Exhibit 10.27
6-1162-JCM-500
United Air Lines, Inc.
Executive Offices
P. O. Box 66100
Chicago, IL 60666-0100
Subject: Letter Agreement No. 6-1162-JCM-500 to
Purchase Agreement No. 1663 -
Buyer Participation in Model 777/PW4077
1000 Cycle Flight Validation Program
Gentlemen:
Reference is made to Purchase Agreement No. 1663 dated
as of December 18, 1990 (the Purchase Agreement)
between The Boeing Company (Boeing) and United Air
Lines, Inc. (Buyer) relating to the sale by Boeing and
the purchase by Buyer of thirty-four (34) Model 777-222
aircraft (hereinafter referred to generally as the
Aircraft).
Reference is also made to Letter Agreement 6-1162-DLJ-
935 to Purchase Agreement No. 1663 (entitled "Early
Approval of One Hundred Eighty (180) Minutes Extended
Range Operations with Two-Engine Aircraft").
This Letter Agreement will become part of the Purchase
Agreement and will evidence our further agreement with
respect to the matters set forth below.
All terms used herein and in the Purchase Agreement,
and not defined herein, shall have the same meanings as
in the Purchase Agreement.
1. Early ETOPS Approval Plan and Memo of
Understanding
1.1 Early-ETOPS Approval Plan
In order to support Buyer's Early-ETOPS Operational
Approval Program for 180-minute ETOPS with the
Aircraft, Boeing and Buyer have jointly developed the
United Airlines 777-222 Early-ETOPS Operational
Approval Program (Document D044W002-2, Volume 2, the
"Plan") that includes operations and activities
necessary for Buyer to obtain Operator Approval from
the Federal Aviation Administration to conduct Extended
Range Operations (as such terms are defined in Letter
Agreement No. 6-1162-DLJ-935). For avoidance of doubt,
the November 30, 1993 revision of the Plan has been
approved by the Federal Aviation Administration and is
the baseline for this agreement.
1.2 Memorandum of Understanding
The Memorandum of Understanding (the "MOU") dated
February 14, 1991, Attachment A hereto, describes how
Boeing and Buyer intend to work together, and outlines
the cooperation between Buyer, Boeing, Pratt & Whitney
and Garrett Auxiliary Power Division (Garrett),
required to support the design objective and to support
Buyer's application for Operator Approval to conduct
Extended Range Operations with the Aircraft.
1.3 Precedence of Purchase Agreement
Nothing in the MOU or the Plan shall be deemed to amend
or otherwise modify the provisions of the Purchase
Agreement, except as specifically provided in this
Letter Agreement.
1.4 Non-Exclusivity of MOU and the Plan
Neither, the MOU, nor the Plan, nor this Letter
Agreement, are intended to prevent other airlines from
participating in similar activities to support their
efforts to obtain Early-ETOPS approval.
2. 1000 Cycle Flight Validation Program
2.1 The 1000-CVP is designed to expose the
Model 777 and its systems to environmental conditions
and in-flight variables that are likely to occur in the
first one to two years of airline operations. The 1000-
CVP is also designed to accomplish those tasks
necessary to support Boeing's application to the
Federal Aviation Administration for One-Hundred-Eighty
(180) Minute ETOPS Type Design Approval (the "TDA").
During the latter part of the 1000-CVP, Buyer may
participate in the maintenance, operation and servicing
of the airplane, as contemplated in the MOU; regulatory
authority representatives may also participate in
the 1000-CVP.
Buyer's participation in the 1000-CVP is described in
Part 5 of the Plan and has been entitled by Buyer as
Early ETOPS Validation and Integration Program (the
"EEVIP"). Part 5 of the Plan is attached hereto as
Attachment B.
The Plan contemplates 1000-CVP Type operations on
Buyer's route network during Buyer's participation in
the 1000-CVP; the presently contemplated schedule of
such operations consists of a minimum of ninety (90)
flight sectors to be operated from April 3, 1995
through May 2, 1995. These ninety (90) flight sectors
will be preceded by approximately eight-hundred-ten
(810) flight sectors conducted primarily by Boeing, and
succeeded by the balance of the one-thousand (1000)
cycles, approximately one-hundred (100) flight sectors,
again conducted primarily by Boeing.
The route network for the EEVIP is currently
contemplated to be limited to Dulles (IAD), Denver
(DIA), Los Angeles (LAX), Miami (MIA), and Honolulu
(HNL). The EEVIP schedule is set forth in Section 5.3
of Part 5 of the November 30th, 1993 revision of the
Plan and is attached hereto as Attachment C (the
"Schedule").
2.1.1 Buyer agrees that it will exert its
best reasonable efforts during the EEVIP to accomplish
the primary objective of the Plan, TDA. At a minimum,
Buyer agrees to accomplish the following conditions, to
the exclusion of other objectives, unless such
conditions are otherwise modified by Boeing:
(a) All flight cycles
shall include a minimum of ten minutes
at cruise; and
(b) Ninety or more of
the flight cycles shall include cruise
segments of two or more hours; and
(c) Nine or more of
such ninety or more flight cycles shall
include cruise segments of nine or more
hours; and
(d) The target altitudes of the
EEVIP flight cycles shall be greater than
35,000 feet in order to satisfy TDA
requirements; and
(e) All flight cycles
must include a complete shutdown of
both engines for a minimum of five
minutes prior to initiation of the next
flight cycle; and
(f) All other requirements
contemplated in the Plan appropriate for
completion during the EEVIP.
2.2 Certain terms and conditions related to
Buyer's participation in the 1000-CVP which have been
negotiated between Buyer and Boeing are documented in
this Letter Agreement, as contemplated on page 3 in
Letter Agreement 6-1162-DLJ-935.
2.3 Ownership and Control of 1000-CVP Aircraft
2.3.1 Operation of the 1000-CVP Aircraft
During the 1000-CVP, including during the EEVIP, the
ownership and control of the Aircraft used in the 1000-
CVP (the "1000-CVP Aircraft") at all times will remain
with Boeing. During all 1000-CVP flights the final
authority and responsibility for the 1000-CVP Aircraft
at all times will remain with the Boeing pilot who will
occupy one of the two pilots' seats; during Buyer's
1000-CVP participation the second seat may be occupied
by a Buyer pilot or, when required, by a regulatory
authority pilot/observer. Regulatory authority pilots
and observers will have priority over Buyer's pilots
and/or Buyer's observers. No revenue passengers or
cargo will be carried on the 1000-CVP Aircraft, and
Boeing may, to the extent that it reasonably deems
necessary, limit or control (i) access to the 1000-CVP
Aircraft on the ground and (ii) the carriage of
participants, passengers or cargo on 1000-CVP Aircraft
flights; for avoidance of doubt, Boeing and Buyer
contemplate that only personnel engaged in performing
the 1000-CVP will normally be carried on 1000-CVP
Aircraft flights.
2.3.1.1 During the non-EEVIP portion
of the 1000-CVP, flight operations will be conducted in
accordance with Boeing's procedures. Buyer's
documentation (MMEL, DDG, Flight Manual, etc.) may be
used during this portion, but Boeing's procedures will
be utilized for the non-EEVIP portion of the 1000-CVP
Aircraft release and operation.
2.3.1.2 Flight operations during the
EEVIP will be conducted in accordance with Buyer's
procedures. Should the Boeing Pilot-in-Command request
a deviation from Buyer's flight operation procedures,
such request will be honored.
2.3.1.3 Buyer's Participation During The 1000-CVP
Buyer's participation during the EEVIP portion of the
1000-CVP, subject to the conditions stated in the
previous paragraph, will be fully accommodated. Boeing
recognizes that Buyer wishes to conduct certain
evaluations during the non-EEVIP portion of the 1000-
CVP and that access to the 1000-CVP Aircraft is
essential for those evaluations. Boeing agrees that
Buyer may participate in the non-EEVIP portion of the
1000-CVP, subject to the following conditions:
(i) Buyer will submit to Boeing a
list of personnel, each identified for a specific
evaluation. Participation on any particular flight
will be limited to those personnel identified as linked
to an evaluation scheduled to be conducted on that
flight.
(ii) The personnel identified in
(i) above will be required to attend a one-time class
conducted by Boeing Flight test familiarizing the
personnel with Boeing Flight Procedures, Test Conduct
and Protocol.
(iii) Buyer's personnel will be
expected to rigorously adhere to the procedures
identified in (ii) above. All actions by Buyer's
personnel on board the 1000-CVP Aircraft must be
coordinated with the Boeing Test Director prior to the
Test Flight, and be part of an approved Test Plan.
(iv) All evaluations contemplated
by Buyer during the non-EEVIP portion of the 1000-CVP
will be on a non-interference basis; in the case of any
conflict between Buyer's evaluation and the objectives
of the 1000-CVP, the 1000-CVP objectives will have
precedence.
2.3.1.4 Participation Limited to Essential Personnel
The 1000-CVP Aircraft will be operated under an FAA
Experimental Category Airworthiness Certificate. FAA
Order 8130.2, Paragraph 139 b (13) states that "No
person may be carried in this aircraft during flight
unless that person is required for that flight."
Specific purposes mentioned in the order include:
Research and Development, Showing Compliance With
Reulations, and Crew Training.
Buyer agrees that all of Buyer's personnel will meet
the requirements as stated above. This condition
applies to the entire 1000-CVP, including the EEVIP.
The final determination of whether an individual meets
the criteria of "Essential Personnel", as defined
above, will be left to the discretion of the Pilot-in-
Command.
2.3.2 Maintenance of the 1000-CVP Aircraft
2.3.2.1 Responsibility
It is contemplated in the Plan that Buyer's maintenance
crews will observe during the non-EEVIP portion of the
1000-CVP and will conduct all maintenance during the
EEVIP. It is anticipated that, during the EEVIP,
Buyer's mechanics will primarily utilize Buyer's
Maintenance Manuals and other documents. When Buyer's
maintenance crews participate in the 1000-CVP, they
shall work in conjunction with, and under the
supervision of, Boeing crews.
2.3.2.2 Tooling and Maintenance Procedures Checkout
Boeing intends to perform validation checks of various
items of Ground Support Equipment ("GSE") tools and
maintenance procedures. Buyer's mechanics may observe
these validations. If Buyer chooses to perform its own
tooling or maintenance procedure validations, they must
be accomplished during the EEVIP, not to interfere with
the TDA Schedule.
2.3.2.3 Records
During the non-EEVIP portion of the 1000-CVP, Boeing
mechanics will perform all maintenance activity on the
1000-CVP Aircraft and will use standard Boeing forms
and records. During the EEVIP portion of the 1000-CVP,
Buyer's mechanics may utilize Buyer's records and forms
for such maintenance; however, Boeing will maintain a
separate record on Boeing's standard form to record
that such work was accomplished. Only Boeing records
will be the official documentation of the 1000-CVP
Aircraft in support of TDA.
2.3.2.4 Oversight
During the EEVIP portion of the 1000-CVP, Boeing
reserves the right to require Buyer's mechanics to
utilize Boeing procedures if, in Boeing's sole opinion,
an unsafe or inappropriate action is contemplated.
2.3.2.5 Engine Change
To satisfy TDA requirements, verify engine change
tooling (specifically the Boeing-designed bootstrap),
and to afford Buyer's mechanics the opportunity to
develop experience, it is agreed that an engine change
will be scheduled. Such engine change will be
performed by Buyer's mechanics under the supervision of
Boeing personnel.
2.3.2.5.1 Location and Date
Boeing and Buyer agree that the engine will be changed
at Denver International Airport (DIA) on or about April
24th, 1995.
2.3.2.5.2 Spare Engine Title and Ownership
The spare engine (plus QEC) installed on or about April
24th, 1995 on the 1000-CVP Aircraft will be owned and
provided by Boeing. This engine will be delivered by
Boeing to DIA on April 10th, 1995. The engine that is
removed will be returned to Seattle by Boeing to be
held in reserve as a Spare. Subsequent to the 777
Flight Test Program, the engine will be refurbed and
installed on a production Aircraft.
2.3.2.5.3 Spare Engine Cradle
To accommodate the engine coming off the 1000-CVP
Aircraft, Buyer will provide a suitable spare engine
cradle.
2.3.2.6 Fueling
Boeing agrees to use Buyer's guidelines for fueling the
1000-CVP Aircraft. If, however, a condition exists
that, in Boeing's sole opinion, jeopardizes the 1000-
CVP Aircraft or the safety of individuals, Boeing
reserves the right to limit such use, or revert to
Boeing standard fueling procedures.
2.3.3 Numerous details of the roles and
responsibilities ascribed to Boeing and Buyer during
the 1000-CVP have been gathered in Boeing Document
D044W003, "1000-Cycle 'Airline Type' Maintenance and
Operating Procedures - Agreement". Revision A of this
document, dated December 22, 1993, together with
Buyer's approval of Appendix I, constitute the agreed
Operating Procedures for the 1000-CVP. In the event of
conflict between this Letter Agreement and Document
D044W003, this Letter Agreement shall take precedence.
3. Allocation of 1000-CVP Costs.
3.1 Costs of the Basic 1000-CVP
As part of its basic program support for the Model 777
aircraft program, Boeing has committed to perform a one
thousand (1,000) cycle flight validation program for
each of the three basic Model 777 aircraft/engine
combinations. The 1000-CVP satisfies such commitment
with respect to the Model 777 aircraft equipped with
Pratt & Whitney PW4077 series engines. Accordingly, as
a general principle the basic costs of performing the
1000-CVP are the responsibility of Boeing. Boeing and
Buyer specifically agree that the following costs are
the responsibility of Boeing:
3.1.1 Wages payable to Boeing's employees
engaged directly or indirectly in the performance of
the 1000-CVP, and benefits or taxes payable with
respect to Boeing's employment of such employees;
3.1.2 Transportation, accommodation and
living expenses payable with respect to Boeing's
employees engaged directly or indirectly in the
performance of the 1000-CVP;
3.1.2.1 Expedited transportation
required for Boeing's employees in support of the 1000-
CVP (as is contemplated in Paragraph 3.4);
3.1.3 Spare parts, including Engine spare
parts, (for which Boeing will make arrangements with
Pratt & Whitney), and spare parts for BFE systems other
than the BFE cabin systems identified in paragraph
3.2.3 below, installed in the 1000-CVP Aircraft during
the 1000-CVP (provided, that although during the EEVIP
Boeing will maintain an inventory of airframe spare
parts, and will also carry a kit of spare parts on
board the 1000-CVP Aircraft, if necessary to support
the EEVIP Boeing may draw spare parts from Buyer's
inventories, and such spare parts shall thereafter be
returned to Buyer with compensation for such use at a
reasonable mutually agreed lease rate or replaced in
kind; and provided further, that Buyer shall accept
reasonable proposals by Boeing to provide repaired
parts previously removed from the 1000-CVP Aircraft as
such replacements in kind or to install such repaired
parts in subsequent production Aircraft); provided
further that such repaired parts installed in
subsequent production aircraft are serviceable and
retain life limits (if any) as though such repaired
parts were new and unused.
3.1.4 Fuel, lubricants and hydraulic fluid
consumed during the 1000-CVP;
3.1.4.1 During the EEVIP, Buyer will
fuel and service the 1000-CVP Aircraft, or have such
performed by Buyer's contracted provider. Such fuel
and service will be charged to Boeing at Buyer's
standard internal rate plus applicable taxes;
3.1.5 In addition to the expenses described
in this paragraph 3.1, all other costs are for Boeing's
account (except those identified in paragraph 3.2 below
and the use of Buyer's facilities and equipment as
contemplated in subparagraph 3.1.8 below) of
maintaining and repairing the 1000-CVP Aircraft during
the 1000-CVP (including the EEVIP), specifically
including third party charges for repair and servicing
of parts (including testing and return of "no fault
found" parts) removed from the 1000-CVP Aircraft,
including Engine spare parts (for which Boeing will
make arrangements with Pratt & Whitney) and BFE spare
parts (other than spare parts for the BFE cabin systems
identified in paragraph 3.2.3 below, which shall be the
responsibility of Buyer).
3.1.6 Refurbishment of the 1000-CVP Aircraft
after the 1000-CVP (as such refurbishment is
contemplated and described in Letter Agreement 6-1162-
DLJ-955 to Purchase Agreement No. 1663).
3.1.7 Landing fees incurred by the 1000-CVP
Aircraft during the 1000-CVP (including applicable
taxes thereon):
3.1.8 The following expenses, incurred for
the use of facilities, equipment and personnel of third
parties not affiliated with Buyer during the 1000-CVP:
3.1.8.1 Ramp charges, gate charges,
ground handling charges and similar costs;
3.1.8.2 Costs related to ground handling equipment
and other airline equipment;
3.1.8.3 Hangar costs associated with use of hangar(s) for
maintenance, repair or storage of the 1000-CVP Aircraft, storage
charges and similar costs;
3.1.8.4 Taxes applicable to the costs in this paragraph
3.1.8
3.1.9 Boeing Field Service representation at
those locations listed in Paragraph 2.1.
3.2 Cost of Buyer's Participation in the 1000-CVP
Buyer's costs to participate in the 1000-CVP are the
responsibility of Buyer. Boeing and Buyer specifically
agree that the following costs are the responsibility
of Buyer:
3.2.1 Wages payable to Buyer's employees
engaged directly or indirectly in the performance of
the 1000-CVP, and benefits or taxes payable with
respect to Buyer's employment of such employees;
3.2.2 Transportation, accommodation and
living expenses payable with respect to Buyer's
employees engaged directly or indirectly in the
performance of the 1000-CVP;
3.2.3 BFE spare parts for the following
cabin systems, to the extent (i) that such systems
consist of BFE and (ii) that Buyer desires that such
systems be operated and maintained during the 1000-CVP
and elects to provide spare parts to support
maintenance of such systems:
Passenger Telephone System (23-18)
PA and Entertainment - CMS (23-30);
Passenger Entertainment - Video (23-32);
Passenger Entertainment System (23-34);
Flight Interphone System (23-51);
Oxygen (35-10/30);
Passenger Seats (25-25);
Floor Coverings (25-27);
Buffet/Galley (25-30/31);
Cargo Compartments (25-50);
Emergency (25-60/63/64); and
Fire Protection (26-20/26);
3.2.4 Costs of use during the EEVIP of
(i) facilities and equipment of Buyer, including any
maintenance and engineering operations presently
conducted by Buyer which Buyer transfers to separate
business entities prior to the EEVIP, and (ii) services
of personnel of Buyer and its affiliates, including:
3.2.4.1 Hangar costs associated with
use of hangar(s) for maintenance, repair or storage
of the 1000-CVP Aircraft, storage charges and similar
costs during the EEVIP;
3.2.4.2 Gate charges associated with
operation of the 1000-CVP Aircraft during the EEVIP;
3.2.4.3 Costs related to ground
handling equipment and other airline equipment during the
EEVIP;
3.2.4.4 Costs for training Boeing
and/or Buyer personnel on equipment or functions that
may be unique to a particular airport used during the EEVIP;
3.2.4.5 Costs for providing storage
areas for Boeing flight test spares and tools to support
the 1000-CVP Aircraft and office and working areas for
Boeing support personnel during the EEVIP, each in
reasonable proximity to the area(s) where the 1000-CVP
Aircraft is to be maintained;
3.2.4.6 Incremental costs associated
with a Buyer-initiated planned diversion to any location
other than those listed in Paragraph 2.1;
3.2.4.7 Costs for onboard food,
beverages, and other passenger related amenities for all
passengers on flights that are flown during the EEVIP.
3.2.5 Boeing Field representation requested
by Buyer at any locations other than those listed in
Paragraph 2.1 and, at the time of the EEVIP, not then
staffed by Boeing;
3.2.6 If available, Buyer will provide any
BFE software which would ordinarily be installed on an
Aircraft by or on behalf of Buyer after delivery,
including but not limited to AIMS software and
Navigational Data Base software.
3.3 Although Boeing and Buyer contemplate
that from time to time the Plan and the 1000-CVP may be
revised by mutual agreement, for avoidance of doubt
neither Boeing nor Buyer shall be obligated to agree to
any revision of the Plan or the 1000-CVP which would
have the effect of significantly increasing the costs
of the 1000-CVP to be borne by that party.
3.4 Travel Assistance
To the extent practicable, the personnel of Boeing and
Buyer performing the EEVIP, and cargo required to
support the EEVIP (consisting of Boeing spare parts and
tool inventories, BFE spare parts and the personal
baggage of the Boeing and Buyer 1000-CVP personnel),
will be transported on the 1000-CVP Aircraft. To the
extent that such personnel and cargo cannot practicably
be transported on the 1000-CVP Aircraft, Buyer will
make reasonable efforts to transport such personnel and
cargo on a priority basis on Buyer's regularly
scheduled service. Boeing will pay Buyer's standard
fares for Boeing passengers and cargo transported in
this manner.
4. 1000-CVP Planning and Arrangements
4.1 As a general principle the planning and
arrangements for performing the 1000-CVP are the
responsibility of Boeing. In particular, Boeing will
assume responsibility for arrangements for 1000-CVP
operations, including the 1000-CVP operations in which
Buyer participates. However, with respect to the
EEVIP, Buyer agrees that, when Buyer's established
relationships and on-site personnel and resources will
enable Buyer to make arrangements more easily, or to
make more advantageous arrangements, upon Boeing's
reasonable request, Buyer will exert reasonable efforts
to make necessary arrangements on Boeing's behalf (and
for Boeing's account) for the EEVIP or assist Boeing in
making such arrangements, as appropriate.
Generally, at EEVIP locations where Buyer has existing
contracts, Buyer will purchase fuel and other goods and
services for the EEVIP under such contracts whenever
such purchase would minimize cost of the EEVIP. Boeing
will reimburse Buyer promptly upon submission of the
paid invoices to Boeing at the following address:
Boeing Commercial Airplane Group
P.O. Box 3707, Mail Stop 14-HF
Seattle, Washington 98124-2207
Attention: Mr. Norman E. Jepsky,
Supervisor, Flight Test
Supporting Services
Telephone: (206) 655-0220
Facsimile: (206) 655-3694
Before finalizing any logistical arrangement exceeding
U.S. $5,000 in expected aggregate value, Buyer shall
obtain concurrence of Boeing at the above address.
For avoidance of doubt, hotel accommodations and other
travelling expenses of the Boeing participants in the
EEVIP shall be arranged for payment directly by the
individual participants, unless billing to Buyer and
rebilling to Boeing is significantly more advantageous
to Boeing, and is permitted by the respective vendor.
In addition, Boeing and Buyer contemplate that Buyer
shall assist Boeing with any emergency arrangements, or
contingency arrangements, for support of the 1000-CVP
Aircraft in the event of accident or damage to the 1000-
CVP Aircraft or other difficulties arising during the
EEVIP.
4.2 Boeing and Buyer agree that the Plan assumes
that arrangements can be made for the EEVIP; in the
event that 1000-CVP operations at particular locations
prove to be unreasonably difficult to arrange or
unreasonably costly, Boeing and Buyer shall mutually
agree upon revisions to the Plan to substitute more
practicable operations.
4.2.1 During the course of EEVIP operations,
Buyer shall be responsible for ensuring that the
appropriate landing slots, gates, and other operational
requirments are allocated at the five stations
identified in Paragraph 2.1.
4.3 Buyer will have deployed trained personnel,
spare parts inventories and support equipment at the
stations to be served by Buyer's initial 777 operations
as appropriate to support its Model 777 aircraft in
revenue service.
4.4 Buyer will appropriately familiarize Boeing's
1000-CVP personnel (including but not limited to flight
crew and maintenance personnel) with Buyer's operations
and procedures, at no charge to Boeing.
5. Realization of Additional Objectives During 1000-CVP
5.1 Primary Objective
Boeing and Buyer agree that the primary objectives of
the 1000-CVP are to ensure the delivery of ETOPS
capable and service-ready Model 777 aircraft to Buyer,
and to demonstrate the reliability of PW4000-powered
Model 777 aircraft in support of applications by Boeing
for ETOPS Type Design Approval and Reliability
Determination. Other objectives are secondary, and
will be pursued during the 1000-CVP (including the
EEVIP) solely under conditions which in Boeing's
reasonable judgment meet the following criteria (the
"1000-CVP Inclusion Criteria"): the pursuit of a
secondary objective will not: (i) interfere with nor
jeopardize such primary objectives of the 1000-CVP, nor
(ii) lengthen the 1000-CVP nor (iii) otherwise
significantly increase the cost of the 1000-CVP
(including the EEVIP).
5.2 Boeing recognizes that if the Federal
Aviation Administration imposes additional
requirements on Buyer to obtain Operator Approval
to conduct Extended Range Operations with the
Aircraft, and such additional requirements are not
the fault of Boeing, Buyer may desire to revise
the 1000-CVP. Boeing will work with Buyer to
satisfy such additional requirements during the
1000-CVP, subject to agreement of the Parties to
modify, if necessary, the 1000-CVP Inclusion
Criteria set forth above.
* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
5.3 Boeing recognizes that Buyer presently
desires to gain cabin service experience during the
EEVIP with some of the BFE cabin systems identified in
paragraph 3.2.3 above. Boeing will work with Buyer to
satisfy this secondary objective during the 1000-CVP,
subject to the 1000-CVP Inclusion Criteria set forth
above. To gain such experience Buyer desires that
cabin crew personnel, and possibly other personnel, of
Buyer participate in some EEVIP flights by simulating
passenger service. However, Buyer recognizes that the
airworthiness certification under which the
CVP-Aircraft operates during the 1000-CVP and the
insurance coverage in effect during the 1000-CVP may
restrict the number of personnel permitted on 1000-CVP
flights or otherwise limit the cabin service experience
which can be obtained during the 1000-CVP, including
the EEVIP.
* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
5.4 During the 1000-CVP Boeing and Buyer each may
desire to conduct sales, marketing and public relations
activity involving the 1000-CVP and the
1000-CVP Aircraft. Boeing and Buyer will work together
to satisfy such secondary objectives during the
1000-CVP, subject to the 1000-CVP Inclusion Criteria
set forth above.
* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
During sales, marketing and public relations activity
involving the 1000-CVP and the 1000-CVP Aircraft,
Boeing and Buyer agree to maintain the confidentiality
of each other's information in accordance with
paragraph 8.2 below.
* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
6. Contingencies
6.1 Aircraft Certification During 1000-CVP
The 1000-CVP, and particularly the EEVIP, as
contemplated in the Plan assume that Boeing will
succeed in making practicable arrangements for
airworthiness certification of the 1000-CVP Aircraft
during the 1000-CVP (including the EEVIP) and to
otherwise comply with all applicable laws and
regulations. ("Practicable arrangements" are defined
as being within the context of our ongoing dialogue
with the FAA, including the normal procedures for
applying for, and obtaining, either an experimental or
type certificate.) Boeing agrees to make reasonable
and timely efforts to arrange for conduct of the 1000-
CVP under an experimental airworthiness certificate or
make other practicable arrangements for airworthiness
certification of the 1000-CVP Aircraft and to otherwise
comply with all applicable laws and regulations. In
the event that Boeing can not make practicable
arrangements, Boeing and Buyer shall mutually agree to
revisions to the 1000-CVP (including the EEVIP) to
facilitate practicable arrangements for airworthiness
certification of the 1000-CVP Aircraft. If Boeing and
Buyer can not agree on such revisions, or if regardless
of such revisions, Boeing cannot make practicable
arrangements for airworthiness certification of the
1000-CVP Aircraft and otherwise comply with all
applicable laws and regulations, Boeing may in its
reasonable discretion, and only to the extent
reasonably necessary, cancel part or all of the 1000-
CVP.
6.2 Collective Bargaining Agreements
The 1000-CVP, and particularly the participation of
Buyer's maintenance personnel in the 1000-CVP, as
contemplated in the Plan, assume that Boeing will
succeed in making practicable arrangements under its
collective bargaining agreements to facilitate the 1000-
CVP. In the event that Boeing can not make practicable
arrangements, Boeing and Buyer will mutually agree to
revisions to the 1000-CVP to conform to Boeing's
collective bargaining agreements. If Boeing and Buyer
can not agree on such revisions, or if regardless of
such revisions, Boeing can not make practicable
arrangements for the 1000-CVP under its collective
bargaining agreements, Boeing may in its reasonable
discretion restrict the participation of Buyer's
maintenance personnel to the EEVIP, or, only to the
extent reasonably necessary, cancel part or all of
the 1000-CVP.
Should Buyer fail to make practicable arrangements with
Buyer's collective bargaining groups, Buyer may
request, and Boeing shall agree to, a revision to the
1000-CVP to the extent reasonably necessary, without in
any way violating the provisions of Paragraph 5.1
herein.
7. Applicability of Purchase Agreement Provisions
Boeing and Buyer specifically agree that the 1000-CVP
shall be flight test activity authorized under the
Purchase Agreement, and that particular provisions of
the Purchase Agreement are applicable to 1000-CVP
occurrences, including, but not limited to, Paragraphs
7.1 through 7.5.
7.1 Excusable Delay
Boeing and Buyer reaffirm that any delay resulting from
any of the causes specified in Article 6.1 of the
Purchase Agreement which occurs during the 1000-CVP,
and which otherwise would be an Excusable Delay, shall
be an Excusable Delay; and that the termination
provisions in Articles 6.2 through 6.6 shall apply to
the 1000-CVP Aircraft.
7.2 Authorized Use of Aircraft
Boeing and Buyer reaffirm that the use of an Aircraft
as the 1000-CVP Aircraft is authorized under Article
9.3 of the Purchase Agreement, subject to the
provisions of Letter Agreement No. 6-1162-DLJ-955,
including but not limited to paragraph 1 ("Test
Aircraft Refurbishment") and paragraph 5
("Accomplishment of "C" Check") thereof.
* CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
8. Confidentiality
8.1 In accordance with Letter Agreement No. 6-
1162-DLJ-832, the terms and conditions of this Letter
Agreement are and will remain strictly confidential
between Boeing and Buyer and will not under any
circumstances be disclosed by either party to any third
party (except, as reasonably necessary, to its
respective employees and professional advisers, and to
Boeing's insurers in connection with the insurance
described in paragraph 7.3 above and to the Federal
Aviation Administration) without the prior written
consent of the other party, such consent not to be
unreasonably withheld.
8.2 Boeing and Buyer recognize that the Model 777
development program, the "Working Together"
partnership, and the 1000-CVP are unique and
unprecedented activities. Boeing and Buyer agree to
work with each other in good faith to maintain the
confidentiality of the other party's drawings,
specifications, models and other information related to
the 777 development (including development of 777
procedures, documentation and computer systems) which
has not otherwise entered the public domain through
authorized disclosure by the party with proprietary
rights to such information.
8.2.1 The obligation of confidentiality set
forth in 8.2 above shall not apply to information
which:
(a) is independently known to Boeing or
Buyer at the time of the transfer, as evidenced by
Boeing or Buyer's written records; or
(b) becomes known to the receiving
party prior to such use or disclosure without similar
restrictions from an independent source having the
right to convey it; or
(c) is independently developed by the
receiving party.
8.2.2 Boeing Flight Test Data
During the CVP Buyer shall incidentally have access to
Boeing flight test data recorded during the CVP
operations, and Boeing shall have access to data
recorded by Buyer's Aircraft Maintenance Information
System ("AMIS"). Boeing deems all flight test data to
be extremely sensitive and highly proprietary to
Boeing. Buyer considers all information received by
Boeing with respect to AMIS to be extremely sensitive
and highly proprietary to Buyer Accordingly, Buyer
agrees to keep flight test data, obtained by Buyer from
the 1000-CVP Aircraft's Quick Access Recorder (QAR), or
AMIS, or otherwise during the CVP, and Boeing agrees to
keep information received by Boeing with respect to
AMIS in confidence, and disclose it only in accordance
with the provisions of paragraph 8.1 above
The provisions set forth in this paragraph 8 relate
only to confidential information made available as a
result of the 1000 CVP and do not supercede the
provisions of Part D Technical Data and Documents of
Exhibit C to the Purchase Agreement.
8.2.3 Buyer's Interior Configuration
Buyer's Model 777 interior configuration and
installations are commercial, confidential information
that could be deemed of value to its competitors.
Boeing will accordingly restrict access to the 1000-CVP
Aircraft by third parties unless Buyer otherwise gives
Boeing its permission.
8.2.4 The Plan
For avoidance of doubt, Boeing and Buyer agree that the
Plan itself has been and will continue to be disclosed
to other parties, including regulatory agencies and
other prospective 777 operators, and that the actual
performance of the 1000-CVP will be open to observation
by such parties as may be mutually agreed by Boeing and
Buyer.
If the foregoing correctly sets forth your
understanding of our agreement with respect to the
matters treated above, please indicate your acceptance
and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Joseph Mc Aleer
Its Attorney-in-Fact
ACCEPTED AND AGREED TO as of
the 9th day of December, 1994.
UNITED AIR LINES, INC.
By /s/ D. Hacker
Its Senior Vice President - Finance