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CONTINENTAL AIRLINES, INC.
0000 XXXXX XXXXXXX, XXXXX 0000
XXXXXXX, XXXXX 00000
November 22, 1996
In-Flight Phone Corporation
Xxx Xxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
MCI Telecommunications Corporation
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Washington, D.C. 20006
Attention: General Counsel
Ladies and Gentlemen:
This letter agreement shall amend the Telecommunications System Agreement
dated as of June 7, 1994 by and between In-Flight Phone Corporation, a Delaware
corporation ("IFPC"), and Continental Airlines, Inc., a Delaware corporation
("Continental"), as amended by letter agreement dated March 29, 1995 and by
letter agreement dated as of April 5, 1996 (as so amended, the "Agreement"), as
specified below. This letter agreement is executed below by MCI
Telecommunications Corporation, a Delaware corporation ("MCI"), solely to agree
to the provisions of Sections 4 and 5 below, and to acknowledge and consent to
the modifications to and amendments of the Agreement evidenced hereby.
Capitalized terms used herein without definition are defined in the Agreement
and are used herein with the meanings ascribed thereto in the Agreement.
Notwithstanding anything to the contrary contained in the Agreement or in any
ancillary documents related thereto, the parties hereto agree as follows:
1. If (i) IFPC does not receive by January 1, 1997 (and deliver a copy
thereof to Continental) a firm written commitment from a nationally recognized
investment banking firm or commercial bank, or other institution reasonably
acceptable to Continental, for financing of IFPC on terms reasonably acceptable
to Continental in an amount of not less than [ ] of net proceeds to
IFPC, of which [ ] of such net proceeds are to be used by IFPC solely
for the procurement and installation of, and of which [ ] of such net
proceeds are to be used by IFPC solely for the maintenance and direct operating
costs of, air-to-ground telecommunications and information equipment on
Continental's jet aircraft fleet in accordance with the Agreement (the
"Financing Commitment"), or (ii) IFPC does so receive the Financing Commitment,
but the closing of such financing contemplated thereby (including receipt of
the funds by IFPC in an amount of not less than [ ] with no
restrictions on the use of [ ] of the net proceeds thereof for the
procurement and installation of, and no restrictions on the use of [ ]
of the net proceeds thereof for the maintenance and direct operating costs of,
air-to-ground telecommunications and information equipment on Continental's jet
aircraft fleet in accordance with the Agreement) (the "Closing") is not
consummated by January 31, 1997, then Continental
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shall have the right to install air-to-ground telecommunications and
information systems in any or all of its aircraft (whether currently operated
or to be operated in the future) on which the Equipment is not installed on
January 1, 1997, if the Financing Commitment is not received by then, or
January 31, 1997, if the Financing Commitment is so received but the Closing
has not occurred by January 31, 1997 ("Other Aircraft"), and IFPC shall have no
right to install any such equipment, or any other form of telecommunications,
information or (except as specified in clauses (A) and (B) of Section 3 below)
entertainment equipment, on the Other Aircraft, and all of IFPC's rights and
obligations (and all of Continental's rights and obligations) with respect
thereto shall terminate and be of no force and effect. Pending receipt by IFPC
of the Financing Commitment and the occurrence of the Closing, Continental
shall have the right to solicit and contract (subject to (i) IFPC not receiving
the Financing Commitment by January 1, 1997 or the Closing not occurring by
January 31, 1997, and (ii) IFPC's rights pursuant to clauses (A) and (B) of
Section 3 below) with other providers of air-to-ground telecommunications and
information systems (as to Other Aircraft and any aircraft on which IFPC
telecommunications and information systems equipment is, in the future,
removed), and with other providers of entertainment systems (as to all
aircraft), to provide such systems with respect to the applicable aircraft.
If the Closing occurs by January 31, 1997, IFPC covenants to use sufficient
proceeds therefrom solely for the procurement and installation of air-to-ground
telecommunications and information equipment on Continental's jet aircraft
fleet in accordance with the installation schedule attached hereto as Appendix
1 (which, if the Closing occurs by January 31, 1997, shall be deemed to replace
Exhibit D to the Agreement from and after such date) and in accordance with the
Agreement, and to segregate at all times on its books and records and use
solely for the procurement, installation, maintenance and direct operating
costs of air-to-ground telecommunications and information equipment on
Continental's jet aircraft fleet in accordance with the Agreement an amount
equal to [ ] segregated into [ ] for procurement and
installation and [ ] for maintenance and direct operating costs as
described above) less amounts expended for such procurement, installation,
maintenance and direct operating costs from and after the date of Closing (it
being understood that, if IFPC timely completes all installations set forth on
Appendix 1 as being completed by September 30, 1997, then IFPC may use any
funds then remaining from such [ ] for its general corporate purposes,
except for an aggregate of [ ] which shall remain segregated on its
books and records and used solely for the procurement and installation of
air-to-ground telecommunications and information equipment on Continental's jet
aircraft fleet in accordance with the Agreement during the fourth quarter of
1997); provided that IFPC shall have no right or obligation to install
air-to-ground telecommunications or information equipment or entertainment
equipment on (i) any of Continental's DC 10-10 and DC 10-30 aircraft, any
Boeing 757 aircraft with BusinessFirst configuration, and any other of
Continental's aircraft which are used primarily in international routes and
(ii) any Embraer 145 aircraft operated by Continental or Continental Express,
Inc. (collectively, the "Excluded Aircraft"), and in each case Continental
shall have the right, without liability or obligation to IFPC, to have
installed on the Excluded Aircraft any air-to-ground telecommunications or
information equipment and any entertainment systems which Continental selects
in its sole discretion.
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Continental and IFPC agree that the provisions of the Agreement relating to
the provisions by IFPC of SATCOM services are hereby terminated and shall be of
no force and effect.
If the Closing occurs by January 31, 1997, then from and after December 31,
1997, IFPC shall procure, or have cash segregated on its books at all times in
an amount sufficient (and to be used solely) to procure (and, on a monthly
basis with respect to applicable aircraft, certify to Continental in writing,
signed by a senior officer of IFPC, such procurement or cash segregation and
compliance with this paragraph), sufficient air to ground telecommunications
and information equipment to satisfy at all times the next following [
] installations of such equipment on the jet aircraft of Continental (other
than the Excluded Aircraft) to be delivered to Continental under its then
current new aircraft delivery orders. Continental will promptly notify IFPC in
writing of any changes in anticipated new jet aircraft delivery dates (other
than with respect to Excluded Aircraft), and IFPC shall have [
] to comply with the foregoing
provisions of this paragraph with respect to such aircraft. If IFPC fails to
so timely procure such equipment (or so segregate cash) and certify thereto as
describe above, then Continental shall notify IFPC of such failure in wiritng
and provide IFPC a [ ] period in which to cure such failure. If such
failure continues after such [ ] cure period then, from and after the
expiration of such [ ] cure period, IFPC shall have no right to
install any such equipment, or any other form of telecommunications,
information or (except as specified in clauses (A) and (B) of Section 3 below)
entertainment equipment, on any of Continental's jet aircraft fleet to be
delivered after the date of such notice for which, at the conclusion of such [
] cure period, IFPC has not procured such equipment (or so segregated cash),
and all of IFPC's rights and obligations (and all of Continental's rights and
obligations) with respect thereto shall terminate and be of no force and
effect. IFPC shall thereafter continue to maintain and operate the Equipment
on the Continental aircraft on which the Equipment is installed on the date of
expiration of such [ ] cure period, and continue to maintain and operate
the ATG System and ATG Services, in accordance with the provisions of the
Agreement throughout the term of the Agreement, shall timely pay to Continental
all commissions and other revenues under the Agreement with respect thereto
(including guaranteed minimum Commissions set forth in Section 4.2(c) of the
Agreement), and shall duly perform all its other obligations under the
Agreement (as amended hereby).
2. If the Financing Commitment is not received by January 1, 1997, or if the
Financing Commitment is so received but the Closing does not occur by January
31, 1997, IFPC shall continue to maintain and operate the Equipment on the
Continental aircraft on which the Equipment is installed on January 1, 1997, if
the Financing Commitment is not received by then, or January 31, 1997, if the
Financing Commitment is so received but the Closing has not occurred by January
31, 1997 ("Current Aircraft"), and continue to maintain and operate the ATG
System and ATG Services, in accordance with the provisions of the Agreement
throughout the term of the Agreement, shall timely pay to Continental all
commissions and other revenues under the Agreement with respect thereto
(including guaranteed minimum Commissions set forth in Section 4.2(c) of the
Agreement), and shall duly perform all its other obligations under the
Agreement (as amended hereby).
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3. Whether or not the Financing Commitment is timely received or the Closing
timely occurs, (A) IFPC shall have the right [ ] to install in accordance
with the Agreement live video on the Current Aircraft (other than any
Excluded Aircraft) in accordance with an installation schedule to be
mutually agreed upon [
] and (B) IFPC shall also have the right [
] to install live video on Other Aircraft (other than Excluded
Aircraft) in accordance with an installation schedule to be mutually agreed
upon, subject to (i) in the case of clause (B), negotiation and timely payment
by IFPC to Continental of mutually agreed upon commissions and minimum
commissions with respect thereto [
] (ii) in the case of both clause (A)
and clause (B), which live video being integrated (in a manner reasonably
satisfactory to Continental) with whatever in-flight entertainment systems are
then installed or to be installed in the applicable aircraft, and (iii) in the
case of both clause (A) and clause (B), satisfaction by IFPC of the
operational, safety, regulatory and other requirements applicable to live
video systems under the Agreement and applicable law. [
]
[
]
Notwithstanding the foregoing or any provision of the Agreement to the
contrary, IFPC shall not be obligated to install live video on any of
Continental's aircraft (except, as to any individual aircraft, if IFPC has
commenced the installation of live video on such aircraft, in which case IFPC
shall be obligated to complete such installation), and Continental shall be
free to install in its aircraft any in-flight entertainment systems it selects,
without any liability or obligation to IFPC whatsoever [
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4. [
].
5. (a) Upon the execution and delivery hereof by the parties hereto,
Continental shall take a non-suit to dismiss without prejudice that certain
Cause styled Continental Airlines v. In-Flight Phone Corporation, in the
District Court of Xxxxxx County, Texas, 269th Judicial District (No. 96-54448).
(b) Continental, for itself and all persons claiming by, through or under
it, hereby fully, finally and forever releases, discharges, quitclaims, and
covenants not to sue on any claim or cause of action, whether known or unknown,
against IFPC or MCI, or any of their respective officers, directors, agents,
employees, representatives, subsidiaries, affiliates or successors in interest,
that exists or has ever existed prior to the date hereof, that Continental now
has or may have and that is based on or relates to the timeliness (or lack
thereof) of installation
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of equipment by IFPC pursuant to the Agreement or any of the ancillary
agreements or any related costs, expenses or damages; provided, however, that
nothing in the foregoing or elsewhere in this letter agreement shall in any way
release or affect any party's obligations under this letter agreement or under
the Agreement and the ancillary agreements, as amended hereby, from and after
the date hereof.
(c) Each of IFPC and MCI, for itself and all persons claiming by, through
or under it, hereby fully, finally and forever releases, discharges,
quitclaims, and covenants not to sue on any claim or cause of action, whether
known or unknown, against Continental, or any of its officers, directors,
agents, employees, representatives, subsidiaries, affiliates or successors in
interest, that exists or has ever existed prior to the date hereof, that IFPC
or MCI now have or may have and that is based on or relates to the timeliness
(or lack thereof) of installation of equipment by IFPC pursuant to the
Agreement or any of the ancillary agreements or any related costs, expenses or
damages; provided, however, that nothing in the foregoing or elsewhere in this
letter agreement shall in any way release or affect any party's obligations
under this letter agreement or under the Agreement and the ancillary
agreements, as amended hereby, from and after the date hereof.
(d) [
]
Continental and IFPC agree that the Agreement is deemed modified and amended
by the provisions of this letter agreement (whether or not such provisions
specifically amend one or more provisions of the Agreement), and that if any of
the provisions hereof conflict with any provision of the Agreement (prior to
its amendment hereby), the terms of this letter agreement shall govern. MCI
acknowledges and consents to the modifications to and amendments of the
Agreement evidenced hereby. The Agreement, as amended and modified hereby,
remains in full force and effect, and Continental hereby withdraws and
terminates any and all notices of default with respect to the Agreement given
by Continental.
Please confirm your agreement to the foregoing by executing the enclosed
copy of this letter agreement as indicated below and returning a copy to our
attention at the above address. MCI is executing this letter agreement solely
to agree to the provisions of Sections 4 and 5 hereof and to acknowledge and
consent to the modifications to and amendments of the Agreement evidenced
hereby.
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Very truly yours,
CONTINENTAL AIRLINES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
Senior Vice President
Accepted and agreed to:
IN-FLIGHT PHONE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
Executed solely to agree to the provisions of Sections 4 and 5 above and to
acknowledge and consent to the modifications to and amendments of the Agreement
evidenced hereby:
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
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Appendix 1
Revised Installation Schedule
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Appendix 2
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