EXHIBIT 10.2
Supplemental Agreement No. 11
to
Purchase Agreement No. 1783
between
The Boeing Company
and
Continental Airlines, Inc.
Relating to Boeing Model 757-224 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of July 30, 1998
by and between THE BOEING COMPANY, a Delaware corporation with its
principal office in Seattle, Washington, (Boeing) and CONTINENTAL
AIRLINES, INC., a Delaware corporation with its principal office in
Houston, Texas (Buyer);
WHEREAS, the parties hereto entered into Purchase Agreement
No. 1783 dated March 18, 1993, as amended and supplemented,
relating to Boeing Model 757-224 aircraft (the Agreement); and
WHEREAS, Buyer wishes to [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
WHEREAS, Boeing and Buyer have agreed to amend the Agreement
to incorporate certain other changes as set forth herein;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to amend the Agreement as follows:
1. Table of Contents and Articles:
1.1 Remove and replace, in its entirety, the Table of
Contents with a new Table of Contents (attached hereto) to reflect
amendment of the Agreement as of the date of this Supplemental
Agreement.
1.2 Remove and replace, in its entirety, Article 1, Subject
Matter of Sale, with new Article 1 (attached hereto) to incorporate
the addition of Block C Aircraft.
1.3 Remove and replace, in its entirety, Article 2,
Delivery, Title and Risk of Loss, with new Article 2 (attached
hereto) to incorporate a revised delivery schedule for the Block C
Aircraft.
1.4 Remove and replace, in its entirety, Article 3, Price of
Aircraft, with new Article 3 (attached hereto) to incorporate
revised Advance Payment Base Prices for the Block C Aircraft.
1.5 Remove and replace, in its entirety, the Delivery
Schedule for Model 757-224 Aircraft, following Article 15, with a
revised delivery schedule (attached hereto) to incorporate current
Aircraft delivery data.
2. Exhibits:
2.1 Remove and replace, in its entirety, Exhibit D entitled
"AIRFRAME AND ENGINE PRICE ADJUSTMENT" with new Exhibit D (attached
hereto) to incorporate the Aircraft Price Adjustment provisions for
Aircraft and Engine with a 1997 Base Price.
3. Letter Agreements:
3.1 Add revised Letter Agreement 1783-10R3, Option Aircraft,
to incorporate [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT].
4. Payment of Additional Advance Payments.
Within three (3) business days after execution of this
Supplemental Agreement, Buyer shall transfer to Boeing's account at
Chase Manhattan Bank, New York, N.Y., the sum [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].
The Agreement will be deemed to be supplemented to the extent
herein provided and as so supplemented will continue in full force
and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY CONTINENTAL AIRLINES, INC.
By: /s/ John A. McGarvey By: /s/ Brian Davis
Its: Attorney-In-Fact Its: Vice President
PURCHASE AGREEMENT
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Relating to Boeing Model 757-224 Aircraft
Purchase Agreement Number 1783
TABLE OF CONTENTS
ARTICLES Page Revised
By
ARTICLE 1. Subject Matter of Sale. . . . . . . 1-1 SA#11
ARTICLE 2. Delivery, Title and Risk of Loss. . 2-1 SA#11
ARTICLE 3. Price of Aircraft . . . . . . . . . 3-1 SA#11
ARTICLE 4. Taxes . . . . . . . . . . . . . . . 4-1
ARTICLE 5. Payment . . . . . . . . . . . . . . 5-1
ARTICLE 6. Excusable Delay . . . . . . . . . . 6-1
ARTICLE 7. Changes to the Detail Specification 7-1 SA#4
ARTICLE 8. Federal Aviation Requirements and
Certificates. . . . . . . . . . . . 8-1
ARTICLE 9. Representatives, Inspection,
Flights and Test Data . . . . . . . 9-1
ARTICLE 10. Assignment, Resale or Lease . . . . 10-1
ARTICLE 11. Termination for Certain Events. . . 11-1
ARTICLE 12. Product Assurance; Disclaimer and
Release; Exclusion of Liabilities;
Customer Support; Indemnification
and Insurance . . . . . . . . . . . 12-1
ARTICLE 13. Buyer Furnished Equipment and
Spare Parts . . . . . . . . . . . . 13-1 SA#2
ARTICLE 14. Contractual Notices and Requests. . 14-1
ARTICLE 15. Miscellaneous . . . . . . . . . . . 15-1
Schedule for Delivery of Model 757-224 Aircraft. SA#11
TABLE OF CONTENTS (Continued)
EXHIBITS
EXHIBIT A Aircraft Configuration. . . . . . . A-1 SA#8
EXHIBIT B Product Assurance Document. . . . . B-1 SA#2
EXHIBIT C Customer Support Document . . . . . C-1 SA#2
EXHIBIT D Price Adjustments Due to Economic
Fluctuations - Airframe and Engines D-1 SA#11
EXHIBIT E Buyer Furnished Equipment Provisions
Document. . . . . . . . . . . . . . E-1 SA#4
EXHIBIT F Defined Terms Document. . . . . . . F-1 SA#2
LETTER AGREEMENTS
1783-1 Spare Parts Support SA#2
1783-2 Seller Purchased Equipment SA#2
1783-4 Waiver of Aircraft Demonstration SA#2
Flights
1783-5 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA #2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
1783-6 Configuration Matters SA#2
1783-7 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
1783-8 Spare Parts Provisioning SA#2
1783-9R1 Escalation Sharing SA#10
1783-10R3 Option Aircraft SA#11
6-1162-WLJ-359 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA #2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-WLJ-367R5 Disclosure of Confidential Info SA#9
6-1162-WLJ-369 Additional Considerations SA#2
6-1162-WLJ-372 Conditions Relating to SA#2
Purchase Agreement
6-1162-WLJ-380 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-WLJ-384 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-WLJ-391R1 Special Purchase Agreement Provisions SA#4
6-1162-WLJ-393 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#2
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-WLJ-405 Certain Additional Contractual SA#2
Matters
6-1162-WLJ-409 Satisfaction of Conditions Relating SA#2
to the Purchase Agreement
6-1162-WLJ-497 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#3
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-RGP-946R1 Special Provisions Relating to SA#5
the Rescheduled Aircraft
6-1162-MMF-289R1 [CONFIDENTIAL MATERIAL OMITTED AND FILED SA#10
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
6-1162-MMF-319 Special Provisions Relating to SA#7
the Rescheduled Aircraft
6-1162-GOC-132 Special Matters SA#10
TABLE OF CONTENTS (Continued)
SUPPLEMENTAL AGREEMENTS Dated as of:
Supplemental Agreement No. 1 April 29, 1993
Supplemental Agreement No. 2 November 4, 1993
Supplemental Agreement No. 3 November 19, 1993
Supplemental Agreement No. 4 March 31, 1995
Supplemental Agreement No. 5 November 30, 1995
Supplemental Agreement No. 6 June 13, 1996
Supplemental Agreement No. 7 July 23, 1996
Supplemental Agreement No. 8 October 27, 1996
Supplemental Agreement No. 9 August 13, 1997
Supplemental Agreement No.10 October 10, 1997
Supplemental Agreement No. 11 July 30, 1998
ARTICLE 1.Subject Matter of Sale.
1.1 The Aircraft. Boeing will manufacture and deliver to
Buyer and Buyer will purchase and accept delivery from Boeing of
the following Boeing Model 757-224 aircraft (the Aircraft).
1.1.1 Block A, A-1 and B Aircraft. Twenty-seven (27)
Block A and A-1 Aircraft (the Block A and A-1 Aircraft), Nine (9)
Block B Aircraft (the Block B Aircraft), and One (1) Block C
Aircraft (the Block C Aircraft) manufactured in accordance with
Boeing detail specification D924N104-3, dated as of even date
herewith, as described in Exhibit A, and as modified from time to
time in accordance with this Agreement (Detail Specification).
1.2 Additional Goods and Services. In connection with the
sale of the Aircraft, Boeing will also provide to Buyer certain
other things under this Agreement, including data, documents,
training and services, all as described in this Agreement.
1.3 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
1.4 Defined Terms. For ease of use, certain terms are
treated as defined terms in this Agreement. Such terms are
identified with a capital letter and set forth and/or defined in
Exhibit F.
ARTICLE 2.Delivery, Title and Risk of Loss.
2.1 Time of Delivery. The Aircraft will be delivered to
Buyer by Boeing, and Buyer will accept delivery of the Aircraft, in
accordance with the following schedule:
Month and Year
of Delivery Quantity of Aircraft
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2.2 Notice of Target Delivery Date. Boeing will give Buyer
notice of the Target Delivery Date of the Aircraft approximately 30
days prior to the scheduled month of delivery.
2.3 Notice of Delivery Date. Boeing will give Buyer at
least 7 days' notice of the delivery date of the Aircraft. If an
Aircraft delivery is delayed beyond such delivery date due to the
responsibility of Buyer, Buyer will reimburse Boeing for all costs
incurred by Boeing as a result of such delay, including amounts for
storage, insurance, Taxes, preservation or protection of the
Aircraft and interest on payments due.
2.4 Place of Delivery. The Aircraft will be delivered at a
facility selected by Boeing in the State of Washington, unless
mutually agreed otherwise.
2.5 Title and Risk of Loss. Title to and risk of loss of an
Aircraft will pass from Boeing to Buyer upon delivery of such
Aircraft, but not prior thereto.
2.6 Documents of Title. Upon delivery of and payment for
each Aircraft, Boeing shall deliver to Buyer a bill of sale duly
conveying to Buyer good title to such Aircraft free and clear of
all liens, claims, charges and encumbrances of every kind
whatsoever, and such other appropriate documents of title as Buyer
may reasonably request.
ARTICLE 3.Price of Aircraft.
3.1 Definitions.
3.1.1 Special Features are the features listed in
Exhibit A which have been selected by Buyer.
3.1.2 Base Airframe Price is the Aircraft Basic Price
excluding the price of Special Features and Engines.
3.1.3 Engine Price is the price established by the
Engine manufacturer for the Engines installed on the Aircraft
including all accessories, equipment and parts set forth in Exhibit
D.
3.1.4 Aircraft Basic Price is comprised of the Base
Airframe Price, the Engine Price and the price of the Special
Features.
3.1.5 Economic Price Adjustment is the adjustment to
the Aircraft Basic Price (Base Airframe, Engine and Special
Features) as calculated pursuant to Exhibit D.
3.1.6 Aircraft Price is the total amount Buyer is to
pay for the Aircraft at the time of delivery.
3.1.7 Price First Published is the first price
published by Boeing for the same model of aircraft to be delivered
in the same general time period as the affected Aircraft and is
used to establish the Base Airframe Price when the Base Airframe
Price was not established at the time of execution of this
Agreement.
3.2 Aircraft Basic Price.
3.2.1 Block A Aircraft. The Aircraft Basic Price of
the Block A Aircraft, expressed in July 1992 dollars, is set forth
below:
Base Airframe Price: [CONFIDENTIAL MATERIAL OMITTED AND
Special Features FILED SEPARATELY WITH THE SECURITIES
Engine Price AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL
Block A Aircraft TREATMENT]
Basic Price
3.2.2 Block A-1 and Block B Aircraft. The Aircraft
Basic Price of the Block A-1 and Block B Aircraft with delivery,
expressed in July 1992 dollars, is set forth below:
Base Airframe Price: [CONFIDENTIAL MATERIAL OMITTED AND
Special Features FILED SEPARATELY WITH THE SECURITIES
Engine Price AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL
Block A-1/B Aircraft TREATMENT]
Basic Price
The special features value above for the Block A-1 and Block B
Aircraft incorporates the special features reprice activity noted
in Exhibit A-1 which includes Exhibit A, Change Orders 1,2, and 3
plus accepted Master Changes as of June 1, 1996.
3.2.2 Block C Aircraft. The Aircraft Basic Price of the Block C
Aircraft with delivery, expressed in July 1997 dollars, is set
forth below:
Base Airframe Price: [CONFIDENTIAL MATERIAL OMITTED AND
Special Features FILED SEPARATELY WITH THE SECURITIES
Engine Price AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL
Block C Aircraft TREATMENT]
Basic Price
The special features value above for the Block C Aircraft
incorporates the special features reprice activity noted in Exhibit
A-1 which includes Exhibit A, Change Orders 1,2, and 3 plus
accepted Master Changes as of June 1, 1996.
3.3 Aircraft Price.
3.3.1 Block A Aircraft, Block A-1 Aircraft and Block
B Aircraft. The Aircraft Price of the Block A Aircraft, Block A-1
Aircraft and Block B Aircraft will be established at the time of
delivery of such Aircraft to Buyer and will be the sum of:
3.3.1.1 the Block A Aircraft Basic Price,
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] plus
3.3.1.2 the Economic Price Adjustments for
the respective Aircraft Basic Price, as calculated pursuant to the
formulas set forth in Exhibit D (Price Adjustments Due to Economic
Fluctuations - Airframe and Engine - Block A, Block A-1 and Block
B Aircraft) plus
3.3.1.3 other price adjustments made pursuant
to this Agreement or other written agreements executed by Boeing
and Buyer.
3.3.1 Block C Aircraft. The Aircraft Price of the
Block C Aircraft will be established at the time of delivery of
such Aircraft to Buyer and will be the sum of:
3.3.1.1 the Block C Aircraft Basic Price,
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] plus
3.3.1.2 the Economic Price Adjustments for
the Aircraft Basic Price, as calculated pursuant to the formulas
set forth in Exhibit D (Price Adjustments Due to Economic
Fluctuations - Airframe and Engine - Block C Aircraft) plus
3.3.1.3 other price adjustments made pursuant
to this Agreement or other written agreements executed by Boeing
and Buyer.
3.4 Advance Payment Base Price.
3.4.1 Advance Payment Base Price. For advance payment
purposes, the following estimated delivery prices of the Aircraft
have been established, using currently available forecasts of the
escalation factors used by Boeing as of the date of signing this
Agreement. The Advance Payment Base Price of each Aircraft is set
forth below:
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
3.4.2 Adjustment of Advance Payment Base Prices -
Long-Lead Aircraft. For Aircraft scheduled for delivery 36 months
or more after the date of this Agreement, the Advance Payment Base
Prices appearing in Article 3.4.1 will be used to determine the
amount of the first advance payment to be made by Buyer on the
Aircraft. No later than 25 months before the scheduled month of
delivery of the first Aircraft scheduled for delivery in a calendar
year (First Aircraft), Boeing will increase or decrease the Advance
Payment Base Price of the First Aircraft and all Aircraft scheduled
for delivery after the First Aircraft as required to reflect the
effects of (i) any adjustments in the Aircraft Price pursuant to
this Agreement and (ii) the then-current forecasted escalation
factors used by Boeing. Boeing will provide the adjusted Advance
Payment Base Prices for each affected Aircraft to Buyer, and the
advance payment schedule will be considered amended to substitute
such adjusted Advance Payment Base Prices.
Continental Airlines, Inc.
Delivery Schedule for Model 757-224 Aircraft
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
AIRFRAME AND ENGINE PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
CONTINENTAL AIRLINES, INC.
Exhibit D to Purchase Agreement Number 1783
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1992 Base Price)
(Relating to Block A, A-1, and B Aircraft)
1. Formula.
The Airframe Price Adjustment will be determined at the time
of Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Airframe Price Adjustment.
L = [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
M = COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
P = Aircraft Basic Price (as set forth in Article 3.2 of
this Agreement) less the base price of Engines (as
defined in this Exhibit D) in the amount of
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing,
standard industrial classification code 3721,
compensation, base month and year June 1989 = 100), as
released by the Bureau of Labor Statistics, U.S.
Department of Labor on a quarterly basis for the months
of March, June, September and December, calculated as
follows: A three-month arithmetic average value
(expressed as a decimal and rounded to the nearest
tenth) will be determined using the months set forth in
the table below for the applicable Aircraft, with the
released Employment Cost Index value described above for
the month of March also being used for the months of
January and February; the value for June also used for
April and May; the value for September also used for
July and August; and the value for December also used
for October and November.
ICI = The three-month arithmetic average of the released
monthly values for the Industrial Commodities Index as
set forth in the "Producer Prices and Price Index" (Base
Year 1982 = 100) as released by the Bureau of Labor
Statistics, U.S. Department of Labor values (expressed
as a decimal and rounded to the nearest tenth) for the
months set forth in the table below for the applicable
Aircraft.
In determining the value of L, the ratio of ECI divided by
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] will be expressed as a decimal rounded to
the nearest ten-thousandth and then multiplied by [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] will be expressed as a decimal rounded to
the nearest ten-thousandth and then multiplied by [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
Month of Scheduled
Aircraft Delivery as Quantity Months to be Utilized
Set Forth in Article of in Determining the
2.1 of this Agreement Aircraft Value of ECI and ICI
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2. If at the time of delivery of an Aircraft Boeing is unable to
determine the Airframe Price Adjustment because the applicable
values to be used to determine the ECI and ICI have not been
released by the Bureau of Labor Statistics, then:
2.1 The Airframe Price Adjustment, to be used at the time of
delivery of each of the Aircraft, will be determined by utilizing
the escalation provisions set forth above. The values released by
the Bureau of Labor Statistics and available to Boeing 30 days
prior to scheduled month of Aircraft delivery will be used to
determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor
Statistics) to calculate the Airframe Price Adjustment. If no
values have been released for an applicable month, the provisions
set forth in Paragraph 2.2 below will apply. If prior to delivery
of an Aircraft the U.S. Department of Labor changes the base year
for determination of the ECI or ICI values as defined above, such
rebased values will be incorporated in the Airframe Price
Adjustment calculation. The payment by Buyer to Boeing of the
amount of the Purchase Price for such Aircraft, as determined at
the time of Aircraft delivery, will be deemed to be the payment for
such Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department
of Labor substantially revises the methodology used for the
determination of the values to be used to determine the ECI and ICI
values (in contrast to benchmark adjustments or other corrections
of previously released values), or for any reason has not released
values needed to determine the applicable Aircraft Airframe Price
Adjustment, the parties will, prior to delivery of any such
Aircraft, select a substitute for such values from data published
by the Bureau of Labor Statistics or other similar data reported by
non-governmental United States organizations, such substitute to
lead in application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use of the
original values as they may have fluctuated during the applicable
time period. Appropriate revision of the formula will be made as
required to reflect any substitute values. However, if within 24
months from delivery of the Aircraft the Bureau of Labor Statistics
should resume releasing values for the months needed to determine
the Airframe Price Adjustment, such values will be used to
determine any increase or decrease in the Airframe Price Adjustment
for the Aircraft from that determined at the time of delivery of
such Aircraft.
2.3 In the event escalation provisions are made
non-enforceable or otherwise rendered null and void by any agency
of the United States Government, the parties agree, to the extent
they may lawfully do so, to equitably adjust the Purchase Price of
any affected Aircraft to reflect an allowance for increases or
decreases in labor compensation and material costs occurring since
February, 1992, which is consistent with the applicable provisions
of paragraph 1 of this Exhibit D.
2.4 If required, Boeing will submit either a supplemental
invoice or refund the amounts due Buyer as appropriate to reflect
any increase or decrease in the Airframe Price Adjustment for the
Aircraft from that determined at the time of delivery of such
Aircraft. Any payments due Boeing or Buyer will be made with
reasonable promptness.
3. For the calculations herein, the values released by the Bureau
of Labor Statistics and available to Boeing 30 days prior to
scheduled month of Aircraft delivery will be used to determine the
ECI and ICI values for the applicable months (including those noted
as preliminary by the Bureau of Labor Statistics) to calculate the
Airframe Price Adjustment.
Note: Any rounding of a number, as required under this
Exhibit D with respect to escalation of the airframe
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.
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1997 Base Price)
(Relating to Block C Aircraft)
1. Formula.
The Airframe Price Adjustment will be determined at the time
of Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Airframe Price Adjustment.
L = [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
M = REQUEST FOR CONFIDENTIAL TREATMENT]
P = Aircraft Basic Price (as set forth in Article 3.2 of
this Agreement) less the base price of Engines (as
defined in this Exhibit D) in the amount of
$+ .
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing,
standard industrial classification code 3721,
compensation, base month and year June 1989 = 100), as
released by the Bureau of Labor Statistics, U.S.
Department of Labor on a quarterly basis for the months
of March, June, September and December, calculated as
follows: A three-month arithmetic average value
(expressed as a decimal and rounded to the nearest
tenth) will be determined using the months set forth in
the table below for the applicable Aircraft, with the
released Employment Cost Index value described above for
the month of March also being used for the months of
January and February; the value for June also used for
April and May; the value for September also used for
July and August; and the value for December also used
for October and November.
ICI = The three-month arithmetic average of the released
monthly values for the Industrial Commodities Index as
set forth in the "Producer Prices and Price Index" (Base
Year 1982 = 100) as released by the Bureau of Labor
Statistics, U.S. Department of Labor values (expressed
as a decimal and rounded to the nearest tenth) for the
months set forth in the table below for the applicable
Aircraft.
In determining the value of L, the ratio of ECI divided by
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] will be expressed as a decimal rounded to
the nearest ten-thousandth and then multiplied by [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] will be expressed as a decimal rounded to
the nearest ten-thousandth and then multiplied by [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
The following definitions of B and D will apply:
B = The calendar year before the year in which the
scheduled month of delivery as set forth in
Article 2.1 occurs.
D = The calendar year during which the scheduled
month of delivery as set forth in Article 2.1
occurs.
2. If at the time of delivery of an Aircraft Boeing is unable to
determine the Airframe Price Adjustment because the applicable
values to be used to determine the ECI and ICI have not been
released by the Bureau of Labor Statistics, then:
2.1 The Airframe Price Adjustment, to be used at the time of
delivery of each Aircraft, will be determined by utilizing the
escalation provisions set forth above. The values released by the
Bureau of Labor Statistics and available to Boeing 30 days prior to
scheduled Aircraft delivery will be used to determine the ECI and
ICI values for the applicable months (including those noted as
preliminary by the Bureau of Labor Statistics) to calculate the
Airframe Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below
will apply. If prior to delivery of an Aircraft the U.S.
Department of Labor changes the base year for determination of the
ECI or ICI values as defined above, such rebased values will be
incorporated in the Airframe Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for
such Aircraft, as determined at the time of Aircraft delivery, will
be deemed to be the payment for such Aircraft required at the
delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department
of Labor substantially revises the methodology used for the
determination of the values to be used to determine the ECI and ICI
values (in contrast to benchmark adjustments or other corrections
of previously released values), or for any reason has not released
values needed to determine the applicable Aircraft Airframe Price
Adjustment, the parties will, prior to delivery of any such
Aircraft, select a substitute for such values from data published
by the Bureau of Labor Statistics or other similar data reported by
non-governmental United States organizations, such substitute to
lead in application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use of the
original values as they may have fluctuated during the applicable
time period. Appropriate revision of the formula will be made as
required to reflect any substitute values. However, if within 24
months from delivery of the Aircraft the Bureau of Labor Statistics
should resume releasing values for the months needed to determine
the Airframe Price Adjustment, such values will be used to
determine any increase or decrease in the Airframe Price Adjustment
for the Aircraft from that determined at the time of delivery of
such Aircraft.
2.3 In the event escalation provisions are made
non-enforceable or otherwise rendered null and void by any agency
of the United States Government, the parties agree, to the extent
they may lawfully do so, to equitably adjust the Purchase Price of
any affected Aircraft to reflect an allowance for increases or
decreases in labor compensation and material costs occurring since
February, 1997, which is consistent with the applicable provisions
of paragraph 1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau
of Labor Statistics and available to Boeing 30 days prior to
scheduled Aircraft delivery will be used to determine the ECI and
ICI values for the applicable months (including those noted as
preliminary by the Bureau of Labor Statistics) to calculate the
Airframe Price Adjustment.
Note: Any rounding of a number, as required under this
Exhibit D with respect to escalation of the airframe
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.
ENGINE PRICE ADJUSTMENT - ROLLS-ROYCE
(1992 BASE PRICE)
(Relating to Block A, A-1, and B Aircraft)
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
ENGINE PRICE ADJUSTMENT - ROLLS-ROYCE
(1997 BASE PRICE)
(Relating to Block C Aircraft)
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
July 30, 1998
1783-10R3
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Subject: Letter Agreement No. 1783-10R3 to
Purchase Agreement No. 1783 - Option Aircraft
Ladies and Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1783 dated
March 18, 1993 (the Purchase Agreement) between THE BOEING COMPANY
(Boeing) and CONTINENTAL AIRLINES, INC. (Buyer) relating to Model
757-224 aircraft (Aircraft). This Letter Agreement supersedes and
replaces in its entirety Letter Agreement 1783-10R2.
All terms used and not defined herein shall have the same meaning
as in the Purchase Agreement.
In consideration of Buyer's purchase of the Aircraft, Boeing hereby
agrees to manufacture and sell up to [CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] to Buyer, on the
same terms and conditions set forth in the Purchase Agreement,
except as otherwise described in Attachment A hereto, and subject
to the terms and conditions set forth below.
1. Delivery.
The Option Aircraft will be delivered to Buyer during or
before the months set forth in the following schedule:
Month and Year Number of
of Delivery Option Aircraft
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2. Price. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
3. Option Aircraft Deposit.
In consideration of Boeing's grant to Buyer of options to
purchase the Option Aircraft as set forth herein, and concurrent
with Buyer's payment to Boeing of initial advance payments required
under Supplemental Agreement No. 6 to the Purchase Agreement for
the Aircraft, Buyer will pay a deposit to Boeing of [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] for each Option Aircraft (the Option Deposit). In the
event Buyer exercises an option herein for an Option Aircraft, the
amount of the Option Deposit for such Option Aircraft will be
credited against the first advance payment due for such Option
Aircraft pursuant to the advance payment schedule set forth in
Article 5 of the Purchase Agreement.
In the event that Buyer does not exercise its option to purchase a
particular Option Aircraft pursuant to the terms and conditions set
forth herein, Boeing shall be entitled to retain the Option Deposit
for such Option Aircraft.
4. Option Exercise.
To exercise its option to purchase the Option Aircraft, Buyer
shall give written notice thereof to Boeing on or before the first
business day of the month in each Option Exercise Date shown below:
Option Aircraft Option Exercise Date
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
5. Contract Terms.
Within thirty (30) days after Buyer exercises an option to
purchase Option Aircraft pursuant to paragraph 4 above, Boeing and
Buyer will use their best reasonable efforts to enter into a
supplemental agreement amending the Purchase Agreement to add the
applicable Option Aircraft to the Purchase Agreement as a firm
Aircraft (the Option Aircraft Supplemental Agreement).
In the event the parties have not entered into such an Option
Aircraft Supplemental Agreement within the time period contemplated
herein, either party shall have the right, exercisable by written
or telegraphic notice given to the other within ten (10) days after
such period, to cancel the purchase of such Option Aircraft.
6. Cancellation of Option to Purchase.
Either Boeing or Buyer may cancel the option to purchase an
Option Aircraft if any of the following events are not accomplished
by the respective dates contemplated in this letter agreement, or
in the Purchase Agreement, as the case may be:
(i) purchase of an Aircraft under the Purchase Agreement for
any reason not attributable to the canceling party;
(ii) payment by Buyer of the Option Deposit with respect to
such Option Aircraft pursuant to paragraph 3 herein; or
(iii) exercise of the option to purchase such Option Aircraft
pursuant to the terms hereof.
Any cancellation of an option to purchase by Boeing which is based
on the termination of the purchase of an Aircraft under the
Purchase Agreement shall be on a one-for-one basis, for each
Aircraft so terminated.
Cancellation of an option to purchase provided by this letter
agreement shall be caused by either party giving written notice to
the other within ten (10) days after the respective date in
question. Upon receipt of such notice, all rights and obligations
of the parties with respect to an Option Aircraft for which the
option to purchase has been canceled shall thereupon terminate.
Boeing shall promptly refund to Buyer, without interest, any
payments received from Buyer with respect to the affected Option
Aircraft. Boeing shall be entitled to retain the Option Deposit
unless cancellation is attributable to Boeing's fault, in which
case the Option Deposit shall also be returned to Buyer without
interest.
7. Applicability.
Except as otherwise specifically provided, limited or excluded
herein, all Option Aircraft that are added to the Purchase Agreement
by an Option Aircraft Supplemental Agreement as firm Aircraft shall
benefit from all the applicable terms, conditions and provisions of
the Purchase Agreement.
If the foregoing accurately reflects your understanding of the
matters treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By John A. McGarvey
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: July 30, 1998
CONTINENTAL AIRLINES, INC.,
By Brian Davis
Its Vice President
Attachment
Model 757-224 Aircraft
1. Option Aircraft Description and Changes.
1.1 Aircraft Description. The Option Aircraft are described
by Boeing Detail Specification D924N104-3, dated March 18, 1993, as
amended and revised pursuant to the Purchase Agreement.
1.2 Changes. The Option Aircraft Detail Specification shall
be revised to include:
(1) Changes applicable to the basic Model 757-200
aircraft which are developed by Boeing between the date of the
Detail Specification and the signing of an Option Aircraft
Supplemental Agreement.
(2) Changes mutually agreed upon.
(3) Changes required to obtain a Standard Certificate
of Airworthiness.
1.3 Effect of Changes. Changes to the Detail Specification
pursuant to the provisions of the clauses above shall include the
effects of such changes upon Option Aircraft weight, balance, design
and performance.
2. Price Description.
2.1 Price Adjustments.
2.1.1 Base Price Adjustments. The base airframe and
base engine price (pursuant to Article 3 of the Purchase Agreement)
of the Option Aircraft will be adjusted to Boeing's and the engine
manufacturer's then-current prices as of the date of execution of
the Option Aircraft Supplemental Agreement.
2.1.2 Special Features. The price for special features
incorporated in the Option Aircraft Detail Specification will be
adjusted to Boeing's then-current prices for such features as of the
date of execution of the Option Aircraft Supplemental Agreement only
to the extent that such increase is attributable to an increase in
Boeing's cost for purchased equipment.
2.1.3 Escalation Adjustments. The base airframe and
special features price will be escalated according to the applicable
airframe and engine manufacturer escalation provisions contained in
Exhibit D of the Purchase Agreement.
Buyer agrees that the engine escalation provisions will be adjusted
if they are changed by the engine manufacturer prior to the signing
the Option Aircraft Supplemental Agreement. In such case, the then-
current engine escalation provisions in effect at the time of
execution of the Option Aircraft Supplemental Agreement will be
incorporated into such agreement.
2.1.4 Price Adjustments for Changes. Boeing may adjust
the basic price and the advance payment base prices for any changes
mutually agreed upon by Buyer and Boeing subsequent to the date that
Buyer and Boeing enter into the Option Aircraft Supplemental
Agreement.
2.1.5 BFE to SPE. An estimate of the total price for
items of Buyer Furnished Equipment (BFE) changed to Seller Purchased
Equipment (SPE) pursuant to the Detail Specification is included in
the Option Aircraft price build-up. The purchase price of the
Option Aircraft will be adjusted by the price charged to Boeing for
such items plus 10% of such price.
2.1.6 Certification of Rolls-Royce Engines. It is
understood by the parties that the price offered hereunder of the
Rolls-Royce Engines may be adjusted by Rolls-Royce to reflect
changes required to be incorporated to satisfy any new or amended
United States Federal Aviation Administration (FAA) regulations.
Therefore, in the event that after May 31, 1990, the FAA or other
applicable U.S. Federal Agency issues new rules or regulations or
changes or amends then-existing rules or regulations, and such new,
changed or amended rules or regulations require changes to or
modification of the Engines (Engine Modifications), then: (i)
Boeing shall adjust the purchase price of the Option Aircraft in the
amount by which Rolls-Royce revises its price of the Engines to
Boeing as a result of such Engine Modifications; (ii) if the Engine
Modifications require any change, modification or alteration to the
Option Aircraft (Option Aircraft Modifications), the charge for
making the Option Aircraft Modifications shall be added to the
purchase price of the Option Aircraft; (iii) notwithstanding the
provisions of paragraph 1 of this Letter Agreement, the time of
delivery of the Option Aircraft shall be extended to the extent of
any delay attributable to the Engine or Option Aircraft
Modifications and said delay shall be deemed excusable; and (iv)
Boeing shall, if necessary, revise the Option Aircraft Detail
Specification as required to reflect the effects of the Engine
Modifications or Option Aircraft Modifications.
3. Advance Payments.
3.1 Buyer shall pay to Boeing advance payments for the Option
Aircraft pursuant to the schedule for payment of advance payments
provided in the Purchase Agreement.