EXHIBIT 10.23
GE Aircraft Engines
General Electric Company
Xxx Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000-0000 XXX
Tel. 513/000-0000
LETTER AGREEMENT NO. 11
Continental Airlines, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Gentlemen:
WHEREAS, General Electric Company ("GE") and Continental
Airlines, Inc. ("Airline") have entered into Amended and Restated
General Terms Agreement No. 6-8057 dated as of November 1, 1994,
as amended (together with Letter Agreement Nos. 1 through 10
thereto, collectively, the "Agreement"). This Letter Agreement
No. 11 amends and supplements the Agreement by providing for
applicable terms and conditions governing the sale by GE and the
purchase by Airline from GE of spare CF6 and GE90 engines and
related equipment and spare parts therefor in support of
Airline's fleet of GE-powered aircraft; and
WHEREAS, Airline has ordered from The Boeing Company ("Boeing")
(i) thirty (30) new firm 767-400ER aircraft for delivery in the
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] time period, [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] and
(ii) ten (10) new firm 777-200 aircraft for delivery in the
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] time period [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
WHEREAS, Airline and Boeing have entered into an agreement
whereby Airline has agreed that in the event Airline purchases
any new 737 through 777 sized aircraft prior to December 31,
2017, such aircraft shall be aircraft manufactured by Boeing. GE
is not a party to this Purchase Agreement and any reference to
such Purchase Agreement is only for the convenience of Airline.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:
I. Airline agrees that when Airline acquires directly from
Boeing new 737 through 777 sized aircraft (other than 757
aircraft), including derivatives, for delivery by December
31, 2017 (except for those for which neither GE nor CFMI
has an application) which are in addition to the Firm 767
Aircraft and Firm 777 Aircraft, [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] Airline shall equip all such additional
aircraft with GE or CFMI engines. If, for any reason
other than one defined in the Agreement as an "Excusable
Delay" (Article VIII), GE or CFMI is unable to deliver
such engines in the time period required by Airline,
Airline may purchase engines from another source.
II. Airline agrees that in the event Airline acquires directly
from an aircraft manufacturer for delivery by December 31,
2017, with or without Boeing's consent, additional new 737
through 777 sized aircraft, including derivatives, which
are not manufactured by Boeing, such additional aircraft
shall be equipped with GE of CFMI engines (except for
those for which neither GE nor CFMI has an application).
If, for any reason, other than one defined in the
Agreement as an "Excusable Delay" (Article VIII), GE or
CFMI is unable to deliver such engines in the time period
required by Airline, Airline may purchase engines from
another source.
The additional aircraft referred to in paragraph I above
and in this paragraph II shall be individually or
collectively referred to as the "Follow-On Aircraft."
III. If Airline purchases Follow-On Aircraft, Airline agrees to
purchase a quantity of spare engines which are equivalent
to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] percent [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] (rounded to the nearest whole
spare engine) of the quantity of new engines installed on
each model of Follow-On Aircraft.
IV. GE agrees to provide Airline the following Special
Allowances, subject to all of the conditions set forth in
Attachment A hereto.
A. Follow-On Aircraft Allowance
In consideration of Airline purchasing and taking
delivery of new CF6 powered Follow-on Aircraft for
delivery through December 31, 2017, GE will provide
Airline an allowance per aircraft as defined by the
formula below:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT]
In consideration of Airline purchasing and taking
delivery of new GE90 powered Follow-On Aircraft for
delivery through December 31, 2017, GE will provide
Airline an allowance per aircraft as defined by the
formula below:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
These Follow-On Aircraft Allowances will be earned by
Airline, on a pro rata basis, upon delivery of each
shipset of CF6 and GE90 Engines to the aircraft
manufacturer for installation on Airline's Follow-On
Aircraft.
Upon concurrence by the aircraft manufacturer, GE will
make the Follow-On Aircraft Allowances available for use
toward the purchase of the respective Follow-On Aircraft
to which such allowance relates.
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
The obligations set forth in this Letter Agreement No. 11 are in
addition to and form part of the obligations set forth in the
Agreement.
Counterparts: This Letter Agreement No. 11 may be executed by the
parties hereto in two or more counterparts and by the different
parties hereto on separate counterparts each of which shall be
deemed to be an original but all of which when taken together
shall constitute one and the same document. Delivery of an
executed counterpart of a signature page to this Agreement by fax
shall be effective as delivery of a manually executed
counterpart.
Please indicate your agreement with the foregoing by signing the
original and one copy in the space provided below and returning
the same to the undersigned whereby this Letter Agreement No. 11
shall become effective as of December 22, 1997.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxx
Typed Name: Xxxxx Xxxxx Typed Name: Xxxxx X. Xxxxxxx
Title: Vice President Title: Sales Director
Date: 12/22/97 Date 12/22/97
1.Allowance for Initial Aircraft Sale Only
Any allowance described in this Letter Agreement No. 11
applies only to new CF6 powered Follow-on Aircraft and new
GE90 powered Follow-On 777 Aircraft (individually or
collectively, the "CF6/GE90 Follow-On Aircraft") and does
not apply to an aircraft that has been the subject of a
previous GE proposal or offer or, to an aircraft that has
been previously sold or otherwise acquired through resale,
lease, trade or exchange.
2. Allowance Not Paid
If: (a) Airline for any reason: terminates, cancels,
revokes or delays beyond the Follow-On Delivery Period
(defined as a period of time not to exceed December 31,
2017 unless such delay occurs as a result of an Excusable
Delay) its order for Follow-On Aircraft or some portion
thereof, or (b) Airline fails to perform, in any material
respect, any of the allowance conditions or other material
terms of the Agreement, in addition to the other remedies
that may be available to GE in this Attachment A, and, with
respect to a failure to perform, in any material respect,
any of the other material terms of the Agreement, such
other remedies that may be available to GE at law or in
equity, any allowance which may have been earned by Airline
upon delivery of GE engines to the aircraft manufacturer
for affected Aircraft shall become an unearned allowance,
and will not be paid; provided, however, that such an
unearned allowance relating to a delayed CF6/GE90 Follow-On
Aircraft may be reinstated and paid to Airline upon
delivery of such CF6/GE90 Follow-On Aircraft if (i) such
delay was not attributable to a breach by Airline under the
applicable aircraft manufacturer's purchase agreement, this
Agreement or any other applicable agreement, and (ii)
Airline accepts such CF6/GE90 Follow-On Aircraft promptly
when tendered by Boeing; and (iii) such acceptance occurs
not later than the Follow-On Delivery Period, subject to
excusable delay as defined in paragraph 10 hereof.
3. Adjustment of Allowances
In the event Airline fails to (i) take delivery of at least
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] the respective CF6 and
GE90 Follow-On Aircraft Allowances described in Article
IV.A of Letter Agreement No. 11 will be reduced according
to the following table:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
and such reduced allowance will be applicable to (i) all
CF6 powered Follow-On Aircraft delivered to Airline through
December 31, 2017 and (ii) all GE90-powered Follow-On
Aircraft delivered to Airline through December 31, 2017.
The Special Allowances described in Article IV.A. will not
be applicable to Follow-On Aircraft delivered after
December 31, 2017.
The cut-off dates set forth in this paragraph 3 are subject
to extension for excusable delay [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].
4. Assignability of Allowances
The allowances described herein are exclusively for the
benefit of Airline, and are not assignable, except in
connection with Airline's financing of the Aircraft.
5. Set Off for Outstanding Balance
Allowances will be made available by GE at the time of
CF6/GE90 Follow-On Aircraft delivery provided Airline has
no accounts aggregating in excess of [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] outstanding for ninety (90) days or more payable
to GE for the purchase of GE Aircraft Engines products and
services for which GE shall have notified airline (to the
attention of Chief Financial Officer) at least ninety (90)
days prior to such scheduled CF6/GE90 Follow-On Aircraft
delivery. In the event of such outstanding accounts
receivable, the amounts of such outstanding accounts
receivable shall be deducted by GE from the allowances that
are payable at the time of scheduled Aircraft delivery.
However, no such deduction will occur for those past due
amounts that Airline has contested in good faith, provided
that Airline has notified GE of such contest within sixty
(60) days after Airline received the invoice(s) therefor.
6. Cancellation of CF6/GE90 Follow-On Spare Engines
In the event Airline cancels any purchase order for
CF6/GE90 Follow-On Aircraft spare engine(s) prior to
scheduled delivery to Airline, except in circumstances
constituting Excusable Delay, (i) GE will retain, and
Airline will forfeit, any spare engine progress payments
made to GE for such canceled spare engine, and (ii) if
written notice of cancellation is received by GE at least
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] prior to the scheduled
engine delivery date, Airline will pay a cancellation
charge of [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] of the
engine price, [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
7. Cancellation or Failure to Accept Delivery of Installed
Engines
If airline cancels any purchase order for, or otherwise
fails to take delivery of, installed CF6/GE90 Follow-On
Aircraft engine(s) (individually or collectively, the
"Engine"), the parties agree that harm or damage will be
sustained by GE as a result. The parties agree that any
such cancellation or failure to accept delivery of the
Engine (except in circumstances constituting Excusable
Delay) will subject Airline to a cancellation charge of
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] of the installed Engine
price, (determined as of the date of scheduled Engine
delivery to the aircraft manufacturer). If Airline
provides notice of cancellation at least [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] prior to the scheduled delivery
date of the aircraft, the parties acknowledge this charge
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] and to be a reasonable
estimate of the harm or damage to GE. To the extent that
GE gets paid cancellation fees by or receives credit or
other quantifiable consideration from the aircraft
manufacturer with respect to installed Engines for
Airline's canceled aircraft or aircraft for which Airline
has failed to accept delivery when duly tendered, GE will
credit airline the value of such fees, credits or other
quantifiable consideration against such cancellation charge
and any other amounts owed to GE by Airline for damages
relating to any such cancellation or failure to accept
delivery.
8. Additional Damages; Confidentiality
In the event written notice of cancellation (of spare or
installed engines) is not received by GE more than
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] prior to scheduled
delivery date to Airline for a spare engine, or
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] prior to the delivery
date of the aircraft for an installed engine, GE will also
retain all remedies available to it for damages in law or
equity in excess of such cancellation charge.
Airline agrees to cooperate with GE to maintain the
confidentiality of any proprietary information disclosed by
GE in connection with proving any such additional harm or
damages, provided that any such disclosure shall be at GE's
discretion.
9. Planned Aircraft Not Operated for Planned Period
If, within the [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] following
delivery of each CF6/GE90 Follow-On Aircraft for which a
special allowance was provided by GE under this Letter
Agreement No. 11, Airline fails to operate (other than as a
result of mechanical problem or due to an event of loss)
such CF6/GE90 Follow-On Aircraft, the special allowances
earned and/or paid on such CF6/GE90 Follow-On Aircraft
shall be proportionately reduced. Airline will reimburse
GE an amount equal to the proportionate share of the
special allowances earned and/or paid with respect to such
CF6/GE90 Follow-On Aircraft, (based on the percentage of
the six-month minimum period the CF6/GE90 Follow-On
Aircraft was actually operated by Airline), with interest
on such amount. The special allowance reimbursement is due
no later than 30 days from the time Airline ceases to
operate such CF6/GE90 Follow-On Aircraft.
Interest will be calculated at [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]. For purposes of the foregoing, Airline shall
be deemed to operate such CF6/GE90 Follow-On Aircraft even
though such CF6/GE90 Follow-On Aircraft are (i) operated by
any majority owned affiliate or subsidiary of Airline or
(ii) operated by any other airline with whom Airline has
entered into a code sharing or other marketing arrangement.
10. Excusable Delay
"Excusable Delay" with respect to an installed engine as
used in this Attachment A means a delay in delivery of an
Aircraft not attributable to a failure of Airline to timely
perform its obligations under the aircraft manufacturer's
purchase agreement (without giving effect to any
supplement, modification or waiver thereto which directly
or indirectly results in a permitted delay of the scheduled
delivery of an aircraft unless GE shall have consented
thereto, which consent shall not be unreasonably withheld),
including any event of force majeure or a default by the
aircraft manufacturer, provided, that airline accepts such
aircraft promptly when tendered by the aircraft
manufacturer.
An "Excusable Delay" with respect to a spare engine as used
in this Attachment A means a delay in delivery of a spare
engine not attributable to a failure of Airline to timely
perform its obligations under the purchase agreement
between Airline and GE, including any event of default by
GE or event of force majeure provided, that Airline accepts
such spare engine promptly when tendered by GE after an
event of force majeure.
