Exhibit 10.15(a)
AGREEMENT
The City and County of Denver ("CCD") and
Continental Airlines, Inc. ("Continental"), and United Air
Lines, Inc. ("United"), as signatory airlines ("Carriers")
pursuant to their respective Denver International Airport
("DIA") Airport Use and Facilities Lease Agreements with
CCD (sometimes hereafter the "Lease" or "Leases" as usage
requires) hereby agree as follows:
1. Continental Gate Lease Commitments: Continental
commits to leasing gates on Concourse A at DIA, on a
preferential use basis, pursuant to the further terms and
conditions hereof, in the number and location, as follows:
CARRIER NUMBER LOCATION LEASE TERM
Continental 10 A32, A34, A36, A38, A40, 5 years
A42, A44, A45, A47, A49
The locations and numbers specified above are intended to
be in lieu of the locations and numbers specified in
Continental's Lease, and such Lease will be revised to
reflect the appropriate deletions and additions, including
without limitation all associated operations and other
space; provided, however, that Continental will lease
terminal and concourse space totaling approximately
113,488 square feet (including club room, mail facility,
and all other space). All such concourse space shall be
located on Concourse A. The parties recognize and
acknowledge that a portion of the space included in
Continental's 113,488 square feet has not been
specifically identified as of the date of this Agreement
and that CCD will cooperate with Continental to designate
such particular space as best meets its needs and
objectives, provided that the final designation of space
shall be approved by CCD in the exercise of its reasonable
discretion. CCD and the Carriers expressly waive any
argument that the lack of specificity as to the identity
of the particular square feet leased renders any portion
of this Agreement unenforceable. Continental will have
the option to renew or not, in its sole discretion, and
without any liquidated damages payment, its lease for five
years at a reduced level of occupancy commensurate with
three gates and associated space on Concourse A,
consistent with any minimum space requirements for a three
gate lease that may be imposed generally upon airlines by
CCD at such time.
2. Rates and Charges: The methodology for calculating
airline rates and charges is hereby modified to reflect
the provisions of this Agreement and such modifications
are reflected on attached Exhibit A, which shall become
Revised Exhibit F to the leases of all signatory airlines;
provided, however, that in the event of any inconsistency
or ambiguity between this Agreement and Exhibit A hereto,
this Agreement shall control. Rates and charges shall
remain subject to the audit rights of all Carriers set
forth in paragraph 6 below. The Carriers agree that for a
period of five years CCD may (but is not required to)
include up to 215,000 square feet of unleased operational
and office space as "undeveloped space"; provided,
however, that as additional square footage is leased after
DBO, CCD agrees that it shall reduce such amount of
undeveloped space accordingly.
3. Increased Amortization: Except and only to the
extent, if any, that the rights of the owners of its
airport revenue bonds (including without limitation rights
arising from the rate maintenance covenant) are not
thereby materially impaired, CCD will cause, by January 1,
1997 (or as soon thereafter as possible consistent with
CCD's aforesaid obligations to owners of its airport
revenue bonds), amortization of Capital Fund contributions
to the planning, development, and construction of the new
airport project, which CCD represents to be approximately
$264 million as of the date hereof, over a thirty-year
term, which costs are currently to be amortized by CCD
over a fifteen-year term. In addition, to the extent that
United is reimbursed by CCD pursuant to the September 1,
1994 agreement between United and CCD, as amended on
October 14, 1994, for (1) payments to BAE Automated
Systems, Inc. for the costs of the modifications to the
automated baggage system, for amounts not to exceed $35
million, and (2) if CCD reimburses United for costs for
the modification of the automated baggage system paid to
parties other than BAE Automated Systems, Inc., for
amounts not to exceed $10 million, such amounts shall be
repaid to CCD by United over a thirty-year amortization
period effective as of the date of any such
reimbursements.
4. Right of First Refusal/Pedestrian Bridge: United
hereby releases any claim of right of first refusal, which
it has pursuant to its agreement with CCD, as to all gates
and other space on Concourse A, except gates A32, A34,
A36, A38, A40, A42, A44, A45, A47, and A49 and other space
related to such gates, as to which gates and space
United's right of first refusal shall continue, and fur-
ther, United releases any claims to any restrictions on
any aspect of the use, appearance or function of the
pedestrian bridge to Concourse A.
5. Certain Baggage System Issues:
a. Rates and Charges for Baggage Systems.
CCD and Carriers hereby agree that for
purposes of rates and charges at DIA there
are three separate and distinct baggage
systems known as the Concourse A Automated
Baggage System ("AABS"), the Concourse B, or
United Automated Baggage System ("UABS"),
and the Rapistan-Demag Backup Baggage System
(the "BBS"). Therefore, all rates and
charges for equipment and certain space
associated with the DIA baggage systems, as
defined and set forth herein, shall be
allocated on the basis of these three
separate systems as follows:
i. All baggage system equipment
(hardware) located on Concourse A ("A
Sortation Equipment") shall be part
of the AABS and shall be charged
exclusively to airlines operating
from Concourse A on the basis of
their respective passenger
enplanements. All space associated
with such A Sortation Equipment shall
be allocated to airlines operating
from Concourse A on the basis of such
airlines' rented square feet on such
concourse as a percentage of total
rentable square feet on such
concourse.
ii. All baggage system equipment
(hardware) located on Concourse B ("B
Sortation Equipment") shall be part
of the UABS and shall be charged
exclusively to airlines operating
from Concourse B. All space
associated with such B Sortation
Equipment shall be allocated to
airlines operating from Concourse B
on the basis of such airlines' rented
square feet on such concourse as a
percentage of total rentable square
feet on such concourse.
iii. All baggage system equipment
(hardware) located on Concourse C ("C
Sortation Equipment") as of DBO, but
not the space associated therewith
nor any subsequent C Sortation
Equipment or trackage, shall be a
part of and charged to the UABS and
shall be charged exclusively to
airlines operating from Concourse B;
provided, however, that if the C
Sortation Equipment is utilized by an
airline or airlines operating on
Concourse C, then said C Sortation
Equipment shall no longer be charged
to the airline or airlines operating
on Concourse B.
iv. All baggage system equipment
(hardware) for the AABS and the UABS
located in the landside terminal and
the tunnel, and space associated with
said hardware located in the landside
terminal, baggage system maintenance
areas, and all control room equipment
and certain space in the landside
terminal and tunnel for the AABS and
UABS (collectively the "Spine
Equipment and Space") shall be
allocated on the basis of 65% to the
UABS, and thus to airlines serving
Concourse B, and 35% to the AABS, and
thus to airlines serving Concourse A,
and shall be further allocated among
such airlines on the respective
Concourses on the basis of their
origination and destination passenger
traffic; provided, however, that
Continental, for itself, its
successors, and assigns, hereby
agrees that in the event it no longer
operates at DIA but remains an
operating airline during the 5 years
following DBO, it, or its successors
or assigns, shall be responsible to
pay, during such initial five-year
term, a share of the 35% of the Spine
Equipment and Space based on its
actual 1995 DIA origination and
destination passenger traffic, but
not less than 800,000 origination and
destination passengers. In the event
that Continental ceases operation
without a successor or assign, then
the 35% share of the Spine Equipment
and Space shall be paid as follows:
For each six-month period after the
commencement of the assessment of
charges for the AABS pursuant to
subparagraph a.vii hereof, the
Concourse A airlines shall
collectively pay 100% of their 35%
share of the Spine Equipment and
Space, unless the total origination
and destination traffic on
Concourse A is below 1.0 million
passengers. In that event, the A
Concourse airlines shall be charged
for the AABS share of the Spine
Equipment and Space costs, using the
1.0 million passenger level as the
"denominator" of origination and
destination traffic on Concourse A
for such six-month period and using
the airlines' actual origination and
destination traffic as the numerator,
with the resulting quotient
multiplied by the 35% charge for the
Spine Equipment and Space for that
six-month period. The balance of the
35% share of the Spine Equipment and
Space not charged to any airline
under this methodology shall, subject
to all prior requirements of CCD's
bond ordinances applicable to the
airport or airport system, be paid by
net revenues of DIA. If for any
reason DIA net revenues are
insufficient or otherwise cannot be
used to pay such costs, then each
Concourse A signatory airline shall
have the right to move to Concourse C
to the extent available space exists,
and be subject to rates and charges
as if such airline were on
Concourse C whether or not such
airline is actually able to obtain
space on such Concourse.
v. The parties recognize and acknowledge
that the 65/35 allocation of Spine
Equipment and Space costs is
desirable for the first 5 years after
DBO, but may not be desirable over a
longer term. Accordingly, at least 8
months prior to the end of the first
five years after DBO, any airline or
group of airlines representing at
least 40% of combined Concourses A
and B origin and destination traffic
may, with respect to the second
five-year period and thereafter,
cause CCD to charge the Spine
Equipment and Space to airlines
operating on Concourses A and B based
on such airlines' respective shares
of the combined A and B origination
and destination traffic. If this
right, as set forth herein, is
exercised, CCD shall change the
allocation as set forth in
subparagraph a.iv above to reflect
the provisions of this paragraph,
thus creating a common A/B system for
purposes of allocating Spine
Equipment and Space costs. If no
such right is exercised, then the
Spine Equipment and Space costs shall
continue thereafter to be allocated
as set forth in subparagraph a.iv of
this paragraph 5.
vi. If, at any time after DBO, a baggage
system, automated or otherwise, other
than the BBS, is constructed for
Concourse C, the costs of such system
shall not be charged, in whole or
part or in any way to airlines
operating from Concourses A or B and
such costs shall be allocated to a
separate cost center, to be charged
exclusively to Concourse C airlines
based on their respective origination
and destination traffic and, in
addition, an equitable share of any
common equipment and space shall be
allocated to such airlines to the
extent such common equipment and
space is utilized by a Concourse C
system.
vii. The Concourse A airlines' AABS rates
and charges for the A Sortation
Equipment, associated space, and for
the 35% of the Spine Equipment and
Space as set forth in subparagraphs
a.i and a.iv of this paragraph 5,
shall begin to be charged to such
airlines at the earlier of
(1) certification by CCD that the
AABS meets the performance standards
established in Contract F-300B as
modified by amendments and change
orders thereto through Change Order
14 or (2) November 15, 1995. Between
DBO and the assessment of rates and
charges for the AABS, as provided for
herein, said rates and charges shall,
subject to all prior requirements of
CCD's bond ordinances applicable to
the airport or airport system, be
paid from net DIA airport revenues.
viii. Any expenditures required to make the
AABS operational shall be paid by CCD
as part of its obligations under
Contract F-300B and the amendments
and change orders thereto. Any
additional expenditures, unless paid
for by CCD's share of net revenues,
for the AABS cannot be made without
the approval of signatory airlines
and their sublessees serving
Concourse A carrying at least 51% of
the origination and destination
traffic on such concourse. In no
event shall any expenditures for the
AABS, over and above that which is
currently approved in Contract F-
300B, including the amendments and
change orders thereto through Change
Order 14, be charged directly or
indirectly or in any way to United,
except to the extent United is
operating from Concourse A.
ix. The Concourse A airlines' obligation
to pay for the AABS as set forth in
subparagraph a.vii of this
paragraph 5, shall not constitute an
obligation of the Concourse A
airlines to use the AABS unless the
AABS meets the performance and
reliability criteria established in
F300-B, as amended, and change orders
thereto through the date hereof and
(1) the total actual annual
origination and destination traffic
on Concourse A exceeds 4.5 million
passengers, or (2) the airlines
carrying at least 51% of the
origination and destination traffic
on Concourse A (excluding United if
United operates from Concourse A)
elect to request the use of such
system.
b. Operations and Maintenance Costs.
Continental hereby agrees for itself and its
sublessees and CCD agrees that any other
airline operating from Concourse A, either
as a signatory or nonsignatory airline,
shall pay a pro rata share of the costs of
an operations and maintenance agreement for
the AABS, UABS, and the BBS on the following
terms and conditions:
i. For so long as the airlines operating
on Concourse A are not required to
use, or do not elect to use, the
AABS, such airlines shall not,
pursuant to this Agreement, be
responsible for, and shall not be
obligated to pay for, any portion of
the costs of the "O&M Agreement," as
defined in subparagraph b.ii below.
If the Concourse A airlines commence
the actual use of the AABS pursuant
to subparagraph a.ix above, then and
only then the following subparagraphs
shall apply.
ii. The operations and maintenance
agreement shall be the agreement
dated January 25, 1995 between United
and BAE Automated Systems, Inc.,
entitled Denver International Airport
Agreement for Operations, Maintenance
and Management Services, or any
substantially similar successor
agreement if the BAE contract is
terminated pursuant to its provisions
("O&M Agreement"), which O&M
Agreement shall be expanded to
include the AABS and that part of the
BBS serving Concourse A.
iii. The "O&M Agreement" shall not be
applicable to the C Concourse portion
of the BBS, and the Concourse C
carriers shall be separately
responsible for the O&M costs for
that part of the BBS which serves
Concourse C. If the AABS is not in
use by airlines on Concourse A, the
Concourse A airlines shall be
separately responsible for the O&M
costs for that part of the BBS
serving Concourse A.
iv. The parties acknowledge that the O&M
Agreement is a five-year agreement.
The Concourse A and B airlines agree
to pay for the cost of the O&M
Agreement, except those costs related
to the BBS, as follows:
A Carriers' B Carriers'
O&M Contract Segment Share Share
Management 35% 65%
Terminal/spine/control room 35% 65%
Concourse A 100% 0%
Concourse B 0% 100%
v. The O&M Agreement costs for any
portion of the BBS shall be allocated
pursuant to the formula for
allocation of the equipment costs for
the BBS.
vi. In the event that an automated system
is built, after DBO, for Concourse C
and if Concourse C airlines also join
in some portion of the O&M Agreement,
then the allocable shares of each
segment of the O&M Agreement shall be
adjusted on an equitable basis to
reflect the addition of such
airlines.
vii. The annual costs of the O&M Agreement
shall be established by United
pursuant to the provisions of the O&M
Agreement, provided however that the
annual budget for the segment of the
contract solely attributable to
Concourse A shall be determined by
the Concourse A airlines in the
manner provided in the O&M Agreement,
with a vote required to bind the
Concourse A airlines of a majority of
the signatory airlines and their
sublessees serving Concourse A,
cumulatively carrying at least 51% of
such airlines' Concourse A
origination and destination
passengers for the immediately
preceding calendar year (except 1994
calendar year Stapleton International
Airport passenger figures for such
Concourse A airlines shall be used
from DBO of DIA through the end of
1995).
viii. The airlines serving Concourse A
shall have the right to dispute the
allocation of budgeted costs among or
between contract segments of the O&M
Agreement, with a vote required to
bind the Concourse A airlines of a
majority of the signatory airlines
and their sublessees serving
Concourse A, cumulatively carrying at
least 51% of such airlines'
Concourse A origination and
destination passengers for the
immediately preceding calendar year
(except 1994 calendar year Stapleton
International Airport passenger
figures for such Concourse A airlines
shall be used from DBO of DIA through
the end of 1995).
c. Miscellaneous Baggage System Provisions.
i. The cost allocations provided for in
this paragraph 5 shall not result in
joint or joint and several liability
for any airline.
ii. CCD agrees that, except for
international arrivals, no airlines
will be allowed to locate on
Concourse A or to use Concourse A on
a charter basis or other limited
basis unless such airlines agree to
pay a fair and equitable share of the
AABS costs, Spine Equipment and
Space, and, if applicable pursuant to
subparagraph b above, their allocable
share of the O&M Agreement,
substantially on the basis set forth
above or on other fair and equitable
terms and conditions, with
appropriate adjustments for signatory
or nonsignatory status. CCD will
credit the AABS cost center to the
extent of such collected rates and
charges from charter or other limited
basis operations.
6. Audit Rights: Notwithstanding paragraph 2 above,
the Carriers will retain the right to audit any and all of
the amounts and the allocation of costs and cost centers
pursuant to the agreed upon rates and charges methodology,
and to dispute (i) such allocations to the extent
inconsistent with such methodology, and (ii) the amounts
of any charges to them. The Carriers also retain the
right to request annual audits.
CCD will follow such procedures and keep and maintain such
books, records and accounts as are necessary or required
under the provisions of the pertinent agreement or CCD's
bond ordinances applicable to the airport or airport
system. Such books, records and accounts will contain all
items affecting the computation of airline rentals, rates,
fees and charges, recorded in accordance with reasonable
accounting principles or procedures. All Carriers will
have the right, at any reasonable time and at their own
expense, until the expiration of three (3) years after the
termination of their respective use and lease agreements,
to examine and make copies of CCD's books, records and
accounts pertinent to such agreements.
Each Carrier agrees that the Auditor of CCD or any of the
Auditor's duly authorized representatives, until the
expiration of three (3) years after the termination of
each respective Carrier's Lease, shall have the right, at
any reasonable time and at its expense, to have access to
and the right to examine any books, documents, papers and
records of the Carrier pertinent to such agreement.
Nothing herein shall be construed to allow a change to the
baggage system cost allocation methodology in subparagraph
5.a.iv above.
7. Capitalization of Delay Costs: Subject to CCD's
obligations to the owners of its airport revenue bonds,
and consistent with CCD's obligations to United for
repayment of Delay Costs for the period March 10, 1994
through May 15, 1994, pursuant to Section 3.03 of the
agreement between CCD and United dated September 1, 1994,
as amended on October 14, 1994, CCD will use its best
efforts to capitalize delay costs incurred between
March 10, 1994 and May 15, 1994 and, if successful, will
then return to the airlines all amounts paid to date to
defray such costs. Subject to CCD's obligations to the
owners of its airport revenue bonds, CCD will include such
capitalized delay costs in the rate base for all carriers,
based on a capitalization period of not less than the term
of any bonds issued to finance such costs or 20 years,
whichever is greater. Notwithstanding the foregoing,
should CCD not return to United said Delay Costs amounts,
nothing herein shall waive United's rights under Section
3.03 of the aforesaid agreement, as amended.
8. Sublease Rights: As a special incentive for
Continental agreeing to commit to take more gates, as of
DBO, than the number of gates it requires as of DBO, and
in compromise of the disputes between the parties, CCD
will amend its policy on subleasing rights, which amended
policy will remain in effect no less than five years from
DBO, to conform to the following:
a. CCD will approve a request by
Continental to sublease any of its gates to
any other airline so long as (i) all other
available gates at DIA are leased to an
airline (other than the City's two
international Concourse A gates), or
(ii) Continental and the subleasing airline
are parties to a legitimate code-sharing
agreement;
b. In addition to the rights in "a" above,
CCD will approve a subleasing request by
Continental as to the seven gates and
associated space that are contemplated to be
subleased to Frontier and America West, if
any of such subleased gates and associated
space thereafter becomes vacant, so long as
the "replacement" subleasing airline is
either (i) a new entrant to DIA (not serving
DIA prior to such replacement sublease) or
(ii) an airline already serving DIA on
Concourse A who wishes to take one or more
additional gates on Concourse A, and no
other gates on such Concourse are available
to be leased by CCD to such airline at such
time.
c. CCD will approve a request by
Continental to sublease or enter into a use
agreement with respect to its club space or
mail sort facility on reasonable terms and
conditions related to the facilities.
d. No sublease for any space will release
an airline from its obligations under its
Lease, and such airline will remain
primarily liable unless CCD elects to
require an assignment of such airline's
Lease.
9. Releases: CCD and Continental, and their
subsidiaries, affiliates, representatives, agents,
officers, directors, employees, successors and assigns,
hereby mutually release and discharge each other from and
against any and all claims, demands, causes of action,
damages, losses or liabilities arising from or relating
to:
a. Any acts or omissions prior to the date
of execution of this Agreement, arising from
or relating to the Airport Use and
Facilities Lease Agreement, the Amendatory
Agreement, the Agreement on a New Airport,
as amended, or the March 16, 1994 Agreement
between CCD and Continental, including but
not limited to any failure by Continental to
occupy, or pay rates and charges on, any
gates or space in the terminal complex or
Concourse A at DIA prior to the date of
execution of this Agreement; and
b. any claim by Continental that CCD was
required to open DIA prior to February 28,
1995; and
c. any claim by Continental that CCD was
required to provide an "Integrated Automated
Baggage Handling System;" and
d. any claim by Continental that CCD failed
to coordinate or consult with Continental in
the planning, design, development and
construction of DIA, that CCD failed to
expedite completion, minimize costs and stay
within its budget, and that CCD failed to
perform as a reasonably prudent airport
operator in the planning, design,
development, and construction of DIA; and
e. any claim by CCD against Continental for
rates and charges at DIA in excess of those
required by or pursuant to this Agreement,
or by agreements not modified, amended or
superseded by this Agreement, it being
expressly agreed that CCD shall withdraw
invoices for rates and charges at DIA
previously submitted to Continental for the
months of March and April 1995, and CCD
shall reissue to Continental invoices for
March and April 1995 as if this Agreement
had then been in full force and effect as of
DBO
This provision shall not be construed to release any
claims arising from any breach of this Agreement or any
claims not specifically released herein. The foregoing
releases shall not affect or release in any way the
parties' rights under paragraph 6 of this Agreement, the
exercise of such rights, or the consequences of the
exercise of such rights. CCD shall, upon payment of
amounts due from Continental pursuant to subparagraph 9.e
of this Agreement and other amounts due, owing and
outstanding as of May 1, 1995 regarding three special
facility leases for facilities at Stapleton and four
support facilities at DIA, cause to be dismissed, without
prejudice except to the extent of the claims released, the
claims filed against Continental in the matter City and
County of Denver, Colorado v. Continental Airlines, Inc.,
Civ. 95-S-419 (D. Colo. filed February 22, 1995).
10. Binding Terms: This Agreement is binding on the
parties hereto and Continental shall be entitled to rely
hereon in order to occupy and to give up for occupancy
premises in the locations and numbers specified in
paragraph 2 above, together with associated operations
space.
11. Bond Ordinance: This agreement and any agreement
contemplated hereby will be in all respects subject and
subordinate to any and all City bond ordinances applicable
to the airport and airport system and to any other bond
ordinances which hereafter may amend, supplement or
replace such ordinances; except to the extent that any
ordinances that amend, supplement, or replace such
ordinances impair the rights of the Carriers under this
Agreement. The parties acknowledge and agree that all
property subject to any agreement which was financed by
the net proceeds of tax-exempt bonds is owned by CCD, and
the Carriers which are a party thereto agree not to take
any action that would impair, or omit to take any action
required to confirm, the treatment of such property as
owned by CCD for purposes of Section 142(b) of the
Internal Revenue Code of 1986, as amended. In particular,
the Carriers agree to make an irrevocable election
(binding on themselves and all successors in interest) not
to claim depreciation or an investment credit with respect
to any property subject to any agreement which was
financed by the net proceeds of tax-exempt bonds and will
execute such forms and take such other action as CCD may
reasonably request in order to implement such election.
12. Revenue Credit Split: The annual "revenue credit"
for DIA, if any, to be divided between the Capital
Improvement Account and the Airline Revenue Credit
Account, shall be divided as follows:
Capital Airline
Improvement Revenue
Years from DBO Account Share Credit Share
0-5 20% 80%
6-11 25% 75%
12- 50% 50%
13. CCD Use of Available Office Space: CCD agrees that
for so long as the currently available office or other
unleased space at DIA is available for office space at
DIA, it will not cause to be built any additional office
space over and above existing space, at DIA for the
purpose of use by CCD employees or agents at DIA.
14. Sixth Runway: CCD will proceed with the completion
of Runway 16R - 34L and related taxiways in two phases.
In the first phase, CCD will complete the rough grading in
FY95-96 utilizing the existing AIP #09 Grant for $10
million and the $6 million required as matching funds,
which funds shall come from the proceeds of 30-year bond
sales or the Capital Fund. In the second phase, CCD will
complete the remainder of the final grading, paving,
lighting and related work to provide a complete
operational unit, only if: (i) its operational
effectiveness, utilizing computer simulation SIMMOD
(current version), is proven to result in annual
operational cost savings that equal or exceed the annual
debt service and operating and maintenance expenses of
this phase of the sixth runway project; or (ii) signatory
airlines that account for at least 51% of total landed
aircraft weight during the previous fiscal year approves;
or (iii) the FAA funds 75% of the entire cost of the
remainder of the sixth runway project.
15. Execution by Counterparts: This agreement may be
signed in two or more counterparts, each of which shall be
deemed an original.
16. Conflicts With and Amendments of Existing Leases
and Other Agreements: In the event of any inconsistency
between the Carriers' Leases, or any other agreements
between Carriers and CCD and the terms hereof, this
Agreement shall control, supersede, and amend any such
inconsistent or contrary provisions, but all provisions in
such leases or agreements not inconsistent with the terms
and provisions hereof shall remain in full force and
effect.
17. Condition; Final Approval: This Agreement is
conditioned on CCD obtaining the written consent of a
numerical majority of the signatory airlines and a
majority of the signatory airlines in terms of rentals,
rates, fees and charges paid in the preceding fiscal year,
pursuant to the General Provisions Section set forth in
the Rate-Making Procedures and Reestablishment Part of the
Airport Use and Facilities Lease Agreements of such
signatory airlines. In addition, this agreement is
expressly subject to, and shall not be or become effective
or binding on CCD until executed by CCD and an executed
copy has been delivered to at least one of the Carriers.
18. Effective Date: For purposes of rates and charges
assessed to airlines at DIA, this Agreement shall be
deemed to be effective as of May 1, 1995; provided,
however, that as part of the compromise of the litigation
pending between Continental and CCD, Continental's rates
and charges for March and April, 1995, shall be calculated
as if this Agreement were effective as of DBO.
19. DBO: "DBO" as used herein is February 28, 1995.
ATTEST: CITY AND COUNTY OF DENVER
______________________________ By_________________________
ARIE P. TAYLOR, Clerk and Mayor Wellington E. Webb
Recorder, Ex-Officio Clerk of
the City and County of Denver Dated:_____________________
Dated:_______________________
RECOMMENDED AND APPROVED:
APPROVED AS TO FORM: By_________________________
Manager of Public Works
DANIEL E. MUSE, Attorney for
the City and County of Denver Dated:_____________________
By____________________________ By_________________________
Assistant City Attorney Manager of Aviation
Dated:________________________ Dated:_____________________
REGISTERED AND
COUNTERSIGNED:
By__________________________
Auditor
Dated:______________________
ATTEST:
___________________________
Secretary
CONTINENTAL AIRLINES, INC. UNITED AIR LINES, INC.
By /s/ Gordon M. Bethune By /s/ Stuart I. Oran
Gordon M. Bethune Stuart I. Oran
Title: Chief Executive Officer Title Executive Vice
President - Corporate
Affairs and General
Counsel
Dated: April 3, 1995 Dated: April 3, 1995
MUTUAL RELEASE
Continental Airlines, Inc. ("Continental") and United
Air Lines, Inc. ("United") hereby grant releases to each
other covering all claims of any nature arising out of or
resulting from any or all of the following: (i)
modifications of the "Integrated Automated Baggage Handling
System" (as defined in Contract F-300B) pursuant to the
agreement dated September 1, 1994 between the City and
County of Denver, Colorado ("CCD") and United, as amended
October 14, 1994; and (ii) the failure of Continental to
occupy, or pay rates and charges on, any gates or facilities
in the terminal complex or Concourse A at DIA except to the
extent of Continental's obligations under the Agreement
between and among Continental, United, and CCD, executed by
Continental and United of even date herewith; provided,
however, that in the event such Agreement does not become
effective by April 17, 1995, this mutual release shall
become null and void in its entirety unless further extended
by mutual written agreement of Continental and United.
CONTINENTAL AIRLINES, INC. UNITED AIR LINES, INC.
By: /s/ Gordon M. Bethune By: /s/ Stuart I. Oran
Gordon M. Bethune STUART I. ORAN
Title: Chief Executive Officer Title: Executive Vice
President
Corporate Affairs
and General Counsel
Dated: April 3, 1995 Dated: April 3, 1995
EXHIBIT A TO AGREEMENT AMONG
CITY AND COUNTY OF DENVER,
UNITED AIR LINES, INC., AND
CONTINENTAL AIRLINES, INC.
(Revised Exhibit F to Leases)
DENVER INTERNATIONAL AIRPORT
AIRLINE RATE-MAKING METHODOLOGY
General Rate-Making Concepts
The City will use a "compensatory" methodology to establish Terminal
Complex rental rates. The Airlines will pay the fully allocated cost of
the space that they lease in the Landside Terminal building and airside
concourses.
Landing fees will be established according to a "cost center residual cost"
methodology, under which the airlines will pay the costs of the Airfield,
after first deducting airfield revenues from other sources (primarily
general aviation landing fees and fuel flowage fees).
Rate-Making Procedures at the Airport
At the Airport, the City intends to use cost accounting concepts and rate-
making procedures as described in the following sections.
Cost Center. Direct (revenue-producing) cost centers to be
established for the New Airport are to include the following:
Terminal Complex -- All levels of space, including the
pedestrian bridge to Concourse A, the clerestory in Concourse
B, public escalators, elevators and moving walkways in the
Landside Terminal and airside Concourses A, B, and C.
Airline Tenant Finishes and Equipment - Airline space finishes
and equipment, ticketing facilities, loading bridges,
communications equipment, baggage and flight information
display systems, apron level commuter facilities and baggage
sortation systems which shall include related equipment and
space within Concourses A and B (and additional concourses as
such sortation systems are operational), and approved
modifications to the automated baggage systems. Sub-cost
centers will be established for the Landside Terminal, the
international facilities, each airside concourse and each
airline as applicable.
Joint Use Facilities - All space and related equipment in the
Landside Terminal and Concourses allocated to Tug Circulation
and common use facilities, (including, but not limited to, pre-
conditioned air facilities, triturators, etc.). The apron
level on Concourse C shall be included in the Concourse C tug
circulation space (excluding the space occupied by the baggage
carrousels on the Concourse C Apron).
Baggage Claim -- All bag claim space and equipment in the
Landside Terminal including carrousels, and input conveyors and
related inbound baggage handling space in the Landside
Terminal.
Spine Equipment and Space -- The inbound and outbound automated
DCV baggage systems (AABS and UABS), including their equipment
and related space (excluding the Tunnel space allocated to the
AGTS and Tunnel cost center) in the Landside Terminal and in
the Tunnel from the Landside Terminal to the Concourses,
separately serving Concourse A (the "AABS") and separately
serving Concourse B (the"UABS"), including the costs of the
maintenance space, control room equipment and related control
room space, (excluding the costs of baggage sortation system
equipment and space in the concourses and the costs of approved
modifications to the automated systems which are included in
the baggage sortation for each concourse).
Backup Baggage System -- The outbound conveyor baggage system
and equipment, including all costs of baggage equipment, and
structural/construction modifications/costs to accommodate the
Backup Baggage System and related operations, tug circulation
and odd size lift space in the Landside Terminal, related
maintenance space and the space in the parking structure used
for the Backup Baggage System.
AGTS and Tunnels -- The Automatic Guideway Transit System
("AGTS"), including vehicles and equipment, the AGTS tunnels
and the baggage and tug tunnels between the Landside Terminal
and the airside concourses and tunnel modifications to
accommodate increased tug and cart operations.
International Facilities -- International gates on Concourse A
and related holdrooms, sterile circulation space, ramp areas,
operations space and the FIS area in the Landside Terminal, and
the international portion of the Connector to Concourse A.
Concourse Ramp Area -- The aircraft parking aprons and pushback
zones located adjacent to the airside concourses.
Airfield Area -- The runway and taxiway system, undeveloped
acreage and 50% of the costs incurred to develop the North
Cargo Site prior to DBO.
Public Parking Area - All space allocated for public parking in
the parking structure and all other public parking lots
(excluding the cost of the parking structure space exclusively
dedicated to the Backup Baggage System which will be allocated
to the Backup Baggage System cost center).
Employee Parking Area -- The employee parking lot(s).
Fueling System - The fuel storage and distribution system,
including hydrant fueling pits at the aircraft parking aprons.
Commercial Vehicle Facilities -- The surface parking area and building
to be used for staging commercial vehicles and the dedicated
commercial roadway serving the Terminal Complex. Commercial vehicles
include hotel/motel courtesy vans, taxis and limousines.
Rental Car Facilities -- Areas and roadways provided for Rental Car
operations not in the Terminal Complex.
Cargo Area -- The joint use air cargo facilities (including apron,
building and truck parking areas) and other areas provided for air
cargo carriers and freight forwarders.
Airline Maintenance and Support Area -- Areas provided for airline
maintenance facilities, cargo facilities and inflight kitchens.
Airport Mail Facility -- Areas provided for the Airport mail facility
to be constructed by the U.S. Postal Service.
Additional Concourses -- Costs related to all levels of space and
associated apron areas of any airside concourses in addition to
Concourses A, B and C shall be allocated to new cost centers to be
established.
Indirect (nonrevenue-producing) cost centers are to include:
Access, Terminal, and Service Roadways -- Pena Boulevard, other
secondary access roads, the terminal area roadways, the terminal
curbsides, the perimeter circulation roadway, and other secondary
internal roadways.
Airport Maintenance -- Airport maintenance facilities and indirect
(unallocated) maintenance expenses.
Airport Administration -- Airport administrative facilities and
administrative expenses.
Aircraft Rescue and Fire Fighting -- The rapid response stations,
structural fire station(s) and ARFF operating expenses.
Certain Cost Center Allocations
The net requirement of the Terminal Complex will be recovered through
rental rates. Net Terminal Complex requirements will be divided by total
rentable space in the Terminal Complex to determine the average rental rate
per square foot of rentable space. Airlines will be charged this average
rate for space that they lease. Undeveloped space in the Terminal Complex
shall not be considered rentable space in computing the average rental
rate. Space costs associated with the FIS area, international facilities,
and AGTS and tunnel areas, baggage claim and baggage systems shall be
assigned at the average Terminal Complex rental rate to the appropriate
costs centers.
The net costs of the Ramp Area including pushback zones will be recovered
through separate ramp fees assessed on a per-lineal-foot basis measured two
hundred and fifty (250) feet from the exterior walls of each concourse.
Commuter aircraft ramp fees will be calculated based on 50% of the sum of
the per-lineal-foot measurement of the commuter facility ramp area.
The net costs of the Airfield Area will be recovered through landing fees
assessed on the basis of the total landed weight of all aircraft using the
Airport.
International fees on arriving international flights will be assessed on a
per deplaning international passenger basis to recover costs allocable to
the International Facilities cost center.
Fueling system charges will be distributed 10% equally and 90% on a
gallonage basis among airlines to recover all of the costs associated with
the fueling system.
Charges for the AGTS, the AGTS tunnels, and the baggage and tug tunnels
between the landside terminal and the airside concourses will be assessed
among airlines on the basis of their respective originating and destination
passengers at the Airport for the preceding three-month period.
Baggage Claim space will be costed at the average rental rate in the
Terminal Complex. This amount will be added to the Baggage Claim cost
center costs. Charges for the Baggage Claim cost center will be allocated
among airlines on the basis of their respective deplaned destination
passengers for the preceding three-month period.
Landside Terminal space allocated to the Backup Baggage System will be
costed at the average rental rate of the Terminal Complex. This space
shall be allocated based on Airline rented square footage in the Landside
Terminal and charged to the Airline Tenants. Space in the Public Parking
Area will be costed at the average cost per square foot of the Parking
Structure, and, when applicable, will be added to the Backup Baggage System
cost center. Charges for the Backup Baggage System cost center, including
equipment, structural/construction costs and related space as described
above, will be allocated to a sub-cost center for each of the five modules
presently developed in the Terminal and Parking Structure (additional
modules will be added when developed). The costs of each module shall be
charged to the airline(s) leasing or using those facilities. In the event
the Backup Baggage System equipment and/or space is jointly used by two or
more airlines, such costs will be allocated among such airlines on the
basis of their proportional number of carrousels in the module exclusively
used by each airline to the total number of carrousels in their module.
Furthermore, if a carousel is jointly used by two or more airlines, the
costs allocated to such carousel will be further allocated to each carrier
using the carousel based on their proportional share of originating
passengers.
The cost of the Parking Structure will be allocated to each module based on
the square footage of that module used for the Backup Baggage System.
However, the airlines will not be charged for such costs until the average
number of cars in the Parking Structure exceeds 12,000 for 22 consecutive
days.
Joint Use Facilities shall be costed at the average Terminal Complex rate.
The cost of the Joint Use Facilities in each concourse shall be separately
allocated based on Airline rentable square footage within the respective
concourse and charged to the respective tenants/users of the facilities in
each concourse based on their proportional share of rented square footage
to the total rentable square footage.
For purposes of allocating costs to airlines based on rentable square
footage, airline rentable square footage shall include the 215,000 square
feet of unleased space that has been redefined for certain purposes as
undeveloped space.
The space associated with the Spine Equipment and Space in the Terminal
Complex will be costed at the average rental rate of the Terminal Complex.
This amount will be added to the equipment costs of the Spine Equipment and
Space and allocated 65% to the UABS serving Concourse B and 35% to the AABS
serving Concourse A and assessed among the airlines on each respective
concourse on the basis of their respective originating and destination
passengers for the preceding three-month period. The parties recognize and
acknowledge that the 65/35 allocation of Spine Equipment and Space is
desirable for the initial 5-year term, but may not be desirable over a
longer term. Accordingly, at least 8 months prior to the end of the first
five years after DBO, any airline or group of airlines representing at
least 40% of combined Concourses A and B originating and destination
traffic may, with respect to the second five-year period and thereafter,
cause the City to charge the Spine Equipment and Space to airlines
operating on Concourse A and B based on such airlines' respective shares of
the combined A and B originating and destination traffic.
The Concourse A airlines' rates and charges for the baggage sortation
equipment and space on Concourse A and for the 35% of the Spine Equipment
and Space shall begin to be charged to such airlines at the earlier of (1)
certification by the City that the AABS meets the performance standards
established in Contract F-300B as modified by amendments and change orders
thereto through Change Order 14 or (2) November 15, 1995. Between DBO and
the assessment of rates and charges for the baggage sortation equipment and
space and the Concourse A proportional share of the Spine Equipment and
Space, as provided for herein, said rates and charges shall, subject to all
prior requirements of the City's Bond Ordinances applicable to the Airport
or Airport System, be paid from net DIA airport revenues.
Continental, for itself, its successors, and assigns, agrees that in the
event it no longer operates at DIA but remains an operating airline during
the 5 years following DBO, it, or its successors or assigns, shall be
responsible to pay, during such initial five-year term, a share of the 35%
of the Spine Equipment and Space based on its actual 1995 DIA originating
and destination passenger traffic, but not less than 800,000 originating
and destination passengers. In the event that Continental ceases operation
without a successor or assign, then the 35% share of the Spine Equipment
and Space shall be paid as follows: For each six-month period after the
commencement of the assessment of charges for the AABS, the Concourse A
airlines shall collectively pay 100% of their 35% share of the Spine
Equipment and Space, unless the total originating and destination traffic
on Concourse A during such period is below 1.0 million passengers. In that
event, the Concourse A airlines shall be charged for the AABS share of the
Spine Equipment and Space, using the 1.0 million passenger level as the
"denominator" of originating and destination traffic on Concourse A for
such six-month period and using the airlines' actual originating and
destination traffic as the numerator, with the resulting quotient
multiplied by the 35% charge for the Spine Equipment and Space for that
six-month period. The balance of the 35% share of the Spine Equipment and
Space not charged to any airline under this methodology shall, subject to
all prior requirements of the City's Bond Ordinances applicable to the
Airport or the Airport System, be paid by net revenues of DIA. If for any
reason DIA net revenues are insufficient or otherwise cannot be used to pay
such costs, then each Concourse A signatory airline shall have the right to
move to Concourse C to the extent available space exists, and be subject to
rates and charges as if such airline were on Concourse C whether or not
such airline is actually able to obtain space on such Concourse.
The City shall credit the AABS cost center to the extent of collected
rates, fees and charges assessed charter and other limited basis operations
on Concourse A.
Airline Tenant Finish and Equipment costs, excluding the costs of the
baggage sortation equipment and approved modifications to the automated DCV
baggage system to provide for the automated system on Concourses A and B,
shall be allocated to the applicable sub-costs centers and then divided by
total airline rentable space in that cost center to determine the average
tenant finish rate per square foot. The cost of the baggage sortation
space shall be included in the costs of the Tenant Finish and Equipment and
allocated based on airline rentable space.
The costs of the Concourse A baggage sortation system equipment and
approved modifications shall be allocated exclusively to the airlines
operating on Concourse A on the basis of their respective passenger
enplanements. The costs of the Concourse B baggage sortation system
equipment and approved modifications shall be allocated exclusively to the
airlines operating on Concourse B on the basis of their respective
passenger enplanements. The costs of the Concourse C baggage sortation
system equipment as of DBO shall be allocated to the Concourse B sortation
system equipment until such equipment is otherwise utilized or leased by
other airlines.
In the event an automated baggage system is constructed for Concourse C or
for any additional airside concourse, the costs related to such baggage
system(s), equipment and space shall be allocated to Concourse C, or the
new concourse as applicable, and charged exclusively to the airlines
operating on such concourse.
Costs associated with undeveloped acreage will be allocated to the Airfield
Area until the land is developed. Costs and revenues associated with
developed acreage will be allocated to the applicable cost center.
Not more than forty percent (40%) of the costs (debt service and operating
and maintenance expenses) associated with the Access and Terminal Roadways
shall be allocated to the Terminal Complex.
Costs associated with the Service Roadways shall be allocated back to the
direct cost centers based primarily on which cost centers benefit from such
Service Roadways.
Not more than eighty percent (80%) of the costs associated with Aircraft
Rescue and Fire Fighting shall be allocated to the Airfield Area cost
center.
Costs associated with the Airport Administration cost center will be
allocated based on a 50/50 revenue/direct expense formula: fifty percent
(50%) on the percentage distribution of operating revenue by cost center
and the remaining fifty percent (50%) allocated on the percentage
distribution of direct Operation and Maintenance Expenses by cost center.
Undeveloped space shall include: (i) space in which no buildout has
occurred, (ii) the space in the basement of Concourse C until such space
is leased or utilized, (iii) no more than 215,000 square feet of unleased
operational and office space (including the prorata costs of Tenant Finish
and Equipment and Joint Use Facilities) until such space is exclusively
leased and (iv) the space in level 3 of the Landside Terminal interior to
the tug circulation rights-of-way not otherwise leased or used.
Airport Costs
Airport "costs" (also referred to as "requirements") include without
limitation:
(1) Operation and Maintenance Expenses.
(2) Debt service on Bonds issued for the Airport and any other
amounts required under the General Bond Ordinance except debt
service on PFC-enhanced bonds for which PFC revenues are
available.
(3) Debt service on Bonds used for Airport land acquisition.
(4) Amortization of 50% of the City's New Airport expenditures
incurred prior to January 1, 1990, from Capital Fund and
Operating Fund moneys used for (a) pre-1990 planning and
administrative costs, (b)Airport land acquisition, (c) New
Airport Project costs, and (d) debt service on Bonds used for
Airport land acquisition.
(5) Amortization of all investments made for the New Airport Project
costs from other than Bonds or grants after January 1, 1990 and
prior to DBO.
(6) Amortization of the City's investment in the Airport Coverage
Account to be accumulated during the pre-DBO period.
(7) For the purposes of items (4), (5), and (6) above, amortization
charges are to be calculated over 15 years at the weighted
average effective interest cost on all Airport fixed-rate Bonds
prior to January 1, 1997. Except and only to the extent, if any,
that the rights of the owners of its airport revenue bonds
(including, without limitation, the rights arising from the rate
maintenance covenant) are not thereby materially impaired, the
City will cause, by January 1, 1997 (or as soon thereafter as
possible consistent with the City's aforesaid obligations to
owners of its airport revenue bonds), amortization of the net
unamortized balance of City's investments in items (4), (5) and
(6) above on a straight-line basis for the balance of the period
through March 1, 2025.
(8) Amortization of reimbursements made to United Airlines related to
costs for modifications to the United Airlines automated DCV
baggage system, not to exceed $45 million, from other than bonds
shall be calculated on a straight line basis over 30 years,
effective as of the date of any such reimbursement, at the
weighted average effective interest rate of all Airport fixed-
rate bonds prior to January 1, 1997.
(9) Amortization of the City's investments from the Capital Fund,
subsequent to DBO, shall be amortized at the average rate of the
Airport fixed-rate bonds over 15 years and charged to the
Airlines.
PFC Revenues
PFC Revenues will not be treated as airport revenues for the purpose of
establishing airline rates, fees and charges. For rate-making purposes,
PFC revenues shall be allocated to the extent available, to at least fifty
percent (50%) of the capital costs and/or debt service associated with the
following eligible projects in the following order of priority: (1)
facilities for the Federal Inspection Services, (2) the portion of Airport
Boulevard from an interchange with the Proposed E-470 to the terminal and
terminal area roads, (3) the Automated Guideway Transit System ("AGTS"),
including vehicles and equipment and (4) the AGTS tunnels. That portion of
the capital costs or debt service paid for by PFC revenues will not be
included in the calculation of the airline rate base.
Airport "Credits"
Debt service will be charged to the airline rate base at the Airport in
lieu of amortization of such Airport costs as are bond-financed. Interest
income on the Bond Reserve Fund (provided that the minimum Bond Reserve
Requirement has been funded) and on the Interest and Principal Accounts of
the Bond Fund that are Gross Revenues shall be credited to the cost centers
of the Airport in the same proportion as the debt service allocation.
The City shall establish accounts within the Capital Fund as illustrated in
Figure 2. Net Revenues of the Airport System, as defined in the General
Bond Ordinance, flowing to the Capital Fund each year are to be used to
replenish reserve funds or accounts as required in the General Bond
Ordinance and the Coverage Account and to fund the Equipment and Capital
Outlay Account for equipment and capital outlays included in the operating
budget. Remaining Net Revenues are to be allocated as follows: (a) 80%
for the first five years following DBO, 75% for the next six years, and 50%
thereafter, up to a maximum of $40 million to flow into the Airline Revenue
Credit Account to be applied as a credit against Signatory Airline rates
and charges in the following fiscal year and (b) the balance to flow into
the Capital Improvement Account.
Prior to DBO, City shall create an Airport Coverage Account and fund that
account up to an amount equal to twenty-five percent (25%) of Debt Service
Requirements on Bonds issued to finance the Airport (other than Special
Facilities Bonds and other Bonds to finance support facilities such as
cargo, maintenance and food preparation facilities). The Airport Coverage
Account shall be considered as Other Available Funds (as defined in the
General Bond Ordinance) for the purpose of meeting the Rate Maintenance
Covenant. Airline rentals, rates, fees and charges will not be used for
such funding unless the intended sources are insufficient to fully fund the
Airport Coverage Account prior to DBO.
Miscellaneous
The City intends to redeem, defease or otherwise provide for the
outstanding Series 1984 and 1985 Bonds that relate to Stapleton. The "land
acquisition" portion of the 1985 Bonds, portions of the 1984 Bonds and the
interim improvements portion of the 1985 Bonds used for the New Airport
Project will be refinanced if it is determined to result in financial
savings to the City.
All defined terms used herein shall be consistent with the defined terms in
the General Bond Ordinance.
Gross Revenues of the Airport System shall include, after January 1, 1994,
the proceeds of the City's 1989 $0.02 per-gallon fuel tax increase.
Any payments received within six (6) months after DBO from tenants of
Stapleton for activities prior to DBO of the Airport shall be treated as if
received prior to DBO for purposes of allocation of the Capital Fund.