Document:

exh102.htm

     

    Exhibit
      10.2

     

     

    Execution 
Copy

    

     

    SUPPLY
      AGREEMENT

     

    FOR
      MONTERREY, MEXICO

     

    

     

    THIS
      AGREEMENT is entered into on this 13th
      day of July,
      2007.

     

    BETWEEN:

     

    THE
      HERSHEY COMPANY, a corporation organized and existing under the laws of
      the State of Delaware, with a principal place of business at 100 Crystal A
      Drive, Hershey, Pennsylvania 17033, (hereinafter referred to as “Hershey” or a
“Party”),

     

    and

     

    BARRY
      CALLEBAUT, AG, a corporation organized and existing under the laws of
      Switzerland with a principal place of business at Westpark Pfingstweidstrasse
      60, 8500 Zurich, Switzerland, (hereinafter individually referred to as
“Callebaut” or a “Party”).

     

    Callebaut
      and Hershey may collectively be referred to herein as the
“Parties”.

     

    

     

    BACKGROUND

     

    This
      Supply Agreement for Monterrey, Mexico (hereinafter this “Agreement”) is subject
      to the terms and conditions found in the Master Innovation and Supply Agreement
      between Hershey and Callebaut of even date herewith (the “Master
      Agreement”).  This Agreement further specifies the terms pursuant to
      which Callebaut will manufacture the products specified in Exhibit I-M at its
      Monterrey, Mexico facility (the “Products”) for Hershey.  Callebaut
      has indicated its ability and intent to manufacture the Products for Hershey
      in
      accordance with the terms and conditions specified herein. Defined terms used
      herein and not otherwise defined herein shall have the meaning set forth in
      the
      Master Agreement.

     

    NOW
      THEREFORE, with the intent to be legally bound and in consideration of
      the mutual promises herein set forth and other good and valuable consideration,
      the Parties hereby agree as follows:

     

    
      	
              1)  

            	
              Production
                of the Product

            

    

     

    
      	
              A)  

            	
              Callebaut
                shall manufacture the Products specified in Exhibit I-M at its facility
                to
                be located in Monterrey, Mexico as further described
                herein.  Products may be added to or removed from this list by
                Hershey at any time throughout the term of this Agreement.  If a
                new Product is added, Exhibit I-M will be revised to add
                the

            

    

     

    
      
        1

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
                

            	
              new
                Product.  Other exhibits will be added or revised as required to
                reflect the production of the new
                Product(s).

            

    

     

    
      	
              B)  

            	
              Provisions
                regarding the volume of Products to be sourced under this Agreement
                are
                set forth in the Master Agreement.  In the event that Hershey’s
                actual order volume of Products in any given calendar year during
                the Term
                of this Agreement is less than the volume set forth in Exhibit VIII-M
                (“Minimum Threshold Volume”) from Callebaut’s Monterrey facility, and
                provided the shortfall is not due to Callebaut’s action or inaction,
                Callebaut has the right to exercise a “put option” for the Monterrey
                facility (excluding equipment) (the “Put Option”). If Callebaut exercises
                its Put Option:

            

    

     

    
      	
              1)  

            	
              Hershey
                will purchase the Callebaut Monterrey facility building and base
                utility
                infrastructure at fair market value (to be determined in accordance
                with a
                methodology agreed upon by the parties);
                and

            

    

     

    
      	
              2)  

            	
              Hershey
                will have the right, but not the obligation, to purchase the equipment
                located at Callebaut’s Monterrey facility at its fair market value (to be
                determined in accordance with a methodology agreed upon by the parties).
                Any equipment Hershey elects not to purchase will be removed from
                the
                facility by Callebaut at its cost.

            

    

     

    Callebaut
      must exercise the Put Option
      within two years from the date Hershey’s annual orders from Monterrey fall below
      the Minimum Threshold Volume threshold (the “Put Period”).  The
      purchase of the facility must be completed within one year of the exercise
      of
      the Put Option. During the Put Period operations will continue pursuant to
      the
      terms of this Agreement.

     

    With
      Hershey’s consent, Callebaut may
      sell its capacity between the volume set forth in Exhibit VIII-M (“Target
      Volume”) pounds and Hershey’s forecasted volume.  Hershey’s overhead
      burden will be reduced proportionately by the incremental sales attained by
      Callebaut.  Callebaut will also use commercially reasonable efforts to
      reduce its costs in order to reduce the overhead burden assigned to
      Hershey.

     

    
      	
              2)  

            	
              Investment
                by Callebaut

            

    

     

    
      	
              A)  

            	
              Except
                as otherwise agreed by the Parties, Callebaut will invest the necessary
                capital, including the acquisition of certain machinery purchased
                or
                ordered by Hershey, for the construction of a liquid chocolate production
                facility in Monterrey, Mexico on land owned by Hershey, adjacent
                to the
                proposed Hershey facility, and leased to Callebaut as described in
                Section
                5 below.  All references to facilities or production hereunder
                shall be deemed to refer to Hershey’s Monterrey facility or Callebaut’s
                Monterrey facility, as appropriate.  New Products added to
                Exhibit I-M and any proposed changes to existing Products must be
                within
                the then existing technical capability of the Monterrey facility
                being
                constructed by Callebaut.  Callebaut agrees to provide Hershey
                with information describing its then-existing technical capabilities.
                Should Callebaut be required to purchase additional or
                new

            

    

     

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
                

            	
              capital
                to manufacture the new or modified Products, the Parties must agree
                prior
                to any production hereunder on the relevant conversion cost to be
                invoiced
                to Hershey by Callebaut, including the applicable allocation of
                incremental capital, if any.

            

    

     

    
      	
              B)  

            	
              Upon
                execution of this Agreement Callebaut will assume, and Hershey will
                assign
                to Callebaut, all of Hershey’s rights and obligations under the purchase
                orders for equipment listed on Exhibit II-M hereto (the “Transferred
                Purchase Orders”). Within ten business days of execution of this
                Agreement, Callebaut will reimburse Hershey in Dollars for all payments
                Hershey has made under the Transferred Purchase Orders.  The
                payments and reimbursement amounts for these purchase orders are
                outlined
                on Exhibit II-M.

            

    

     

    
      	
              3)  

            	
              Callebaut’s
                Structure

            

    

     

    Callebaut
      will maintain a structure that enables Callebaut to pass on duty free and value
      added tax (VAT) free equipment, ingredient and material costs to Hershey as
      allowable under current applicable laws and regulations.

     

    If
      for
      any reason Callebaut is required to pay duties or value added tax on any
      equipment, ingredients or components of the Products, other than as a result
      of
      a change in any applicable law or regulations, Callebaut agrees not to pass
      those costs on to Hershey.

     

    In
      the
      event a change in any such law or regulation pertaining to the duty and value
      added tax (VAT) free structure should occur that results in an economic impact
      necessitating Hershey’s cessation of its chocolate activities in its Monterrey
      facility, Hershey may terminate its obligations under this Agreement.
 Callebaut may exercise the Put Option set forth in Section 2(B) within
      three months of the termination.  Should Callebaut choose not to exercise
      its Put Option, Callebaut may purchase the land leased to it by Hershey at
      fair
      market value.  In addition, upon such cessation of Hershey’s chocolate
      activities in its Monterrey facility, the Parties agree to jointly evaluate
      the
      Parties’ ongoing strategic relationship for the source of supply of those
      Products previously sourced from the Monterrey facilities, including sourcing
      from and investment in alternative locations.

     

    
      	
              A)  

            	
              The
                Products must qualify as products of Mexico under the North American
                Free
                Trade Agreement (NAFTA), and Callebaut must provide Hershey with
                accurate
                NAFTA Certificates of Origin throughout the Term of this
                Agreement.   Any exceptions to the foregoing must be
                approved in writing by Hershey.

            

    

     

    
      	
              4)  

            	
              Capacity
                of Operation

            

    

     

    
      	
              A)  

            	
              The
                Callebaut Monterrey, Mexico facility will have the capacity to produce
                and
                deliver the Target Volume pounds per year of Products to
                Hershey.  Callebaut will install two manufacturing lines, each
                capable of producing liquid milk, dark and compound
                chocolate.

            

    

     

    
      	
              B)  

            	
              Should
                Hershey’s planned demand increase above the Target Volume pounds per
                calendar year, Callebaut will, unless otherwise agreed by the Parties,
                invest the

            

    

     

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              necessary
                capital in the facility to meet Hershey’s demand.  The related
                conversion costs for production in excess of the Target Volume pounds
                will
                be mutually agreed by the Parties, using the guidelines shown on
                Exhibit
                VIII-M.

            

    

     

    
      	
              C)   

            	
              Hershey
                shall provide Callebaut with twelve (12) months notice for planned
                demand
                increases over the Target Volume pounds to allow Callebaut to expand
                capacity if a new line is required.  Should Callebaut’s cost
                base be increased as a result of such capital investment, the Parties
                shall negotiate in good faith to agree on the conversion cost to
                be
                invoiced to Hershey by Callebaut, including the applicable allocation
                of
                capital costs.  Should Callebaut’s cost base be reduced due to
                increased volume from Hershey, such cost savings shall be shared
                with
                Hershey on a reasonable basis to be agreed to by the
                Parties.

            

    

     

    
      	
              5)  

            	
              Lease
                of Land to Callebaut

            

    

     

    On
      or
      before August 31, 2007 the Parties anticipate executing a lease agreement (the
      “Lease Agreement”), whereby Hershey will lease to Callebaut (or its Mexican
      subsidiary) land to be identified in the lease (the “Leased Premises”) upon
      which Callebaut will construct its Monterrey facility.  The Parties
      agree to negotiate in good faith the terms of the Lease Agreement and use
      commercially reasonable efforts to execute the Lease Agreement on or before
      August 31, 2007.  In the event a Lease Agreement is not executed on or
      before August 31, 2007, either Party may terminate this Agreement, and if so
      terminated neither Party shall have any further obligation to the other
      hereunder.

     

    
      	
              6)  

            	
              Utilities
                and Services

            

    

     

    Exhibit
      IV-M lists the Hershey infrastructure which Hershey has agreed to make available
      to Callebaut, in exchange for the payment described on the Exhibit IV-M, to
      enable Callebaut’s access to certain utilities and services for its Monterrey
      facility. The Parties agree that the Lease Agreement will reflect which part
      of
      Hershey’s utility infrastructure Callebaut wishes to utilize (at the costs
      specified on Exhibit IV-M hereto), and any ongoing maintenance or usage costs
      associated therewith.  Payment for any one-time costs will be made by
      Callebaut to Hershey within 30 days after signing of the Monterrey Lease
      Agreement.

     

    
      	
              7)  

            	
              Key
                Timelines for Facility
                Readiness

            

    

     

    
      	
              A)  

            	
              Callebaut
                will be able to deliver Products from its Monterrey facility to Hershey’s
                Monterrey facility in accordance with the terms and timelines set
                forth on
                Exhibit VIII-M.

            

    

     

    
      	
              B)  

            	
              The
                facility will be able to deliver Products to Hershey’s Monterrey facility
                in accordance with the terms and timelines set forth on Exhibit
                VIII-M.

            

    

     

    
      	
              8)  

            	
              Contingency

            

    

     

    Callebaut
      will have the process and equipment capabilities set forth on Exhibit
      VIII-M.

     

    
      
        4

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               
                9)

            	
              Access
                to Facility

            

    

     

    Upon
      reasonable notice, and during either Party's normal hours of operation, either
      Party shall be granted access to the other Party's facilities utilized in the
      receiving, manufacturing, handling, packaging and storage of packaging,
      ingredients and Products for the purpose of ascertaining either Party's
      compliance with the provisions of this Agreement and the Master Agreement,
      as
      pertains to compliance with Good Manufacturing Practices, Quality Assurance
      and
      Hershey’s Specifications; provided, however, that unless permitted either Party
      shall not have access to any part of either Party's facilities which are not
      used directly in the manufacture of Products or the receiving, storage, handling
      or packaging of any Products or ingredients or which are subject to limited
      access by agreement of the Parties.  Notwithstanding the foregoing,
      Hershey acknowledges the requirement for the Callebaut facility to remain
      allergen free and Hershey will take necessary precautions when accessing the
      Callebaut facility.

     

    
      	
              10)  

            	
              Operations
                Planning

            

    

     

    
      	
              A)  

            	
              Callebaut
                shall deliver Products meeting all Hershey Quality Specifications
                to
                Hershey’s designated plant and receiving
                station.

            

    

     

    
      	
              B)  

            	
              The
                procedure for determining annual, quarterly, weekly and daily demands
                for
                the Products manufactured by Callebaut at its Monterrey facility
                is
                described in the Master Agreement.

            

    

     

    
      	
              C)  

            	
              An
                estimate for the first eighteen (18) months of Product demand is
                attached
                hereto as Exhibit V-M.

            

    

     

    
      	
              D)  

            	
              The
                Parties agree that there are maximum quantities of Products that
                Callebaut
                can deliver in a given period of time.  Such quantities are
                described in Exhibit VI-M.  The minimum quantity of Product that
                will be delivered to Hershey by Callebaut will be one (1) full
                5,000-gallon (approximately 48,000 lbs or 21,800 Kg) tanker load
                unless
                pre-approved.

            

    

     

    
      	
              E)  

            	
              The
                Parties will develop procedures to enable visibility to each other’s
                demand and inventory information.

            

    

     

    
      	
              F)  

            	
              Callebaut
                will provide a fleet of trucks and tankers capable of delivering
                the
                Products.  Unless otherwise specified herein, Callebaut shall be
                responsible for all costs associated with delivery of the
                Products.

            

    

     

    
      	
              G)  

            	
              Callebaut’s
                fleet of tankers will be capable of unloading at least 60 gallons
                per
                minute of Product.  Hershey will be responsible for providing
                sufficient pumps, hoses and connections to empty the tankers at this
                rate.  Callebaut will at its cost retrofit any tankers in its
                fleet with the appropriate fittings and discharge devices to match
                Hershey’s receiving equipment at Callebaut’s
                cost.

            

    

     

    
      	
              H)  

            	
              Callebaut
                shall inspect all tankers shipping the Products and shall reject
                any
                carrier not meeting the Hershey Specifications.  Callebaut shall
                be responsible for cleaning

            

    

     

    
      
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              and
                sanitizing tankers on an agreed upon
                frequency.

            

    

     

    
      	
              I)  

            	
              Callebaut
                will maintain adequate and accurate shipping records in order that
                Product
                lots on all shipments may be
                traced.

            

    

     

    
      	
              J)  

            	
              All
                shipments of Product shall meet the standard of identity for the
                planned
                Product.

            

    

     

    
      	
              11)  

            	
              Product
                Cost

            

    

     

    
      	
              A)  

            	
              The
                procedures for determining the cost of the Products are described
                in the
                Master Agreement.

            

    

     

    
      	
              B)  

            	
              The
                conversion costs for the Products are set forth on Exhibit
                VI-M.  By October 1 of each year, Hershey shall advise Callebaut
                of the Annual Estimate of Products. Callebaut will utilize the conversion
                cost applicable to the volumes in the Annual Estimate and conversion
                cost
                tier in its cost to Hershey for the following calendar year after
                taking
                into consideration the available Global Volume Increment, if
                any.

            

    

     

    At
      the
      conclusion of each of the calendar years during the Term, should actual volume
      differ from the Annual Estimate and fall into a conversion cost tier other
      than
      the one charged, Hershey will be debited or credited the difference in total
      annual conversion costs with cash settlement in accordance with the terms of
      the
      Master Agreement, or the Parties can mutually agree to roll over the variance
      for inclusion in the cost base to be invoiced to Hershey by Callebaut for
      Products purchased in the next calendar year.

     

    
      	
              C)  

            	
              The
                initial Annual Estimate provided at the date of this Agreement indicates
                that the total weighted average Product fineness for Monterrey is
                as shown
                on Exhibit VII-M.  Should the actual average fineness for any
                given calendar year fall outside the Base Range set forth in Exhibit
                VII-M, the change in fineness charge shown on Exhibit VII-M will
                apply as
                appropriate to the total volume of Product purchases for such calendar
                year.  Hershey will be debited or credited the difference in
                fineness on an annual basis with cash settlement in accordance with
                the
                terms of the Master Agreement, or the Parties can mutually agree
                to roll
                over the difference in fineness for inclusion in the cost base to
                be
                invoiced to Hershey by Callebaut for Products purchased in the next
                calendar year.

            

    

     

    
      	
              12)  

            	
              Coordination
                of Product Receiving and
                Invoicing

            

    

     

    
      	
              A)  

            	
              Callebaut
                and Hershey will coordinate the delivery details for each
                tanker.

            

    

     

    
      	
              B)  

            	
              Upon
                entering the Hershey operation, Hershey will weigh Callebaut’s tanker
                truck, and Product at Hershey’s weigh station.  The driver shall
                exit truck before weight is
                recorded.

            

    

     

    
      
        6

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              C)  

            	
              Hershey
                will unload each tanker to the fullest extent possible and take ownership
                once chocolate leaves the relevant
                tanker.

            

    

     

    
      	
              D)  

            	
              Hershey’s
                operator will be responsible for all connections of Hershey’s hoses to
                Callebaut’s tankers and any resulting
                incidents.

            

    

     

    
      	
              E)  

            	
              Once
                a tanker is emptied and appropriate documentation is approved, Callebaut’s
                tanker will proceed to Hershey’s weigh station to weigh truck, tanker and
                any left-over chocolate.  Again, the driver shall exit the truck
                before its weight is recorded.  Callebaut will electronically
                submit the invoice for the difference between the “full weight” and “empty
                weight” to Hershey immediately upon the tanker leaving Hershey’s
                operation.

            

    

     

    
      	
              13)  

            	
              Quality
                Assurance

            

    

     

    
      	
              A)  

            	
              All
                Products delivered by Callebaut to Hershey shall meet the terms agreed
                to
                under the Master Agreement.

            

    

     

    
      	
              B)  

            	
              Callebaut
                will not be required to utilize rework generated by
                Hershey.  Any use of such rework shall be negotiated on a
                case-by-case basis.

            

    

     

    
      	
              14)  

            	
              Title
                Transfer and Risk of
                Loss

            

    

     

    
      	
              A)  

            	
              Title
                to the Products shall be and remain with Hershey from the date and
                time:

            

    

     

    
      	
              i)  

            	
              the
                Product leaves Callebaut’s tanker;
                or

            

    

     

    
      	
              ii)  

            	
              the
                Product leaves Callebaut’s trailer and is delivered to Hershey’s receiving
                dock for dry Products.

            

    

     

    
      	
              B)  

            	
              Callebaut
                shall bear the risk of loss to the Products (either while in storage
                or in
                process at Callebaut’s plant or any non-Hershey storage facility utilized
                by Callebaut with Hershey’s consent) until the Products leave the tanker
                for delivery into Hershey’s Monterrey
                facility.

            

    

     

    
      	
              15)  

            	
              Term

            

    

     

    
      	
              A)  

            	
              The
                initial term of this Agreement shall commence on the date noted on
                the
                first page of this Agreement and shall expire, unless earlier terminated
                in accordance with the terms hereof, on December 31, 2022 (the “Initial
                Term”).

            

    

     

    
      	
              B)  

            	
              This
                Agreement may be renewed thereafter for one or more five (5) year
                terms
                (the “Renewal Term(s)”) upon written agreement of the Parties executed no
                later than eighteen (18) months prior to the expiration of the then
                current term.

            

    

     

    
      	
              C)  

            	
              The
                Initial Term and any Renewal Term shall be referred to herein as
                the
                “Term”.

            

    

     

    
      
        7

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              16)  

            	
              Termination

            

    

     

    Termination
      rights are set forth in the
      Master Agreement.

     

    
      	
              17)  

            	
              Consequences
                of Sale, Termination, Expiration, or Change in
                Control

            

    

     

    In
      the
      event of termination or expiration of this Agreement, or of a change in control
      of Callebaut described in the Master Agreement to which Hershey does not
      consent,  Hershey  shall have a right to acquire Callebaut’s
      Monterrey facility and the equipment required to manufacture Products for
      Hershey   at fair market value to be determined by a mutually
      agreed upon valuation process. Should Hershey exercise such purchase, (i) an
      eighteen (18) month period (either before the end of the Term or at the time
      of
      notice) will be given to Callebaut to allow time to build a new facility to
      maintain business continuity and (ii) the Parties will agree on any future
      employment of Callebaut’s employees working at the Monterrey facility at the end
      of the eighteen month notice period.  If notice is given at the time
      of termination, the Parties shall continue to operate under the terms and
      conditions of the Master Agreement and this Agreement for the duration of such
      notification period.  Ownership of any equipment not acquired by
      Hershey will be retained by Callebaut and such equipment will be removed at
      Callebaut’s cost in accordance with an agreed upon schedule.  In the
      event Hershey chooses to sell its Monterrey facility to a third party (and
      not
      as part of an acquisition or joint venture) or Hershey chooses not to exercise
      its right to acquire Callebaut’s Monterrey facility, Callebaut shall have a
      right to acquire the Leased Premises at fair market value to be determined
      by a
      mutually agreed upon valuation process, subject to Hershey’s continued ownership
      of the water rights attributable to the Leased Premises; provided that Hershey
      or the purchaser of its facility, as a condition of the sale agreement with
      Hershey, continues to make water available to the Callebaut facility on
      substantially the same terms and to the same extent as Hershey was providing
      any
      water prior to such transfer. In the event Hershey does not exercise its right
      to purchase the Callebaut facility and Callebaut does not exercise its right
      to
      purchase the land, the Lease Agreement will be extended for an agreed upon
      term
      on terms no less favourable than those contained in the Lease
      Agreement.

     

    
      	
              18)  

            	
              Taxes
                and Charges

            

    

     

    Except
      as
      otherwise provided in Section 3(A), Callebaut shall pay all federal, state
      and
      local taxes, charges, duties, fees and assessments which may be levied in
      connection with Callebaut's performance of this Agreement except for charges
      or
      assessments resulting from Callebaut's violations of any laws or regulations
      which were the result of Callebaut's adherence to the Hershey Specifications
      or
      directions or caused by Callebaut's use of Hershey supplied ingredients. In
      the
      event of a charge or assessment resulting from adherence to Hershey’s
      Specifications, directions, or Hershey supplied ingredients, Hershey will be
      responsible for resolving the assessment or charge in accordance with applicable
      laws at its cost.

     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

    WITNESS
      WHEREOF, each of the Parties has executed this Agreement by its duly authorized
      representatives as of the date and year first above written.

     

    

    

    
      	 	
              BARRY
                CALLEBAUT, AG.

            
	 	 
	 	
              BY:  /s/
                Patrick De Maeseneire   

                            

              NAME:
                Patrick De Maeseneire

               

              TITLE:  Chief
                Executive Officer

            
	 	 
	 	 
	 	
              THE
                HERSHEY COMPANY

            
	 	 
	 	
              BY:  /s/
                Burton H.
                Snyder                         

            
	 	
              NAME:
                Burton H. Snyder

               

              TITLE:  Senior
                Vice President,

                            General
                Counsel & Secretary

               

            

    

    

     

    
      
        9CERTIFICATION

EXHBIT 10.1

Supplemental Agreement No. 41

to

Purchase Agreement No. 1951

between

The Boeing Company

and

Continental Airlines, Inc.

Relating to Boeing Model 737 Aircraft

 

 

THIS SUPPLEMENTAL AGREEMENT, entered into as of 

June 1, 2007, by and between THE BOEING COMPANY (Boeing) and Continental Airlines, Inc. (Buyer);

WHEREAS, the parties hereto entered into Purchase Agreement No. 1951 dated July 23, 1996 (the Agreement), as amended and supplemented, relating to Boeing Model 737-500, 737-600, 737-700, 737-800, 737-900 and 737-900ER aircraft (the Aircraft);

WHEREAS, Buyer wishes to exercise [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

WHEREAS, Buyer wishes to exercise its [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

WHEREAS, Buyer wishes to exercise its [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

WHEREAS, Boeing agrees to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

WHEREAS, Boeing agrees to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to amend the Agreement as follows:

1.Table of Contents, Articles, Tables and Exhibits, and Letter Agreements:

	Remove and replace, in its entirety, the "Table of Contents", with the Table of Contents attached hereto, to reflect the changes made by this Supplemental Agreement No. 41.
	Remove and replace, in its entirety, page T-2-2, T-2-3, and T-2-4 of Table 1 entitled the "Aircraft Deliveries and Descriptions, Model 737-700 Aircraft", with the revised page T-2-2 of Table 1 attached hereto.
	Add page T-3-5 to Table 1 entitled the "Aircraft Deliveries and Descriptions, Model 737-800 Aircraft".  
	Remove, in its entirety, page T-5-2 of Table 1 entitled, "Aircraft Deliveries and Descriptions, Model 737-900 Aircraft". 
	Remove and replace, in its entirety, page T-6-1 and T-7-1 of Table 1 entitled, "Aircraft Deliveries and Descriptions, Model 737-900ER Aircraft", with the revised page T-6-1 and T-6-2 attached hereto.
	Remove and replace, in its entirety, "Exhibit A-6", with the revised Exhibit A-1.1 (737-724 Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] attached hereto.
	Remove and replace, in its entirety, "Exhibit A-7", with the revised Exhibit A-2.1 (737-824 Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] attached hereto.
	Add Exhibit A-2.2 (737-824 Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] attached hereto.
	Remove and replace Exhibit A-9, with the revised Exhibit A-6 (737-900ER Aircraft) attached hereto.  
	Remove Exhibit A-8, in its entirety (737-924 Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
	Remove and replace, in its entirety, "Supplemental Exhibit D-3", with the revised Supplemental Exhibit D-3 attached hereto.
	Add "Supplemental Exhibit D-4", to reflect the changes to the Bureau of Labor Statistics related to Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
	Remove and replace, in its entirety, Letter Agreement 6-1162-GOC-131R7 "Special Matters", with the revised Letter Agreement 6-1162-GOC-131R8 attached hereto.

The Agreement will be deemed to be supplemented to the extent herein provided as of the date hereof and as so supplemented will continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first written above.

 

THE BOEING COMPANYContinental Airlines, Inc.

 

 

 

By:  /s/ Anthony J. Hicker By:  /s/ Gerald Laderman  

Its:  Attorney-In-Fact    Its: Senior Vice President - 
     Finance and Treasurer

TABLE OF CONTENTS

PageSA

NumberNumber

ARTICLES

1.Subject Matter of Sale1-1SA 39

2.Delivery, Title and Risk

of Loss2-1

3.Price of Aircraft3-1SA 39

4.Taxes4-1

5.Payment5-1

6.Excusable Delay6-1

7.Changes to the Detail

Specification7-1SA 39

8.Federal Aviation Requirements and

Certificates and Export License8-1SA 39

9.Representatives, Inspection,

Flights and Test Data9-1

10.Assignment, Resale or Lease10-1

11.Termination for Certain Events11-1

12.Product Assurance; Disclaimer and Release: Exclusion

Of Liabilities; Customer Support; Indemnification and

Insurance12-1

13.Buyer Furnished Equipment and

Spare Parts13-1

14.Contractual Notices and Requests14-1SA 39

15.Miscellaneous15-1

 

TABLE OF CONTENTS

PageSA

NumberNumber

TABLES

1.Aircraft Deliveries and

Descriptions - 737-500T-1SA 3

Aircraft Deliveries and

Descriptions - 737-700T-2SA 41

Aircraft Deliveries and

Descriptions - 737-800T-3SA 41

Aircraft Deliveries and

Descriptions - 737-600T-4SA 4

Aircraft Deliveries and

Descriptions - 737-900T-5SA 39

Aircraft Deliveries and

Descriptions - 737-900ERT-6SA 41

EXHIBITS

A-1Aircraft Configuration - Model 737-724

(Aircraft delivering through July 2004)SA 26

A-1.1Aircraft Configuration - Model 737-724

(Aircraft delivering after July 2004)SA 41

A-2Aircraft Configuration - Model 737-824 

(Aircraft delivering through July 2004)SA 26

A-2.1Aircraft Configuration - Model 737-824 

(Aircraft delivering after July 2004

through December 2007)SA 41

A-2.2Aircraft Configuration - Model 737-824 

(Aircraft delivering after December 2007SA 41

A-3Aircraft Configuration - Model 737-624SA 1

A-4Aircraft Configuration - Model 737-524SA 3

A-5Aircraft Configuration - Model 737-924 

SA 26

A-6Aircraft Configuration - Model 737-92ERSA 41

 

TABLE OF CONTENTS

SA

Number
EXHIBITS (continued)

BProduct Assurance DocumentSA 1

CCustomer Support Document - Code Two - 

Major Model DifferencesSA 1

C1Customer Support Document - Code Three -

Minor Model DifferencesSA 39

DAircraft Price Adjustments - Next 

Generation Aircraft (1995 Base Price - 

Aircraft delivering through July 2004)SA 1

D1Airframe and Engine Price Adjustments - 

Current Generation AircraftSA 1

D2Aircraft Price Adjustments - Next 

Generation Aircraft (1997 Base Price - Aircraft 

delivering through July 2004)SA 5

D3Aircraft Price Adjustments - Next 

Generation Aircraft (July 2003 Base Price - 

Aircraft delivering through December 2007)SA 41

D4Aircraft Price Adjustments - Next 

Generation Aircraft (Aircraft delivering in 

or after January 2008)SA 41

EBuyer Furnished Equipment

Provisions DocumentSA 39

FDefined Terms DocumentSA 5

 
TABLE OF CONTENTS

SA

Number

LETTER AGREEMENTS

1951-1Not Used

1951-2R4Seller Purchased EquipmentSA 39

1951-3R22Option Aircraft-Model 737-824 AircraftSA 38

1951-4R1Waiver of Aircraft DemonstrationSA 1

1951-5R3Promotional Support - Next Generation

AircraftSA 39

1951-6Configuration Matters

1951-7R1Spares Initial ProvisioningSA 1

1951-8R2Escalation Sharing - Next Generation 

AircraftSA 4

1951-9R18Option Aircraft-Model 737-724 AircraftSA 38

1951-11R1Escalation Sharing-Current Generation 

AircraftSA 4

1951-12R7Option Aircraft - Model 737-924 Aircraft SA 32

1951-13Configuration Matters - Model 737-924     SA 5

	Installation of Cabin Systems Equipment  

737-924SA 22

1951-15Configuration Matters - Model 737-924ER  SA 39

 

 

 

 

TABLE OF CONTENTS

SA

Number

RESTRICTED LETTER AGREEMENTS

6-1162-MMF-295Performance Guarantees - Model 

737-724 Aircraft

6-1162-MMF-296Performance Guarantees - Model 

737-824 Aircraft

6-1162-MMF-308R4Disclosure of Confidential 

InformationSA 39

6-1162-MMF-309R1[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 1

6-1162-MMF-311R5[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 39

6-1162-MMF-312R1Special Purchase Agreement

ProvisionsSA 1

6-1162-MMF-319Special Provisions Relating to the

Rescheduled Aircraft

6-1162-MMF-378R1Performance Guarantees - Model

737-524 AircraftSA 3

6-1162-GOC-015R1[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 31

6-1162-GOC-131R7Special MattersSA 41

6-1162-DMH-365Performance Guarantees - Model

737-924 AircraftSA 5

6-1162-DMH-624[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 8

6-1162-DMH-680Delivery Delay Resolution ProgramSA 9

6-1162-DMH-1020[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 14

6-1162-DMH-1035[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 15

6-1162-DMH-1054[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]SA 16

6-1162-CHL-048Rescheduled Aircraft AgreementSA 26

6-1162-CHL-195Restructure Agreement for Model

737NG and 757-300 Aircraft  SA 30

6-1162-MSA-768Performance Guarantees - Model

737-924ER AircraftSA 39

 

TABLE OF CONTENTS

 

SUPPLEMENTAL AGREEMENTSDATED AS OF:

Supplemental Agreement No. 1October 10, 1996

Supplemental Agreement No. 2March 5, 1997

Supplemental Agreement No. 3July 17, 1997

Supplemental Agreement No. 4October 10, 1997

Supplemental Agreement No. 5May 21, 1998

Supplemental Agreement No. 6July 30, 1998

Supplemental Agreement No. 7November 12, 1998

Supplemental Agreement No. 8December 7, 1998

Supplemental Agreement No. 9February 18, 1999

Supplemental Agreement No. 10March 19, 1999

Supplemental Agreement No. 11May 14, 1999

Supplemental Agreement No. 12July 2, 1999

Supplemental Agreement No. 13October 13, 1999

Supplemental Agreement No. 14December 13, 1999

Supplemental Agreement No. 15January 13, 2000

Supplemental Agreement No. 16March 17, 2000

Supplemental Agreement No. 17May 16, 2000

Supplemental Agreement No. 18September 11, 2000

Supplemental Agreement No. 19October 31, 2000

Supplemental Agreement No. 20December 31, 2000

Supplemental Agreement No. 21March 30, 2001

TABLE OF CONTENTS

 

SUPPLEMENTAL AGREEMENTSDATED AS OF:

Supplemental Agreement No. 22May 23, 2001

Supplemental Agreement No. 23June 29, 2001

Supplemental Agreement No. 24August 31, 2001

Supplemental Agreement No. 25December 31, 2001

Supplemental Agreement No. 26March 29, 2002

Supplemental Agreement No. 27November 6, 2002

Supplemental Agreement No. 28April 1, 2003

Supplemental Agreement No. 29August 19, 2003

Supplemental Agreement No. 30November 4, 2003

Supplemental Agreement No. 31August 20, 2004

Supplemental Agreement No. 32December 29, 2004

Supplemental Agreement No. 33December 29, 2004

Supplemental Agreement No. 34June 22, 2005

Supplemental Agreement No. 35June 30, 2005

Supplemental Agreement No. 36July 21, 2005

Supplemental Agreement No. 37March 30, 2006

Supplemental Agreement No. 38June 6, 2006

Supplemental Agreement No. 39August 3, 2006

Supplemental Agreement No. 40December 5, 2006

Supplemental Agreement No. 41June 1, 2007

Table 1 to Purchase Agreement 1951

Aircraft Deliveries and Descriptions

Model l737-700 Aircraft

 

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

1951PA/CALContinental Airlines, Inc.

 

 

 

 

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

Continental Airlines, Inc.

 

 

Exhibit A-1.1 to Purchase Agreement Number 1951

(737-724 Aircraft delivering August 2004 through December 2007)

AIRCRAFT CONFIGURATION

Dated                 

relating to

BOEING MODEL 737-724 AIRCRAFT

Exhibit A-1.1

 

The Detail Specification is Customer Detail Specification D6-38808-42 Revision A dated November 1, 1998.  Such Detail Specification will be comprised of Boeing Configuration Specification D6-38808 Revision G dated April 29, 1997 as amended to incorporate the applicable specification language to reflect the effect of the changes set forth in the Change Requests and Master Changes listed below, including the effects of such changes on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW).  Such Change Requests and Master Changes are set forth in Boeing Document D6-39049.  As soon as practicable, Boeing will furnish to Buyer copies of the Detail Specification, which copies will reflect the effect of such changes.  The Aircraft Basic Price will reflect and include all effects of such changes of price, except such Aircraft Basic Price will not include the price effects of Change Requests changing Buyer Furnished Equipment to Seller Purchased Equipment.

Exhibit A-1.1 to

Purchase Agreement No. 1951

Page 3

PRICE PER

AIRCRAFT

CHANGE NO.TITLEK[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

 

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

1951PA/CALContinental Airlines, Inc.

 

 

 

 

AIRCRAFT CONFIGURATION

between

 

THE BOEING COMPANY

and

Continental Airlines, Inc.

 

 

Exhibit A-2.1 to Purchase Agreement Number 1951

(737-824 Aircraft delivering August 2004 through December 2007)

 

AIRCRAFT CONFIGURATION

Dated

relating to

BOEING MODEL 737-824 AIRCRAFT

Exhibit A-2.1

The Detail Specification is Boeing Detail Specification D6-38808-43 dated October 2, 2001.  Such Detail Specification will be comprised of Boeing Configuration Specification D6-38808 Revision G dated April 29, 1997 as amended to incorporate the applicable specification language to reflect the effect of the changes set forth in the Change Requests listed below, including the effects of such changes on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW).  Such Change Requests are set forth in Boeing Document D6-39050.  As soon as practicable, Boeing will furnish to Buyer copies of the Detail Specification, which copies will reflect the effect of such changes.  The Aircraft Basic Price will reflect and include all effects of such changes on price, except such Aircraft Basic Price will not include the price effect of changing Buyer Furnished Equipment to Seller Purchased Equipment.

Exhibit A-2.1 to

Purchase Agreement No. 1951

Page 3

PRICE PER

AIRCRAFT

CHANGE NO.TITLEK[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

 

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

Continental Airlines, Inc.

 

Exhibit A-2.2 to Purchase Agreement Number 1951

 

(737-800 Aircraft delivering in or after January 2008)

737-800BOEING PROPRIETARY

Exhibit A-2.2

	

CR
	

TITLE
	
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

First of Model

Per A/C
	
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Follow on Price

Per A/C

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

Continental Airlines, Inc.

 

Exhibit A-6 to Purchase Agreement Number 1951

 

(737-924ER Aircraft)

 

737-900ERBOEING PROPRIETARY

Exhibit A-6

	

CR
	

TITLE
	
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

First of Model

Per A/C
	
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Follow on Price

Per A/C

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

1951PA/CALCONTINENTAL AIRLINES, INC.

 

 

 

 

AIRCRAFT PRICE ADJUSTMENT

between

THE BOEING COMPANY

and

Continental Airlines, Inc.

 

 

 

 

Exhibit D-3 to Purchase Agreement Number 1951

 

Next Generation Aircraft

(Aircraft Delivering in August 2004 through December 2007)

PRICE ADJUSTMENT DUE TO

ECONOMIC FLUCTUATIONS

AIRCRAFT PRICE ADJUSTMENT

(July 2003 Base Price)

Aircraft Price Adjustment for New Generation Aircraft 

(Aircraft delivering [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

1.Formula

The Aircraft Price Adjustment will be determined at the time of Aircraft delivery in accordance with the following formula:

Pa = (P) (L + M) - P

Where:

Pa =Airframe Price Adjustment.

P =Airframe Price plus Optional Features Price (as set forth in Article 3.2 of this Agreement).

L =[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]    x (ECI 

        ECIb)

M =[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] x [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

ECI = a value determined using the U.S. Department of Labor, Bureau of Labor Statistics [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] calculated by establishing a three-month arithmetic average value (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the month of scheduled delivery of the applicable Aircraft.  As the Employment Cost Index values are released only on a quarterly basis, the value released for the month of March will be used for the months of January and February; the value for June used for April and May; the value for September used for July and August; and the value for December used for October and November.

ECIb =the base year index (as set forth in Table 1 for Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] of this Purchase Agreement)

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] = 
a value determined using the U.S. Department of Labor, Bureau of Labor Statistics [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] prior to the month of scheduled delivery of the applicable Aircraft.

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] =
the base year index (as set forth in Table 1 for Aircraft [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] of this Purchase Agreement)

As an example, for an Aircraft scheduled to be delivered in the month of July, the months [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] will be utilized in determining the value of ECI and CPI.

Note:i.In determining the values of L and M, all calculations and resulting values will be expressed as a decimal rounded to the nearest ten-thousandth. 

ii.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is the numeric ratio attributed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] in the Airframe Price Adjustment formula.

iii.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is the numeric ratio attributed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] in the Airframe Price Adjustment formula.

iv.The denominators (base year indices) are the actual average values reported by the U.S. Department of Labor, Bureau of Labor Statistics.  The actual average values are calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the airframe base year.  The applicable base year and corresponding denominator is provided by Boeing in Table 1 of this Purchase Agreement. 

v.The final value of Pa will be rounded to the nearest dollar.

vi.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.Values to be Utilized in the Event of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].

2.1[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.2Notwithstanding Article 2.1 above, if prior to the scheduled delivery month of an Aircraft the Bureau of Labor Statistics changes the base year for determination of the ECI and [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] values as defined above, such re-based values will be incorporated in the Airframe Price Adjustment calculation.  

2.3[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.4If within 12 months of Aircraft delivery, the published index values are revised due to an acknowledged error by the Bureau of Labor Statistics, the Airframe Price Adjustment will be re-calculated using the revised index values (this does not include those values noted as preliminary by the Bureau of Labor Statistics). A credit memorandum or supplemental invoice will be issued for the Airframe Price Adjustment difference. Interest charges will not apply for the period of original invoice to issuance of credit memorandum or supplemental invoice.

Note:i.The values released by the Bureau of Labor Statistics and available to Boeing 30 days prior to the first day of the scheduled delivery month of an Aircraft will be used to determine the ECI and CPI values for the applicable months (including those noted as preliminary by the Bureau of Labor Statistics) to calculate the Airframe Price Adjustment for the Aircraft invoice at the time of delivery.  The values will be considered final and no Airframe Price Adjustments will be made after Aircraft delivery for any subsequent changes in published Index values, subject always to paragraph 2.4 above.  

ii.The maximum number of digits to the right of the decimal after rounding utilized in any part of the Airframe Price Adjustment equation will be 4, where rounding of the fourth digit will be increased to the next highest digit when the 5th digit is equal to 5 or greater.

 

ESCALATION ADJUSTMENT

 

AIRFRAME AND OPTIONAL FEATURES

 

between

THE BOEING COMPANY

and

CONTINENTAL AIRLINES, INC.

 

Exhibit D-4 to Purchase Agreement Number 1951

 

Next Generation Aircraft

(Aircraft delivering in or after January 2008)

 

1.Formula.

Airframe and Optional Features price adjustments (Airframe Price Adjustment) are used to allow prices to be stated in current year dollars at the signing of this Purchase Agreement and to adjust the amount to be paid by Customer at delivery for the effects of economic fluctuation.  The Airframe Price Adjustment will be determined at the time of Aircraft delivery in accordance with the following formula:

Pa = (P) (L + M) - P

Where:

Pa =Airframe Price Adjustment.  (Airframe Price includes the Engine Price at its basic thrust level.)

P =Airframe Price plus the price of the Optional Features (as set forth in Table 1 of this Purchase Agreement).

 

L =[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] x [(ECI    x  (ECI-R

      ECIb)       ECI-Rb)]

Where:

ECI =three-month arithmetic average value of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] for October, November, and December 2005, using [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT];

ECIb =base year airframe escalation index (as set forth in Table 1 of this Purchase Agreement);

ECI-R =a value determined using the U.S. Department of Labor, Bureau of Labor Statistics, [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] calculated by establishing a three-month arithmetic average value (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the month of scheduled delivery of the applicable Aircraft.  As the Employment Cost Index values are only released on a quarterly basis, the value released for the first quarter will be used for the months of January, February, and March; the value released for the second quarter will be used for the months of April, May, and June; the value released for the third quarter will be used for the months of July, August, and September; the value released for the fourth quarter will be used for the months of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

ECI-Rb =three-month arithmetic average value of 100.0 for October, November, and December 2005, using the ECI - NAICS Manufacturing [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] and

M =[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] x [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Where:

 
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] = a value determined using the U.S. Department of Labor, Bureau of Labor Statistics, [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the month of scheduled delivery of the applicable Aircraft.

CPIb = the base year airframe escalation index (as set forth in Table 1 of this Purchase Agreement); and

As an example, for an Aircraft scheduled to be delivered in the month of July, the months of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] of the preceding year will be utilized in determining the value of ECI-R and [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].

Note:i.In determining the values of L and M, all calculations and resulting values will be expressed as a decimal rounded to the nearest ten-thousandth. 

ii.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is the numeric ratio attributed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] in the Airframe Price Adjustment formula.

iii.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] is the numeric ratio attributed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] in the Airframe Price Adjustment formula.

iv. The denominators (base year indices) are the actual average values reported by the U.S. Department of Labor, Bureau of Labor Statistics.  The actual average values are calculated as a 3-month arithmetic average of the released monthly values (expressed as a decimal and rounded to the nearest tenth) using the values for the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] months prior to the airframe base year.  The applicable base year and corresponding denominator is provided by Boeing in Table 1 of this Purchase Agreement. 

v.The final value of Pa will be rounded to the nearest dollar.

vi.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.Values to be Utilized in the Event of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].

2.1[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.2Notwithstanding Article 2.1 above, if prior to the scheduled delivery month of an Aircraft the Bureau of Labor Statistics changes the base year for determination of the ECI-R and [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] values as defined above, such re-based values will be incorporated in the Airframe Price Adjustment calculation.  

2.3[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.4If within 12 months of Aircraft delivery, the published index values are revised due to an acknowledged error by the Bureau of Labor Statistics, the Airframe Price Adjustment will be re-calculated using the revised index values (this does not include those values noted as preliminary by the Bureau of Labor Statistics). A credit memorandum or supplemental invoice will be issued for the Airframe Price Adjustment difference. Interest charges will not apply for the period of original invoice to issuance of credit memorandum or supplemental invoice.

Note:i.The values released by the Bureau of Labor Statistics and available to Boeing 30 days prior to the first day of the scheduled delivery month of an Aircraft will be used to determine the ECI-R and [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] values for the applicable months (including those noted as preliminary by the Bureau of Labor Statistics) to calculate the Airframe Price Adjustment for the Aircraft invoice at the time of delivery.  The values will be considered final and no Airframe Price Adjustments will be made after Aircraft delivery for any subsequent changes in published Index values, subject always to paragraph 2.4 above.  

ii.The maximum number of digits to the right of the decimal after rounding utilized in any part of the Airframe Price Adjustment equation will be 4, where rounding of the fourth digit will be increased to the next highest digit when the 5th digit is equal to 5 or greater.

June 1, 2007

6-1162-GOC-131R8

 

 

Continental Airlines, Inc.

1600 Smith Street

Houston, Texas  77002

 

Subject:Letter Agreement No. 6-1162-GOC-131R8 to Purchase
Agreement No. 1951 - Special Matters

 

Ladies and Gentlemen:

This Letter Agreement amends Purchase Agreement No. 1951 dated as of July 23, 1996 (the Agreement) between The Boeing Company (Boeing) and Continental Airlines, Inc. (Buyer) relating to Model 737 aircraft (the Aircraft).  This Letter Agreement supersedes and replaces in its entirety Letter Agreement 6-1162-GOC-131R7 dated December 5, 2006.

All terms used herein and in the Agreement, and not defined herein, will have the same meaning as in the Agreement.

1.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Advance Payment Schedule.

2.1Firm Aircraft.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

 

 

2.2Option Aircraft and follow-on Firm.  [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

3.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

4.Option Aircraft.

[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

5.[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

6.Assignment of Credits.

Buyer may not assign the credit memoranda described in this Letter Agreement without Boeing's prior written consent [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

7.Confidential Treatment.

Boeing and Buyer understand that certain information contained in this Letter Agreement, including any attachments hereto, are considered by both parties to be confidential.  Notwithstanding the provisions of Letter Agreement 6-1162-MMF-308R4, Boeing and Buyer agree that each party will treat this Letter Agreement and the information contained herein as confidential and will not, without the other party's prior written consent, disclose this Letter Agreement or any information contained herein to any other person or entity except as may be required by applicable law or governmental regulations.

Very truly yours,

THE BOEING COMPANY

 

 

By   /s/ Anthony J. Hicker 

Its    Attorney-In-Fact    

 

ACCEPTED AND AGREED TO this

Date:     June 1, 2007

CONTINENTAL AIRLINES, INC.

 

 

By    /s/ Gerald Laderman

Its Senior Vice President - Finance and Treasurer

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