Exhibit 10.16
PURCHASE AGREEMENT NUMBER 2060
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Relating to Boeing Model 767-400ER Aircraft
TABLE OF CONTENTS
SA
ARTICLES NUMBER
1. Quantity, Model and Description
2. Delivery Schedule
3. Price
4. Payment
5. Miscellaneous
TABLE
1. Aircraft Information Table
EXHIBIT
A. Aircraft Configuration
B. Aircraft Delivery Requirements and
Responsibilities
SUPPLEMENTAL EXHIBITS
BFE1. BFE Variables
CS1. Customer Support Variables
EE1. Engine Escalation/Engine Warranty
and Patent Indemnity
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
TABLE OF CONTENTS
SA
LETTER AGREEMENTS NUMBER
2060-1 not used
2060-2 Demonstration Flights
2060-3 Spares Initial Provisioning
2060-4 Flight Crew Training Spares
2060-5 Escalation Sharing
TABLE OF CONTENTS
SA
CONFIDENTIAL LETTER AGREEMENTS NUMBER
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6-1162-GOC-086 Special Matters
Purchase Agreement No. 2060
between
The Boeing Company
and
Continental Airlines, Inc.
______________________________
This Purchase Agreement No. 2060 is dated as of
October 10, 1997, between The Boeing Company (Boeing) and
Continental Airlines, Inc. (Customer) relating to the purchase and
sale of Model 767-400ER aircraft. The terms and conditions of the
Aircraft General Terms Agreement dated as of October 10, 1997,
between the parties, identified as AGTA-CAL (AGTA), are hereby
incorporated by reference into this Purchase Agreement.
Article 1. Quantity, Model and Description.
The aircraft to be delivered to Customer will be
designated as Model 767-400ER aircraft (the Aircraft). Boeing will
manufacture and sell to Customer Aircraft conforming to the
configuration described in Exhibit A, which is part of this
Purchase Agreement, in the quantities listed in Table 1 to the
Purchase Agreement.
Article 2. Delivery Schedule.
The Aircraft will be delivered to Customer in
accordance with the scheduled months of delivery listed in the
attached Table 1, which is part of this Purchase Agreement.
Exhibit B, which is part of this Purchase Agreement, describes
certain responsibilities for both Customer and Boeing in order to
accomplish the delivery of the Aircraft.
Article 3. Price.
3.1 Aircraft Basic Price. The Aircraft Basic Price
is listed in Table 1 and is subject to mutually agreed upon price
adjustments and the Escalation Adjustment.
3.2 Advance Payment Base Prices. The Advance
Payment Base Prices for the Aircraft are listed in Table 1 and were
calculated utilizing the latest escalation factors available to
Boeing on the date of this Purchase Agreement projected to the
month of scheduled delivery.
3.3 Boeing has not yet established the Aircraft
Basic Price for Aircraft scheduled to be delivered after December
31, 2002. The prices listed in Table 1 for such Aircraft are only
to provide Customer with an estimate of the applicable Advance
Payment Base Prices. Accordingly, the Aircraft Basic Price for
such Aircraft will be the sum of the Airframe Price, Optional
Features Prices and the Engine Price first published by Boeing for
the same model of aircraft and engines to be delivered after
December 31, 2002.
Article 4. Payment.
4.1 Boeing acknowledges receipt of a deposit in the
amount shown in Table 1 for each Aircraft (Deposit).
4.2 The amounts and payment dates for advance
payments to be made by Customer are set forth in the attached Table
1. Advance payments for each aircraft are due on the first
business day of the months listed in the attached Table 1.
4.3 For any Aircraft whose scheduled month of
delivery is less than [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] from the date of this
Purchase Agreement, the total amount of advance payments due for
payment upon signing of this Purchase Agreement will include all
advance payments which are past due in accordance with the standard
advance payment schedule set forth in Table 1.
4.4 The Aircraft Price is the total amount Customer
will pay to Boeing at the time of delivery of each Aircraft. Such
Aircraft Price will be calculated at time of delivery using then
available escalation factors to calculate the Escalation
Adjustment. The invoice amount for an Aircraft will show the
Aircraft Price appropriately adjusted to account for previously
received applicable advance payments.
Article 5. Miscellaneous.
5.1 Buyer Furnished Equipment Variables.
Supplemental Exhibit BFE1, which is part of this Purchase
Agreement, contains vendor selection dates, on dock dates and other
variables applicable to the Aircraft.
5.2 Customer Support Variables. Supplemental
Exhibit CS1, which is part of this Purchase Agreement, contains
the variable information applicable to information, training
services and other things furnished by Boeing in support of the
Aircraft.
5.3 Engine Escalation Variables. Supplemental
Exhibit EE1 contains the applicable engine escalation formula, the
engine warranty and the engine patent indemnity for the Aircraft.
5.4 [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT]
5.6 Negotiated Agreement; Entire Agreement. This
Purchase Agreement, including the provisions of Article 8.2 of the
AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C
of the AGTA relating to DISCLAIMER AND RELEASE and EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion
and negotiation and is understood by the parties; the Aircraft
Price and other agreements of the parties stated in this Purchase
Agreement were arrived at in consideration of such provisions.
This Purchase Agreement, including the AGTA, contains the entire
agreement between the parties and supersedes all previous
proposals, understandings, commitments or representations
whatsoever, oral or written, with respect to the subject matter
hereof, and may be changed only in writing signed by authorized
representatives of the parties.
CONTINENTAL AIRLINES, INC. THE BOEING COMPANY
By /s/ Brian Davis By /s/ Gunar O. Clem
Its Vice President Its Attorney in Fact
Table 1 to
Purchase Agreement No. 2060
Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTGW: 767-400ER 440,000 Detail Specification: D019T003-A (3/13/97)
Engine Model/
Thrust Level: CF6-80C2B7F 62,100 Price Base Year: Jul-95
Airframe Base Price: [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
Optional Features: COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Sub-Total of Airframe and Features:
Engine Price (Per Aircraft):
Aircraft Basic Price (Excluding BFE/SPE):
Buyer Furnished Equipment (BFE) Estimate:
Seller Purchased Equipment (SPE) Estimate:
Refundable Deposit per Aircraft at Proposal Acceptance:
Airframe Escalation Data:
Base Year Index (ECI):
Base Year Index (ICI):
Engine Escalation Data:
Base Year Index (CPI):
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Exhibit A to Purchase Agreement Number 2060
AIRCRAFT CONFIGURATION
Dated October 10, 1997
relating to
BOEING MODEL 767-400ER AIRCRAFT
The Detail Specification is Boeing Detail Specification
D019T001-CAL-64E1 dated as of even date herewith. Such Detail
Specification will be comprised of Boeing Configuration
Specification D019T003, revision A, dated March 13, 1997 as amended
to incorporate the Options listed below, including the effects on
Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW).
Such Options are set forth in Boeing Document D019TCR1-CAL-64E1.
As soon as practicable, Boeing will furnish to Buyer copies of the
Detail Specification, which copies will reflect such Options. The
Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the
price effects of any Buyer Furnished Equipment or Seller Purchased
Equipment.
Exhibit A to
Purchase Agreement No. 2060
Page 2
The configuration for Customer's 767-400ER will be developed during
the first half of 1998. For purposes of calculating the Advance
Payment Base Prices listed in Table 1, an estimated amount of
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] has been assumed for Optional Features.
The [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Exhibit B to Purchase Agreement Number 2060
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
relating to
BOEING MODEL 767-400ER AIRCRAFT
Both Boeing and Customer have certain documentation and approval
responsibilities at various times during the construction cycle
of Customer's Aircraft that are critical to making the delivery
of each Aircraft a positive experience for both parties. This
Exhibit B documents those responsibilities and indicates
recommended completion deadlines for the actions to be
accomplished. Failure to obtain such completion deadlines shall
not be deemed a breach of this Purchase Agreement or reduce or
amend the parties' obligations hereunder.
1. GOVERNMENT DOCUMENTATION REQUIREMENTS.
Certain actions are required to be taken by Customer in advance
of the scheduled delivery month of each Aircraft with respect to
obtaining certain government issued documentation.
1.1 Airworthiness and Registration Documents.
Not later than 6 months prior to delivery of
each Aircraft, Customer will notify Boeing of the registration
number to be painted on the side of the Aircraft. In addition,
and not later than 3 months prior to delivery of each Aircraft,
Customer will, by letter to the regulatory authority having
jurisdiction, authorize the temporary use of such registration
numbers by Boeing during the pre-delivery testing of the
Aircraft.
Customer is responsible for furnishing any temporary or permanent
registration certificates required by any governmental authority
having jurisdiction to be displayed aboard the Aircraft after
delivery.
1.2 Certificate of Sanitary Construction.
1.2.1 U.S. Registered Aircraft. Boeing
will obtain from the United States Public Health Service, a
United States Certificate of Sanitary Construction to be
displayed aboard each Aircraft after delivery to Customer.
1.2.2 Non-U.S. Registered Aircraft. If
Customer requires a United States Certificate of Sanitary
Construction at the time of delivery of the Aircraft, Customer
will give written notice thereof to Boeing at least 3 months
prior to delivery. Boeing will then use its reasonable best
efforts to obtain the Certificate from the United States Public
Health Service and present it to Customer at the time of Aircraft
delivery.
1.3 Customs Documentation.
1.3.1 Import Documentation. If the
Aircraft is intended to be exported from the United States,
Customer must notify Boeing not later than 3 months prior to
delivery of each Aircraft of any documentation required by the
customs authorities or by any other agency of the country of
import.
1.3.2 General Declaration - U.S. If the
Aircraft is intended to be exported from the United States,
Boeing will prepare Customs Form 7507, General Declaration, for
execution by U.S. Customs immediately prior to the ferry flight
of the Aircraft. For this purpose, Customer will furnish to
Boeing not later than 20 days prior to delivery a complete crew
and passenger list and a complete ferry flight itinerary,
including point of exit from the United States for the Aircraft.
If Customer intends, during the ferry flight of an Aircraft, to
land at a U.S. airport after clearing Customs at delivery,
Customer must notify Boeing not later than 20 days prior to
delivery of such intention. If Boeing receives such
notification, Boeing will provide to Customer the documents
constituting a Customs permit to proceed, allowing such Aircraft
to depart after any such landing. Sufficient copies of completed
Form 7507, along with passenger manifest, will be furnished
Customer to cover U.S. stops scheduled for the ferry flight.
1.3.3 Export Declaration - U.S. If the
Aircraft is intended to be exported from the United States,
Boeing will prepare Form 7525V and, immediately prior to the
ferry flight, will submit such Form to U.S. Customs in Seattle in
order to obtain clearance for the departure of the Aircraft,
including any cargo, from the United States. U.S. Customs will
deliver the Export Declaration to the U.S. Department of Commerce
after export.
2. INSURANCE CERTIFICATES.
Unless provided earlier, Customer will provide to
Boeing not later than 30 days prior to delivery of the first
Aircraft, a copy of the requisite annual insurance certificate in
accordance with the requirements of Article 8 of the AGTA.
3 NOTICE OF FLYAWAY CONFIGURATION.
Not later than 20 days prior to delivery of the
Aircraft, Customer will provide to Boeing a configuration letter
stating the requested "flyaway configuration" of the Aircraft for
its ferry flight. This configuration letter should include:
(i) the name of the company which is to furnish
fuel for the ferry flight and any scheduled post-delivery
flight training, the method of payment for such fuel, and
fuel load for the ferry flight;
(ii) the cargo to be loaded and where it is to be
stowed on board the Aircraft and address where cargo is to
be shipped after flyaway;
(iii) any BFE equipment to be removed prior to
flyaway and returned to Boeing BFE stores for installation
on Customer's subsequent Aircraft;
(iv) a complete list of names and citizenship of
each crew member and non-revenue passenger who will be
aboard the ferry flight; and
(v) a complete ferry flight itinerary.
4. DELIVERY ACTIONS BY BOEING.
4.1 Schedule of Inspections. All FAA, Boeing,
Customer and, if required, U.S. Customs Bureau inspections will
be scheduled by Boeing for completion prior to delivery or
departure of the Aircraft. Customer will be informed of such
schedules.
4.2 Schedule of Demonstration Flights. All FAA and
Customer demonstration flights will be scheduled by Boeing for
completion prior to delivery of the Aircraft.
4.3 Schedule for Customer's Flight Crew. Boeing
will inform Customer of the date that a flight crew is required
for acceptance routines associated with delivery of the Aircraft.
4.4 Fuel Provided by Boeing. Boeing will provide
to Customer, without charge, the amount of fuel shown in U.S.
gallons in the table below for the model of Aircraft being
delivered and full capacity of engine oil at the time of delivery
or prior to the ferry flight of the Aircraft.
Aircraft Model Fuel Provided
767 [CONFIDENTIAL MATERIAL
OMITTED AND FILED
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COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT]
4.5 Flight Crew and Passenger Consumables. Boeing
will provide food, coat hangers, towels, toilet tissue, drinking
cups and soap for the first segment of the ferry flight for the
Aircraft.
4.6 Delivery Papers, Documents and Data. Boeing
will have available at the time of delivery of the Aircraft
certain delivery papers, documents and data for execution and
delivery. Boeing will pre-position in Oklahoma City, Oklahoma,
for filing with the FAA at the time of delivery of the Aircraft
an executed original Form 8050-2, Aircraft Bill of Sale,
indicating transfer of title to the Aircraft from Boeing or
Boeing's sales subsidiary, to Customer.
4.7 Delegation of Authority. If specifically
requested in advance by Customer, Boeing will present a certified
copy of a Resolution of Boeing's Board of Directors, designating
and authorizing certain persons to act on its behalf in
connection with delivery of the Aircraft.
5. DELIVERY ACTIONS BY CUSTOMER.
5.1 Aircraft Radio Station License. At delivery
Customer will provide its Aircraft Radio Station License to be
placed on board the Aircraft following delivery.
5.2. Aircraft Flight Log. At delivery Customer
will provide the Aircraft Flight Log for the Aircraft.
5.3 Delegation of Authority. If necessary,
Customer will present to Boeing at delivery of the Aircraft an
original or certified copy of Customer's Delegation of Authority
designating and authorizing certain persons to act on its behalf
in connection with delivery of the specified Aircraft.
BUYER FURNISHED EQUIPMENT VARIABLES
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Supplemental Exhibit BFE1 to Purchase Agreement Number 2060
BUYER FURNISHED EQUIPMENT VARIABLES
relating to
BOEING MODEL 767-400ER AIRCRAFT
This Supplemental Exhibit BFE1 contains vendor selection dates,
on-dock dates and other variables applicable to the Aircraft.
1. Supplier Selection.
Customer will select and notify Boeing of the suppliers of
the galley system and the passenger seats by a date to be
mutually agreed to by the parties during the 767-400
configuration discussions to be held in the first half of 1998.
2. On-dock Dates
On or before a date to be mutually agreed to by the parties
Boeing will provide to Customer a BFE Requirements On-
Dock/Inventory Document (BFE Document) or an electronically
transmitted BFE Report which may be periodically revised, setting
forth the items, quantities, on-dock dates and shipping
instructions relating to the in-sequence installation of BFE.
CUSTOMER SUPPORT VARIABLES
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Supplemental Exhibit CS1 to Purchase Agreement Number 2060
CUSTOMER SUPPORT VARIABLES
relating to
BOEING MODEL 767-400 AIRCRAFT
Customer and Boeing will conduct planning conferences
approximately 12 months before delivery of the first Aircraft, or
as otherwise agreed, to develop and schedule a customized
Customer Support Program to be furnished by Boeing in support of
the Aircraft.
The customized Customer Services Program will be based upon and
equivalent to the entitlements summarized below.
Part 1: Maintenance and Flight Training Programs; Operations
Engineering Support
1. Maintenance Training.
1.1 Airplane General Familiarization Course; 1 class of
24 students;
1.2 Mechanical/Power Plant Systems Course; 2 classes of
15 students;
1.3 Electrical Systems Course; 2 classes of 15 students;
1.4 Avionics Systems Course; 2 classes of 15 students;
1.5 Corrosion Prevention & Control Course; 1 class of
10 students;
1.6 Aircraft Rigging Course; 1 class of 6 students;
1.7 Composite Repair for Technicians - Basic; 1 class of
8 students;
1.8 Training materials will be provided to each student.
In addition, one set of training materials used in
Boeing's training program, including visual aids,
Computer Based Training Courseware, color instrument
panel wall charts, text/graphics, video programs, etc.
will be provided for use in Customer's own training
program.
2. Flight Training.
2.1 Transition training for 8 flight crews (16 pilots) in 2
classes; The training will consist of ground school
(utilizing computer based training), fixed base
simulator, full flight simulator and actual aircraft
training on Customer's Aircraft.
2.2 Flight Dispatcher training; 2 classes of 6 students;
2.3 Flight Attendant training; 2 classes of 12 students;
2.4 Performance Engineer training in Boeing's regularly
scheduled courses; schedules are published twice
yearly.
2.5 Training materials will be provided to each student.
In addition, one set of training materials as used in
Boeing's training program, including visual aids,
Computer Based Training Courseware, color instrument
panel wall charts, text/graphics, video programs, etc.
will be provided for use in Customer's own training
program.
2.6 Additional Flight Operations Services:
a. Boeing flight crew personnel to assist in
ferrying the first aircraft to Customer's main
base;
b. Instructor pilots for 90 calendar days for
revenue service training assistance;
c. An instructor pilot to visit Customer 6 months
after revenue service training to review
Customer's flight crew operations for a 2 week
period.
3. Planning Assistance.
3.1 Maintenance and Ground Operations.
Upon request, Boeing will visit Customer's main base to
evaluate aircraft maintenance facilities, develop
recommendations and assist in maintenance planning.
3.2 Spares.
a) Recommended Spares Parts List (RSPL)
customized RSPL, data and documents will be
provided to identify spare parts required for
Customer's support program.
b) Illustrated Parts Catalog (IPC)
A customized IPC in accordance with ATA 100
will be provided.
c) Provisioning Training
Provisioning training will be provided for
Customer's personnel at Boeing's facilities,
where documentation and technical expertise are
available. Training is focused on the initial
provisioning process and calculations reflected
in the Boeing RSPL.
d) Spares Provisioning Conference
A provisioning conference will be conducted,
normally at Boeing's facilities where technical
data and personnel are available.
4. Technical Data and Documents
The following list contains the documents Customer will
receive to support the introduction and operation of the
Aircraft. Customer and Boeing will conduct a planning conference
approximately 12 months before the first delivery of the Aircraft
to mutually determine the proper format (e.g. digital or hard
copy) and quantity of Materials to be furnished to Customer.
4.1. Flight Operations.
Airplane Flight Manual
Operations Manual
Quick Reference Handbook
Weight and Balance Manual
Dispatch Deviation Procedures Guide
Flight Crew Training Manual
Baggage/Cargo Loading Manual
Performance Engineer's Manual
Jet Transport Performance Methods
FMC Supplemental Data Document
Operational Performance Software
4.2. Maintenance.
Aircraft Maintenance Manual
Wiring Diagram Manual
Systems Schematics Manual
Connector Part Number Options Document
Structural Repair Manual
Overhaul/Component Maintenance Manual
Standard Overhaul Practices Manual
Standard Wiring Practices Manual
Non-Destructive Test Manual
Service Bulletins and Index
Corrosion Prevention Manual
Fault Isolation Manual
Fuel Measuring Stick Calibration Document
Power Plant Buildup Manual
Built-In Test Equipment (BITE) Manual
Central Maintenance Computer System Reporting Table
In Service Activity Report
All Operator Letters
Service Letters
Structural Item Interim Advisory
Maintenance Tips
Combined Index
4.3. Maintenance Planning.
Maintenance Planning Data Document
Maintenance Planning Data Tasks Masterfile
Maintenance Task Cards and Index
Maintenance Inspection Intervals Report
4.4. Spares.
Illustrated Parts Catalog
Standards Books
4.5. Facilities and Equipment Planning.
Facilities and Equipment Planning Document
Special Tool and Ground Handling Equipment Drawings and
Index
Supplementary Tooling Documentation
System Test Equipment Document
Illustrated Tool and Equipment List/Manual
Aircraft Recovery Document
Airplane Characteristics for Airport Planning Document
Airplane Rescue and Fire Fighting Document
Engine Handling Document
4.6. Computer Software Index.
4.7. Supplier Technical Data.
Service Bulletins
Ground Support Equipment Data
Provisioning Information
Component Maintenance/Overhaul Manuals and Index
Publications Index
Product Support Supplier Directory
5. Additional Customer Support.
In response to a Customer request, Boeing agrees to provide
the following additional training and support to Customer at
no charge.
5.1 General Familiarization Courses.
Boeing will provide a total of 6 General
Familiarization Courses (5 in addition to the 1 General
Familiarization Courses described in paragraph 1.1
above).
5.2 Maintenance and Flight Training Materials.
Boeing will provide (i) a total of 2 sets of all
training materials (1 in addition to the 1 set
described in paragraphs 1.8 and 2.5 above), (ii) the
flight training material in digital format and (iii)
the source code for the flight training Computer Based
Training (CBT).
5.3 Maintenance Instructor in Houston.
On a mutually agreeable date 6 to 8 months prior to
delivery of the first Aircraft, Boeing will send a
maintenance instructor to Houston, Texas, for sixty
days. Such instructor will be qualified to assist
Customer with developing and teaching Customer's own
maintenance training courses and answer Customer's
questions related to the maintenance of the Aircraft.
Customer will provide the round trip airfare.
5.4 Additional Flight Training Course.
On a mutually agreeable schedule, Boeing will provide
transition training for a total of 24 pilots (8 pilots
in addition to the 16 pilots previously committed in
paragraph 2.1 above).
5.5 767 Engine Run-up Course.
On a mutually agreeable schedule provide one 767 engine
run-up course.
5.6 Extra Simulator Sessions
Provide one extra simulator session for 5 students for
two Avionics Systems Courses, for two Electrical
Systems Courses and for two Mechanical/Powerplant
Systems Courses, for a total of 6 extra simulator
sessions.
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Supplemental Exhibit EE1 to Purchase Agreement Number 2060
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
relating to
BOEING MODEL 767-400ER AIRCRAFT
1. ENGINE ESCALATION.
(a) The Aircraft Basic Price of each Aircraft set forth in Table
1 of the Purchase Agreement includes an aggregate price for CF6-
80C2 engines and all accessories, equipment and parts provided by
the engine manufacturer. The adjustment in Engine price
applicable to each Aircraft (Engine Price Adjustment) will be
determined at the time of Aircraft delivery in accordance with
the following formula:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
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(b) The following definitions will apply herein:
Pe = Engine Price Adjustment
Pb = Engine Base Price (per Aircraft), as set forth in Table
1 of the Purchase Agreement.
CPI is the Composite Price Index, a value determined using
the Bureau of Labor Statistics, U.S. Department of Labor
actual data in accordance with the formula below. The Index
values utilized in the formula will be the numbers shown in
the actual data for the ninth month prior to the month of
scheduled Aircraft delivery or the ninth month prior to the
Base Year Dollars month set forth in Table 1.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
L = The Labor Index will be equal to the quotient
of the value associated with the Aircraft
Delivery Month divided by the value associated
with the Base Year Dollar month in "Hourly
Earnings of Aircraft Engines and Engine Parts
Production Workers" SIC 3724, multiplied by 100
and then by 30%.
C = The Industrial Commodities Index will be equal
to 30% of the Producer Price Index for "all
commodities other than Farm and Foods," Code
3-15 associated with the scheduled Aircraft
delivery month.
M = The Metals and Metal Products Index will be
equal to 30% of the Producer Price Index for
"Metals and Metal Products," Code 10 associated
with the scheduled Aircraft delivery month.
E = The Fuel Index will be equal to 10% of the
Producer Price Index for "Fuel and Related
Products and Power," Code 5 associated with the
scheduled Aircraft delivery month.
The Engine Price Adjustment will not be made if it would result
in a decrease in the Engine Base Price.
(c) The values of the Average Hourly Earnings and Producer Price
Indices used will be those published as of a date 30 days prior
to the scheduled Aircraft delivery to Customer. Such values will
be considered final and no Engine Price Adjustment will be made
after Aircraft delivery for any subsequent changes in published
Index values.
(d) In the event the Engine price escalation provisions are made
non-enforceable or otherwise rendered null and void by any agency
of the United States Government, or if the U.S. Department of
Labor, Bureau of Labor Statistics (i) substantially revises the
methodology (in contrast to benchmark adjustments or other
corrections of previously published data) or (ii) discontinues
publication of any of the data referred to above, General
Electric Company (GE) agrees to meet jointly with Boeing and
Customer, (to the extent such parties may lawfully do so,) to
jointly select a substitute for the revised or discontinued data;
such substitute data to lead in application to the same
adjustment result, insofar as possible, as would have been
achieved by continuing the use of the original data as it may
have fluctuated had it not been revised or discontinued. If such
Engine price escalation provisions, methodology or data
publication are subsequently reinstated, Boeing will make
adjustments consistent with the agreements defined in this
Supplemental Exhibit EE1.
NOTE: The factor (CPI divided by the base year index) by
which the Engine Base Price is to be multiplied will be
expressed as a decimal and rounded to the nearest
thousandth. Any rounding of a number, as required
under this Supplemental Exhibit EE1 with respect to
escalation of the Engine price, will be accomplished as
follows: if the first digit of the portion to be
dropped from the number to be rounded is five or
greater, the preceding digit will be raised to the next
higher number.
2. ENGINE WARRANTY AND PRODUCT SUPPORT PLAN.
Boeing has obtained from GE the right to extend to Customer the
provisions of GE's Warranty and Product Support Plan; subject,
however, to Customer's acceptance of the conditions set forth
herein. Accordingly, Boeing hereby extends to Customer and
Customer hereby accepts the provisions of GE's Warranty and
Product Support Plan hereinafter set forth, and such Warranty and
Product Support Plan shall apply to all CF6 turbofan engines
including all Modules and Parts thereof (Engines) installed in
the Aircraft at the time of delivery or purchased from Boeing by
Customer for support of the Aircraft except that, if Customer and
GE have executed a General Terms Agreement covering the Engines,
then the terms of that Agreement shall be substituted for and
supersede the below-stated provisions and such provisions shall
be of no force or effect and neither Boeing nor GE shall have any
obligation arising therefrom. In consideration for Boeing's
extension of the GE Warranty and Product Support Plan to
Customer, Customer hereby releases and discharges Boeing from any
and all claims, obligations and liabilities whatsoever arising
out of the purchase or use of such CF6 turbofan engines and
Customer hereby waives, releases and renounces all its rights in
all such claims, obligations and liabilities except for the
provisions in paragraphs 2.1 (i) and 2.1 (iv) of Part 2 to
Exhibit C to the AGTA.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Supplemental Exhibit [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] to Purchase Agreement Number
2060
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
relating to
BOEING MODEL 767 AIRCRAFT
This is the listing of Covered Components for the Aircraft which
relate to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] Product Assurance Document to the AGTA and
is a part of Purchase Agreement No. 2060.
1. Wing.
(a) Upper and lower wing skins and stiffeners between the
forward and rear wing spars.
(b) Wing spar webs, chords and stiffeners.
(c) Inspar wing ribs.
(d) Inspar splice plates and fittings.
(e) Main landing gear support structure.
(f) Wing center section lower beams, spanwise beams and
floor beams, but not the seat tracks attached to the
beams.
(g) Wing-to-body structural attachments.
(h) Engine strut support fittings attached directly to wing
primary structure.
(i) Support structure in the wing for spoilers and spoiler
actuators; for aileron hinges and reaction links; and
for leading edge devices and trailing edge flaps.
(j) Leading edge device and trailing edge flap support
system.
(k) Aileron, leading edge device and trailing edge flap
internal, fixed attachment and actuator support
structure.
2. Body.
(a) External surface skins and doublers, longitudinal
stiffeners, longerons and circumferential rings and
frames between the forward pressure bulkhead and the
vertical stabilizer rear spar bulkhead, and structural
support and enclosure for the APU but excluding all
system components and related installation and
connecting devices, insulation, lining, and decorative
panels and related installation and connecting devices.
(b) Window and windshield structure but excluding the
windows and windshields.
(c) Fixed attachment structure of the passenger doors,
cargo doors and emergency exits excluding door
mechanisms and movable hinge components. Sills and
frames around the body openings for the passenger
doors, cargo doors and emergency exits, excluding scuff
plates and pressure seals.
(d) Nose wheel well structure, including the wheel well
walls, pressure deck, forward and aft bulkheads, and
the gear support structure.
(e) Main gear wheel well structure including pressure deck,
bulkheads and landing gear beam support structure.
(f) Floor beams and support posts in the control cab and
passenger cabin area, but excluding seat tracks.
(g) Forward and aft pressure bulkheads.
(h) Keel structure between the wing front spar bulkhead and
the main gear wheel well aft bulkhead, including
splices.
(i) Wing front and rear spar support bulkheads, and
vertical and horizontal stabilizer front and rear spar
support bulkheads including terminal fittings but
excluding all system components and related
installation and connecting devices, insulation,
lining, and decorative panels and related installation
and connecting devices.
(j) Support structure in the body for the stabilizer pivot
and stabilizer screw.
3. Vertical Stabilizer.
(a) External skins between front and rear spars including
splices.
(b) Front, rear and auxiliary spar chords, webs and
stiffeners, and attachment fittings between vertical
stabilizer and body.
(c) Inspar ribs.
(d) Support structure in the vertical stabilizer for rudder
hinges, reaction links and actuators.
(e) Rudder internal, fixed attachment and actuator support
structure.
(f) Rudder hinges and supporting ribs, excluding bearings.
4. Horizontal Stabilizer.
(a) External skins between front and rear spars.
(b) Front, rear and auxiliary spar chords, webs and
stiffeners.
(c) Inspar ribs.
(d) Stabilizer center section and fittings splicing to
outboard stabilizer including pivot and screw support
structure.
(e) Support structure in the horizontal stabilizer for the
elevator hinges, reaction links and actuators.
(f) Elevator internal, fixed attachment and actuator
support structure.
5. Engine Strut.
(a) Strut external surface skin and doublers and
stiffeners.
(b) Internal strut chords, frames and bulkheads.
(c) Strut to wing fittings and diagonal brace.
(d) Engine mount support fittings attached directly to
strut structure.
(e) For Aircraft equipped with General Electric or Pratt &
Whitney engines only, the engine mounted support
fittings.
6. Main Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder.
(c) Upper and lower side strut, including spindles and
universals.
(d) Upper and lower drag strut, including spindles and
universals.
(e) Orifice support tube.
(f) Downlock links, including spindles and universals
(g) Torsion links.
(h) Bogie beam.
(i) Axles.
(j) Retraction Links.
7. Nose Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder, including axles.
(c) Orifice support tube.
(d) Upper and lower drag strut, including lock links.
(e) Steering plates and steering collar.
(f) Torsion links.
(g) Actuator support beam and hanger.
(h) Retraction Links.
NOTE: The [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT] Policy does not
cover any bearings, bolts, bushings, clamps, brackets,
actuating mechanisms or latching mechanisms used in or on
the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT].
October 10, 1997
2060-2
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: Demonstration Flights
Reference: Purchase Agreement No. 2060 (the Purchase
Agreement) between The Boeing Company (Boeing) and
Continental Airlines, Inc. (Customer) relating to
Model 767-400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement shall have the same meaning as in the Purchase
Agreement.
Definition of Terms:
Correction Costs: Customer's or a third party's direct labor
costs and the cost of any material required to correct a Flight
Discrepancy where direct labor costs are equal to the warranty
labor rate in effect between the parties at the time such labor
is expended.
Flight Discrepancy: A failure or malfunction of an Aircraft, or
the accessories, equipment or parts installed on the Aircraft
which results from a defect in the Aircraft, Boeing Product,
engine or Supplier Product or a nonconformance to the Detail
Specification for the Aircraft.
The AGTA provides that each aircraft will be test flown prior to
delivery for the purpose of demonstrating the functioning of such
Aircraft and its equipment to Customer; however, Customer may
elect to waive this test flight. For each test flight waived,
Boeing agrees to provide Customer an amount of jet fuel at
delivery that, together with the standard fuel entitlement,
totals [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] U.S. gallons.
Further, Boeing agrees to reimburse Customer for any Correction
Costs incurred as a result of the discovery of a Flight
Discrepancy during the first flight of the aircraft by Customer
following delivery to the extent such Correction Costs are not
covered under a warranty provided by Boeing, the engine
manufacturer or any of Boeing's suppliers.
Should a Flight Discrepancy be detected by Customer which
requires the return of the Aircraft to Boeing's facilities at
Seattle, Washington, so that Boeing may correct such Flight
Discrepancy, Boeing and Customer agree that title to and risk of
loss of such Aircraft will remain with Customer. Any such
correction by Boeing shall be at no cost to Customer. In
addition, it is agreed that Boeing will have responsibility for
the Aircraft while it is on the ground at Boeing's facilities in
Seattle, Washington, as is chargeable by law to a bailee for
mutual benefit, but Boeing shall not be chargeable for loss of
use.
To be reimbursed for Correction Costs, Customer shall submit a
written itemized statement describing any flight discrepancies
and indicating the Correction Cost incurred by Customer for each
discrepancy. This request must be submitted to Boeing's
Contracts Regional Director at Renton, Washington, within ninety
(90) days after the first flight by Customer.
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
October 10, 1997
2060-3
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: Spares Initial Provisioning
Reference: Purchase Agreement No. 2060 (the Purchase
Agreement) between The Boeing Company (Boeing) and
Continental Airlines, Inc. (Customer) relating to
Model 767-400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement shall have the same meaning as in the Purchase
Agreement.
1. Applicability.
This Letter Agreement will apply to initial provisioning for
the Model 767-400ER Aircraft purchased by Customer under the
Purchase Agreement.
2. Initial Provisioning Meeting.
Boeing will conduct an initial provisioning meeting (Initial
Provisioning Meeting) with Customer to establish mutually
agreeable procedures to accomplish Customer's initial
provisioning of spare parts for the Aircraft. The parties will
agree, during the Initial Provisioning Meeting on the operational
data to be provided by Customer for Boeing's use in preparing its
quantity recommendations for initial provisioning of spare parts
for the Aircraft, exclusive of special tools, ground support
equipment, engines and engine parts (Provisioning Items). Such
operational data to be provided by Customer will be the data
described in Section E of Boeing Manual D6-49090, entitled
"Initial Provisioning Implementation Manual, Boeing Model 757,
767, 777, 747-400 and 737-300, -400 and -500" (Boeing Initial
Provisioning Implementation Manual) which will be furnished to
Customer prior to the Initial Provisioning Meeting. The parties
will also agree on the provisioning documentation data to be
provided by Boeing. Such data will be essentially in accordance
with the provisions of Chapter 1 of ATA International
Specification 2000, Revision 1, dated April 20, 1989, as
described in Boeing Initial Provisioning Implementation Manual
D6-49090 (such data will be hereinafter referred to collectively
as the "Provisioning Data"). Boeing will provide instruction in
the use of the initial provisioning documentation. This
instruction will be provided in conjunction with the Initial
Provisioning Meeting. In addition, the parties will discuss
spares ordering procedures and other matters related to the
provisioning for the Aircraft. The time and location for such
Initial Provisioning Meeting will be mutually agreed upon between
the parties.
3. Initial Provisioning Documentation.
3.1 Provisioning Data. Boeing will furnish Provisioning
Data to Customer on or about August 1, 1999. The Provisioning
Data will be as complete as possible and will cover Provisioning
Items selected by Boeing for review by Customer for initial
provisioning for the Aircraft. The Provisioning Data will set
forth the prices for Provisioning Items which are Boeing Spare
Parts and such prices will be firm and remain in effect until the
date or dates set forth below in Paragraph 4.1, Boeing Spare
Parts, by which orders must be placed with Boeing. Boeing will,
from time to time, until a date approximately 90 days following
delivery of the last Aircraft or until the delivery configuration
of each of the Aircraft is reflected in the Provisioning Data,
whichever is later, furnish to Customer revisions to the
Provisioning Data.
3.2 Provisioning IPC. Boeing will, on or about July 1,
1999, furnish to Customer a Boeing Illustrated Parts Catalog
(IPC), hereinafter referred to as the "Provisioning IPC." The
Provisioning IPC will be as complete as possible and will cover
Provisioning Items selected by Boeing for review by Customer for
initial provisioning for the Aircraft. Boeing will, from time to
time, until a date approximately 90 days following delivery of
the last Aircraft, or until the delivery configuration of each of
the Aircraft is reflected in the Provisioning IPC, whichever is
later, furnish to Customer revisions to the Provisioning IPC.
3.3 Buyer Furnished Equipment (BFE) Provisioning Data.
3.3.1 Boeing's Responsibility. Boeing will include
BFE end items in the Provisioning Data and Provisioning IPC for
BFE installed on Customer's Aircraft provided such equipment has
been installed on other Aircraft by Boeing and Boeing has data on
the BFE.
3.3.2 Customer's Responsibility. Customer will be
responsible for ensuring BFE data is provided to Boeing by the
BFE supplier in a format reasonably acceptable to Boeing for BFE
not covered by 3.3.1 above. If the data is not provided to
Boeing in a timely manner and in a format reasonably acceptable
to Boeing, such BFE equipment will not be included in Boeing's
Provisioning Data or IPC.
3.4 Other Data. Boeing will submit to Customer listings
of raw materials, standard parts and bulk materials to be used by
Customer in the maintenance and repair of the Aircraft.
4. Purchase from Boeing of Spare Parts as Initial Provisioning
for the Aircraft.
4.1 Boeing Spare Parts. Customer will place orders for
Provisioning Items by October 1, 1999; provided, however, that in
those instances where Boeing submits any revision to the
Provisioning Data, Customer will place orders for Boeing Spare
Parts covered by such revision within 90 days following the date
of such submittal. At Customer's request, Boeing will process
"controlled shipments" by shipping full or partial quantities of
an order on a schedule specified by Customer, provided the final
shipment is made no later than 24 months after receipt of the
order.
4.2 Vendor Provisioning Items. Customer may place orders
with Boeing for Provisioning Items which are manufactured by
vendors or to their detailed design and are covered by the
Provisioning Data as initial provisioning for the Aircraft. The
price to Customer for any such vendor Provisioning Item will be
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] of the vendor's quoted price to Boeing
therefor. If Customer elects to purchase such vendor Provisioning
Items from Boeing, Customer will place its orders therefor in
accordance with the provisions of Paragraph 4.1, Boeing Spare
Parts.
4.3 Ground Support Equipment and Special Tools. Customer
may place orders with Boeing for ground support equipment (GSE)
and special tools manufactured by vendors which Customer
determines it will initially require for maintenance, overhaul
and servicing of the Aircraft and/or engines. The price to
Customer for such GSE or special tools will be [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] of the vendor's quoted price to Boeing therefor. If
Customer elects to purchase such GSE and special tools from Boeing,
Customer will place its orders therefor by the date set forth in
Paragraph 4.1, Boeing Spare Parts or such later date as the parties
may mutually agree.
4.4 Spare Engines and Engine Spare Parts. Customer may
place orders with Boeing for spare engines and/or engine spare
parts which Customer determines it will initially require for
support of the Aircraft or for maintenance and overhaul of the
engines. The price to Customer for such spare engines or such
engine spare parts, will be [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] of the engine
manufacturer's quoted price to Boeing for the engine, and
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] of the engine manufacturer's quoted price
to Boeing for the engine spare parts. If Customer elects to
purchase such spare engines or engine spare parts through Boeing,
Customer will place its orders on a date to be mutually agreed upon
during the Initial Provisioning Meeting.
4.5 QEC Kits. Boeing will, on or about July 1, 1999,
furnish to Customer a listing of all components which could be
included in the Quick Engine Change (QEC) kits which may be
purchased by Customer from Boeing. Customer agrees to review
such listing and indicate by marking on one copy of such listing
those components that Customer desires included in its QEC kits.
Customer will return such marked copy to Boeing within 30 days
after Customer's receipt of such listing. Within 30 days after
Boeing's receipt of such marked copy, Boeing will republish such
listing to reflect only those components selected by Customer and
will provide copies of such republished listing to Customer.
Boeing will from time to time furnish revisions to such
republished listing until a date approximately 90 days after
delivery of the last QEC kit ordered by Customer for the
Aircraft. Boeing will furnish to Customer as soon as practicable
a statement setting forth a firm price for the QEC kit
configuration selected by Customer. Customer agrees to place
orders with Boeing for the QEC kits for the Aircraft by October
1, 1999.
4.6 Payment for Provisioning Items. The payment
provisions of the Customer Services General Terms Agreement
(CSGTA) between Boeing and Customer will be applicable to
Provisioning Items ordered by Customer from Boeing for the
Aircraft.
5. Delivery.
Boeing will, insofar as reasonably possible, deliver to
Customer the Spare Parts ordered by Customer in accordance with
the provisions of this letter on dates reasonably calculated to
conform to Customer's anticipated needs in view of the scheduled
deliveries of the Aircraft. Customer and Boeing will agree upon
the date to begin delivery of the Provisioning Spare Parts
ordered in accordance with this letter. Where appropriate,
Boeing will arrange for shipment of such Spare Parts, which are
manufactured by vendors, directly to Customer from the applicable
vendor's facility. The routing and method of shipment for
initial deliveries and all subsequent deliveries of such Spare
Parts will be as mutually agreed between Boeing and Customer.
6. Substitution for Obsolete Spare Parts.
6.1 Obligation to Substitute. In the event that, prior to
delivery of the first Aircraft pursuant to the Purchase
Agreement, any Spare Part purchased by Customer from Boeing in
accordance with this letter is rendered obsolete or unusable due
to the redesign of the Aircraft or of any accessory, equipment or
part thereof (other than a redesign at Customer's request),
Boeing will deliver to Customer new and usable Spare Parts in
substitution for such obsolete or unusable Spare Parts and
Customer will return the obsolete or unusable Spare Parts to
Boeing. Boeing will credit Customer's account with Boeing with
the price paid by Customer for any such obsolete or unusable
Spare Part and will invoice Customer for the purchase price of
any such substitute Spare Part delivered to Customer.
6.2 Delivery of Obsolete Spare Parts and Substitutes
Therefor. Obsolete or unusable Spare Parts returned by Customer
pursuant to this Item will be delivered to Boeing at its Seattle
Distribution Center, or such other destination as Boeing may
reasonably designate. Spare Parts substituted for such returned
obsolete or unusable Spare Parts will be delivered to Customer at
Boeing's Seattle Distribution Center, or such other Boeing
shipping point as Boeing may reasonably designate. Boeing will
pay the freight charges for the shipment from Customer to Boeing
of any such obsolete or unusable Spare Part and for the shipment
from Boeing to Customer of any such substitute Spare Part.
7. Repurchase of Provisioning Items.
7.1 Obligation to Repurchase. During a period commencing
1 year after delivery of the first Aircraft under the Purchase
Agreement, and ending 5 years after such delivery, Boeing will,
upon receipt of Customer's written request and subject to the
exceptions in Paragraph 7.2, Exceptions, repurchase unused and
undamaged Provisioning Items which (i) were recommended by Boeing
in the Provisioning Data as initial provisioning for the
Aircraft, (ii) were purchased by Customer from Boeing, and (iii)
are surplus to Customer's needs.
7.2 Exceptions. Boeing will not be obligated under
Paragraph 7.1, Obligation to Repurchase, to repurchase any of the
following: (i) quantities of Provisioning Items in excess of
those quantities recommended by Boeing in the Provisioning Data
for the Aircraft, (ii) QEC Kits, bulk material bits, raw material
kits, service bulletin kits, standards kits and components
thereof (except those components listed separately in the
Provisioning Data), (iii) Provisioning Items for which an Order
was received by Boeing more than 8 months after delivery of the
last Aircraft, (iv) Provisioning Items which have become obsolete
or have been replaced by other Provisioning Items as a result of
(a) Customer's modification of the Aircraft or (b) design
improvements by Boeing or the vendor (other than Provisioning
Items which have become obsolete because of a defect in design if
such defect has not been remedied by an offer by Boeing or the
vendor to provide no charge retrofit kits or replacement parts
which correct such defect), and (v) Provisioning Items which
become excess as a result of a change in Customer's operating
parameters, provided to Boeing pursuant to the Initial
Provisioning meeting in Paragraph 2, which were the basis of
Boeing's initial provisioning recommendations for the Aircraft.
7.3 Notification and Format. Customer will notify Boeing,
in writing, when Customer desires to return Provisioning Items
which Customer's review indicates are eligible for repurchase by
Boeing under the provisions of this Repurchase of Provisioning
Items paragraph. Customer's notification will include a detailed
summary, in part number sequence, of the Provisioning Items
Customer desires to return. Such summary will be in the form of
listings, tapes, diskettes or other media as may be mutually
agreed between Boeing and Customer, and will include part number,
nomenclature, purchase order number, purchase order date and
quantity to be returned. Within 5 business days after receipt of
Customer's notification, Boeing will advise Customer, in writing,
when Boeing's review of such summary will be completed, but in no
case will the Boeing review be completed more than 30 days after
receipt of Customer's notification.
7.4 Review and Acceptance by Boeing. Upon completion of
Boeing's review of any detailed summary submitted by Customer
pursuant to Paragraph 7.3, Boeing will issue to Customer a
Material Return Authorization (MRA) for those Provisioning Items
Boeing agrees are eligible for repurchase in accordance with this
Repurchase of Provisioning Items paragraph. Boeing will advise
Customer of the reason that any spare part included in Customer's
detailed summary is not eligible for return. Boeing's MRA will
state the date by which Provisioning Items listed in the MRA must
be redelivered to Boeing and Customer will arrange for shipment
of such Provisioning Items accordingly.
7.5 Price and Payment. The price of each Provisioning
Item repurchased by Boeing pursuant to this Repurchase of
Provisioning Items paragraph will be an amount equal to
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] of the original invoice price thereof. In
the case of Provisioning Items manufactured by a vendor which were
purchased pursuant to Paragraph 4, Purchase from Boeing of Spare
Parts as Initial Provisioning for the Aircraft, hereof the
repurchase price will not include Boeing's [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
handling charge. Boeing will pay the repurchase price by issuing
a credit memorandum in favor of Customer which may be applied
against amounts due Boeing for the purchase of aircraft, Spare
Parts, services or data.
7.6 Delivery of Provisioning Items. Provisioning Items
repurchased by Boeing pursuant to this Repurchase of Provisioning
Items paragraph will be delivered to Boeing at its Seattle
Distribution Center, or such other destination as Boeing may
reasonably designate. Boeing will pay the freight charges for
the shipment from Customer to Boeing of any such Provisioning
Items.
8. Obsolete Spare Parts and Surplus Provisioning Items - Title
and Risk of Loss.
Title to and risk of loss of any obsolete or unusable Spare
Parts returned to Boeing pursuant to Paragraph 6, Substitution
for Obsolete Spare Parts, will pass to Boeing upon delivery
thereof to Boeing. Title to and risk of loss of any Spare Part
substituted for an obsolete or unusable Spare Part pursuant to
Paragraph 6, Substitution for Obsolete Spare Parts, will pass to
Customer upon delivery thereof to Customer. Title to and risk of
loss of any Provisioning Item repurchased by Boeing pursuant to
Paragraph 7, Repurchase of Provisioning Items, will pass to
Boeing upon delivery thereof to Boeing. With respect to the
obsolete or unusable Spare Parts which may be returned to Boeing
and the Spare Parts substituted therefor, pursuant to
Paragraph 6, and the Provisioning Items which may be repurchased
by Boeing, pursuant to Paragraph 7, the party which has risk of
loss of any such Spare Part or Provisioning Item will have the
responsibility of providing any insurance coverage for it desired
by such party.
9. Supplier Support.
Boeing has entered, or anticipates entering, into product
support agreements with suppliers (Boeing Suppliers) of major
system components manufactured by such Suppliers to be installed
on the Aircraft (Supplier Components). Such product support
agreements commit, or are expected to commit, the Boeing
Suppliers to provide to Boeing's customers and/or such customer's
designees support services with respect to the Supplier
Components which can be reasonably expected to be required during
the course of normal operation. This support includes but is not
limited to shelf-stock of certain spare parts, emergency spare
parts, timely delivery of spare parts, and technical data related
to the Supplier Components. Copies of such product support
agreements will be provided to Customer on or about October 1,
1999, in Boeing Document D6-56115, Volumes 1 and 2. In the event
Customer has used due diligence in attempting to resolve any
difficulty arising in normal business transactions between
Customer and a Boeing Supplier with respect to product support
for a Supplier Component manufactured by such Supplier and if
such difficulty remains unresolved, Boeing will, if requested by
Customer, assist Customer in resolving such difficulty.
Assistance will be provided by the Spares Supplier Support and
Data Management Organization within the Boeing Buyer Services
Division.
10. Termination for Excusable Delay.
In the event of termination of the Purchase Agreement with
respect to any Aircraft pursuant to Article 7 of the AGTA, such
termination will, if Customer so requests by written notice
received by Boeing within 15 days after such termination, also
discharge and terminate all obligations and liabilities of the
parties as to any Spare Parts which Customer had ordered pursuant
to the provisions of this letter as initial provisioning for such
Aircraft and which are undelivered on the date Boeing receives
such written notice.
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
October 10,1997
2060-4
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: Flight Crew Training Spare Parts Support
Reference: Purchase Agreement No. 2060 (the Purchase
Agreement) between The Boeing Company (Boeing) and
Continental Airlines, Inc. (Customer) relating to
Model 767-400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement shall have the same meaning as in the Purchase
Agreement.
Definition of Terms:
Flight Crew Training: Flight training occurring immediately
following delivery using Boeing facilities.
Removed Parts: Parts removed from an Aircraft during Flight Crew
Training.
Replacement Parts: Parts taken from Boeing inventory and
installed in an Aircraft because no Standby Parts are available.
Standby Parts: Parts which are owned by Customer and located at
Customer's designated storage area at Boeing to support Flight
Crew Training. The Standby Parts list, including part numbers,
exact quantities and on-dock dates, will be established during
the spares provisioning meeting.
Training Aircraft: The Aircraft delivered to Customer used for
Flight Crew Training.
1. Provisioning of Spare Parts
To support Flight Crew Training, Boeing agrees to provide
normal line maintenance and expendable spare parts at no charge
on the Training Aircraft; and, Customer agrees to provide Standby
Parts for the Training Aircraft.
If parts other than those discussed above fail, Boeing will
attempt to provide Replacement Parts for those failed parts in
order to prevent extended down time on the Training Aircraft. If
Boeing is unable to provide Replacement Parts, Customer will be
responsible for providing those parts.
2. Disposition of Removed Parts
Boeing may with Customer consent either:
(i) repair such Removed Parts, at no charge to
Customer, and either retain such parts as Standby Parts or
return the Removed Parts to Customer, at Customer expense;
or
(ii) return the Removed Parts to Customer at
Customer's expense; or
(iii) return the Removed Parts to the manufacturer
for repair or replacement under such manufacturer's
warranty. Upon Boeing's receipt of the repaired Removed
Parts or their replacements, Boeing may retain such Removed
Parts or their replacements as Standby Parts or return such
Removed Parts or their replacements to Customer, at
Customer's expense. Any Removed Parts returned to
Customer, or replacements, will be accomplished in
accordance with any written instructions from Customer
received by Boeing prior to such return.
3. Payment for of Replacement Parts
Boeing will invoice Customer for Replacement Parts at
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT].
4. Redelivery of Standby Parts
Standby Parts not installed in the Training Aircraft will
be redelivered to Customer on board the last aircraft used for
Flight Crew Training.
5. Non-performance by Customer
If Customer's non-performance of obligations in this Letter
Agreement causes a delay in the Flight Crew Training, Customer
will be deemed to have agreed to any such delay in Flight Crew
Training. In addition, Boeing will have the right to:
(i) purchase Standby Parts and invoice Customer for
the price of such Parts and for any necessary adjustment
and calibration of such Parts;
(ii) cancel or reschedule the Flight Crew Training;
or
(iii) invoice Customer for any out-of-pocket
expenses, including but not limited to ground handling
expenses, maintenance costs and storage costs, that are
directly attributable to the delay in the Flight Crew
Training.
6. Customer Warranty
Customer warrants that the Standby Parts will meet the
requirements of the Detail Specification and be in a condition to
pass Boeing's receival inspection and functional test, and if not
in a new condition, will have an attached FAA Serviceable Parts
Tag.
7. Title and Risk of Loss
Title to and risk of loss of any Standby Parts or Removed
Parts will remain with Customer. Boeing will have only such
liability for Standby Parts and Removed Parts as a bailee for
mutual benefit would have, but will not be liable for loss of
use. For Replacement Parts, title will transfer to Customer at
the time such part is installed on the Training Aircraft.
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
October 10, 1997
2060-5
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: Escalation Sharing
Reference: Purchase Agreement No. 2060 (the Purchase Agreement)
between The Boeing Company (Boeing) and Continental
Airlines, Inc. (Customer) relating to Model 767-
400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement have the same meaning as in the Purchase Agreement.
1. Commitment.
Boeing agrees to share one-half of the escalation, up to a
maximum of 3 percent per year, in each of the years 1997 and 1998
according to the terms in paragraph 2 below for any of Customer's
aircraft which are scheduled to deliver after December 31, 1996.
For the purpose of this Letter Agreement such aircraft are
referred to as "Eligible Aircraft."
All escalation calculations under this Letter Agreement will be
made in accordance with Exhibit D to the AGTA between Boeing and
Customer, using actual escalation indices published for the
applicable period.
2. Escalation Credit Memo.
2.1 Calculation - Eligible Aircraft Delivering in 1997.
At the time of delivery of each Eligible Aircraft
delivering in 1997, Boeing will issue to Customer a credit
memorandum (the 1997 Credit Memorandum) which will be applied to
the Aircraft Price of such Eligible Aircraft. The 1997 Credit
Memorandum is calculated as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2.2 Calculation - Eligible Aircraft Delivering in 1998.
At the time of delivery of each Eligible Aircraft
delivering in 1998, Boeing will issue to Customer a credit
memorandum (the 1998 Credit Memorandum) which shall be applied to
the Aircraft Price of such Eligible Aircraft. The 1998 Credit
Memorandum shall be calculated as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
2.3 Eligible Aircraft Delivering after 1998.
For Eligible Aircraft delivering after the calendar
year 1998, the amount of the Credit Memorandum will be the amount
calculated pursuant to paragraph 2.2 above through December 1998.
This credit memorandum amount will be escalated from December
1998 to the month of delivery in accordance with Exhibit D to the
AGTA.
3. Advance Payment Base Price.
It is agreed that the Advance Payment Base Prices for the
Eligible Aircraft set forth in the Purchase Agreement include an
estimate for the escalation sharing Credit Memorandum pursuant to
this Letter Agreement.
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
October 10, 1997
6-1162-GOC-084
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
Reference: Purchase Agreement No. 2060 (the Purchase Agreement)
between The Boeing Company (Boeing) and Continental
Airlines, Inc. (Customer) relating to Model 767-
400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement have the same meaning as in the Purchase Agreement.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Boeing and Customer understand that certain information
contained in this Letter Agreement, including any attachments
hereto, are considered by both parties to be confidential.
Boeing and Customer agree that each party will treat this Letter
Agreement and the information contained herein as confidential
and will not, without the other party's prior written consent,
disclose this Letter Agreement or any information contained
herein to any other person or entity except as may be required by
applicable law or governmental regulations.
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
October 10, 1997
6-1162-GOC-085
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Subject: [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
Reference: Purchase Agreement No. 2060 (the Purchase Agreement)
between The Boeing Company (Boeing) and Continental
Airlines, Inc. (Customer) relating to Model 767-
400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter
Agreement have the same meaning as in the Purchase Agreement.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Very truly yours,
THE BOEING COMPANY
By /s/ Gunar O. Clem
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By /s/ Brian Davis
Its Vice President
October 10, 1997
6-1162-GOC-086
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Subject: Special Matters
Reference: Purchase Agreement No. 2060 (the Purchase Agreement)
between The Boeing Company (Boeing) and Continental
Airlines, Inc. (Customer) relating to Model 767-
400ER aircraft (the Aircraft)
Ladies and Gentlemen:
This Letter Agreement amends and supplements the Purchase
Agreement. All terms used and not defined in this Letter
Agreement shall have the same meaning as in the Purchase
Agreement.
1. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3. Payment of Interest on Deferred Advance Payments.
3.1 Interest Rate for Firm Aircraft. Customer agrees to
pay interest on all amounts which are deferred pursuant to
Paragraph 2.1 of this Letter Agreement at [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. Such
interest shall accrue from and include the date on which such
payments would have been due but for the execution of this Letter
Agreement to but excluding the date on which such amounts are paid
in full. Interest shall be due and payable on the first business
day of each calendar quarter and on the delivery date of any
Aircraft that had a deferred advance payment schedule. (Note: the
interest rate as determined above will be use for the entire
calendar quarter; e.g., the interest rate determined based on
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT].)
3.2 Delivery Delay Impact on Interest Calculations. If
the delivery of any Aircraft is delayed due to either an
excusable or a non-excusable delay, then interest on the deferred
advance payments in respect of such Aircraft will not accrue
during the time period from the last working day of the scheduled
delivery month to the day of delivery of the Aircraft. Payment
of any interest that has accrued prior to the start of the delay
but remains unpaid will be paid on the normal quarterly interest
payment schedule set forth in Paragraph 3.1 of this Letter
Agreement or on the delivery date of the Aircraft, whichever
comes first.
3.3 Boeing Invoice. Boeing shall submit to Customer,
not less than fifteen (15) days prior to the end of each quarter,
an invoice for interest accrued during each such quarter.
Customer's payment is due and payable to Boeing on the first
business day of the following month. Boeing's invoice will show
interest accrued during the quarter for each Aircraft for which
advance payments have been deferred. The invoice will also
include interest accrued on deferred advance payments with
respect to other aircraft in other purchase agreements between
Customer and Boeing.
4. Model Substitution.
After delivery of the [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Aircraft,
Customer may elect to substitute Model 777-200IGW aircraft for any
undelivered Aircraft, subject to (i) Boeing having an available
position in the desired delivery month, (ii) the configuration of
the substitute aircraft having been established, (iii) Boeing
production constraints, and (iv) receipt of written concurrence
from the engine manufacturer acceptable to both Customer and
Boeing.
5. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6. CF6-80C2B8F Engines.
Boeing and General Electric have entered into a Memorandum of
Understanding with respect to the offerability of the CF6-80C2B8F
(B8F) engine on model 767-400 aircraft. The definitive agreement
between Boeing and General Electric is scheduled to be
executed by the end of October, 1997. In the event Customer
selects the B8F engine for the Aircraft after Boeing and General
Electric have entered into a definitive agreement to offer the B8F
engine, Boeing will make the necessary revisions to the Purchase
Agreement to reflect the installation of such B8F engines. Boeing
commits that the price Boeing charges Customer for the B8F engines
will be the same price that General Electric charges Boeing for
such B8F engines.
7. Aircraft Invoices.
Upon Customer request, at time of Aircraft delivery Boeing
agrees to provide a separate invoice addressed to the owner/trustee
of such Aircraft specifying the dollar amount to be received at
time of delivery. [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT]
8. Assignment of Credits.
Customer may not assign the credit memoranda described in
this Letter Agreement without Boeing's prior written consent
other than in circumstances where Boeing provides or arranges
lease equity financing to Customer in respect of an Aircraft.
9. Confidential Treatment.
Boeing and Customer understand that certain information
contained in this Letter Agreement, including any attachments
hereto, are considered by both parties to be confidential.
Boeing and Customer agree that each party will treat this Letter
Agreement and the information contained herein as confidential
and will not, without the other party's prior written consent,
disclose this Letter Agreement or any information contained
herein to any other person or entity except as may be required by
applicable law or governmental regulations.
Very truly yours,
THE BOEING COMPANY
By__/s/ Gunar O. Clem_________
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: October 10, 1997
CONTINENTAL AIRLINES, INC.
By___/s/ Brian Davis___________
Its___Vice President____________