Exhibit 10.1
------------
Supplemental Agreement No. 8
to
Purchase Agreement No. 1663
between
The Boeing Company
and
UNITED AIR LINES, INC.
Relating to Boeing Model 777-222 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of the 10th day
of February, 1999, by and between THE BOEING COMPANY, a Delaware
corporation (hereinafter called Boeing), and UNITED AIR LINES,
INC., a Delaware corporation, (hereinafter called Buyer);
W I T N E S S E T H:
-------------------
WHEREAS, the parties hereto entered into an agreement dated
as of December 18, 1990, relating to Boeing Model 777-222
aircraft (hereinafter referred to as the "Aircraft"), which
agreement, as amended, together with all exhibits and
specifications attached thereto and made a part thereof which is
hereinafter called the "Purchase Agreement" and;
WHEREAS, Buyer has requested to substitute nine (9) 777-222
"B" Market Aircraft (the Block D "B" Market Aircraft) for seven
(7) 747-422 Aircraft [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] and;
WHEREAS, Buyer has requested revision to the engine prices
applicable to six (6) 777-222 Block B "A" Market Aircraft and ten
(10) 777-222 Block C "B" Market Aircraft added to the Purchase
Agreement in Supplemental Agreement No. 7;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree to supplement the
Purchase Agreement as follows:
P. A. No. 1663 S8-1 SA8
1. In the TABLE OF CONTENTS , revise the title of EXHIBIT D-1
to read as follows:
"EXHIBIT D-1 "Price Adjustment Due to Economic
Fluctuations - Airframe and Engine
Block B "A" Market Aircraft,
Block C "B" Market Aircraft, and
Block D "B" Market Aircraft"
2. Article 1.1.2 is revised as follows:
(a) in the first sentence, the words "thirty-nine (39)" are
inserted in lieu of the words "thirty (30)";
(b) in the second sentence, the words "Block D "B" Market
Aircraft" are inserted after the words "Block C "B" Market
Aircraft.
3. In Article 2, Paragraph 2.1, Time of Delivery, add the
following schedule after the schedule for the Block C "B" Market
Aircraft:
"Block D "B" Market Aircraft
----------------------------
[*CONFIDENTIAL
MATERIAL OMITTED AND
FILED SEPARATELY WITH
THE SECURITIES AND EX-
CHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT] ▇▇▇▇ ▇▇▇ (1)
[*CONFIDENTIAL
MATERIAL OMITTED AND
FILED SEPARATELY WITH
THE SECURITIES AND EX-
CHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT] ▇▇▇▇ ▇▇▇ (1)
[*CONFIDENTIAL
MATERIAL OMITTED AND
FILED SEPARATELY WITH
THE SECURITIES AND EX-
CHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT] One (1)
One (1)
One (1)
One (1)
One (1)
One (1)
One (1)"
4. Paragraph 3.1.4 is revised by deleting the words
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] with the words [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
P.A. No.1663 S8-2 SA 8
5. Paragraph 3.1.5 is deleted and replaced by the following
Paragraph 3.1.5:
"3.1.5 Basic Price for the Block C and Block D "B"
Market Aircraft. The basic price of each of the Block
C and Block D "B" Market Aircraft shall be equal to the
sum of (i) [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] plus
the price of the engines, [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] for a total of [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]," (which includes
the price effects of all Change Orders through Change
Order 9A) [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] and
(ii) such price adjustments applicable to such Block C
and Block D "B" Market Aircraft as may be made pursuant
to the provisions of this Agreement, including Article
7 (Changes to Detail Specification) and Article 8 (FAA
Requirements) or other written agreements executed by
Buyer and Boeing."
6. Article 3.2 Purchase Price is revised to read:
"The purchase price of each Aircraft shall be equal to
the sum of the following items as determined at the
time of such Aircraft delivery; (i) the Basic Price of
the Block A "A" Market Aircraft, Block B "A" Market
Aircraft, Block A "B" Market Aircraft, Block B "B"
Market Aircraft, Block C "B" Market Aircraft or Block D
"B" Market Aircraft as applicable, (ii) the Airframe
and Engine Price Adjustments to be determined pursuant
to Exhibit D (Price Adjustment Due to Economic
Fluctuations - Airframe and Engine - Block A "A" Market
Aircraft, Block A "B" Market Aircraft and Block B "B"
Market Aircraft) or Exhibit D-1 (Price Adjustment Due
to Economic Fluctuations - Airframe and Engine (Block B
"A" Market Aircraft, Block C "B" Market Aircraft, and
Block D "B" Market Aircraft) attached hereto or the
applicable provisions determined in Article 3.1 above,
and (iii) such price adjustments applicable to such
Aircraft as may be made pursuant to the provisions of
this Agreement, including Exhibit E (Buyer Furnished
Equipment Document) or other written agreements
executed by Boeing and Buyer (the "Purchase Price")."
7. In Article 5, Paragraph 5.1, Advance Payment Base Price,
revise the table of Advance Payment Base Prices for the Block "B"
A Market Aircraft to read as follows
"Block B "A" Market Aircraft
----------------------------
[*CONFIDENTIAL [*CONFIDENTIAL
MATERIAL OMITTED MATERIAL OMITTED
AND FILED SEPARATELY AND FILED SEPARATELY
WITH THE SECURITIES WITH THE SECURITIES
AND EXCHANGE AND EXCHANGE
COMMISSION COMMISSION
PURSUANT TO A PURSUANT TO A
REQUEST FOR REQUEST FOR
CONFIDENTIAL CONFIDENTIAL
TREATMENT] 2000 TREATMENT]
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 2000
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 2000
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 2000
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 2000
P.A. No. 1663 S8-3 SA8
8. In Article 5, Paragraph 5.1, Advance Payment Base Price,
revise the table of Advance Payment Base Prices for the Block C
"B" Market Aircraft to read as follows:
"Block C "B" Market Aircraft
----------------------------
March 1999 [*CONFIDENTIAL
[*CONFIDENTIAL MATERIAL OMITTED
MATERIAL OMITTED AND FILED SEPARATELY
AND FILED SEPARATELY WITH THE SECURITIES
WITH THE SECURITIES AND EXCHANGE
AND EXCHANGE COMMISSION
COMMISSION PURSUANT TO A
PURSUANT TO A REQUEST FOR
REQUEST FOR CONFIDENTIAL
CONFIDENTIAL TREATMENT]
TREATMENT] 1999
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 1999
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 1999
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT]"
9. In Article 5, Paragraph 5.1, Advance Payment Base Price,
add the following table after the table for the Block C "B"
Market Aircraft:
"Block D "B" Market Aircraft
----------------------------
[*CONFIDENTIAL [*CONFIDENTIAL
MATERIAL OMITTED MATERIAL OMITTED
AND FILED SEPARATELY AND FILED SEPARATELY
WITH THE SECURITIES WITH THE SECURITIES
AND EXCHANGE AND EXCHANGE
COMMISSION COMMISSION
PURSUANT TO A PURSUANT TO A
REQUEST FOR REQUEST FOR
CONFIDENTIAL CONFIDENTIAL
TREATMENT] 2000 TREATMENT]
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT] 2000
[*CONFIDENTIAL
MATERIAL OMITTED
AND FILED SEPARATELY
WITH THE SECURITIES
AND EXCHANGE
COMMISSION
PURSUANT TO A
REQUEST FOR
CONFIDENTIAL
TREATMENT]
10. EXHIBIT D-1 Price Adjustment Due to Economic Fluctuations
- Airframe and Engine Block B "A" Market Aircraft and Block C "B"
Market Aircraft is deleted and replaced by the new Exhibit D-1
which is attached to this Supplemental Agreement No. 8 as
"Attachment 1."
P.A. No. 1663 S8-4 SA8
11. Letter Agreement 6-1162-RCN-859 entitled "Certain
Contractual Matters" is revised by adding the words "and Block D"
after each occurrence of the words "Block C" in Paragraphs 1.1.3,
1.3.4 and 1.3.5.
12. For clarity, Boeing and Buyer agree that the provisions
of Paragraph 2.b) of Letter Agreement 6-1162-RCN-859 apply to all
"B" Market Aircraft.
13. Letter Agreement 6-1162-MDH-150R1 entitled "Widebody
Special Contractual Matters", Paragraph 1.1, entitled
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] the definition of "C" in the formula at
the end of the paragraph is revised to read as follows:
"C = [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]"
14. Boeing and Buyer agree that Paragraph 1.8 entitled
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] of Letter Agreement 6-1162-MDH-150R1
shall apply to the Block D "B" Market Aircraft to the same extent
as such paragraph applies to [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
15. Boeing and Buyer agree that the following [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] by this Supplemental Agreement No. 8:
Buyer may elect, subject to available position {STAP} a one-
time substitution of a Model 747-400 Aircraft {each, a
"Substitute Aircraft"} for the Block D Aircraft by
notification received by Boeing on or before twenty-four
(24) months prior to the first day of the scheduled delivery
month of such Block D Aircraft. Within five (5) working
days of receipt of Buyer's notification Boeing shall propose
for sale and delivery to Buyer such Substitute Aircraft.
Any delivery position offered by Boeing in response to
Buyer's notification of its election to substitute will be
offered to Buyer subject to prior sale or other disposition
(STPS) and will approximate the delivery position of the
Block D Aircraft for which Buyer has elected a Substitute
Aircraft. If within thirty (30) days of the date of
Boeing's proposal for such Substitute Aircraft Buyer accepts
such proposal, Boeing and Buyer will enter into a
supplemental agreement to the applicable purchase agreement,
or a definitive agreement, within sixty (60) days
thereafter. In any such supplemental agreement the Basic
Price of the Substitute Aircraft and all applicable Credit
Memoranda shall be as set forth in Attachment No. 3 to
Letter Agreement 6-1162-MDH-150R1.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]
P.A. No. 1663 S8-5 SA8
16. Boeing and Buyer agree that the following [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]:
A. [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].
B. [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].
17. Boeing and Buyer agree that Buyer shall have the right to
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] be received by Boeing on or before the
first day of the month [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the
scheduled delivery date of the [*CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Block D
Aircraft.
18. For clarity, Boeing and Buyer agree that the nine Block D
"B" Market Aircraft added in this Supplemental Agreement No. 8
are in substitution for the seven Model 747-422 Aircraft deleted
from Purchase Agreement 1670 in Supplemental Agreement No. 10
thereto, [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT].
19. Letter Agreement 6-1162-MDH-770 dated March 6, 1998 is
hereby null and void.
20. Boeing has offered to Buyer certain business terms for
purchase of additional [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT].
P.A. No. 1663 S8-6 SA8
21. This Supplemental Agreement, including all of the
Attachments, will be treated as privileged and confidential
information pursuant to the terms of Letter Agreement No. 6-1162-
DLJ-832.
The Purchase Agreement shall be deemed to be supplemented to the
extent herein provided and as so supplemented shall continue in
full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
ACCEPTED AND AGREED TO:
THE BOEING COMPANY UNITED AIR LINES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------ ---------------------
Its Attorney-in-Fact Its Senior Vice President
---------------- -------------------------
and Chief Financial Officer
P.A. No. 1663 S8-7 SA8
Attachment 1 to Supplemental Agreement No. 8
AIRFRAME AND ENGINE PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
UNITED AIR LINES, INC.
▇▇▇▇▇ ▇ "▇" ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ C and ▇▇▇▇▇ ▇ "▇" ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇-▇ to Purchase Agreement Number 1663
P.A. ▇▇. ▇▇▇▇ ▇-▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ 1 to Supplemental Agreement No. 8
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
BLOCK B "A" MARKET AIRCRAFT, BLOCK C and BLOCK D "B" MARKET
AIRCRAFT
(1995 Base Price - Airframe)
(1990 Base Price - PW4077 Engines (Block B "A" Market Aircraft))
(1994 Base Price - PW4090 Engines (Block C and Block D "B" Market 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 = .65 x ECI
---
130.1
M = .35 x ICI
---
123.6
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-1) in the amount of:
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] {Block B
"A" Market Aircraft}
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] {Block C
and Block D "B" Market Aircraft}
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.
P.A. No. 1663 D-1-1 SA8
Attachment 1 to Supplemental Agreement No. 8.
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
130.1 will be expressed as a decimal rounded to the nearest
ten-thousandth and then multiplied by .65 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
123.6 will be expressed as a decimal rounded to the nearest
ten-thousandth and then multiplied by .35 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:
P.A. No. 1663 D-1-2 SA8
Attachment 1 to Supplement Agreement No. 8
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 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, 1995, which is consistent with the applicable
provisions of paragraph 1 of this Exhibit D-1.
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-1 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.
P.A. No. 1663 D-1-3 SA8
Attachment 1 to Supplemental Agreement No. 8
ENGINE PRICE ADJUSTMENT - ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Block B "A" MARKET AIRCRAFT
(1990 Base Price)
(a) The basic price of each Block B "A" Market Aircraft set
forth in Article 3.1 of the Purchase Agreement includes an
aggregate price for PW4077 engines and all accessories, equipment
and parts therefor provided by the engine manufacturer
(collectively in this Exhibit D called "Engines") of
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]. The adjustment in Engine price
applicable to each Block B "A" Market Aircraft (Block B "A"
Market "Engine Price Adjustment" herein) shall be determined at
the time of Block B "A" Market Aircraft delivery in accordance
with the following formula:
Pa = (P) (AA + BB + CC) - P
(b) The following definitions shall apply herein:
Pa = Block B "A" Market Engine Price Adjustment
P = Aggregate Block B "A" Market Engine Base
Price [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT].
AA = .60 x L
---
$14.68
BB = .30 x M
---
121.7
CC = .10 x E
---
73.7
In determining the value of AA, BB and CC, the ratio of L divided
by $14.68, M divided by 121.7 and E divided by 73.7 shall be
expressed as a decimal and rounded to the nearest ten-thousandth
but the decimal value resulting from multiplying such ratios by
the respective constants (.60, .30 and .10) shall not be rounded.
The value of the sum of AA + BB + CC shall also be rounded to the
nearest ten-thousandth.
L = Labor Index, which is the "Hourly Earnings of
Aircraft Engines and Engine Parts Production
Workers, SIC 3724" published by the Bureau of
Labor Statistics, U.S. Department of Labor,
for the seventh month preceding the month of
scheduled Aircraft delivery.
P.A. No. 1663 D-1-4 SA8
Attachment 1 to Supplemental Agreement No. 8
$14.68 = Published Labor Index (SIC 3724) for
December, 1989.
M = Material Index, which is the "Producer Price
Index - Code 10, Metals and Metal Products,"
(Base Year 1982 = 100) published by the
Bureau of Labor Statistics, U.S. Department
of Labor, for the seventh month preceding the
month of scheduled Aircraft delivery.
121.7 = Published Material Index (Code 10) for
December, 1989.
E = Fuel Index, which is the "Producer Price
Index - Code 5, Fuels and Related Products
and Power" (Base Year 1982 = 100) published
for the Bureau of Labor Statistics, U.S.
Department of Labor, for the seventh month
preceding the month of scheduled Aircraft
delivery.
73.7 = Published Fuel Index (Code 5) for December, 1989.
The Block B "A" Market Engine Price Adjustment shall not be made
if it would result in a decrease in the aggregate Block B "A"
Market Aircraft Engine base price.
(c) The value of the Labor, Material and Fuel Index used in
determining the Block B "A" Market Engine Price Adjustment shall
be those published by the Bureau of Labor Statistics, U.S.
Department of Labor as of a date thirty (30) days prior to the
scheduled Block B "A" Market Aircraft delivery to Buyer. Such
Index values shall be considered final and no revision to the
Block B "A" Market Engine Price Adjustment shall be made after
Aircraft delivery for any subsequent changes in published Index
values.
(d) If the Bureau of Labor Statistics, U.S. Department of
Labor, (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 or (iii) temporarily discontinues
publication of any of the data referred to above, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Aircraft (P&WA) agrees to meet jointly with Boeing and Buyer and
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.
Appropriate revision of the Block B "A" Market Engine Price
Adjustment provisions set forth above shall be made to accomplish
this result for affected Engines.
P.A. No. 1663 D-1-5 SA8
Attachment 1 to Supplemental Agreement No. 8
In the event the Engine Price Adjustment escalation provisions of
this Agreement are made non-enforceable or otherwise rendered
null and void by any agency of the United States Government, P&WA
agrees to meet with Boeing and jointly agree, to the extent that
they may lawfully do so, to adjust equitably the purchase price
of the Engine(s) to reflect an allowance for increases in labor,
material and fuel costs that occurred from December, 1989 to the
seventh month preceding the month of scheduled delivery of the
applicable Block B "A" Market Aircraft.
(e) The Engine escalation provisions set forth above shall be
appropriately amended to reflect changes in such provisions
(including any increase in Block B "A" Market Engine base price)
established by the Engine manufacturer as of the date of entering
into a definitive agreement to purchase the Block B "A" Market
Aircraft and applicable to Engines for delivery to Boeing during
the same approximate time period as the Block B "A" Market
Aircraft.
NOTES: Any rounding of a number, as required under this
Exhibit D-1 with respect to escalation of the Engine
price, shall 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
shall be raised to the next higher number.
P.A. No. 1663 D-1-6 SA8
Attachment 1 to Supplemental Agreement ▇▇. ▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ C and Block D "B" MARKET AIRCRAFT
(1994 Base Price)
(a) The basic price of each Block C and Block D "B" Market
Aircraft set forth in Article 3.1 of the Purchase Agreement
includes an aggregate price for PW4090 Engines of [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]. The adjustment in Engine price applicable to each
Block C and Block D "B" Market Aircraft (Block C and Block D "B"
Market "Engine Price Adjustment" herein) shall be determined at
the time of Block C and Block D "B" Market Aircraft delivery in
accordance with the following formula:
(a) Pa = (P) (AA+BB+CC) - P
(b) The following definitions shall apply herein:
Pa = Block C and Block D "B" Market Engine Price
Adjustment
P = Aggregate Block C and Block D "B" Market Engine
Price [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT].
Base
AA = .60 x L
---
$17.13
BB = .30 x M
---
120.2
CC = .10 x E
---
74.7
In determining the value of AA, BB and CC, the ratio of
L divided by $17.13, M divided by 120.0 and E divided
by 74.7 shall be expressed as a decimal and rounded to
the nearest ten-thousandth but the decimal value
resulting from multiplying such ratios by the
respective constants (.60, .30 and .10) shall not be
rounded. The value of the sum of AA + BB + CC shall
also be rounded to the nearest ten-thousandth.
L = Labor Index, which is the "Hourly Earnings of
Aircraft Engines and Engine Parts Production
Workers, SIC 3724" published by the Bureau of
Labor Statistics, U.S. Department of Labor, for
the seventh month preceding the month of scheduled
Aircraft delivery.
$17.13 = Published Labor Index (SIC 3724) for December, 1993.
P.A. No. 1663 D-1-7 SA8
Attachment 1 to Supplemental Agreement No. 8.
M = Material Index, which is the "Producer Price
Index - Code 10, Metals and Metal Products,"
(Base Year 1982 = 100) published by the Bureau of
Labor Statistics, U.S. Department of Labor, for
the seventh month preceding the month of scheduled
Aircraft delivery.
120.2 = Published Material Index (Code 10) for December,
1993.
E = Fuel Index, which is the "Producer Price Index
Code 5, Fuels and Related Products and Power"
(Base Year 1982 = 100) published by the Bureau of
Labor Statistics, U.S. Department of Labor, for
the seventh month preceding the month of scheduled
Aircraft delivery.
74.7 = Published Fuel Index (Code 5) for December, 1993.
The Block C and Block D "B" Market Engine Price Adjustment shall
not be made if it would result in a decrease in the aggregate
Block C and Block D "B" Market Engine base price.
(c) The value of the Labor, Material and Fuel Index used in
determining the Block C and Block D "B" Market Engine Price
Adjustment shall be those published by the Bureau of Labor
Statistics, U.S. Department of Labor as of a date thirty (30)
days prior to the scheduled Block C or Block D "B" Market
Aircraft delivery to Buyer. Such Index values shall be
considered final and no revision to the Block C or Block D "B"
Market Engine Price Adjustment shall be made after Aircraft
delivery for any subsequent changes in published Index values.
(d) If the Bureau of Labor Statistics, U.S. Department of
Labor, (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 or (iii) temporarily discontinues
publication of any of the data referred to above, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Aircraft (P&WA) agrees to meet jointly with Boeing and Buyer and
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.
Appropriate revision of the Block C and Block D "B" Market Engine
Price Adjustment provisions set forth above shall be made to
accomplish this result for affected engines.
In the event the Block C and Block D "B" Market Price Adjustment
escalation provisions of this Agreement are made non-enforceable
or otherwise rendered null and void by any agency of the United
States Government, P&WA agrees to meet with Boeing and jointly
agree, to the extent that they may lawfully do so, to reflect an
allowance for increases in labor, material and fuel costs that
occurred from December, 1993, to the seventh month preceding the
month of scheduled delivery of the applicable Block C or Block D
"B" Market Aircraft.
P.A. No. 1663 D-1-8 SA8
Attachment 1 to Supplemental Agreement No. 8
(e) The Engine escalation provisions set forth above shall be
appropriately amended to reflect changes in such provisions
(including any increase in Block C or Block D "B" Market Engine
base price) established by P&WA as of the date of entering into a
definitive agreement to purchase the Block C or Block D "B"
Market Aircraft and applicable to Engines for delivery to Boeing
during the same approximate time period as the Block C or Block D
"B" Market Aircraft.
NOTE: Any rounding of a number, as required under this
Exhibit D-1 with respect to escalation of the Engine
price, shall 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
shall be raised to the next higher number.
P.A. No. 1663 D-1-9 SA8
