1988.than 2,000 hours of service.If you meet the conditions described on page4: You earned benefit service credit as early asJanuary 1, 1984.If you meet the conditions described on page4: You earned benefit service for all of youremployment with the Company.Your benefit service did not include any period during which: You were employed by a predecessor company, except as described on page 4 Except as described on page 4, you worked for an affiliate or a division that was notparticipating in the Plan at the time you were employed You were assigned to a job category that is not eligible for this Plan, or You had already received a distribution of your accrued benefit.Third Element: Social Security Wage Base (SSWB)Each year Social Security sets a level of wage dollars above which it does not collect tax for futurebenefits. This is known as the Social Security Wage Base. This is the maximum amount of eligiblecompensation on which you and Continental pay income replacement Social Security taxes eachyear.Average Social Security Wage Base (ASSWB)The Plan uses the average Social Security Wage Base to calculate your benefit. This is the Averageof the SSWB for the 35-year period that ends the year before the year you reach the Social SecurityNormal Retirement Age (age 65 through age 67 depending on when you were born).6

Plan FormulaYour benefit will be calculated using this formula.1.19% of your FinalAverage Compensation 0.45% of your FinalAverage Compensationin excess of the AverageSocial Security Wage Base Years ofBenefitService up to30 YearsThis annual benefit is then divided by 12 to determine your monthly payments.Key #4: You Become Vested in (or Entitled to) Your Benefit Based on Your ServiceVesting means you have a right to receive a benefit when you leave the Company or retire. Youbecome vested in your benefit from the Plan when you complete five years of vesting service. Youalso become vested in the Plan if you are a participant and reach age 65.How you earn years of vesting service changed in 1999:Before February 1, 1999After January 31, 1999You earned one day of vesting service for every You earn one year of vesting service for anyday that the Plan counts as service as described calendar year in which you are credited with aton page 2.least 1,000 hours of service.You earn a partial year of vesting service foryears in which you are credited with less than1,000 hours of service (hours of service crediteddivided by 2,000).See page 2 for a description of how hours arecredited.Key #5: Your “Normal Retirement Age” to Receive Benefits from the Plan isAge 65Your normal retirement age is age 65. You can begin to receive benefits as of the first of the monthcoincident with or next following your 65th birthday. In most cases, your benefits will be suspendedif you choose to continue working after your normal retirement age of 65 in “disqualifyingemployment.”“Disqualifying employment” for this purpose is any employment that results in your being entitledto be credited for (a) at least forty Hours of Service for such calendar month; or (b) at least one hourof Service performed on each of eight or more days (or separate work shifts) in such month, if thePlan has not for any purpose determined or used the actual number of Hours of Service.7

Continental Retirement PlanKey #6: You May Take Early Retirement Before This Date and Receive a ReducedBenefitYou may retire early – and receive a reduced benefit – if: You are at least age 50 and have at least 20 years of vesting service or You are at least age 55 and have at least 10 years of vesting service.The earliest age you achieve either of these age and service requirements is your “EarlyRetirement Age.”If you retire early, you will receive a reduced benefit because you are expected to receive thatbenefit over a longer period of time. You may begin to receive early retirement benefits as of thefirst of any month between the day you take early retirement and age 65.The Plan will first calculate your normal retirement benefit – as of age 65 – then reduce this benefitfor each year you begin to receive benefits before age 65. The chart below shows how your benefitwould be reduced at different ages:Actual Retirement AgePercentage of Age 65 Benefit You 63%6269.29%6378.10%6488.25%If you are between the ages in the chart above (for example, age 51 and 6 months) when you retire,the percentage you receive will be adjusted for each month.8

Continental Retirement PlanKey #7: You May Wait to Take a Benefit from the PlanIf you continue to work beyond your normal retirement age, your benefit will be calculated usingyour compensation and benefit service as of your actual retirement date.You may begin to receive payments on the first day of any month after you leave the Company. Youmay not receive your benefit while you still work for the Company.Current laws require that, if you are no longer actively at work, you must begin to receive yourbenefit no later than the April 1 following the year you reach age 70½. You will be notified at yourmost recent address on file if this rule applies to you.If you do not begin receiving this mandatory distribution by the date required by law:You could be liable for a 50% excise tax on the amount that is not distributed on a timely basis. Youmay not roll over a mandatory distribution.If you work beyond age 70½:If you work beyond age 70½, your accrued retirement benefit will be actuarially increased for theperiod after age 70½.Key #8: When You Retire, the Plan Will Pay Your Benefit as an Annuity (MonthlyAmount) Unless You Choose an Optional Form of Payment Such as a Lump SumYou will automatically receive an annuity based on your marital status unless you choose anoptional form of payment such as a lump sum. If you are eligible for early or normal retirementwhen you leave the Company, you may choose a lump sum option. If your benefit has a value of 1,000 or less, your benefit will automatically be paid in a lump sum.Unless you are eligible for and elect the lump sum option or another optional annuity, the Plan willdefault your choice as shown in the chart below:If You Are SingleWhen You Begin to Receive BenefitsIf You Are MarriedWhen You Begin to Receive BenefitsYou automatically receive a life annuity.You automatically receive a 50% joint andsurvivor annuity.This pays a monthly benefit for as long as youlive. Payments stop when you die.This pays a reduced monthly benefit for as longas you live.If you die, your spouse will receive 50% of yourpayments for the rest of his or her life.To choose any option other than the 50% joint and survivor annuity, your spouse must irrevocablyagree to your choice by signing a notarized, written consent form.You may change your election of the form of payment at any time before you begin to receivebenefits as long as your spouse consents in writing witnessed by a notary public. You may not makea change, however, after you begin to receive benefits.To make your election, log on to Your Benefits ResourcesTM via myCOAIR – in the EmployeeBenefits Area – or directly at http://resources.hewitt.com/continental. You may also call theContinental Benefits Center - at 1-800-651-1007 between 8:00 a.m. and 5:30 p.m. Central time,Monday through Friday - after you officially initiate your retirement. In the meantime, take a look atthe optional forms of payment available to you.9

Your Choices forPayment OptionsYour BenefitLife AnnuityYou receive a monthly benefit for as long as you live. Paymentsstop when you die.(Automatic if You Are Singleand Make No Other Election)Joint and Survivor AnnuityYou receive a reduced monthly benefit for as long as you live.(50% is Automatic if You AreMarried and Make No OtherElection)When you die, your spouse will continue to receive 50%, 662/3%, 75% or 100% of your benefit until he or she dies. Youelect the percentage that your spouse receives.Lump SumYou receive the full value of your benefit in a one-time lumpsum.Available if you leave theCompany on or after theThis amount will be the actuarial equivalent of what you wouldearlier of the date you reach: have received as monthly payments.Age 50, at least 20 years ofvesting serviceSince you receive the full value of your benefit in a lump sum,your spouse will receive no additional benefits when you die.Age 55, at least 10 years ofvesting serviceAge 65Domestic Partner Joint and Survivor AnnuityWhen you retire, in addition to the optional forms of payment described above, you may electan optional domestic partner joint and survivor annuity. If you elect this form of payment, you willreceive a reduced monthly benefit for as long as you live, and when you die, your designateddomestic partner will continue to receive 50% of your benefit until he or she dies.Please see Key #9 below for more information on the requirements that must be met for yourpartner to be considered an eligible domestic partner for purposes of the Plan.Key #9: Special Circumstances May Apply to Your Benefits from the PlanIf You Receive Benefits You Face Tax ConsequencesIn general, benefit payments from the Plan will be subject to federal income taxes. They may besubject to state and local income taxes, too.If you elect a lump sum:Continental is required to withhold federal income taxes equal to 20% of the taxable portion ofyour payment, unless it is directly rolled over into a traditional IRA or eligible employer plan.If you are not at least age 55 at the time you leave Continental or at least age 59½ at the timepayment is made to you or another exception applies:Your distribution may be subject to a 10% early payment penalty tax in addition to regular incometaxes unless it is rolled over to an eligible retirement plan. Generally, your distribution will beeligible for rollover if it is paid as a single lump sum payment. More information on the additional10% tax is available on IRS Form 5329.You are responsible to comply with applicable federal, state and local tax laws and regulationswhen you receive the distribution. You will receive more information about the tax rules when yourequest a benefit. Because taxes are complicated and subject to change, you may want to consult atax advisor before you begin to receive benefits.10

Continental Retirement PlanIf You Leave the Company Before Early Retirement AgeEven if you leave the Company before Early Retirement Age, you are entitled to receive a benefit ifyou leave the Company after you are vested. Your benefit will be determined by the formula as ofthe date you leave.When you leave the Company before Early Retirement Age, you must wait to receive either anormal retirement benefit at age 65 — or request an early commencement benefit at age 55 (if youhad at least 10 years of vesting service) or age 50 (if you had at least 20 years of vesting service).The early retirement reduction shown in the chart on page 8 will apply. If you leave the Companybefore achieving these age and service requirements, the lump sum option will not be availableunless the vested value of your benefit is 1,000 or less. If the vested value of your benefit is 1,000or less, it will automatically be paid to you as a lump sum when you leave the Company.If You Become Disabled While Actively EmployedIf you become disabled, you will continue to earn years of benefit and vesting service as thoughyou were still an active employee until you qualify for early or normal retirement. Your final averagecompensation and average Social Security Wage Base will be determined as of the date youbecame disabled.This Plan will consider you disabled if either of the following situations occur:Before Age 55On or After Age 55You have an illness or injury that totally andpermanently prevents you from performing theduties of any occupation or employment.You have an illness or injury that totally andpermanently prevents you from performingthe duties of your prior normal occupation oremployment or any comparable occupation oremployment.You may retire as of the first day of the month after the later of (1) the date you became disabled;or (2) the date you are eligible to retire under this Plan. You stop accruing any benefits under thisPlan when you start to receive benefits from this Plan.If you incur a separation while disabled, and later recover, you must return to work within 60 daysfollowing your recovery, and remain at work for one year, in order to receive vesting or benefitservice for your period of disability.If you recover from a disability, are able to return to work, but do not return to work, you willreceive vesting and benefit service until your date of disability, but not beyond.If You Waive Survivor CoverageThe Plan pays a benefit to your spouse if you die before you begin to receive benefits. Thisis called “survivor benefit coverage.” To help pay the cost of survivor benefit coverage, yourretirement benefit is reduced by 0.25% per year for every year from when you leave the Companyuntil you begin to collect benefits.You may waive this survivor benefit coverage. Simply return the appropriate form to the ContinentalBenefits Center with your spouse’s irrevocable, notarized written consent.You may revoke the waiver at any time before your benefits begin and survivor benefit coveragetakes effect. The waiver is not effective if you remarry, so you would need to submit a new waiver ifyou again wish to waive coverage after your remarriage. Also, you must submit a new waiver whenyou attain 35 years of age if you previously waived survivor benefit coverage or if you terminateemployment before age 35 and waive survivor benefit coverage.11

Continental Retirement PlanIf You DieIf you die before payments begin and you were married and you did not waive survivor benefitcoverage as described on page 11, your spouse will receive a monthly annuity equal to thesurvivor’s portion of the benefit that would have been payable if you: Terminated employment with Continental on the earlier of the date you leave Continental orthe date of your death Elected to begin benefits at your earliest possible retirement date (or first of the monthfollowing death if you were already eligible), and Elected the 50% joint and survivor annuity.This benefit, subject to the reductions for early payment, will be payable for life to your survivingspouse. If you were actively employed and eligible for early or normal retirement at the time ofyour death, your spouse may elect a lump sum payment of the value of the survivor’s annuity.If you die before payments begin but you were not married, no benefit is payable. If you die afterpayments begin, the amount payable to your beneficiary depends on the form of payment youelect as listed on page 10.SituationRuleSurviving spouse dies before you would havebecome eligible for early retirement, or youwere not married when you died.No death benefit will be paid.You were not eligible to begin receivingbenefits at the time of your death.The death benefit will begin for your spouseas of the earliest date you would have becomeeligible for payment.You were eligible for early or normal retirementat the earlier of when you died or terminatedemployment with the Company.Your spouse has the option of electing toreceive payment as a lump sum or an annuitybenefit.You die when the surviving spouse portion ofyour vested benefit is 1,000 or less.Your spouse will receive an automatic lumpsum payment.You are a vested, terminated employee, andyou die before you begin to receive benefits.Your spouse will receive benefits when youwould have reached your Early Retirement Ageunless you waived surviving benefit coverage.Domestic Partner Survivor BenefitsIf you die or begin to receive Plan benefits on or after October 1, 2010, your domestic partnermay be eligible to receive domestic partner survivor benefits under the Plan. To be eligible, yourdomestic partner must be of the same sex, must be mentally competent to enter into contracts, atleast age 18, and the two of you must meet the following requirements for at least six months: Must not be married to or the legal domestic partner of anyone else,Must be each other’s sole domestic partner,Must live together in the same principal residence,Must be emotionally committed to each other and share joint responsibili

Continental Retirement Plan Contents The Keys to the Plan Page #1: You Must Be Eligible You must be employed by a workgroup covered by the plan and meet specific participation requirements. 1 #2: The Plan Counts Your Service With Continental The Plan counts your service as you work for Continental to credit Eligibility Service, Vesting