EXHIBIT 10.11

 

 

 

 

 

 

 

 

AMENDED AND RESTATED

CAPACITY PURCHASE AGREEMENT

AMONG

CONTINENTAL AIRLINES, INC.,

EXPRESSJET HOLDINGS, INC.,

XJT HOLDINGS, INC.

AND

EXPRESSJET AIRLINES, INC.

 

 

 

 

 

DATED AS OF APRIL 17, 2002

 

 

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I

DEFINITIONS

 

ARTICLE II

CAPACITY PURCHASE, SCHEDULES AND FARES

Section 2.01 Capacity
Purchase...............................................................................1

Section 2.02 Withdrawal of Regional Jet Aircraft from this
Agreement.........................................2

Section 2.03 Withdrawal of Turboprop Aircraft from this
Agreement............................................5

Section 2.04 Withdrawal of
Engines...........................................................................6

Section 2.05 Embraer Option
Aircraft.........................................................................7

Section 2.06 Flight-Related
Revenues.........................................................................7

ARTICLE III

CONTRACTOR COMPENSATION

Section 3.01 Base and Incentive
Compensation.................................................................7

Section 3.02 Periodic Adjustment of Base and Incentive
Compensation..........................................7

Section 3.03 Contractor
Expenses.............................................................................8

Section 3.04 Continental
Expenses............................................................................8

Section 3.05 Accounting Provisions and
Audit.................................................................8

Section 3.06 Billing and Payment;
Reconciliation.............................................................9

ARTICLE IV

CONTRACTOR OPERATIONS AND AGREEMENTS WITH CONTINENTAL

Section 4.01 Crews; Resource
Allocation.....................................................................10

Section 4.02 Governmental
Regulations.......................................................................11

Section 4.03 Quality of
Service.............................................................................11

Section 4.04 Safety
Matters.................................................................................12

Section 4.05
Turboprops.....................................................................................12

Section 4.06 Master Facility and Ground Handling
Agreement..................................................13

Section 4.07 Codeshare
Terms................................................................................13

Section 4.08 Administrative Support and Information Services Provisioning
Agreement.........................13

Section 4.09 Fuel Purchasing
Agreement......................................................................13

Section 4.10 Slots and Route
Authorities....................................................................13

Section 4.11 Use of Continental
Marks.......................................................................13

Section 4.12 Use of Contractor
Marks........................................................................14

Section 4.13 Catering
Standards.............................................................................14

Section 4.14 Ticket Handling
Terms..........................................................................14

 

 

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ARTICLE V

FINANCING OF AIRCRAFT

Section 5.01 Financing of Firm and Option
Aircraft..........................................................14

Section 5.02 No Financing of Other
Aircraft.................................................................15

Section 5.03 Refinancing or Replacement of Uncovered
Aircraft...............................................15

Section 5.04 Pre-Delivery
Deposits..........................................................................16

Section 5.05 Lease of Owned
Aircraft........................................................................16

ARTICLE VI

EXCLUSIVITY AND CERTAIN RIGHTS OF CONTINENTAL

Section 6.01 Exclusivity; Use of Covered
Aircraft...........................................................17

Section 6.02 Exclusive Arrangements at Hub
Airports.........................................................17

Section 6.03 Most Favored
Nations...........................................................................17

Section 6.04 Change of
Control..............................................................................18

ARTICLE VII

INSURANCE

Section 7.01 Minimum Insurance
Coverages....................................................................18

Section 7.02
Endorsements...................................................................................19

Section 7.03 Evidence of Insurance
Coverage.................................................................19

Section 7.04 Insurance Through Combined
Placement...........................................................20

ARTICLE VIII

INDEMNIFICATION

Section 8.01 Contractor Indemnification of
Continental......................................................20

Section 8.02 Continental Indemnification of
Contractor......................................................21

Section 8.03 Indemnification
Claims.........................................................................21

Section 8.04 Employer's Liability; Independent Contractors; Waiver of
Control...............................22

Section 8.05
Survival.......................................................................................23

ARTICLE IX

TERM, TERMINATION AND DISPOSITION OF AIRCRAFT

Section 9.01 Base
Term......................................................................................23

Section 9.02 Extension
Terms................................................................................23

Section 9.03 Early
Termination..............................................................................24

Section 9.04 Disposition of Aircraft during Wind-Down
Period................................................25

Section 9.05 Other Remedies for
Breach......................................................................32

 

 

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ARTICLE X

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 10.01 Representations, Warranties and Covenants of Holdings, XJT and
ExpressJet......................34

Section 10.02 Representations and Warranties of
Continental..................................................35

ARTICLE XI

MISCELLANEOUS

Section 11.01 Amendment of Certain
Contracts.................................................................36

Section 11.02
Notices........................................................................................37

Section 11.03 Binding Effect;
Assignment.....................................................................37

Section 11.04 Amendment and
Modification.....................................................................37

Section 11.05
Waiver.........................................................................................37

Section 11.06
Interpretation.................................................................................38

Section 11.07
Confidentiality................................................................................38

Section 11.08
Arbitration....................................................................................39

Section 11.09
Counterparts...................................................................................41

Section 11.10
Severability...................................................................................41

Section 11.11 Equitable
Remedies.............................................................................41

Section 11.12 Relationship of
Parties........................................................................41

Section 11.13 Entire
Agreement...............................................................................41

Section 11.14 Governing
Law..................................................................................42

Section 11.15
Guarantees.....................................................................................42

Section 11.16 Right of
Set-Off...............................................................................42

Section 11.17 Cooperation with Respect to
Reporting..........................................................43

 

SCHEDULE 1: Covered Aircraft

SCHEDULE 2: Continental Increased Lease Rate

SCHEDULE 3: Compensation for Capacity Purchase

EXHIBIT A: Definitions

EXHIBIT B: Form of Aircraft Sublease

EXHIBIT C: Master Facility and Ground Handling Agreement

EXHIBIT D: Terms of Codeshare Arrangements

EXHIBIT E: Administrative Support and Information Services Provisioning
Agreement

EXHIBIT F: Fuel Purchasing Agreement

EXHIBIT G: Use of Continental Marks

EXHIBIT H: Use of Contractor Marks

EXHIBIT I: Catering Standards

EXHIBIT J: Ticket Handling Terms

 

 

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AMENDED AND RESTATED

CAPACITY PURCHASE AGREEMENT

This Amended and Restated Capacity Purchase Agreement (this "Agreement"), dated
as of April 17, 2002, is among Continental Airlines, Inc., a Delaware
corporation ("Continental"), ExpressJet Holdings, Inc., a Delaware corporation
("Holdings"), XJT Holdings, Inc., a Delaware corporation and a wholly-owned
subsidiary of Holdings ("XJT"), and ExpressJet Airlines, Inc., a Delaware
corporation and a subsidiary of XJT ("ExpressJet" and, collectively with
Holdings and XJT, "Contractor").

WHEREAS, Continental, Holdings and XJT (formerly ExpressJet Airlines, Inc.)
entered into that certain Capacity Purchase Agreement, dated as of January 1,
2001 (the "Original Capacity Purchase Agreement");

WHEREAS, Continental, Holdings and XJT made certain amendments to the Original
Capacity Purchase Agreement effective as of January 1, 2002;

WHEREAS, XJT assigned its interests herein to ExpressJet (formerly New
ExpressJet Airlines, Inc.) effective as of the date hereof, with the consent of
Holdings and Continental; and

WHEREAS, as a condition to the consent of Continental to the assignment to
ExpressJet referenced above, XJT has agreed to become a party to this Agreement
with such rights and obligations as are set forth more fully below, and the
other parties hereto desire XJT to become a party hereto with such rights and
obligations;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations hereinafter contained, the parties agree to amend the
Original Capacity Agreement to reflect the assignment of XJT's interests herein
to ExpressJet, the addition of XJT hereto with certain rights and obligations,
and certain other amendments relating thereto, and to restate it in its
entirety, as so amended and to reflect the amendments effective as of January 1,
2002, as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used in this Agreement (including, unless otherwise defined
therein, in the Schedules, Appendices and Exhibits to this Agreement) shall have
the meanings set forth in Exhibit A hereto.

ARTICLE II

CAPACITY PURCHASE, SCHEDULES AND FARES

Section 2.01 Capacity Purchase. Continental agrees to purchase the capacity of
the Covered Aircraft for the Term, under the terms and conditions set forth
herein and for the consideration described in Article III. Subject to the terms
and conditions of this

 

 

 

 

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Agreement, Contractor shall provide all of the capacity of the Covered Aircraft
solely to Continental and use the Covered Aircraft solely to operate the
Scheduled Flights.

(a) Fares, Rules and Seat Inventory. Continental

shall establish and publish all fares and related tariff rules for all

seats on the Covered Aircraft. Contractor shall not publish any fares,

tariffs, or related information for the Covered Aircraft. In addition,

Continental shall have complete control over all seat inventory and

inventory and revenue management decisions for the Covered Aircraft,

including overbooking levels, discount seat levels and allocation of

seats among various fare buckets.

(b) Flight Schedules. Continental shall, in its sole

discretion, establish and publish all schedules for the Covered

Aircraft, including determining the city-pairs served, frequencies,

utilization and timing of scheduled arrivals and departures and charter

flights; provided that such schedules shall be subject to Reasonable

Operating Constraints. Contractor and Continental shall meet monthly

(but not later than the fourth Friday of each calendar month) to review

the planned flight schedules for the Covered Aircraft for each of the

next 12 months. At such meeting, Continental shall present a planned

flight schedule for the Covered Aircraft for each of the next 12

months, including a proposed Final Monthly Schedule for the next

calendar month. At such meeting, Continental shall review and consider

any changes to the planned flight schedule for the Covered Aircraft,

including the proposed Final Monthly Schedule, suggested by Contractor.

Following such monthly meeting, Continental shall make such adjustments

to the proposed Final Monthly Schedule as it deems appropriate (subject

to Reasonable Operating Constraints), and, not later than three

Business Days prior to the beginning of each calendar month, will

deliver to Contractor the Final Monthly Schedule.

Section 2.02 Withdrawal of Regional Jet Aircraft from this Agreement.
Continental shall be entitled to withdraw jet Covered Aircraft from the capacity
purchase provisions of this Agreement, in accordance with and subject to the
limitations, terms and conditions contained in this Section 2.02, which
limitations, terms and conditions shall be applicable only to jet aircraft.
Subject to the limitations contained below, Continental shall have complete
discretion to select the particular Covered Aircraft and Engines to be withdrawn
pursuant to this Section 2.02.

(a) Continental Notice of and Limitations on Regional

Jet Reduction. At any time and from time to time after July 1, 2003,

Continental may give not more than 18 months and not less than 12

months notice of the withdrawal of Covered Aircraft from the capacity

purchase provisions of this Agreement, which notice shall specify an

Effective Date and the number and type of Covered Aircraft to be

withdrawn, and shall include an Early Withdrawal Schedule for the

withdrawal of such aircraft that delineates the number of each aircraft

type to be withdrawn by month. The number of Covered Aircraft to be

withdrawn pursuant to this Section 2.02 shall be subject to the

following numerical limitations:

 

 

 

 

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(i) Continental shall not be entitled to

provide in any notice delivered pursuant to Section 2.02(a)

for the withdrawal of any number of Covered Aircraft greater

than the excess of (i) 25% (rounded to the nearest whole

number) of the sum of the number of Delivered Covered Aircraft

as of the Effective Date set forth in such notice, plus the

number of Delivered Covered Aircraft that have been withdrawn

from the capacity purchase provisions of this Agreement at any

time before such Effective Date in connection with a Labor

Strike pursuant to Section 9.05(c) and the number withdrawn

for any other reason within the three-year period immediately

preceding such Effective Date, over (ii) the number of

Delivered Covered Aircraft that have been withdrawn pursuant

to this Section 2.02 within the three-year period immediately

preceding such Effective Date; provided that the foregoing

limitations shall not limit Continental's right to withdraw

any Undelivered Covered Aircraft.

(ii) Continental shall not be entitled to

withdraw a Covered Aircraft pursuant to this Section 2.02 if,

after such withdrawal, there would be fewer than 25 Covered

Aircraft remaining.

(iii) The Early Withdrawal Schedule may not

provide for the withdrawal of more than 15 Delivered Covered

Aircraft per month, and may not provide for the withdrawal of

any Delivered Covered Aircraft more than 36 months after the

Effective Date; provided that Continental may provide for the

immediate withdrawal of any aircraft that are Undelivered

Covered Aircraft on the applicable Effective Date.

(b) Contractor's Right to Retain Regional Jets.

Except to the extent otherwise provided in this Agreement, Contractor

shall have the right either to retain (as Uncovered Aircraft) any

Covered Aircraft being withdrawn from the capacity purchase provisions

of this Agreement pursuant to this Section 2.02, or to return such

aircraft to Continental (or its designee), in each case as follows:

(i) Contractor shall have nine months after

receipt of the Early Withdrawal Schedule delivered pursuant to

Section 2.02(a) to notify Continental that it elects to retain

any of the Covered Aircraft being withdrawn (whether such

Covered Aircraft constitute Delivered Covered Aircraft or

Undelivered Covered Aircraft). If Contractor elects to keep

any Delivered Covered Aircraft, then its notice must include

an indication by calendar month of the number and type of

aircraft it proposes to retain, such number of any particular

type of aircraft in any particular month to be no greater than

the number of such type of aircraft scheduled to be withdrawn

during such month pursuant to the Early Withdrawal Schedule.

In addition, regardless of whether it intends to retain any

aircraft, Contractor shall include in its notice a reasonably

detailed current summary of the maintenance and repair

condition of each aircraft and Engine and a list detailing the

location of each Engine (by aircraft or, if appropriate,

maintenance facility).

 

 

 

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(ii) Within 30 days after receipt of

Contractor's notice of its election to retain Covered Aircraft

being withdrawn, Continental shall select the individual

aircraft to be withdrawn, including those aircraft to be

retained by Contractor, and shall notify Contractor of its

selection. Continental shall have complete discretion in the

selection of the particular Covered Aircraft to be withdrawn

and those to be retained by Contractor; provided that

Continental must adhere to the timing, number and type of

aircraft to be retained by Contractor as provided in

Contractor's notice to Continental delivered pursuant to

Section 2.02(b)(i).

(c) Replacement of Sublease. Upon Contractor

retaining a previously Covered Aircraft as an Uncovered Aircraft

pursuant to this Section 2.02, effective on the first day of the month

during which such aircraft becomes an Uncovered Aircraft, the Covered

Aircraft Sublease shall be terminated and replaced with an Uncovered

Aircraft Sublease, and Contractor may fly the aircraft as permitted by

Article VI.

(d) Return Conditions. Upon the withdrawal from the

capacity purchase provisions of this Agreement of a Covered Aircraft

that is being returned to Continental (or its designee) pursuant to

this Section 2.02, the Covered Aircraft Sublease with respect to such

aircraft shall be terminated upon the date of such withdrawal, and

Contractor shall not be required to meet the return conditions

applicable to such aircraft that relate to time or cycles remaining

between maintenance events or to any time- or cycle-controlled part

under clause (v) of Section 4 of the Covered Aircraft Sublease;

provided that Contractor shall remain obligated to comply with all

other provisions of the Covered Aircraft Sublease applicable at the

time, including without limitation provisions generally applicable to

the maintenance, airworthiness, repair and general operating condition

and cleanliness of the aircraft; and provided further, that the general

condition of the Covered Aircraft being returned to Continental shall

not have materially changed relative to the condition of Contractor's

fleet of the same aircraft type since the related notice of withdrawal

was delivered by Continental to Contractor pursuant to Section 2.02(a),

and the withdrawn aircraft being returned to Continental shall not have

been discriminated against or operated, maintained or otherwise treated

differently (including with respect to the removal of any part for

convenience or without cause) than any other Covered Aircraft.

(e) Financial Arrangements. In connection with the

withdrawal of any Covered Aircraft from the capacity purchase

provisions of this Agreement pursuant to this Section 2.02, (i)

Continental shall be responsible for all reasonable and necessary

direct out-of-pocket costs incurred by Contractor as a result of such

withdrawal, including without limitation the reasonable costs of

terminating facility leases and/or employees and disposing of Excess

Inventory caused by such withdrawal and any increased charges per

scheduled block hour for Covered Aircraft under Section 5.4.3 of the

Flight Hour Agreement precipitated by the return of any Covered

Aircraft to Continental, but excluding any lost profits and any other

indirect costs; provided that Contractor shall use its

 

 

 

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reasonable good faith efforts to mitigate any such costs; (ii)

Continental shall meet and confer with Contractor regarding the impact

of the withdrawal on Contractor's cash flow, and shall negotiate in

good faith regarding the provision by Continental of a credit facility

for Contractor, if needed by Contractor as a result of such withdrawal,

for a term not to exceed two years, a size not to exceed $75 million in

the aggregate and at an interest rate equal to LIBOR plus 200 basis

points; provided, that Continental has no obligation to provide such

credit facility; (iii) for each such withdrawn aircraft being retained

by Contractor, Contractor shall calculate a maintenance reimbursement

equal to the product of (x) Contractor's average cost of a heavy

maintenance visit for such aircraft type during the previous six months

and (y) a fraction, the numerator of which is the number of hours

remaining until the next heavy maintenance visit for such aircraft

minus 1/2 of the total number of hours allowable between heavy

maintenance visits for such aircraft, and the denominator of which is

the total number of hours allowable between heavy maintenance visits

for such aircraft, and at the time of such withdrawal (I) Continental

shall pay Contractor an amount equal to such maintenance reimbursement,

if the numerator of such fraction is less than zero, (II) Contractor

shall pay Continental an amount equal to such maintenance

reimbursement, if the numerator of such fraction is greater than zero,

and (III) there shall be no maintenance reimbursement payable pursuant

to this clause (iii) if the numerator of such fraction is equal to

zero; and (iv) for each such withdrawn aircraft being retained by

Contractor, if Continental shall have previously reimbursed Contractor

for the cost of any engine life-limited component pursuant to Paragraph

B(3) of Schedule 3 which component is installed in such aircraft, then

Contractor shall pay to Continental an amount equal to the cost of such

life-limited component multiplied by a fraction, the numerator of which

is the number of hours remaining in the life of such life-limited part,

and the denominator of which is the total number of hours in the life

of such life-limited part. Contractor may elect, in lieu of making the

payment contemplated by clause (iv) above, to pay such amount plus

accrued interest, which interest shall accrue monthly at the interest

rate used in the Uncovered Aircraft Sublease for such aircraft to

determine the lease payments thereunder, in equal monthly installments

over the remaining term of the Uncovered Aircraft Sublease with respect

to such aircraft.

Section 2.03 Withdrawal of Turboprop Aircraft from this Agreement.

(a) Continental Notice of Turboprop Aircraft

Withdrawal. All Turboprop Aircraft shall be withdrawn from the capacity

purchase provisions of this Agreement on a schedule to be agreed upon

by Continental and Contractor, but in any event not later than December

31, 2004; provided that notwithstanding any such agreed schedule,

Continental may at any time, upon not less than 45 days' notice (or 14

days' notice in the case of a Turboprop Aircraft for which Continental

received notice of a maintenance event pursuant to Section 4.05(a)),

withdraw any Turboprop Aircraft from the capacity purchase provisions

of

 

 

 

 

 

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this Agreement. Without Continental's prior written consent, Contractor

may not retain any Turboprop Aircraft withdrawn from the capacity

purchase provisions of this Agreement. At Continental's request in

connection with any withdrawal of a Turboprop Aircraft, Contractor

shall promptly provide a list detailing the location of each turboprop

engine (by aircraft or, if appropriate, maintenance facility).

(b) Retirement Costs of Turboprop Aircraft.

Continental shall be responsible for any reasonable out-of-pocket

expenses associated with the retirement of each Turboprop Aircraft in

connection with its withdrawal from the capacity purchase provisions of

this Agreement pursuant to this Section 2.03; provided that Contractor

shall conduct its retirement checks for such aircraft in a manner

consistent with its past practices; provided, further, that Contractor

shall not discriminate against or operate, maintain (except as provided

above) or otherwise treat the aircraft differently in contemplation of

its return to Continental (or its designee), including with respect to

the removal of any part or parts for convenience or without cause; and

provided, further, that if the amount which Contractor is compensated

pursuant to Schedule 3 in respect of the reasonable out-of-pocket

expenses incurred by Contractor as determined pursuant to this Section

2.03(b) exceeds the actual aggregate amount of such expenses, then

Contractor shall promptly reimburse to Continental an amount equal to

the quotient of (i) such excess divided by (ii) the Cost Factor set

forth on Appendix 23 to Schedule 3. In connection with each such

retirement, Continental shall also (i) purchase (or arrange for the

purchase) from Contractor, at the time of withdrawal, each such

Turboprop Aircraft that is owned by Contractor at a price equal to the

book value of such aircraft on Contractor's most recent financial

statements, and (ii) purchase the Excess Inventory relating to such

Turboprop Aircraft (as reasonably determined by Contractor) at a price

equal to the book value of such inventory on Contractor's most recent

financial statements.

(c) Impairment Costs of Turboprop Aircraft. Subject

to the provisions of Section 3.05, if Contractor shall incur a charge

for the impairment of a Turboprop Aircraft prior to its withdrawal

pursuant to this Section 2.03, then Continental shall reimburse

Contractor in the amount of such charge; provided that Contractor shall

not discriminate against any Turboprop Aircraft in determining whether

to take such charge or the amount of such charge.

Section 2.04 Withdrawal of Engines. In connection with the withdrawal of any
Covered Aircraft (including any Turboprop Aircraft) from the capacity purchase
provisions of this Agreement pursuant to Section 2.02 or 2.03, whether such
aircraft is being retained by Contractor as an Uncovered Aircraft or returned to
Continental or its designee, Continental shall have complete discretion in the
selection of the particular Engines or Turboprop engines, as the case may be, to
be withdrawn in connection with any particular aircraft and shall notify
Contractor of its selection not less than 10 days after Continental shall have
selected aircraft to be withdrawn pursuant to Section 2.02(b)(ii) or 2.03(a), as
applicable. Continental shall bear the cost of any engine swaps reasonably
necessary to accommodate its engine selections, based on the engine-location
list provided to Continental by Contractor; provided that Contractor use its
commercially reasonable efforts to minimize the number and cost of engine swaps
reasonably necessary to accommodate Continental's engine selections and shall be

 

 

 

 

 

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responsible for the cost of all such swaps, if any, required because of any
inaccuracy in the engine-location list provided to Continental by Contractor.

Section 2.05 Embraer Option Aircraft. With respect to the Embraer Option
Aircraft, Contractor shall give Continental written notice of the deadline for
the exercise of any option for any such Embraer Option Aircraft at least 60 days
(but not more than 180 days) prior to such deadline, and Continental shall,
within 30 days from receipt of such notice, determine and notify Contractor (i)
that such Embraer Option Aircraft shall constitute Covered Aircraft, (ii) that
such Embraer Option Aircraft shall be delivered to Contractor in exchange for
the delivery to Continental of an Uncovered Aircraft that is subject to an
Uncovered Aircraft Sublease, (iii) that Continental desires to acquire such
Embraer Option Aircraft for its own account (or that of its designee) outside of
this Agreement if Contractor does not intend to exercise such option or (iv)
that it does not elect to exercise any of the above rights, in which case
Embraer Option Aircraft obtained by Contractor in respect of such option shall
be Uncovered Aircraft. If Continental shall have elected clause (i) above, then
upon receipt by Contractor of notice from Continental of its determination,
Contractor shall exercise its option to acquire such aircraft from Embraer, and
the provisions of Section 5.01 shall apply. If Continental shall have elected
clause (ii) above, then the provisions of Section 5.03(b) shall apply. If
Continental shall have elected clause (iii) above, then Contractor shall notify
Continental at least 15 days prior to the deadline for exercise of such option
whether Contractor intends to exercise such option on its own behalf, and
Contractor shall timely exercise such option on behalf of Continental (and take
all other actions reasonably appropriate to permit Continental (or its designee)
to acquire such aircraft) if Contractor shall have determined not to exercise
such option on its own behalf.

Section 2.06 Flight-Related Revenues. Contractor acknowledges and agrees that
all revenues resulting from the sale and issuance of passenger tickets
associated with the operation of the Covered Aircraft and all other sources of
revenue associated with the operation of the Covered Aircraft, including without
limitation revenues relating to the transportation of cargo or mail and revenues
associated with food, beverage and duty-free services and guaranteed or
incentive payments from airport, local or municipal authorities in connection
with scheduling flights to such airport or locality, are the sole property of
and shall be retained by Continental (or, if received by Contractor, shall be
promptly remitted to Continental).

ARTICLE III

CONTRACTOR COMPENSATION

Section 3.01 Base and Incentive Compensation. For and in consideration of the
transportation services, facilities and other services to be provided by
Contractor hereunder, Continental shall pay Contractor the base and incentive
compensation as provided in Paragraph A of Schedule 3 hereto, subject to the
terms and conditions set forth in this Article III.

Section 3.02 Periodic Adjustment of Base and Incentive Compensation. The initial
base and incentive compensation rates under this Agreement (including the
initial

 

 

 

 

 

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Block Hour Rates) set forth in Paragraph A of Schedule 3 hereto shall remain in
effect through December 31, 2004, with certain limited adjustments as are
provided in Schedule 3. The Block Hour Rates shall be subject to further
adjustment on January 1, 2005 and each January 1 thereafter during the Term.
Continental and Contractor hereby agree to meet promptly after July 1, 2004,
September 1, 2005 and each September 1 thereafter during the Term in order to
review and revise the Block Hour Rates, as appropriate, for the subsequent year
based on the methodology (including the Cost Factor) for setting the initial
Block Hour Rates as set forth in Schedule 3. Should the parties be unable to
agree on such revised Block Hour Rates by October 1, 2004 for the year beginning
January 1, 2005 or by November 1 in any subsequent year for the year beginning
on the subsequent January 1, then the parties shall submit the disagreement to
arbitration pursuant to Section 11.08.

Section 3.03 Contractor Expenses. Except as provided otherwise in Section 3.04,
Contractor shall discharge in accordance with commercially reasonable practices
all expenses incurred in connection with Contractor's provision of Regional
Airline Services.

Section 3.04 Continental Expenses. In addition to the reconciliation pursuant to
Section 3.06(b) of all or a portion of the actual costs of certain expenses, the
anticipated costs of which are provided for in the Block Hour Rates:

(a) Certain Revenue-Related Expenses. Continental

shall be responsible for all passenger and cargo revenue-related

expenses relating to the Regional Airlines Services, as described in

Paragraph B(1) of Schedule 3.

(b) Design Changes. Continental shall be responsible

for any reasonable out-of-pocket expenses relating to interior and

exterior design changes to the Covered Aircraft and other

product-related changes required by Continental that occur outside of

Contractor's normal aircraft and facility refurbishment program,

including facility-related design changes and the cost of changes in

uniforms and other livery.

Section 3.05 Accounting Provisions and Audit.

(a) Separate Books and Records. Contractor shall

maintain separate books and records for the provision of Regional

Airlines Services, on the one hand, and Contractor's other operations

(if any) on the other, in each case in the aggregate, and shall include

a reasonable allocation of expenses, including overhead, among such

aircraft such that aircraft-specific costs are assigned among Covered

Aircraft and Uncovered Aircraft based on the specific aircraft type

that generated such cost and all other costs are allocated

proportionately based on block hours flown; provided that in the event

that engine maintenance or other costs arising under the Flight Hour

Agreement change pursuant to the terms thereof as a result of the

inclusion of Uncovered Aircraft under such agreement (including because

of the stage length or other utilization characteristics of the

Uncovered Aircraft), then the engine maintenance and other costs

arising under

 

 

 

 

 

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the Flight Hour Agreement shall be allocated to the Covered Aircraft as

if such Uncovered Aircraft had not been included under such agreement,

regardless of whether such allocation results in higher or lower costs

being allocated to the Covered Aircraft. Contractor's books and records

that relate to the provision of Regional Airlines Services shall be

maintained in accordance with generally accepted accounting principles

consistently applied, and such books and records and all calculations

made pursuant to this Agreement shall be kept and made in accordance

with the accounting policies and procedures used by Continental and

Contractor to develop Block Hour Rates, unless otherwise agreed in

writing by Continental. Without limiting the foregoing in any respect,

Contractor agrees that it shall not depreciate Turboprop Aircraft or

Excess Inventory from and after the date hereof more slowly than it has

historically depreciated such items, unless otherwise agreed in writing

by Continental.

(b) Audit Rights. Contractor shall make available for

inspection by Continental and its outside auditors, within a reasonable

period of time after Continental makes a written request therefor, all

of Contractor's books and records (including all financial and

accounting records and operations reports, and records of other

subsidiaries or affiliates of Contractor, if any, as necessary to audit

the allocations made pursuant to Section 3.05(a)). Continental and its

outside auditors shall be entitled to make copies and notes of such

information as they deem necessary and to discuss such records with

Contractor's Chief Financial Officer or such other employees or agents

of Contractor knowledgeable about such records. Upon the reasonable

written request of Continental or its outside auditors, Contractor will

cooperate with Continental and its outside auditors to permit

Continental and its outside auditors access to Contractor's outside

auditors for purposes of reviewing such records.

Section 3.06 Billing and Payment; Reconciliation.

(a) Billing and Payment. On the next Business Day

after Contractor receives the Final Monthly Schedule from Continental

pursuant to Section 2.01(b), Contractor shall present a reasonably

detailed written invoice for amounts due under this Agreement in

respect of the Base Compensation and per passenger fees (based on the

Forecasted Passengers) for the Scheduled Flights during the month to

which such Final Monthly Schedule pertains. Continental shall pay

Contractor the amount due under such invoice (the "Invoiced Amount"),

subject to Continental's right to dispute any calculations set forth on

such invoice that do not comply with the terms of this Agreement, and,

at Continental's option, net of amounts owed by Contractor to

Continental under the Administrative Support and Information Services

Provisioning Agreement, the Master Facility and Ground Handling

Agreement, the Fuel Purchasing Agreement and/or any Covered Aircraft

Sublease or Uncovered Aircraft Sublease, as follows:

(i) One-quarter of the Invoiced Amount shall

be payable by Continental to Contractor, by electronic

transfer of funds to a bank account designated by Contractor,

available on or before the first day

 

 

 

 

 

9

 

 

of the month (or if such day is not a Business Day, the next

Business Day) to which such invoice relates;

(ii) One-quarter of the Invoiced Amount

shall be payable by Continental to Contractor, by electronic

transfer of funds to a bank account designated by Contractor,

available on or before the 8th day of the month (or if such

day is not a Business Day, the next Business Day) to which the

invoice relates;

(iii) One-quarter of the Invoiced Amount

shall be payable by Continental to Contractor, by electronic

transfer of funds to a bank account designated by Contractor,

available on or before the 15th day of the month (or if such

day is not a Business Day, the next Business Day) to which the

invoice relates; and

(iv) One-quarter of the Invoiced Amount

shall be payable by Continental to Contractor, by electronic

transfer of funds to a bank account designated by Contractor,

available on or before the 22nd day of the month (or if such

day is not a Business Day, the next Business Day) to which the

invoice relates.

(b) Reconciliation. Not later than 12 days following

the end of each month, Contractor and Continental shall reconcile

actual amounts due in respect of such month with the estimated amounts

included in the Invoiced Amount for such items for such month in

accordance with the terms and conditions set forth in Schedule 3. Such

reconciled amounts for such month shall be paid by Continental to

Contractor together with the next payment to be made pursuant to

Section 3.06(a)(iii) above, or set off by Continental against any other

amounts owing to Contractor, as the case may be. If, subsequent to any

reconciliation payments or set-off, as the case may be, Contractor's

financial statements, maintained as provided in Section 3.05(a), are

restated, amended or otherwise adjusted for any month or Performance

Period, then the reconciled amounts for such period shall be

recalculated in accordance with the terms and conditions set forth in

Schedule 3, and the parties shall make further payments or set off

further amounts as appropriate in respect of such recalculations.

ARTICLE IV

CONTRACTOR OPERATIONS AND AGREEMENTS WITH CONTINENTAL

Section 4.01 Crews; Resource Allocation.

(a) Personnel Employed. Contractor shall be

responsible for providing all crews (flight and cabin) and maintenance

personnel and, at Contractor Airports, gate agents and other ground

personnel, necessary to operate the Scheduled Flights and for all

aspects (personnel and other) of dispatch control.

(b) Resource Allocation. If Contractor is flying any

Uncovered Aircraft, then for so long as either (i) the number of

Scheduled Flights in a

 

 

 

 

10

 

 

calendar month represent at least 50% of the aggregate number of

Contractor's scheduled flights of Covered and Uncovered Aircraft in

such month or (ii) the number of Covered Aircraft is at least 200, then

Contractor crews, maintenance personnel and other resources shall be

allocated on a priority basis to Scheduled Flights above all other

flights and aircraft.

Section 4.02 Governmental Regulations. Contractor has and shall maintain all
FAA, DOT and other certifications, permits, licenses, certificates and insurance
required by governmental authorities to enable Contractor to perform the
services required by this Agreement. All flight operations, dispatch operations
and all other operations undertaken by Contractor pursuant to this Agreement
shall be conducted and operated by Contractor in compliance in all material
respects with all governmental regulations, including, without limitation, those
relating to airport security, the use and transportation of hazardous materials,
crew qualifications, crew training and crew hours. Without limiting Contractor's
obligations under any Covered Aircraft Lease, all Covered Aircraft shall be
operated and maintained by Contractor in compliance in all material respects
with all governmental regulations, Contractor's own operations manuals and
maintenance manuals and procedures, and all applicable equipment manufacturer's
instructions.

Section 4.03 Quality of Service. At all times, Contractor shall provide Regional
Airline Services with appropriate standards of care, but in no event lower than
such standards utilized by Continental as of the date of this Agreement.
Continental procedures, performance standards and means of measurement thereof
concerning the provision of air passenger and air cargo services shall be
applicable to all Regional Airline Services provided by Contractor. Contractor
shall achieve at least the comparable quality of airline service as provided by
Continental, subject to limitations imposed by the type of aircraft used by
Contractor, its route network and the availability of equipment and facilities,
as compared to those of Continental. Contractor shall comply with all airline
customer service commitments or policies of Continental as of the date hereof,
including without limitation the "CustomerFirst" commitments, and employee
conduct, appearance and training policies in place as of the date hereof, and
shall handle customer-related services in a professional, businesslike and
courteous manner. In connection therewith, Contractor shall maintain aircraft
cleaning cycles and policies, and shall maintain adequate staffing levels, to
ensure at least a comparable level of customer service and operational
efficiency that Continental achieves, including without limitation in respect of
customer complaint response, ticketing and boarding timing, and baggage
services. In addition, at the request of Continental, Contractor shall comply
with all such airline customer service commitments, policies or standards of
care of Continental as adopted, amended or supplemented after the date hereof,
provided that Continental shall reimburse Contractor for the reasonable
out-of-pocket costs of Contractor of complying with such policies in excess of
the costs of complying with such policies as in effect as of the date of this
Agreement. Contractor shall provide Continental with timely communication
regarding the status of all Scheduled Flights, and shall perform closeout
procedures at service levels at least as high as those of Continental at
comparably-sized airports. Contractor will use Continental's standard procedures
for processing and adjudicating all claims for which Contractor is responsible
in an effort to avoid such matters becoming the subject of litigation or
insurance claims. Contractor and

 

 

 

 

 

11

 

 

Continental will periodically meet to discuss and review Contractor's customer
service and handling procedures and policies and its employees' conduct,
appearance and training standards and policies in an effort to ensure compliance
with this Agreement, and to agree to the terms of any necessary corrective
action plan and the timing of its implementation.

Section 4.04 Safety Matters.

(a) Incidents or Accidents. Contractor shall promptly

notify Continental of all irregularities involving a flight operated by

Contractor which result in any damage to persons or property or are

otherwise likely to result in a complaint or claim by passengers or an

investigation by a governmental agency or authority, shall furnish to

Continental as much detail as practicable concerning such

irregularities and shall cooperate with Continental at Contractor's own

expense in any appropriate investigation. Contractor shall adopt

Continental's Emergency Response Plan for aircraft accidents or

incidents, and shall be responsible for Continental's direct costs

resulting from Contractor's participation in such plan. In the event of

an accident or incident involving a Covered Aircraft, Continental will

have the right, but not the obligation, to manage the emergency

response efforts on behalf of Contractor and to approve settlement of

any liability claims resulting from the accident or incident.

(b) Safety Audits. Continental shall have the right,

at its own cost, to inspect, review, and observe Contractor's

operations of Scheduled Flights, and/or to conduct a full safety and/or

service audit of Contractor's operations, manuals and procedures

reasonably related to Scheduled Flights, at such intervals as

Continental reasonably requests. Any such safety review may include an

audit of Contractor's maintenance and operating procedures, crew

planning, passenger and baggage handling, customer service, personnel

records, spare parts, inventory records, training records and manuals,

and flight, flight training and operational personnel records.

Section 4.05 Turboprops.

(a) Maintenance. Contractor shall notify Continental

at least 30 days prior to performing the last scheduled maintenance

event of any type (including airframe checks, and engine, propeller and

landing gear overhauls) on any Turboprop Aircraft prior to the

withdrawal date for such aircraft as agreed pursuant to Section 2.03.

Upon notice from Continental that, prior to such maintenance event,

such Turboprop Aircraft is to be withdrawn from the capacity purchase

provisions of this Agreement pursuant to Section 2.03, then Contractor

shall cancel such maintenance event. The expected cost of such

maintenance event provided for in the Block Hour Rates and theretofore

paid to Contractor, net of any out-of-pocket costs to Contractor of

such cancellation, shall be credited to Continental in connection with

the next reconciliation payment pursuant to Paragraph B(9) of Schedule

3.

 

 

 

12

 

 

(b) Post-Withdrawal Management. At the request of

Continental, and at Continental's cost and direction, Contractor shall

make arrangements for the storage and continued maintenance (including

the keeping of active logs) of withdrawn Turboprop Aircraft that have

not yet been returned to Continental or its designee, together with the

Excess Inventory relating thereto.

Section 4.06 Master Facility and Ground Handling Agreement. Contemporaneous with
the execution and delivery of this Agreement, Contractor and Continental shall
enter into a Master Facility and Ground Handling Agreement in the form attached
hereto as Exhibit C.

Section 4.07 Codeshare Terms. Contractor agrees to operate all Scheduled Flights
using the Continental flight code and flight numbers assigned by Continental, or
such other flight codes and flight numbers as may be assigned by Continental (to
accommodate, for example, a Continental alliance partner), and otherwise under
the codeshare terms set forth in Exhibit D.

Section 4.08 Administrative Support and Information Services Provisioning
Agreement. Contemporaneous with the execution and delivery of this Agreement,
Continental and Contractor shall enter into the Administrative Support and
Information Services Provisioning Agreement in the form attached hereto as
Exhibit E.

Section 4.09 Fuel Purchasing Agreement. Contemporaneous with the execution and
delivery of this Agreement, Continental and Contractor shall enter into the Fuel
Purchasing Agreement in the form attached hereto as Exhibit F.

Section 4.10 Slots and Route Authorities. At the request of Continental made at
any time and from time to time, including upon termination of this Agreement,
Contractor shall use its commercially reasonable efforts to transfer to
Continental or its designee, to the extent permitted by law, any airport takeoff
or landing slots, route authorities or other similar regulatory authorizations
held by Contractor and used for Scheduled Flights, in consideration of the
payment to ExpressJet of the net book value, if any, of such slot, authority or
authorization on ExpressJet's books. Contractor's obligations pursuant to the
immediately preceding sentence shall survive the termination of this Agreement
for so long as any transfer requested pursuant to this Section 4.10 shall not
have been completed. Contractor hereby agrees that all of Contractor's contacts
or communications with any applicable regulatory authority concerning any
airport takeoff or landing slots, route authorities or other similar regulatory
authorizations used for Scheduled Flights will be coordinated through
Continental. If any airport takeoff or landing slot, route authority or other
similar regulatory authorization held by Contractor and used for Scheduled
Flights is withdrawn or otherwise forfeited as a result of Controllable
Cancellations or any other reason within Contractor's reasonable control, then
Contractor agrees to pay to Continental promptly upon demand an amount equal to
the market value of such withdrawn or forfeited slot, authority or
authorization.

Section 4.11 Use of Continental Marks. Continental hereby grants to Contractor
the non-exclusive and non-transferable rights to use the Continental Marks and
other

 

 

 

 

13

 

 

Identification as provided in, and Contractor shall use the Continental Marks
and other Identification in accordance with the terms and conditions of, Exhibit
G.

Section 4.12 Use of Contractor Marks. Contractor hereby grants to Continental
the non-exclusive and non-transferable rights to use the Contractor Marks as
provided in, and Continental shall use the Contractor Marks in accordance with
the terms and conditions of, Exhibit H.

Section 4.13 Catering Standards. Continental and Contractor shall comply with
the catering requirements set forth on Exhibit I hereto. The parties agree that,
in the event of a conflict between the provisions of Exhibit I and the
Contractor Ground Handling Agreement, the provisions of Exhibit I shall control.

Section 4.14 Ticket Handling Terms. Continental and Contractor shall comply with
the ticket handling requirements set forth in Exhibit J hereto. The parties
agree that, in the event of a conflict between the provisions of Exhibit J and
the Contractor Ground Handling Agreement, the provisions of Exhibit J shall
control.

ARTICLE V

FINANCING OF AIRCRAFT

Section 5.01 Financing of Firm and Option Aircraft. Subject to the terms and
conditions of this Agreement, Continental agrees to participate, on behalf of
Contractor, in the financing for the firm-order aircraft under the Embraer
Contract as further set forth on Schedule 1 attached hereto in accordance with
and subject to the terms and conditions of the Embraer Contract and this Article
V. For any such firm-order aircraft that constitute Covered Aircraft,
Continental shall lease such aircraft from Embraer or its equity designee
pursuant to the Embraer Contract and (if applicable with respect to a particular
aircraft) the Funding Agreement and sublease such aircraft to Contractor under a
Covered Aircraft Sublease. For any such firm-order aircraft that become
Uncovered Aircraft (either in connection with the release of Covered Aircraft
pursuant to Section 2.02 or in connection with certain terminations of this
Agreement), Continental shall lease (or continue to lease, as the case may be)
such aircraft from Embraer or its equity designee pursuant to the Embraer
Contract and (if applicable with respect to a particular aircraft) the Funding
Agreement and sublease such aircraft to Contractor under an Uncovered Aircraft
Sublease, subject to the provisions of Section 5.03. In addition, Continental
agrees to participate in the financing for the Embraer Option Aircraft that
constitute Covered Aircraft pursuant to clause (i) of Section 2.05 as if such
aircraft were firm-order aircraft under the Embraer Contract. Notwithstanding
the foregoing, (i) if the other parties to any financing or lease transaction
involving Covered Aircraft or Uncovered Aircraft consent to the release of
Continental from any obligation to participate in such financing or otherwise to
terminate Continental's head lease, in each case without increasing the
obligations of Contractor under such contract, then Contractor agrees to consent
to such release and agrees that the foregoing provisions of this Section 5.01
shall not apply in respect of such aircraft and (ii) Continental shall have no
obligation under this Article V with respect to Undelivered Covered Aircraft
that are deemed Uncovered Aircraft pursuant to Section 2.02 or Article IX.
Contractor further

 

 

 

 

 

14

 

 

agrees that Continental shall be entitled to assign or otherwise transfer its
interest in any Uncovered Aircraft and/or any financing or lease agreements
relating thereto, and Contractor shall not withhold its required consent, if
any, to such assignment or transfer; provided, that Contractor shall not be
required to agree to such transfer or assignment if such action would cause
Contractor to be in default of such financing or lease agreement (in which event
the Uncovered Aircraft or the financing or lease agreement shall not be assigned
or transferred unless Continental shall have provided indemnification or other
protection sufficient to hold Contractor harmless against any loss, damage,
claim or expense arising out of such default) or if such transfer or assignment
would violate any applicable law; and provided further that Contractor's
expenses in connection with such transaction shall be reimbursed by Continental.

Section 5.02 No Financing of Other Aircraft. Except as provided in Section 5.01,
the parties acknowledge and agree that Continental does not have any obligation
hereunder to finance, arrange financing or participate in the financing of any
aircraft on behalf of Contractor.

Section 5.03 Refinancing or Replacement of Uncovered Aircraft.

(a) Refinancing at Contractor's Option. If Contractor

shall have successfully negotiated a transaction at any time providing

for the refinancing of an Uncovered Aircraft and the termination by

Continental of the head lease relating to such aircraft, then

Continental shall use its reasonable efforts to cooperate with

Contractor to consummate the transaction; provided, that Continental

shall not be required to terminate such head lease if such termination

is not permitted by such head lease or such termination would violate

any applicable law or cause a breach under any other contract to which

Continental is a party, in which event the Uncovered Aircraft Sublease

shall not be terminated; and provided further that Continental's

expenses in connection with such transaction shall be reimbursed by

Contractor.

(b) Replacement at Continental's Option. Continental

shall be entitled at any time and from time to time to terminate the

Uncovered Aircraft Sublease relating to an Uncovered Aircraft, and take

possession of such Uncovered Aircraft, in a transaction providing for

the delivery to Contractor of a Replacement Aircraft.

(i) Replacement Using Embraer Option

Aircraft. If the Replacement Aircraft proposed by Continental

is an Embraer Option Aircraft, then Continental may take

possession of the replaced Uncovered Aircraft on or after the

fifth day after the earlier of the actual delivery date of the

Replacement Aircraft and the scheduled delivery date of the

Replacement Aircraft (regardless of whether such Replacement

Aircraft is actually delivered on such date, whether or not

Contractor has elected to exercise its option with respect to

such Replacement Aircraft and whether or not Contractor is

able to finance the acquisition of such Replacement Aircraft);

provided that Continental shall have given Contractor at least

30

 

 

 

 

 

15

 

 

days' advance written notice prior to the expiration of

Contractor's option to acquire such Embraer Option Aircraft;

and provided further that such Embraer Option Aircraft does

not constitute a Replacement Aircraft for another Uncovered

Aircraft.

(ii) Replacement Using Other Embraer

Aircraft. If Continental (A) shall obtain the right to acquire

(including by exercise of an option) any Embraer aircraft

other than the Covered Aircraft and the Embraer Option

Aircraft and (B) at least 30 days prior to the expiration of

such right, shall propose in writing delivered to Contractor

to acquire such aircraft or exercise an option for such

aircraft on behalf of Contractor as a Replacement Aircraft for

an Uncovered Aircraft, then Contractor shall be required to

use its commercially reasonable efforts to finance the

acquisition of such Replacement Aircraft prior to the

expiration of such right. If Contractor shall obtain such

financing on terms reasonably satisfactory to it prior to the

expiration of such right, then (x) Continental shall acquire

such Replacement Aircraft or cause it to be acquired, using

such financing obtained by Contractor; (y) Continental shall

be entitled to terminate the Uncovered Aircraft Sublease

relating to such Uncovered Aircraft; and (z) Continental shall

take possession of such Uncovered Aircraft on the fifth day

after the delivery of such Replacement Aircraft to Contractor.

If Contractor shall not obtain such financing on terms

reasonably satisfactory to it prior to the expiration of such

right, then Continental shall not be entitled to use such

Embraer aircraft as a Replacement Aircraft for an Uncovered

Aircraft.

Section 5.04 Pre-Delivery Deposits. Continental shall pay all pre-delivery
deposits required to be paid under the Embraer Contract in respect of all
firm-order aircraft and all Embraer Option Aircraft other than those for which
the option is being exercised in anticipation of such aircraft becoming an
Uncovered Aircraft. If any of such pre-delivery deposits are returned to
Contractor, Contractor shall promptly refund such amounts to Continental.
Contractor shall be responsible for the payment of all other such pre-delivery
deposits under the Embraer Contract.

Section 5.05 Lease of Owned Aircraft. If Continental purchases or otherwise
acquires title to any Covered Aircraft or Uncovered Aircraft, then Contractor
shall cooperate reasonably with Continental to give effect to such purchase or
acquisition, including by amending or otherwise re-executing each applicable
Covered Aircraft Sublease and Uncovered Aircraft Sublease as a lease, in each
case containing substantially the same terms and conditions as the corresponding
sublease. If Continental owns any Covered Aircraft or Uncovered Aircraft as of
the date hereof, then each reference in this document to a Covered Aircraft
Sublease or Uncovered Aircraft Sublease shall be deemed to be a reference to a
lease containing substantially the same terms and conditions as the
corresponding sublease.

 

 

 

 

16

 

 

ARTICLE VI

EXCLUSIVITY AND CERTAIN RIGHTS OF CONTINENTAL

Section 6.01 Exclusivity; Use of Covered Aircraft. Contractor agrees that,
except as otherwise directed or approved in writing by Continental in
Continental's sole discretion, (i) the Covered Aircraft may be used only to
provide the Regional Airline Services contemplated by this Agreement and (ii)
the Covered Aircraft may not be used by Contractor for any other purpose (other
than training flights, ferrying and other non-revenue flights related to the
provision of the Regional Airline Services and consistent with past practices
and Reasonable Operating Constraints), including without limitation flying for
any other airline or on Contractor's own behalf.

Section 6.02 Exclusive Arrangements at Hub Airports.

(a) Contractor Hub Flights. In furtherance of the

capacity purchase arrangements hereunder, Continental and Contractor

agree that Contractor shall operate only Scheduled Flights in or out of

any Hub Airport prior to the Termination Date, except as otherwise

approved in writing by Continental in its sole discretion.

(b) Continental Hub Flights. Subject to Section

9.05(c), Continental agrees that, without Contractor's prior written

consent, Continental shall not fly or contract with a third party to

fly on Continental's behalf any regional jets in or out of any Existing

Hub Airports until the earlier of any Termination Date and December 31,

2005; provided that the foregoing provisions shall not apply with

respect to up to ten flights per day operated by Continental's

codeshare partners in or out of each Existing Hub Airport, which

flights carry Continental's two-letter designator code "CO" or "CO*" as

a secondary code; and provided, further, that (i) if the Embraer

XRJ-145 aircraft does not meet design or performance specifications and

the delivery of one or more Embraer XRJ-145 aircraft is cancelled or

delayed by more than six months, and (ii) Contractor does not offer to

provide to Continental regional airline services utilizing regional jet

aircraft comparable to the Embraer XRJ-145 (assuming that such Embraer

aircraft met its design and performance specifications) at block hour

rates comparable to those provided herein for the XRJ-145 aircraft or,

if higher, at a price at or lower than the price offered to Continental

by any third party offering to provide such services, then the

exclusivity provisions of this Section 6.02(b) shall not apply with

respect to the block hours for which Continental would have utilized

the Embraer XRJ-145 (which in any event may include routes and

frequencies previously served by other Covered Aircraft).

Section 6.03 Most Favored Nations. Notwithstanding any other provision in this
Agreement to the contrary, at any time during which Continental is the largest
customer of Contractor (measured by the percentage of all of Contractor's
available seat miles represented by Scheduled ASMs during the most recently
completed Performance Period), with respect to the purchase of Regional Airline
Services hereunder Continental shall in all events be entitled to the same or
comparable aggregate economic terms and

 

 

 

 

 

 

17

 

 

conditions (measured by the net benefit to Contractor on a cost per available
seat mile basis), on a most-favored-nations basis, as are provided, directly or
indirectly, to any other Major Carrier by Contractor in any agreement or series
of agreements for the provision of flight services for such Major Carrier on a
capacity purchase basis (or other arrangements the economics of which replicate
capacity purchase arrangements) with an aggregate of more than 10 aircraft. To
the extent that any such agreement or arrangement is entered into and is not
available for audit by Continental pursuant to Section 3.05(b) because of
contractual confidentiality restrictions in such agreement or arrangement, then
in connection with Contractor's entering into such agreement or arrangement,
each of Contractor and (with respect to financial provisions only) its outside
auditors shall be required to certify whether the net benefit to Contractor of
the economic terms and conditions of such agreement or arrangement is comparable
to or exceeds the net benefit to Contractor of the economic terms and conditions
of this Agreement (in each case on a cost per available seat mile basis).

Section 6.04 Change of Control. Upon the occurrence of a Change of Control of
Holdings, XJT or ExpressJet, at any time during which Continental is the largest
customer of Contractor (measured by the percentage of all of Contractor's
available seat miles represented by Scheduled ASMs during the most recently
completed Performance Period), to which Change of Control Continental shall not
have consented in writing in advance, then without any further action by any
party the Block Hour Rates shall be decreased for the remaining Term by an
amount equal to such Block Hour Rates multiplied by the Cost Factor, and the
provisions of Paragraph B(9)(d) of Schedule 3 shall be of no further force or
effect.

ARTICLE VII

INSURANCE

Section 7.01 Minimum Insurance Coverages. During the Term, in addition to any
insurance required to be maintained by Contractor pursuant to the terms of any
aircraft lease (including without limitation each Covered Aircraft Sublease and
Uncovered Aircraft Sublease), or by any applicable governmental authority,
Contractor shall maintain, or cause to be maintained, in full force and effect
policies of insurance with insurers of recognized reputation and responsibility,
in each case to the extent available on a commercially reasonable basis, as
follows:

(a) Comprehensive aircraft hull and liability

insurance, including aircraft third party, passenger liability

(including passengers' baggage and personal effects), cargo and mail

legal liability, and all-risk ground and flight physical damage, with a

combined single limit of not less than $300 million per occurrence and

a minimum limit in respect of personal injury (per clause AVN 60 or its

equivalent) of $25 million per occurrence and in the aggregate;

(b) Workers' compensation as required by the

appropriate jurisdiction and employer's liability with a limit of not

less than $1,000,000 combined single limit; and

 

 

 

18

 

 

(c) Other property and liability insurance coverages

of the types and in the amounts that would be considered reasonably

prudent for a business organization of Contractor's size and nature,

under the insurance market conditions in effect at the time of

placement, but in any event of the type and the amount that Continental

may reasonably require to prevent or minimize a disruption in the

provision of Regional Airline Services resulting from a casualty or

liability incident related to Contractor's operations. All coverages

described in this Section 7.01 shall be placed with deductibles

reasonably prudent for a business organization of Contractor's size and

nature, under the insurance market conditions in effect at the time of

placement.

Section 7.02 Endorsements. Unless Contractor and Continental are participating
in a combined policy placement, Contractor shall cause the policies described in
Section 7.01 to be duly and properly endorsed by Contractor's insurance
underwriters with respect to Contractor's flights and operations as follows:

(a) To provide that the underwriters shall waive

subrogation rights against Continental, its directors, officers,

agents, employees and other authorized representatives, except for

their gross negligence or willful misconduct;

(b) To provide that Continental, its directors,

officers, agents, employees and other authorized representatives shall

be endorsed as additional insured parties, except for their gross

negligence or willful misconduct;

(c) To provide that insurance shall be primary to and

without right of contribution from any other insurance which may be

available to the additional insureds;

(d) To include a breach of warranty provision in

favor of the additional insureds;

(e) To accept and insure Contractor's hold harmless

and indemnity undertakings set forth in this Agreement, but only to the

extent of the coverage afforded by the policy or policies; and

(f) To provide that such policies shall not be

canceled, terminated or materially altered, changed or amended until 30

days (but seven days or such lesser period as may be available in

respect of hull, war and allied perils) after written notice shall have

been sent to Continental.

Section 7.03 Evidence of Insurance Coverage. At the commencement of this
Agreement, and thereafter at Continental's request, Contractor shall furnish to
Continental evidence reasonably satisfactory to Continental of such insurance
coverage and endorsements (other than that obtained pursuant to Section 7.04
below), including certificates certifying that the such insurance and
endorsements are in full force and effect. Initially, this evidence shall be a
certificate of insurance. If Contractor fails to

 

 

 

 

 

 

19

 

 

acquire or maintain insurance as herein provided, Continental may at its option
secure such insurance on Contractor's behalf at Contractor's expense.

Section 7.04 Insurance Through Combined Placement.

(a) Combined Placement. Promptly after the date

hereof, Continental and Contractor shall seek to obtain bids from

insurance providers with respect to airline hull and liability

insurance, based on Continental's and Contractor's combined exposures.

Each party will determine at its own discretion whether it will acquire

this insurance based on the bids received. Any insurance so obtained

will be a combined placement evidenced as appropriate by separate

policies in the names of Continental and Contractor. If either party

determines that it does not want to participate in such combined

placement of insurance it will provide the other party written notice

at least 120 days prior to the date for renewal of any existing

insurance policy that covers both Contractor and Continental.

(b) Allocation of Costs. The parties hereto shall

allocate the costs of any such combined placements as provided in

Paragraph B(7) of Schedule 3.

(c) Adjustment for Major Loss. If there is a Major

Loss under a combined placement insurance policy, Continental and

Contractor will adjust the premium amounts paid by each party in

accordance with the provisions set forth in Paragraph B(7) of Schedule

3.

ARTICLE VIII

INDEMNIFICATION

Section 8.01 Contractor Indemnification of Continental. Contractor shall be
liable for and hereby agrees to fully defend, release, discharge, indemnify and
hold harmless Continental, its directors, officers, employees and agents from
and against any and all claims, demands, damages, liabilities, suits, judgments,
actions, causes of action, losses, costs and expenses of any kind, character or
nature whatsoever (in each case whether groundless or otherwise), including
attorney's fees, costs and expenses in connection therewith and expenses of
investigation and litigation thereof, which may be suffered by, accrued against,
charged to, or recoverable from Continental or its directors, officers,
employees or agents (including any such losses, costs and expenses involving (i)
death or injury (including claims of emotional distress and other non-physical
injury by passengers) to any person including any of Contractor's or
Continental's directors, officers, employees or agents, (ii) loss of, damage to,
or destruction of property (including real, tangible and intangible property,
and specifically including regulatory property such as route authorities, slots
and other landing rights), including any loss of use of such property, and (iii)
damages due to delays) in any manner arising out of, connected with, or
attributable to (w) any act or omission by Contractor or any of its directors,
officers, employees or agents relating to the provision of Regional Airline
Services, (x) the performance, improper performance, or non-performance of any
and all

 

 

 

 

 

20

 

 

obligations to be undertaken by Contractor or any of its directors, officers,
employees or agents pursuant to this Agreement, (y) the operation,
non-operation, or improper operation of the Covered Aircraft or Contractor's
equipment or facilities at any location or (z) the termination of an Uncovered
Aircraft Sublease and the related head lease pursuant to Section 5.03(a) hereto,
excluding only claims, demands, damages, liabilities, suits, judgments, actions,
causes of action, losses, costs and expenses to the extent resulting from the
negligence or willful misconduct of Continental or its directors, officers,
agents or employees. Contractor will do all things necessary to cause and
assure, and will cause and assure, that Contractor will at all time be and
remain in custody and control of all aircraft, equipment, and facilities of, or
operated by, Contractor, and Continental and its directors, officers, employees
and agents shall not, for any reason, be deemed to be in custody or control, or
a bailee, of such aircraft, equipment or facilities.

Section 8.02 Continental Indemnification of Contractor. Continental shall be
liable for and hereby agrees fully to defend, release, discharge, indemnify, and
hold harmless Contractor, its directors, officers, employees, and agents from
and against any and all claims, demands, damages, liabilities, suits, judgments,
actions, causes of action, losses, costs and expenses of any kind, character or
nature whatsoever (in each case whether groundless or otherwise), including
attorneys' fees, costs and expenses in connection therewith and expenses of
investigation and litigation thereof, which may be suffered by, accrued against,
charged to, or recoverable from Contractor, or its directors, officers,
employees or agents (including any such losses, costs and expenses involving (i)
death or injury (including claims of emotional distress and other non-physical
injury by passengers) to any person including any of Contractor's or
Continental's directors, officers, employees or agents, (ii) loss of, damage to,
or destruction of property (including any loss of use of such property including
real, tangible and intangible property, and specifically including regulatory
property such as route authorities, slots and other landing rights), and (iii)
damages due to delays) in any manner arising out of, connected with, or
attributable to, (x) the performance, improper performance, or nonperformance of
any and all obligations to be undertaken by Continental or any of its directors,
officers, employees or agents pursuant to this Agreement, or (y) the operation,
non-operation or improper operation of Continental's aircraft, equipment or
facilities (excluding, for the avoidance of doubt, Covered Aircraft, Uncovered
Aircraft and any equipment or facilities leased or subleased by Continental to
Contractor) at any location, excluding only claims, demands, damages,
liabilities, suits judgments, actions, causes of action, losses, costs and
expenses to the extent resulting from the negligence or willful misconduct of
Contractor or its directors, officers, agents or employees. Continental will do
all things necessary to cause and assure, and will cause and assure, that
Continental will at all times be and remain in custody and control of any
aircraft, equipment and facilities of, or operated by, Continental, and
Contractor and its directors, officers, employees and agents shall not, for any
reason, be deemed to be in the custody or control, or a bailee, of such
aircraft, equipment or facilities.

Section 8.03 Indemnification Claims. A party (the "Indemnified Party") entitled
to indemnification from another party under the terms of this Agreement (the
"Indemnifying Party") shall provide the Indemnifying Party with prompt written
notice

 

 

 

21

 

 

(an "Indemnity Notice") of any third party claim which the Indemnified Party
believes gives rise to a claim for indemnity against the Indemnifying Party
hereunder. The Indemnifying Party shall be entitled, if it accepts financial
responsibility for the third party claim, to control the defense of or to settle
any such third party claim at its own expense and by its own counsel; provided
that the Indemnified Party's prior written consent (which may not be
unreasonably withheld or delayed) must be obtained prior to settling any such
third party claim. If the Indemnifying Party does not accept financial
responsibility for the third party claim or fails to defend against the third
party claim that is the subject of an Indemnity Notice within 30 days of
receiving such notice (or sooner if the nature of the third party claim so
requires), or otherwise contests its obligation to indemnify the Indemnified
Party in connection therewith, the Indemnified Party may, upon providing written
notice to the Indemnifying Party, pay, compromise or defend such third party
claim. The Indemnified Party shall provide the Indemnifying Party with such
information as the Indemnifying Party shall reasonably request to defend any
such third party claim and shall otherwise cooperate with the Indemnifying Party
in the defense of any such third party claim. Except as set forth in this
Section 8.03, the Indemnified Party shall not enter into any settlement or other
compromise or consent to a judgment with respect to a third party claim as to
which the Indemnifying Party has an indemnity obligation hereunder without the
prior written consent of the Indemnifying Party (which may not be unreasonably
withheld or delayed), and the entering into of any settlement or compromise or
the consent to any judgment in violation of the foregoing shall constitute a
waiver by the Indemnified Party of its right to indemnity hereunder to the
extent the Indemnifying Party was prejudiced thereby. Any Indemnifying Party
shall be subrogated to the rights of the Indemnified Party to the extent that
the Indemnifying Party pays for any loss, damage or expense suffered by the
Indemnified Party hereunder.

Section 8.04 Employer's Liability; Independent Contractors; Waiver of Control.

(a) Employer's Liability and Workers' Compensation.

Each party hereto assumes full responsibility for its employer's

liability and workers' compensation liability to its own officers,

directors, employees or agents on account of injury or death resulting

from or sustained in the performance of their respective service under

this Agreement. Each party, with respect to its own employees, accepts

full and exclusive liability for the payment of workers' compensation

and employer's liability insurance premiums with respect to such

employees, and for the payment of all taxes, contributions or other

payments for unemployment compensation or old age benefits, pensions or

annuities now or hereafter imposed upon employers by the government of

the United States or any other governmental body, including state,

local or foreign, with respect to such employees measured by the wages,

salaries, compensation or other remuneration paid to such employees, or

otherwise, and each party further agrees to make such payments and to

make and file all reports and returns, and to do everything to comply

with the laws imposing such taxes, contributions or other payments.

(b) Independent Contractors. The employees, agents,

and independent contractors of Contractor engaged in performing any of

the services Contractor is to perform pursuant to this Agreement are

employees, agents, and

 

 

 

 

 

22

 

 

independent contractors of Contractor for all purposes, and under no

circumstances will be deemed to be employees, agents or independent

contractors of Continental. In its performance under this Agreement,

Contractor will act, for all purposes, as an independent contractor and

not as an agent for Continental. Notwithstanding the fact that

Contractor has agreed to follow certain procedures, instructions and

standards of service of Continental pursuant to this Agreement,

Continental will have no supervisory power or control over any

employees, agents or independent contractors engaged by Contractor in

connection with its performance hereunder, and all complaints or

requested changes in procedures made by Continental will, in all

events, be transmitted by Continental to Contractor's designated

representative. Nothing contained in this Agreement is intended to

limit or condition Contractor's control over its operations or the

conduct of its business as an air carrier, and Contractor and its

principals assume all risks of financial losses which may result from

the operation of the air services to be provided by Contractor

hereunder.

(c) Employees. The employees, agents, and independent

contractors of Continental engaged in performing any of the services

Continental is to perform pursuant to this Agreement are employees,

agents, and independent contractors of Continental for all purposes,

and under no circumstances will be deemed to be employees, agents, or

independent contractors of Contractor. Contractor will have no

supervision or control over any such Continental employees, agents and

independent contractors and any complaint or requested change in

procedure made by Contractor will be transmitted by Contractor to

Continental's designated representative. In its performance under this

Agreement, Continental will act, for all purposes, as an independent

contractor and not as an agent for Contractor.

(d) Contractor Flights. The fact that Contractor's

operations are conducted under Continental's Marks and listed under the

CO designator code will not affect their status as flights operated by

Contractor for purposes of this Agreement or any other agreement

between the parties, and Contractor and Continental agree to advise all

third parties, including passengers, of this fact.

Section 8.05 Survival. The provisions of this Article VIII shall survive the
termination of this Agreement for a period of seven years.

ARTICLE IX

TERM, TERMINATION AND DISPOSITION OF AIRCRAFT

Section 9.01 Base Term. This Agreement shall commence on and shall be effective
as of January 1, 2001 and, unless earlier terminated or extended as provided
herein, shall continue until December 31, 2010 (the "Base Term").

Section 9.02 Extension Terms. The term of this Agreement may be extended at the
sole election of Continental for up to four additional five-year terms (each, an

 

 

 

 

 

23

 

 

"Extension Term") upon written notice to Contractor delivered at least 24 months
prior to the expiration of the Base Term or the Extension Term, as applicable.

Section 9.03 Early Termination.

(a) By Continental after Five Years. Continental may

terminate this Agreement for any reason or for no reason, at its sole

option, at any time on or after January 1, 2006, by providing written

notice to Contractor that specifies a Termination Date of not more than

18 months nor less than 12 months after the provision of such notice.

Such written notice may be delivered before January 1, 2006 so long as

the Termination Date is on or after January 1, 2006.

(b) By Continental for Cause. Continental may

terminate this Agreement, with or without any advance notice, upon the

occurrence and continuation of any event that constitutes Cause.

(c) By Continental for Breach. Continental may

terminate this Agreement, with or without any advance notice, upon the

occurrence of a material breach of this Agreement by Contractor as

described in clause (ii) below. Continental may terminate this

Agreement upon the occurrence of any other material breach of this

Agreement by Contractor, which breach shall not have been cured within

90 days after written notice of such breach is delivered by Continental

to Contractor. The parties hereto agree that, without limiting the

circumstances or events that may constitute a material breach, (i) the

occurrence of a System Flight Disruption, a Labor Strike or any event

constituting Cause shall constitute a material breach of this Agreement

by Contractor, (ii) at any time that Continental makes a reasonable and

good faith determination, using recognized standards of safety, that

there is a material safety concern with the operation of any Scheduled

Flights, Contractor shall be deemed to have materially breached this

Agreement and (iii) the grounding of any of the Embraer Fleets by

regulatory or court order or other governmental action shall constitute

a material breach of this Agreement by Contractor.

(d) By Contractor for Breach. Contractor may

terminate this Agreement upon the occurrence of any material breach of

this Agreement by Continental, which breach shall not have been cured

within 90 days after written notice of such breach is delivered by

Contractor to Continental.

(e) Survival During Wind-Down Period. Upon any

termination hereunder, the Term shall continue, and this Agreement

shall survive in full force and effect, beyond the Termination Date

until the end of the Wind-Down Period, and the rights and obligations

of the parties under this Agreement, including without limitation

remedies available upon the occurrence of events constituting Cause or

material breach, shall continue with respect to the Covered Aircraft

until they become Uncovered Aircraft.

 

 

 

24

 

 

Section 9.04 Disposition of Aircraft during Wind-Down Period.

(a) Termination by Continental After Five Years. If

this Agreement is terminated by Continental under Section 9.03(a), then

the Covered Aircraft shall be withdrawn from the capacity purchase

provisions of this Agreement in accordance with the following terms and

conditions:

(i) At the time of delivery of any notice of

termination delivered pursuant to Section 9.03(a), Continental

shall deliver to Contractor a Wind-Down Schedule providing for

the withdrawal of all Covered Aircraft from the capacity

purchase provisions of this Agreement, delineating the number

of each aircraft type to be withdrawn by month.

(ii) The Wind-Down Schedule may not provide

for the withdrawal of more than 15 Delivered Covered Aircraft

per month, and may not provide for the withdrawal of any

Delivered Covered Aircraft more than 60 months after the

Termination Date. Undelivered Covered Aircraft (determined as

of the Termination Date) shall be deemed to be Uncovered

Aircraft on the Termination Date.

(iii) Contractor shall have nine months

after receipt of the proposed Wind-Down Schedule to notify

Continental whether it elects to retain any of the Covered

Aircraft being withdrawn (whether such Covered Aircraft

constitute Delivered Covered Aircraft or Undelivered Covered

Aircraft). If Contractor elects to keep any Delivered Covered

Aircraft, then its notice must set forth by calendar month the

number and type of aircraft it proposes to retain, such number

of any particular type of aircraft in any particular month to

be no greater than the number of such type of aircraft

scheduled to be withdrawn during such month pursuant to the

Wind-Down Schedule. In addition, regardless of whether it

intends to retain any aircraft, Contractor shall include in

its notice a reasonably detailed current summary of the

maintenance and repair condition of each aircraft and Engine

and a list detailing the location of each Engine (by aircraft

or, if appropriate, maintenance facility).

(iv) Within 30 days after receipt of

Contractor's notice of its election to retain Covered Aircraft

being withdrawn, Continental shall select the individual

aircraft to be withdrawn according to the Wind-Down Schedule,

including those aircraft to be retained by Contractor, and

shall notify Contractor of its selection. Continental shall

have complete discretion in the selection of the particular

Covered Aircraft to be withdrawn in any month and those to be

retained by Contractor; provided that Continental must adhere

to the timing, number and type of aircraft to be retained by

Contractor as provided in Contractor's notice to Continental

delivered pursuant to Section 9.04(a)(iii).

 

 

25

 

 

(v) If any Covered Aircraft is being

retained by Contractor pursuant to this Section 9.04, then

effective on the first day of the month in which such Covered

Aircraft becomes an Uncovered Aircraft pursuant to the

Wind-Down Schedule the Covered Aircraft Sublease with respect

to such aircraft shall be terminated and replaced with an

Uncovered Aircraft Sublease. Upon each such aircraft becoming

an Uncovered Aircraft, Contractor shall calculate a

maintenance reimbursement equal to the product of (x) the

average cost of a heavy maintenance visit for such aircraft

type during the previous six months and (y) a fraction, the

numerator of which is the number of hours remaining until the

next heavy maintenance visit for such aircraft minus 1/2 of

the total number of hours allowable between heavy maintenance

visits for such aircraft, and the denominator of which is the

total number of hours allowable between heavy maintenance

visits for such aircraft. At the time of such withdrawal (I)

Continental shall pay Contractor an amount equal to such

maintenance reimbursement, if the numerator of such fraction

is less than zero, (II) Contractor shall pay Continental an

amount equal to such maintenance reimbursement, if the

numerator of such fraction is greater than zero, and (III)

there shall be no maintenance reimbursement payable pursuant

to this sentence if the numerator of such fraction is equal to

zero. In addition, if Continental shall have previously

reimbursed Contractor for the cost of any engine life-limited

component pursuant to Paragraph B(3) of Schedule 3 which

component is installed in such aircraft, then Contractor shall

pay to Continental an amount equal to the cost of such

life-limited component multiplied by a fraction, the numerator

of which is the number of hours remaining in the life of such

life-limited part, and the denominator of which is the total

number of hours in the life of such life-limited part.

Contractor may elect, in lieu of making the payment

contemplated by the preceding sentence to pay such amount plus

accrued interest, which interest shall accrue monthly at the

interest rate used in the Uncovered Aircraft Sublease for such

aircraft to determine the lease payments thereunder, in equal

monthly installments over the remaining term of the Uncovered

Aircraft Sublease with respect to such aircraft.

(vi) Upon the withdrawal of a Covered

Aircraft that is being returned to Continental (or its

designee) pursuant to this Section 9.04, the Covered Aircraft

Sublease with respect to such aircraft shall be terminated,

and Contractor shall not be required to meet the return

conditions applicable to such aircraft that relate to time or

cycles remaining between maintenance events or to any time- or

cycle- controlled part under clause (v) of Section 4 of the

Covered Aircraft Sublease; provided that Contractor shall

remain obligated to comply with all other provisions of the

Covered Aircraft Sublease applicable at the time, including

without limitation provisions generally applicable to the

maintenance, airworthiness, repair and general operating

condition and cleanliness of the aircraft; and provided

further, that the general condition

 

 

 

 

26

 

 

of the Covered Aircraft being returned shall not have

materially changed relative to the condition of Contractor's

fleet of the same aircraft type since the notice of

termination was delivered by Continental to Contractor, and

the withdrawn aircraft being returned shall have not been

discriminated against or operated, maintained or otherwise

treated differently (including with respect to the removal of

any part for convenience or without cause) than any other

Covered Aircraft

(vii) In connection with the withdrawal of

each Covered Aircraft, whether such aircraft is being retained

by Contractor as an Uncovered Aircraft or returned to

Continental or its designee, Continental shall have complete

discretion in the selection of the particular Engines or

Turboprop engines, as the case may be, to be withdrawn in

connection with any particular aircraft and shall notify

Contractor of its selection not less than 10 days after

Continental shall have selected aircraft to be withdrawn

pursuant to Section 9.04(a)(iv). Continental shall bear the

cost of any engine swaps reasonably necessary to accommodate

its engine selections, based on the engine-location list

provided to Continental by Contractor; provided that

Contractor use its commercially reasonable efforts to minimize

the number and cost of engine swaps reasonably necessary to

accommodate Continental's engine selections and shall be

responsible for the cost of all such swaps, if any, required

because of any inaccuracy in the engine-location list provided

to Continental by Contractor.

(b) Termination by Continental for Cause. If this

Agreement is terminated by Continental under Section 9.03(b), then the

Covered Aircraft shall be withdrawn from the capacity purchase

provisions of this Agreement and Continental shall have the option to

take possession (or direct possession to its designee) of any of such

aircraft in accordance with the following terms and conditions:

(i) Within five Business Days after the

Termination Date, Continental may elect by written notice to

Contractor to withdraw, effective as of the Termination Date,

all of the Covered Aircraft from the capacity provisions of

this Agreement and to terminate all of the Covered Aircraft

Subleases and replace such subleases with Uncovered Aircraft

Subleases (such an election being referred to as an "Immediate

Withdrawal Election"). If Continental makes an Immediate

Withdrawal Election, Continental shall provide to Contractor

within five Business Days after the Termination Date a

Wind-Down Schedule that provides for the return to Continental

(and for the termination of the related Uncovered Aircraft

Sublease) of any of such aircraft that Continental elects to

retain, delineating the date of the return of such aircraft.

Such Wind-Down Schedule will provide for the return to

Continental of all such aircraft within 360 days following the

Termination Date. Contractor shall deliver

 

 

 

 

27

 

 

possession of such aircraft to Continental or its designee in

accordance with the Wind-Down Schedule.

(ii) If Continental determines not to make

an Immediate Withdrawal Election, Continental shall provide to

Contractor within five Business Days after the Termination

Date a Wind-Down Schedule providing for the withdrawal of all

Covered Aircraft from the capacity purchase provisions of this

Agreement, delineating the date of the withdrawal of each

Covered Aircraft. The Wind-Down Schedule will provide for the

withdrawal of all Covered Aircraft within 360 days following

the Termination Date. Continental shall also indicate in the

Wind-Down Schedule which aircraft shall be returned to

Continental (or its designee). Contractor shall deliver

possession of such aircraft to Continental or its designee

upon the withdrawal of such aircraft from the capacity

provisions of this Agreement in accordance with the Wind-Down

Schedule.

(iii) Contractor shall be required to retain

as Uncovered Aircraft all aircraft (including all Turboprop

Aircraft) not determined by Continental to be returned to

Continental pursuant to this Section 9.04(b), and the

provisions of Section 9.04(a)(v) shall apply as if such

aircraft were being retained by Contractor in connection with

a termination under Section 9.03(a). With respect to each such

aircraft being returned to Continental (or its designee), the

provisions of Section 9.04(a)(vi) shall apply as if the

aircraft were being returned to Continental in connection with

a termination under Section 9.03(a) (except that if

Continental makes an Immediate Withdrawal Election, an

Uncovered Aircraft Sublease with respect to a particular

aircraft will not terminate until such aircraft is returned to

Continental in accordance with the Wind-Down Schedule). With

respect to any Turboprop Aircraft owned by Contractor and not

previously retired, if Continental elects to take possession

of such aircraft it shall purchase such aircraft and the

Excess Inventory relating thereto for a price equal to the

book value of such aircraft and such Excess Inventory on

Contractor's most recent financial statements. In connection

with the withdrawal of each Covered Aircraft from the capacity

purchase provisions of this Agreement pursuant to this Section

9.04(b), whether such aircraft is being retained by Contractor

as an Uncovered Aircraft or returned to Continental or its

designee, Continental shall have complete discretion in the

selection of the particular Engines or Turboprop engines, as

the case may be, to be withdrawn in connection with any

particular aircraft and shall notify Contractor of its

selection not less than 10 days after Continental shall have

selected aircraft to be withdrawn pursuant to this Section

9.04(b). At Continental's request, Contractor shall promptly

provide a list detailing the location of each engine (by

aircraft or, if appropriate, maintenance facility).

Continental shall bear the cost of any engine swaps reasonably

necessary to accommodate the engine selections, based on the

engine-location list provided to Continental by Contractor;

 

 

 

28

 

 

provided that Contractor shall use its commercially reasonable

efforts to minimize the number and cost of engine swaps

reasonably necessary to accommodate the engine selections and

shall be responsible for the cost of all such swaps, if any,

required because of any inaccuracy in the engine-location list

provided to Continental by Contractor.

(c) Termination by Continental for Breach. If this

Agreement is terminated by Continental under Section 9.03(c), then the

provisions of Section 9.04(a) shall apply as if this Agreement were

terminated under Section 9.03(a), except that (i) Continental shall

have the option to deem such Covered Aircraft withdrawn from the

capacity purchase provisions of this Agreement as of the Termination

Date or according to the Wind-Down Schedule, and each Covered Aircraft

Sublease shall be terminated with the aircraft being returned to

Continental or replaced with an Uncovered Aircraft Sublease as

applicable; (ii) the Wind-Down Schedule may not commence until the

later of the Termination Date and 30 days following Continental's

delivery of the Wind-Down Schedule to Contractor, (iii) Contractor

shall have 15 days after receipt of such Wind-Down Schedule to notify

Continental of its decision to retain any of the Covered Aircraft or

any aircraft that were Covered Aircraft immediately prior to such

Termination Date, (iv) Continental shall have five days after receipt

of such notice from Contractor to select the individual aircraft to be

returned to Continental; (v) Contractor shall be required to retain any

Turboprop Aircraft owned by Contractor and not previously retired,

unless Continental elects to purchase such aircraft and the Excess

Inventory relating thereto for a price equal to the book value of such

aircraft and such Excess Inventory on Contractor's most recent

financial statements; and (vi) in connection with the withdrawal of

each Covered Aircraft, whether such aircraft is being retained by

Contractor as an Uncovered Aircraft or returned to Continental or its

designee, Continental shall have complete discretion in the selection

of the particular Engines or Turboprop engines to be withdrawn in

connection with any particular aircraft and shall notify Contractor of

its selection not less than five days after Continental shall have

selected aircraft to be withdrawn pursuant to this Section 9.04(c). At

Continental's request, Contractor shall promptly provide a list

detailing the location of each such engine (by aircraft or, if

appropriate, maintenance facility). Continental shall bear the cost of

any engine swaps reasonably necessary to accommodate its engine

selections, based on the engine-location list provided to Continental

by Contractor; provided that Contractor shall use its commercially

reasonable efforts to minimize the number and cost of engine swaps

reasonably necessary to accommodate Continental's engine selections and

shall be responsible for the cost of all such swaps, if any, required

because of any inaccuracy in the engine-location list provided to

Continental by Contractor.

(d) Termination by Contractor for Breach. If this

Agreement is terminated by Contractor under Section 9.03(d), then the

Covered Aircraft shall be withdrawn from the capacity purchase

provisions of this Agreement in accordance with the following terms and

conditions:

 

 

 

29

 

 

(i) The notice of termination delivered by

Contractor to Continental pursuant to Section 9.03(d) shall

contain a Termination Date that is at least 180 days after the

date of such notice, and a Wind-Down Schedule beginning on

such Termination Date and setting forth the number and type of

Covered Aircraft that Contractor elects to retain as Uncovered

Aircraft. The Wind-Down Schedule may not provide for the

withdrawal of more than 15 Delivered Covered Aircraft per

month, and may not provide for the withdrawal of any Delivered

Covered Aircraft more than 60 months after the Termination

Date. Undelivered Covered Aircraft (determined as of the

Termination Date) shall be deemed to be withdrawn on the

Termination Date (whether or not retained as Uncovered

Aircraft). In addition, regardless of whether it intends to

retain any aircraft, Contractor shall include in its notice a

reasonably detailed current summary of the maintenance and

repair condition of each aircraft and each Engine and

Turboprop engine and a list detailing the location of each

Engine and Turboprop engine (by aircraft or, if appropriate

maintenance facility).

(ii) Continental shall, within 120 days of

receipt of such Wind-Down Schedule from Contractor, propose a

schedule for the withdrawal from the capacity purchase

provisions of this Agreement of the Covered Aircraft not being

retained by Contractor, which aircraft shall be returned to

Continental (or its designee) upon their withdrawal from the

capacity purchase provisions of this Agreement; provided that

such Wind-Down Schedule may not provide for the withdrawal of

more than 15 Delivered Covered Aircraft per month (inclusive

of those aircraft being retained by Contractor), and may not

provide for the withdrawal of any Delivered Covered Aircraft

more than 60 months after the Termination Date. Continental

shall select the individual aircraft to be withdrawn according

to the Wind-Down Schedule, including those aircraft to be

retained by Contractor, and shall notify Contractor of its

selection. Continental shall have complete discretion in the

selection of the particular Covered Aircraft to be withdrawn

in any month and those to be retained by Contractor; provided

that Continental must adhere to the timing, number and type of

aircraft to be retained by Contractor as provided in

Contractor's notice to Continental delivered pursuant to

Section 9.04(d)(i). In addition, in connection with the

withdrawal of each Covered Aircraft, whether such aircraft is

being retained by Contractor as an Uncovered Aircraft or

returned to Continental or its designee, Continental shall

have complete discretion in the selection of the particular

Engines or Turboprop engines to be withdrawn in connection

with any particular aircraft and shall notify Contractor of

its selection not less than 10 days after Continental shall

have selected aircraft to be withdrawn pursuant to this

Section 9.04(d). Continental shall bear the cost of any engine

swaps reasonably necessary to accommodate its engine

selections, based on the engine-location list provided to

Continental by Contractor; provided that Contractor shall use

its commercially reasonable efforts to minimize the

 

 

 

 

30

 

 

number and cost of engine swaps reasonably necessary to

accommodate Continental's engine selections and shall be

responsible for the cost of all such swaps, if any, required

because of any inaccuracy in the engine-location list provided

to Continental by Contractor.

(iii) Within 30 days of receipt of

Continental's Wind-Down Schedule, Contractor may elect in

writing to have all of the Covered Aircraft being returned to

Continental (or its designee) converted to Uncovered Aircraft

and returned to Continental effective as of the Termination

Date. If Contractor does not make such an election, such

Covered Aircraft shall be converted to Uncovered Aircraft and

returned to Continental both in accordance with Continental's

Wind-Down Schedule delivered pursuant to Section 9.04(d)(ii).

(iv) With respect to each aircraft that is

retained by Contractor pursuant to this Section 9.04(d), the

provisions of Section 9.04(a)(v) shall apply as if the

aircraft were being retained by Contractor in connection with

a termination under Section 9.03(a). With respect to each such

aircraft being returned to Continental (or its designee)

pursuant to this Section 9.04(d), the provisions of Section

9.04(a)(vi) shall apply as if the aircraft were being returned

to Continental in connection with a termination under Section

9.03(a).

(e) Termination at End of Term. If the Agreement is

terminated at the end of the Base Term or any Extension Term, then the

provisions of Section 9.04(a) shall apply as if the termination were

pursuant to Section 9.03(a), except that the Termination Date shall be

the end of such Base Term or Extension Term, and Continental's initial

Wind-Down Schedule shall be delivered to Contractor not less than 24

months prior to the Termination Date, and Contractor shall have 12

months after receipt of the proposed Wind-Down Schedule to notify

Continental of any Covered Aircraft that Contractor elects to retain.

(f) Termination of Other Financings. If any Covered

Aircraft are not leased from Continental, but are subject to a security

interest or mortgage in favor of Continental in connection with

Continental's guarantee of Contractor's lease or purchase obligations,

then the foregoing provisions relating to the termination of subleases

shall apply instead to the foreclosure by Continental under such

security interest or mortgage, as the case may be, and the foregoing

provisions relating to increased lease rates shall apply instead to the

payment by Contractor to Continental of a financing fee equal to two

percent per annum of the amount guaranteed for the life of Contractor's

lease or outstanding obligations with respect to the applicable Covered

Aircraft.

(g) Maintenance at Continental's Expense. With

respect to any aircraft being returned to Continental by Contractor, if

pursuant to the provisions of this Agreement Contractor is released

from the obligation to meet

 

 

 

 

 

 

 

31

 

 

any return conditions applicable to such aircraft under the Covered

Aircraft Sublease applicable thereto, Contractor shall, at

Continental's cost, perform such maintenance on such aircraft,

consistent with Contractor's maintenance program, as and when requested

by Continental prior to such return.

(h) Fleet Hour Program. In connection with the return

of any Covered Aircraft to Continental, Contractor shall use its

commercially reasonable efforts to facilitate the participation by

Continental in the fleet hour program of Rolls Royce Allison, and in

connection therewith both Contractor and Continental shall cooperate in

connection with any adjustment of charges pursuant to Section 5.4.3 of

the Flight Hour Agreement precipitated by the return of any Covered

Aircraft to Continental.

(i) Excess Inventory and Improvements.

(i) In connection with the return of any

Covered Aircraft to Continental (whether pursuant to Section

2.02 or this Article IX), Continental shall promptly purchase

from Contractor the Excess Inventory relating thereto at a

price equal to the book value of such Excess Inventory on

Contractor's most recent financial statements.

(ii) In connection with the return of any

Covered Aircraft to Continental (whether pursuant to Section

2.02 or this Article IX) which Covered Aircraft shall contain

improvements that are reflected as an asset on Contractor's

most recent financial statements, then Continental shall

promptly pay to Contractor the book value of such improvements

as reflected in such financial statements.

(iii) In connection with the retention of

any Covered Aircraft by Contractor (whether pursuant to

Section 2.02 or this Article IX) which Covered Aircraft shall

contain improvements that are reflected as an asset on

Continental's most recent financial statements, then

Contractor shall promptly pay to Continental the book value of

such improvements as reflected in such financial statements.

Section 9.05 Other Remedies for Breach.

(a) Material Breach by Contractor. Upon a material

breach of this Agreement by Contractor (including without limitation,

those described in Section 9.03(c)), which breach shall not have been

cured within 60 days after written notice delivered by Continental to

Contractor, then for the period from such 60th day until such breach is

cured or the Agreement is otherwise terminated by Continental pursuant

to Section 9.03, in addition to, and not in limitation of, any recourse

or remedy available to Continental at law or in equity, Contractor

shall pay to Continental on the 1st and 15th of each month during such

period an amount equal to the greater of the Cost Factor and the

Prevailing Margin, multiplied by Contractor's aggregate fixed and

variable operating costs allocable

 

 

 

 

32

 

 

to Scheduled Flights for the semi-monthly period ending one calendar

month prior to the date of such payment; provided, that if the material

breach is in respect of any event constituting Cause, the 60-day cure

period referenced above shall not apply, and Contractor shall pay such

amounts to Continental from the first day of such material breach until

such breach is cured or the Agreement is otherwise terminated by

Continental pursuant to Section 9.03; and provided further, that in no

event shall Contractor be required to pay to Continental under this

Section 9.05(a) in respect of any calendar month an amount that is in

excess of the aggregate amount received by Contractor from Continental

in respect of such calendar month pursuant to Section 3.06 (it being

understood that the aggregate amount received by Contractor from

Continental in respect of any calendar month shall include any amounts

that would have been received but for the set-off of any such amounts

by Continental pursuant to Section 11.16).

(b) Material Breach by Continental. Upon a material

breach of this Agreement by Continental, which breach shall not have

been cured within 60 days after written notice delivered by Contractor

to Continental, then for the period from such 60th day until such

breach is cured or the Agreement is otherwise terminated by Contractor

pursuant to Section 9.03, in addition to, and not in limitation of, any

recourse or remedy available to Contractor at law or in equity,

Contractor shall be entitled to obtain the payments due to it hereunder

directly from Airline Clearing House, Inc. for the duration of such

default.

(c) Labor Strike. In the event of a Labor Strike,

then (i) the provisions of Section 6.02(b) shall no longer apply for

the duration of the Term, (ii) the provisions of Paragraph B(6)(e) of

Schedule 3 and Section 9.05(a) shall apply, (iii) after each of the

2nd, 15th, 30th, 45th, 60th and 75th days of such Labor Strike,

Continental (or its designee) shall be entitled to take immediate

possession of up to 20 Covered Aircraft (up to a total of 120 aircraft

after such 75th day) designated by Continental, which shall

simultaneously be withdrawn from this Agreement and the provisions of

Section 9.04(a)(vi) shall apply as if such aircraft were being returned

to Continental in connection with a termination under Section 9.03(a),

and (iv) if Continental (or its designee) shall take possession of any

aircraft pursuant to clause (iii) above, then for so long as the Labor

Strike shall continue and for 180 days thereafter, Contractor shall

provide Continental or its designee with first-priority access to all

of Contractor's operating and training facilities, including without

limitation, flight simulators and hangars, at the standard rental rate

charged by Contractor to third parties prior to the beginning of the

Labor Strike (or, if Contractor had not rented any such facility, at

non-strike market rates), and to its inventory of spare parts and other

equipment at market rates, in each case for such period of time and to

such extent as is necessary and prudent in Continental's judgment to

operate such aircraft safely and to integrate such aircraft and such

operations into Continental's (or its designee's) fleet and operations.

(d) Punitive Damages. No party to this Agreement or

any of its affiliates shall be liable to any other party hereto or any

of its affiliates for

 

 

 

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claims for punitive, special or exemplary damages, arising out of or

relating to this Agreement or the transactions contemplated hereby,

regardless of whether a claim is based on contract, tort (including

negligence), strict liability, violation of any applicable deceptive

trade practices act or similar law or any other legal or equitable

principle, and each party releases the others and their respective

affiliates from liability for any such damages. No party shall be

entitled to rescission of this Agreement as a result of breach of any

other party's representations, warranties, covenants or agreements, or

for any other matter.

ARTICLE X

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 10.01 Representations, Warranties and Covenants of Holdings, XJT and
ExpressJet. Holdings, XJT and ExpressJet, jointly and severally, represent,
warrant and covenant to Continental as of the date hereof as follows:

(a) Organization and Qualification. Each of Holdings,

XJT and ExpressJet is a duly organized and validly existing corporation

in good standing under the laws of the State of Delaware and has the

corporate power and authority to own, operate and use its assets and

operate the Regional Airline Services.

(b) Authority Relative to this Agreement. Each of

Holdings, XJT and ExpressJet has the corporate power and authority to

execute and deliver this Agreement and to consummate the transactions

contemplated hereby in accordance with the terms hereof. The execution

and delivery of this Agreement and the consummation of the transactions

contemplated hereby have been duly authorized by all necessary

corporate action on the part of each of Holdings, XJT and ExpressJet.

This Agreement has been duly and validly executed and delivered by each

of Holdings, XJT and ExpressJet and is, assuming due execution and

delivery thereof by Continental and that Continental has legal power

and right to enter into this Agreement, a valid and binding obligation

of each of Holdings, XJT and ExpressJet, enforceable against each of

Holdings, XJT and ExpressJet in accordance with its terms, except as

enforcement hereof may be limited by bankruptcy, insolvency, fraudulent

conveyance, reorganization, moratorium and other similar laws relating

to or affecting the enforcement of creditors' rights generally and

legal principles of general applicability governing the availability of

equitable remedies (whether considered in a proceeding in equity or at

law or otherwise under applicable law).

(c) Conflicts; Defaults. Neither the execution or

delivery of this Agreement nor the performance by each of Holdings, XJT

and ExpressJet of the transactions contemplated hereby will (i)

violate, conflict with, or constitute a default under any of the terms

of either Holdings', XJT's or ExpressJet's certificate of

incorporation, by-laws, or any provision of, or result in the

acceleration of any obligation under, any material contract, sales

commitment, license, purchase order, security agreement, mortgage,

note, deed, lien, lease or

 

 

 

 

34

 

 

other agreement to which Holdings, XJT or ExpressJet is a party, (ii)

result in the creation or imposition of liens in favor of any third

person or entity, (iii) violate any law, statute, judgment, decree,

order, rule or regulation of any governmental authority, or (iv)

constitute any event which, after notice or lapse of time or both,

would result in such violation, conflict, default, acceleration or

creation or imposition of liens.

(d) Broker. None of Holdings, XJT or ExpressJet has

retained or agreed to pay any broker or finder with respect to this

Agreement and the transactions contemplated hereby.

(e) Board Designee. At all times during the Term,

with respect to XJT and ExpressJet, and, with respect only to Holdings,

when Continental has ceased to elect at least one director pursuant to

its ownership of special voting preferred stock of Holdings, each of

Holdings, XJT and ExpressJet agrees that it will endeavor to ensure

that an individual designated from time to time by Continental (who

shall not be a director, officer or employee of Continental) shall be a

member of the board of directors of Holdings, XJT or ExpressJet, as the

case may be. In furtherance of such endeavors, at the time of any

nomination, appointment or election of any board member of Holdings,

XJT or ExpressJet, when no Continental designee is a member of such

board, and, with respect only to Holdings, when Continental has ceased

to elect at least one director pursuant to its ownership of special

voting preferred stock of Holdings, then Holdings, XJT or ExpressJet,

as the case may be, shall nominate or appoint, as the case may be, an

individual designated by Continental at such time and, in the event of

a shareholders vote, shall recommend to shareholders such individual's

election to the board. In addition, at any time when no Continental

designee is a member of its board and at Continental's request,

Holdings, XJT or ExpressJet, as the case may be, shall invite the

individual designated by Continental at such time to attend all board

meetings (including telephonic meetings) and review all actions taken

without a meeting, and shall provide such individual, at the same time

as provided to board members, all materials provided to board members

in connection with such meetings or actions taken without a meeting.

Section 10.02 Representations and Warranties of Continental. Continental
represents and warrants to Holdings, XJT and ExpressJet as of the date hereof as
follows:

(a) Organization and Qualification. Continental is a

duly incorporated and validly existing corporation in good standing

under the laws of the State of Delaware.

(b) Authority Relative to this Agreement. Continental

has the corporate power and authority to execute and deliver this

Agreement and to consummate the transactions contemplated hereby in

accordance with the terms hereof. The execution and delivery of this

Agreement and the consummation of the transactions contemplated hereby

have been duly authorized by all necessary corporate action on the part

of Continental. This Agreement has been duly and

 

 

 

 

 

35

 

 

validly executed and delivered by Continental and is, assuming due

execution and delivery thereof by Holdings, XJT and ExpressJet and that

Holdings, XJT and ExpressJet each has legal power and right to enter

into this Agreement, a valid and binding obligation of Continental,

enforceable against Continental in accordance with its terms, except as

enforcement hereof may be limited by bankruptcy, insolvency, fraudulent

conveyance, reorganization, moratorium and other similar laws relating

to or affecting the enforcement of creditors' rights generally and

legal principles of general applicability governing the availability of

equitable remedies (whether considered in a proceeding in equity or at

law or otherwise under applicable law).

(c) Conflicts; Defaults. Neither the execution or

delivery of this Agreement nor the performance by Continental of the

transactions contemplated hereby will (i) violate, conflict with, or

constitute a default under any of the terms of Continental's

certificate of incorporation, by-laws, or any provision of, or result

in the acceleration of any obligation under, any material contract,

sales commitment, license, purchase order, security agreement,

mortgage, note, deed, lien, lease or other agreement to which

Continental is a party, (ii) result in the creation or imposition of

any liens in favor of any third person or entity, (iii) violate any

law, statute, judgment, decree, order, rule or regulation of any

governmental authority, or (iv) constitute any event which, after

notice or lapse of time or both, would result in such violation,

conflict, default, acceleration or creation or imposition of liens.

(d) Broker. Continental has not retained or agreed to

pay any broker or finder with respect to this Agreement and the

transactions contemplated hereby.

ARTICLE XI

MISCELLANEOUS

Section 11.01 Amendment of Certain Contracts. Without Continental's express
prior written consent, Contractor shall not amend, supplement, grant a waiver or
extension under, or otherwise modify (i) the Embraer Contract in any manner that
results in changes to the pricing, number or delivery schedule of firm-order and
option aircraft subject to such agreements, the financing or leasing
arrangements contained therein, or any other changes that may be expected to
adversely affect Continental's rights, benefits or obligations under this
Agreement or Contractor's ability to perform hereunder, or (ii) the Flight Hour
Agreement in any manner that adversely affects the engine maintenance costs of
Contractor or Continental in respect of the Covered Aircraft. Contractor agrees
to consent to any amendment of the Embraer Contract that reduces the financing
or other obligations of Continental under the Embraer Contract, provided that
such amendment does not increase the obligations of Contractor under such
contract, it being understood that such amendment shall not discharge or
otherwise reduce Continental's obligations under Article V.

 

 

36

 

 

Section 11.02 Notices. All notices made pursuant to this Agreement shall be in
writing and shall be deemed given upon (a) a transmitter's confirmation of a
receipt of a facsimile transmission (but only if followed by confirmed delivery
by a standard overnight courier the following Business Day or if delivered by
hand the following Business Day), or (b) confirmed delivery by a standard
overnight courier or delivered by hand, to the parties at the following
addresses:

if to Continental:

Continental Airlines, Inc.

1600 Smith Street, HQSCD

Houston, Texas 77002

Attention: Senior Vice President - Corporate Development

Telecopy No.: (713) 324-3229

with a copy to:

Continental Airlines, Inc.

1600 Smith Street, HQSLG

Houston, Texas 77002

Attention: General Counsel

Telecopy No.: (713) 324-5161

if to Holdings, XJT or ExpressJet to:

ExpressJet Holdings, Inc.

1600 Smith Street, HQSCE

Houston, Texas 77002

Attention: Chief Financial Officer

Telecopy No.: (713) 324-4420

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 11.02.

Section 11.03 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party with another Person,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties.

Section 11.04 Amendment and Modification. This Agreement may not be amended or
modified in any respect except by a written agreement signed by the parties
hereto.

Section 11.05 Waiver. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or

 

 

 

 

37

 

 

prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right or privilege under this Agreement
operate as a waiver of any other right or privilege under this Agreement nor
shall any single or partial exercise of any right or privilege preclude any
other or further exercise thereof or the exercise of any other right or
privilege under this Agreement. No failure by any party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
each party against whom the existence of such waiver is asserted.

Section 11.06 Interpretation. The table of contents and the section and other
headings and subheadings contained in this Agreement and in the exhibits and
schedules hereto are solely for the purpose of reference, are not part of the
agreement of the parties hereto, and shall not in any way affect the meaning or
interpretation of this Agreement or any exhibit or schedule hereto. All
references to days or months shall be deemed references to calendar days or
months. All references to "$" shall be deemed references to United States
dollars. Unless the context otherwise requires, any reference to an "Article," a
"Section," an "Exhibit," or a "Schedule" shall be deemed to refer to a section
of this Agreement or an exhibit or schedule to this Agreement, as applicable.
The words "hereof," "herein" and "hereunder" and words of similar import
referring to this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, unless otherwise specifically
provided, they shall be deemed to be followed by the words "without limitation."
This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
the document to be drafted.

Section 11.07 Confidentiality. Except as required by law or in any proceeding to
enforce the provisions of this Agreement, Continental, ExpressJet, XJT and
Holdings hereby agree not to publicize or disclose to any third party the terms
or conditions of this Agreement or any of the Ancillary Agreements, or any
exhibit, schedule or appendix hereto or thereto, without the prior written
consent of the other parties thereto. Except as required by law or in any
proceeding to enforce the provisions of this Agreement or any of the Ancillary
Agreements, Continental, ExpressJet, XJT and Holdings hereby agree not to
disclose to any third party any confidential information or data, both oral and
written, received from the other, whether pursuant to or in connection with this
Agreement or any of the Ancillary Agreements, and designated as such by the
other without the prior written consent of the party providing such confidential
information or data. Continental, ExpressJet, XJT and Holdings hereby agree not
to use any such confidential information or data of the other party other than
in connection with performing their respective obligations or enforcing their
respective rights under this Agreement or any of the Ancillary Agreements, or as
otherwise expressly contemplated by this Agreement or any of the Ancillary
Agreements. If any party is served with a subpoena or other process requiring
the production or disclosure of any of such

 

 

 

 

 

38

 

 

agreements or information, then the party receiving such subpoena or other
process, before complying with such subpoena or other process, shall immediately
notify the other parties of same and permit said other parties a reasonable
period of time to intervene and contest disclosure or production. Upon
termination of this Agreement, each party must return to each other any
confidential information or data received from the other and designated as such
by the party providing such confidential information or data which is still in
the recipient's possession or control. The provisions of this Section 11.07
shall survive the termination of this Agreement for a period of ten years.

Section 11.08 Arbitration.

(a) Agreement to Arbitrate. Subject to Section 11.11,

any and all claims, demands, causes of action, disputes, controversies,

and other matters in question arising out of or primarily relating to

Article III or Schedule 3 to this Agreement, including without

limitation the definition of any term used therein (all of which are

referred to herein as "Claims") shall be resolved by binding

arbitration pursuant to the Federal Arbitration Act. Each of the

parties agrees that arbitration under this Section 11.08 is the

exclusive method for resolving any Claim and that it will not commence

an action or proceeding based on a Claim hereunder, except to enforce

the arbitrators' decisions as provided in this Section 11.08, to compel

any other party to participate in arbitration under this Section 11.08

or as otherwise provided in Section 11.11. The governing law for any

such action or proceeding shall be the law set forth in Section

11.08(f).

(b) Initiation of Arbitration. If any Claim has not

been resolved by mutual agreement on or before the 15th day following

the first notice of the subject matter of the Claim to or from a

disputing party, then the arbitration may be initiated by any party by

providing to the others a written notice of arbitration specifying the

Claim or Claims to be arbitrated. If a party refuses to honor its

obligations under this agreement to arbitrate, any other party may

compel arbitration in either federal or state court.

(c) Place of Arbitration. The arbitration proceeding

shall be conducted in Houston, Texas, or some other place mutually

agreed upon by the parties.

(d) Selection of Arbitrators. Within thirty days of

the notice initiating the arbitration procedure, each party shall

designate one arbitrator, who shall not be disqualified on the basis of

minimal past or present relationships with the party appointing such

arbitrator. If a party fails to designate an arbitrator, the other

party may have an arbitrator appointed by applying to the senior active

United States District Judge for the Southern District of Texas. The

two arbitrators so selected shall then select a third arbitrator. If

the two arbitrators chosen by the parties fail to agree on the third

arbitrator, then the parties (or either of them) may apply to the

senior active United States District Judge for the Southern District of

Texas for the appointment of a third arbitrator. The third arbitrator

shall take an oath of neutrality. The three arbitrators shall make all

of

 

 

 

 

 

39

 

 

their decisions by majority vote. Evident partiality on the part of an

arbitrator exists only where the circumstances are such that a

reasonable person would have to conclude there in fact existed actual

bias and a mere appearance or impression of bias will not constitute

evident partiality or otherwise disqualify an arbitrator. Minimal or

trivial past or present relationships between the neutral arbitrator

and the party selecting such arbitrator or any of the other

arbitrators, or the failure to disclose such minimal or trivial past or

present relationships, will not by themselves constitute evident

partiality or otherwise disqualify any arbitrator.

(e) Choice of Law as to Procedural Matters. The

enforcement of this agreement to arbitrate, the making, validity,

construction, and interpretation of this agreement to arbitrate, and

all procedural aspects of the proceeding pursuant to this agreement to

arbitrate, including but not limited to, the issues subject to

arbitration (i.e., arbitrability), the scope of the arbitrable issues,

allegations of waiver, delay or defenses to arbitrability, and the

rules governing the conduct of the arbitration, shall be governed by

and construed pursuant to the Federal Arbitration Act.

(f) Choice of Law as to Substantive Claims. In

deciding the substance of the parties' Claims, the arbitrators shall

apply the substantive laws of the State of Texas (excluding Texas

choice-of-law principles that might call for the application of the law

of another jurisdiction).

(g) Procedure. Except as modified in this Agreement,

the arbitration shall be conducted in accordance with the rules of

arbitration of the Federal Arbitration Act and, to the extent an issue

is not addressed by the federal law of arbitration, by the Commercial

Arbitration Rules of the American Arbitration Association. It is

contemplated that although the arbitration shall be conducted in

accordance with the Commercial Arbitration Rules of the American

Arbitration Association, the arbitration proceeding will be

self-administered by the parties; provided, however, that if a party

believes the process will be enhanced if it is administered by the

American Arbitration Association, such party shall have the right to

cause the process to become administered by the American Arbitration

Association by applying to the American Arbitration Association and,

thereafter, the arbitration shall be conducted pursuant to the

administration of the American Arbitration Association. In determining

the extent of discovery, the number and length of depositions, and all

other pre-hearing matters, the arbitrators shall endeavor to the extent

possible to streamline the proceedings and minimize the time and cost

of the proceedings.

(h) Final Hearing. The final hearing shall be

conducted within 120 days of the selection of the third arbitrator. The

final hearing shall not exceed ten working days, with each party to be

granted one-half of the allocated time to present its case to the

arbitrators.

(i) Damages. Only actual damages may be awarded. It

is expressly agreed that the arbitrators shall have no authority to

award treble,

 

 

 

 

40

 

 

exemplary or punitive damages of any type under any circumstances

regardless of whether such damages may be available under the

applicable law.

(j) Decision of the Arbitration. The arbitrators

shall render their final decision within twenty days of the completion

of the final hearing completely resolving all of the Claims that are

the subject of the arbitration proceeding. The arbitrators' ultimate

decision after final hearing shall be in writing. The arbitrators shall

certify in their decision that no part of their award includes any

amount for treble, exemplary or punitive damages. The arbitrators'

decision shall be final and non-appealable to the maximum extent

permitted by law. Any and all of the arbitrators' orders and decisions

may be enforceable in, and judgment upon any award rendered in the

arbitration proceeding may be confirmed and entered by, any federal or

state court having jurisdiction.

(k) Confidentiality. All proceedings conducted

hereunder and the decision of the arbitrators shall be kept

confidential by the parties.

Section 11.09 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Agreement may be
executed by facsimile signature.

Section 11.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

Section 11.11 Equitable Remedies. Each of Continental, Holdings, XJT and
ExpressJet acknowledges and agrees that under certain circumstances the breach
by Continental, Holdings, XJT or ExpressJet of a term or provision of this
Agreement will materially and irreparably harm the other party, that money
damages will accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any breach of the provisions of this Agreement.

Section 11.12 Relationship of Parties. Nothing in this Agreement shall be
interpreted or construed as establishing between the parties a partnership,
joint venture or other similar arrangement.

Section 11.13 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) and the Ancillary Agreements are intended by the parties as a
complete statement of the entire agreement and understanding of the parties with
respect to the subject matter hereof and all matters between the parties related
to the subject matter herein or therein set forth.

 

 

 

41

 

 

Section 11.14 Governing Law. Except with respect to matters referenced in
Section 11.08(e) (which shall be governed by and construed pursuant to the
Federal Arbitration Act), this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (excluding Texas choice-of-law
principles that might call for the application of the law of another
jurisdiction) as to all matters, including matters of validity, construction,
effect, performance and remedies. Except as otherwise provided in Section
11.08(e), any action arising out of this Agreement or the rights and duties of
the parties arising hereunder may be brought, if at all, only in the state or
federal courts located in Harris County, Texas.

Section 11.15 Guarantees.

(a) Holdings Guarantee. Holdings hereby

unconditionally and irrevocably guarantees to Continental the due and

punctual performance by each of XJT and ExpressJet of all of their

obligations arising under this Agreement and the Ancillary Agreements.

If either XJT or ExpressJet shall fail or be unable to perform such

obligations as and when the same shall be required to be performed,

then Holdings shall be obligated to perform or cause to be performed

such obligations in accordance with the terms hereof and thereof. This

guaranty is a guaranty of payment, performance and compliance and not

of collectibility and is in no way conditioned or contingent upon any

attempt to collect from or enforce performance or compliance by

ExpressJet or XJT or upon any other event or condition whatsoever.

(b) XJT Guarantee. XJT hereby unconditionally and

irrevocably guarantees to Continental the due and punctual performance

by ExpressJet of all of its obligations arising under this Agreement

and the Ancillary Agreements. If ExpressJet shall fail or be unable to

perform such obligations as and when the same shall be required to be

performed, then XJT shall be obligated to perform or cause to be

performed such obligations in accordance with the terms hereof and

thereof. This guaranty is a guaranty of payment, performance and

compliance and not of collectibility and is in no way conditioned or

contingent upon any attempt to collect from or enforce performance or

compliance by ExpressJet or upon any other event or condition

whatsoever.

Section 11.16 Right of Set-Off. If (i) any party hereto shall be in default
hereunder to any other party, (ii) Contractor shall be in default under any
Covered Aircraft Sublease or Uncovered Aircraft Sublease, (iii) Contractor shall
be in default under that certain promissory note, dated as of March 31, 2001,
payable by Contractor in favor of Continental, or (iv) any party to any tax
agreement among the parties hereto shall be in default to any other party
thereunder, then in any such case the non-defaulting party shall be entitled to
set off from any payment owed by such non-defaulting party to the defaulting
party hereunder any amount owed by the defaulting party to the non-defaulting
party thereunder; provided that contemporaneously with any such set-off, the

 

 

 

 

42

 

 

non-defaulting party shall give written notice of such action to the defaulting
party; provided further that the failure to give such notice shall not affect
the validity of the set-off. It is specifically agreed that (i) for purposes of
the set-off by any non-defaulting party, mutuality shall be deemed to exist
among Continental, Holdings, XJT and ExpressJet; (ii) reciprocity among
Continental, Holdings, XJT and ExpressJet exists with respect to their relative
rights and obligations in respect of any such set-off; and (iii) the right of
set-off is given as additional security to induce the parties to enter into the
transactions contemplated hereby and by the Ancillary Agreements. Upon
completion of any such set-off, the obligation of the defaulting party to the
non-defaulting party shall be extinguished to the extent of the amount so
set-off. Each party hereto further waives any right to assert as a defense to
any attempted set-off the requirements of liquidation or mutuality. This set-off
provision shall be without prejudice, and in addition, to any right of set-off,
combination of accounts, lien or other right to which any non-defaulting party
is at any time otherwise entitled (either by operation of law, contract or
otherwise).

Section 11.17 Cooperation with Respect to Reporting. Each of the parties hereto
agrees to use its commercially reasonable efforts to cooperate with each other
party in providing necessary data, to the extent in the possession of the first
party, required by such other party in order to meet any reporting requirements
to, or otherwise in connection with any filing with or provision of information
to be made to, any regulatory agency or other governmental authority.

 

 

 

43

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Capacity Purchase Agreement to be duly executed and delivered as of the date and
year first written above.

 

CONTINENTAL AIRLINES, INC.

 

By:

--------------------------------------------------

Name: Jeffery A. Smisek

Title: Executive Vice President- Corporate

EXPRESSJET HOLDINGS, INC.

 

By:

--------------------------------------------------

Name: James B. Ream

Title: President and Chief Executive Officer

XJT HOLDINGS, INC.

 

By:

--------------------------------------------------

Name: James B. Ream

Title: President and Chief Executive Officer

EXPRESSJET AIRLINES, INC.

 

By:

--------------------------------------------------

Name: James B. Ream

Title: President and Chief Executive Officer

 

 

 

 

44

 

 

 

 

SCHEDULE 1

COVERED AIRCRAFT

ERJ-145 AIRCRAFT

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

ERJ-145ER 925 N14925 145004 Delivered

ERJ-145ER 926 N15926 145005 Delivered

ERJ-145ER 927 N16927 145006 Delivered

ERJ-145ER 928 N17928 145007 Delivered

ERJ-145ER 929 N13929 145009 Delivered

ERJ-145ER 930 N14930 145011 Delivered

ERJ-145ER 932 N15932 145015 Delivered

ERJ-145ER 933 N14933 145018 Delivered

ERJ-145ER 934 N12934 145019 Delivered

ERJ-145ER 935 N13935 145022 Delivered

ERJ-145ER 936 N13936 145025 Delivered

ERJ-145ER 937 N14937 145026 Delivered

ERJ-145ER 938 N14938 145029 Delivered

ERJ-145ER 939 N14939 145030 Delivered

ERJ-145ER 940 N14940 145033 Delivered

ERJ-145ER 941 N15941 145035 Delivered

ERJ-145ER 942 N14942 145037 Delivered

ERJ-145ER 943 N14943 145040 Delivered

ERJ-145ER 944 N16944 145045 Delivered

ERJ-145ER 945 N14945 145049 Delivered

ERJ-145ER 946 N12946 145052 Delivered

ERJ-145ER 947 N14947 145054 Delivered

ERJ-145ER 948 N15948 145056 Delivered

ERJ-145LR 949 N13949 145057 Delivered

ERJ-145LR 950 N14950 145061 Delivered

ERJ-145LR 951 N16951 145063 Delivered

ERJ-145LR 952 N14952 145067 Delivered

ERJ-145LR 953 N14953 145071 Delivered

ERJ-145LR 954 N16954 145072 Delivered

ERJ-145LR 955 N13955 145075 Delivered

ERJ-145LR 956 N13956 145078 Delivered

ERJ-145LR 957 N12957 145080 Delivered

ERJ-145LR 958 N13958 145085 Delivered

ERJ-145LR 959 N14959 145091 Delivered

ERJ-145LR 960 N14960 145100 Delivered

ERJ-145LR 961 N16961 145103 Delivered

ERJ-145LR 962 N27962 145110 Delivered

ERJ-145LR 963 N16963 145116 Delivered

ERJ-145LR 964 N13964 145123 Delivered

ERJ-145LR 965 N13965 145125 Delivered

ERJ-145LR 966 N19966 145131 Delivered

ERJ-145LR 967 N12967 145133 Delivered

ERJ-145LR 968 N13968 145138 Delivered

 

 

Schedule 1-1

 

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

ERJ-145LR 969 N13969 145141 Delivered

ERJ-145LR 970 N13970 145146 Delivered

ERJ-145LR 971 N22971 145149 Delivered

ERJ-145LR 972 N14972 145151 Delivered

ERJ-145LR 973 N15973 145159 Delivered

ERJ-145LR 974 N14974 145161 Delivered

ERJ-145LR 975 N13975 145163 Delivered

ERJ-145LR 976 N16976 145171 Delivered

ERJ-145LR 977 N14977 145175 Delivered

ERJ-145LR 978 N13978 145180 Delivered

ERJ-145LR 979 N13979 145181 Delivered

ERJ-145LR 980 N15980 145202 Delivered

ERJ-145LR 981 N16981 145208 Delivered

ERJ-145LR 982 N18982 145223 Delivered

ERJ-145LR 983 N15983 145239 Delivered

ERJ-145LR 984 N17984 145246 Delivered

ERJ-145LR 985 N15985 145248 Delivered

ERJ-145LR 986 N15986 145254 Delivered

ERJ-145LR 987 N16987 145261 Delivered

ERJ-145LR 988 N13988 145265 Delivered

ERJ-145LR 989 N13989 145271 Delivered

ERJ-145LR 990 N13990 145277 Delivered

ERJ-145LR 991 N14991 145278 Delivered

ERJ-145LR 992 N13992 145284 Delivered

ERJ-145LR 993 N14993 145289 Delivered

ERJ-145LR 994 N13994 145291 Delivered

ERJ-145LR 995 N13995 145295 Delivered

ERJ-145LR 996 N12996 145296 Delivered

ERJ-145LR 997 N13997 145298 Delivered

ERJ-145LR 998 N14998 145302 Delivered

ERJ-145LR 999 N16999 145307 Delivered

ERJ-145LR 924 N12924 145311 Delivered

ERJ-145LR 923 N14923 145318 Delivered

ERJ-145LR 922 N12922 145338 Delivered

ERJ-145LR 921 N12921 145354 Delivered

Aircraft 80 ERJ-145LR Firm

Aircraft 81 ERJ-145LR Firm

Aircraft 82 ERJ-145LR Firm

Aircraft 83 ERJ-145LR Firm

Aircraft 84 ERJ-145LR Firm

Aircraft 85 ERJ-145LR Firm

Aircraft 86 ERJ-145LR Firm

Aircraft 87 ERJ-145LR Firm

Aircraft 88 ERJ-145LR Firm

Aircraft 89 ERJ-145LR Firm

Aircraft 90 ERJ-145LR Firm

Aircraft 91 ERJ-145LR Firm

 

 

 

Schedule 1-2

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

Aircraft 92 ERJ-145LR Firm

Aircraft 93 ERJ-145LR Firm

Aircraft 94 ERJ-145LR Firm

Aircraft 95 ERJ-145LR Firm

Aircraft 96 ERJ-145LR Firm

Aircraft 97 ERJ-145LR Firm

Aircraft 98 ERJ-145LR Firm

Aircraft 99 ERJ-145LR Firm

Aircraft 100 ERJ-145LR Firm

Aircraft 101 ERJ-145LR Firm

Aircraft 102 ERJ-145LR Firm

Aircraft 103 ERJ-145LR Firm

Aircraft 104 ERJ-145LR Firm

Aircraft 105 ERJ-145LR Firm

Aircraft 106 ERJ-145LR Firm

Aircraft 107 ERJ-145LR Firm

Aircraft 108 ERJ-145LR Firm

Aircraft 109 ERJ-145LR Firm

Aircraft 110 ERJ-145LR Firm

Aircraft 111 ERJ-145LR Firm

Aircraft 112 ERJ-145LR Firm

Aircraft 113 ERJ-145LR Firm

Aircraft 114 ERJ-145LR Firm

Aircraft 115 ERJ-145LR Firm

Aircraft 116 ERJ-145LR Firm

Aircraft 117 ERJ-145LR Firm

Aircraft 118 ERJ-145LR Firm

Aircraft 119 ERJ-145LR Firm

Aircraft 120 ERJ-145LR Firm

Aircraft 121 ERJ-145LR Firm

Aircraft 122 ERJ-145LR Firm

Aircraft 123 ERJ-145LR Firm

Aircraft 124 ERJ-145LR Firm

Aircraft 125 ERJ-145LR Firm

Aircraft 126 ERJ-145LR Firm

Aircraft 127 ERJ-145LR Firm

Aircraft 128 ERJ-145LR Firm

Aircraft 129 ERJ-145LR Firm

Aircraft 130 ERJ-145LR Firm

Aircraft 131 ERJ-145LR Firm

Aircraft 132 ERJ-145LR Firm

Aircraft 133 ERJ-145LR Firm

Aircraft 134 ERJ-145LR Firm

Aircraft 135 ERJ-145LR Firm

Aircraft 136 ERJ-145LR Firm

Aircraft 137 ERJ-145LR Firm

Aircraft 138 ERJ-145LR Firm

 

 

 

Schedule 1-3

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

Aircraft 139 ERJ-145LR Firm

Aircraft 140 ERJ-145LR Firm

Aircraft 141 ERJ-145LR Firm

Aircraft 142 ERJ-145LR Firm

Aircraft 143 ERJ-145LR Firm

Aircraft 144 ERJ-145LR Firm

Aircraft 145 ERJ-145LR Firm

Aircraft 146 ERJ-145LR Firm

Aircraft 147 ERJ-145LR Firm

Aircraft 148 ERJ-145LR Firm

Aircraft 149 ERJ-145LR Firm

Aircraft 150 ERJ-145LR Firm

Aircraft 151 ERJ-145LR Firm

Aircraft 152 ERJ-145LR Firm

Aircraft 153 ERJ-145LR Firm

Aircraft 154 ERJ-145LR Firm

Aircraft 155 ERJ-145LR Firm

Aircraft 156 ERJ-145LR Firm

Aircraft 157 ERJ-145LR Firm

Aircraft 158 ERJ-145LR Firm

Aircraft 159 ERJ-145LR Firm

Aircraft 1 ERJ-145XR Firm

Aircraft 2 ERJ-145XR Firm

Aircraft 3 ERJ-145XR Firm

Aircraft 4 ERJ-145XR Firm

Aircraft 5 ERJ-145XR Firm

Aircraft 6 ERJ-145XR Firm

Aircraft 7 ERJ-145XR Firm

Aircraft 8 ERJ-145XR Firm

Aircraft 9 ERJ-145XR Firm

Aircraft 10 ERJ-145XR Firm

Aircraft 11 ERJ-145XR Firm

Aircraft 12 ERJ-145XR Firm

Aircraft 13 ERJ-145XR Firm

Aircraft 14 ERJ-145XR Firm

Aircraft 15 ERJ-145XR Firm

Aircraft 16 ERJ-145XR Firm

Aircraft 17 ERJ-145XR Firm

Aircraft 18 ERJ-145XR Firm

Aircraft 19 ERJ-145XR Firm

Aircraft 20 ERJ-145XR Firm

Aircraft 21 ERJ-145XR Firm

Aircraft 22 ERJ-145XR Firm

Aircraft 23 ERJ-145XR Firm

Aircraft 24 ERJ-145XR Firm

Aircraft 25 ERJ-145XR Firm

 

 

 

Schedule 1-4

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

Aircraft 26 ERJ-145XR Firm

Aircraft 27 ERJ-145XR Firm

Aircraft 28 ERJ-145XR Firm

Aircraft 29 ERJ-145XR Firm

Aircraft 30 ERJ-145XR Firm

Aircraft 31 ERJ-145XR Firm

Aircraft 32 ERJ-145XR Firm

Aircraft 33 ERJ-145XR Firm

Aircraft 34 ERJ-145XR Firm

Aircraft 35 ERJ-145XR Firm

Aircraft 36 ERJ-145XR Firm

Aircraft 37 ERJ-145XR Firm

Aircraft 38 ERJ-145XR Firm

Aircraft 39 ERJ-145XR Firm

Aircraft 40 ERJ-145XR Firm

Aircraft 41 ERJ-145XR Firm

Aircraft 42 ERJ-145XR Firm

Aircraft 43 ERJ-145XR Firm

Aircraft 44 ERJ-145XR Firm

Aircraft 45 ERJ-145XR Firm

Aircraft 46 ERJ-145XR Firm

Aircraft 47 ERJ-145XR Firm

Aircraft 48 ERJ-145XR Firm

Aircraft 49 ERJ-145XR Firm

Aircraft 50 ERJ-145XR Firm

Aircraft 51 ERJ-145XR Firm

Aircraft 52 ERJ-145XR Firm

Aircraft 53 ERJ-145XR Firm

Aircraft 54 ERJ-145XR Firm

Aircraft 55 ERJ-145XR Firm

Aircraft 56 ERJ-145XR Firm

Aircraft 57 ERJ-145XR Firm

Aircraft 58 ERJ-145XR Firm

Aircraft 59 ERJ-145XR Firm

Aircraft 60 ERJ-145XR Firm

Aircraft 61 ERJ-145XR Firm

Aircraft 62 ERJ-145XR Firm

Aircraft 63 ERJ-145XR Firm

Aircraft 64 ERJ-145XR Firm

Aircraft 65 ERJ-145XR Firm

Aircraft 66 ERJ-145XR Firm

Aircraft 67 ERJ-145XR Firm

Aircraft 68 ERJ-145XR Firm

Aircraft 69 ERJ-145XR Firm

Aircraft 70 ERJ-145XR Firm

Aircraft 71 ERJ-145XR Firm

Aircraft 72 ERJ-145XR Firm

 

 

 

 

Schedule 1-5

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

Aircraft 73 ERJ-145XR Firm

Aircraft 74 ERJ-145XR Firm

Aircraft 75 ERJ-145XR Firm

Aircraft 76 ERJ-145XR Firm

Aircraft 77 ERJ-145XR Firm

Aircraft 78 ERJ-145XR Firm

Aircraft 79 ERJ-145XR Firm

Aircraft 80 ERJ-145XR Firm

Aircraft 81 ERJ-145XR Firm

Aircraft 82 ERJ-145XR Firm

Aircraft 83 ERJ-145XR Firm

Aircraft 84 ERJ-145XR Firm

Aircraft 85 ERJ-145XR Firm

Aircraft 86 ERJ-145XR Firm

 

ERJ-135 AIRCRAFT

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

ERJ-135ER 501 N16501 145145 Delivered

ERJ-135ER 502 N16502 145166 Delivered

ERJ-135ER 503 N19503 145176 Delivered

ERJ-135ER 504 N25504 145186 Delivered

ERJ-135ER 505 N14505 145192 Delivered

ERJ-135ER 506 N27506 145206 Delivered

ERJ-135ER 507 N17507 145215 Delivered

ERJ-135ER 508 N14508 145220 Delivered

ERJ-135ER 509 N15509 145238 Delivered

ERJ-135ER 510 N16510 145251 Delivered

ERJ-135ER 511 N16511 145267 Delivered

ERJ-135ER 512 N27512 145274 Delivered

ERJ-135LR 513 N17513 145292 Delivered

ERJ-135LR 514 N14514 145303 Delivered

ERJ-135LR 515 N29515 145309 Delivered

ERJ-135LR 516 N14516 145323 Delivered

ERJ-135LR 517 N24517 145332 Delivered

ERJ-135LR 518 N28518 145334 Delivered

Aircraft 19 ERJ-135LR Firm

Aircraft 20 ERJ-135LR Firm

Aircraft 21 ERJ-135LR Firm

Aircraft 22 ERJ-135LR Firm

Aircraft 23 ERJ-135LR Firm

 

 

 

Schedule 1-6

 

 

ORDER 1/1/01

NUMBER AIRCRAFT TAIL US REG MSN STATUS

====================================================================================================

Aircraft 24 ERJ-135LR Firm

Aircraft 25 ERJ-135LR Firm

Aircraft 26 ERJ-135LR Firm

Aircraft 27 ERJ-135LR Firm

Aircraft 28 ERJ-135LR Firm

Aircraft 29 ERJ-135LR Firm

Aircraft 30 ERJ-135LR Firm

 

CONVERTED ORDERS NEW ORDER

Aircraft 31 ERJ-135LR 145LR Firm

Aircraft 32 ERJ-135LR 145LR Firm

Aircraft 33 ERJ-135LR 145LR Firm

Aircraft 34 ERJ-135LR 145LR Firm

Aircraft 35 ERJ-135LR 145LR Firm

Aircraft 36 ERJ-135LR 145LR Firm

Aircraft 37 ERJ-135LR 145LR Firm

Aircraft 38 ERJ-135LR 145LR Firm

Aircraft 39 ERJ-135LR 145LR Firm

Aircraft 40 ERJ-135LR 145XR Firm

Aircraft 41 ERJ-135LR 145XR Firm

Aircraft 42 ERJ-135LR 145XR Firm

Aircraft 43 ERJ-135LR 145XR Firm

Aircraft 44 ERJ-135LR 145XR Firm

Aircraft 45 ERJ-135LR 145XR Firm

Aircraft 46 ERJ-135LR 145XR Firm

Aircraft 47 ERJ-135LR 145XR Firm

Aircraft 48 ERJ-135LR 145XR Firm

Aircraft 49 ERJ-135LR 145XR Firm

Aircraft 50 ERJ-135LR 145XR Firm

 

TURBOPROP AIRCRAFT

TAIL AIRCRAFT US REG

====================================================

811 ATR-42-320 N25811

812 ATR-42-320 N19812

813 ATR-42-320 N14813

814 ATR-42-320 N18814

815 ATR-42-320 N14815

816 ATR-42-320 N15816

817 ATR-42-320 N34817

 

 

 

Schedule 1-7

 

 

 

 

TAIL AIRCRAFT US REG

====================================================

818 ATR-42-320 N15818

819 ATR-42-320 N14819

820 ATR-42-320 N34820

821 ATR-42-320 N14821

822 ATR-42-320 N14822

823 ATR-42-320 N15823

824 ATR-42-320 N16824

825 ATR-42-320 N14825

826 ATR-42-320 N26826

827 ATR-42-320 N15827

828 ATR-42-320 N14828

829 ATR-42-320 N14829

830 ATR-42-320 N14830

831 ATR-42-320 N17831

832 ATR-42-320 N14832

833 ATR-42-320 N14833

834 ATR-42-320 N14834

835 ATR-42-320 N11835

836 ATR-42-320 N42836

837 ATR-42-320 N21837

838 ATR-42-320 N99838

840 ATR-42-320 N93840

841 ATR-42-320 N97841

842 ATR-42-320 N86842

712 EMB-120ER N34712

713 EMB-120ER N15713

715 EMB-120ER N12715

716 EMB-120ER N27716

717 EMB-120ER N40717

718 EMB-120ER N16718

720 EMB-120ER N17720

722 EMB-120ER N47722

723 EMB-120ER N16723

724 EMB-120ER N16724

725 EMB-120ER N15725

726 EMB-120ER N51726

727 EMB-120ER N22727

728 EMB-120ER N17728

729 EMB-120ER N16729

730 EMB-120ER N15730

 

 

 

Schedule 1-8

 

 

 

TAIL AIRCRAFT US REG

====================================================

731 EMB-120ER N16731

732 EMB-120ER N15732

733 EMB-120ER N58733

734 EMB-120ER N57734

534 B1900-D N17534

538 B1900-D N81538

540 B1900-D N16540

541 B1900-D N17541

542 B1900-D N47542

543 B1900-D N49543

544 B1900-D N48544

546 B1900-D N81546

547 B1900-D N69547

548 B1900-D N69548

549 B1900-D N69549

550 B1900-D N87550

551 B1900-D N87551

552 B1900-D N87552

553 B1900-D N81553

554 B1900-D N87554

555 B1900-D N87555

556 B1900-D N81556

557 B1900-D N87557

 

 

Schedule 1-9

 

 

 

SCHEDULE 2

CONTINENTAL INCREASED LEASE RATE

CALCULATIONS FOR UNCOVERED AIRCRAFT SUBLEASES

The interest rate used in a Covered Aircraft Sublease relating to an aircraft to
determine the lease payments thereunder shall be increased by 200 basis points
and used to determine the lease payments under the Uncovered Aircraft Sublease
for the same aircraft.

 

 

 

 

 

Schedule 2-1

 

 

 

 

SCHEDULE 3

 

 

A. Base and Incentive Compensation. The following provisions shall apply

for all applicable periods through December 31, 2004:

1. Base Compensation. For each calendar month, "Base

Compensation" shall equal the sum of (i) (a) the First

Benchmark Factor multiplied by (b) the aggregate sum of the

following products for each aircraft type set forth in the

Final Monthly Schedule: the First Adjusted Block Hour Rate for

the applicable aircraft type multiplied by the number of block

hours of Scheduled Flights set forth on the Final Monthly

Schedule for such month for such aircraft type and (ii) the

Appendix 1 Expenses set forth in column 1 of Appendix 1 for

such calendar month as may be adjusted pursuant to Paragraph

(A)(3) of this Schedule 3.

The "First Benchmark Factor" for each calendar month equals

one minus the sum of the First Cancellation Rate for such

calendar month and the Second Cancellation Rate for such

calendar month. The First Benchmark Factor for each month in

2001 is set forth in Appendix 2.

The "First Adjusted Block Hour Rate" for a particular aircraft

type and a particular month equals (i) the applicable Appendix

3 Block Hour Rate set forth on Appendix 3 for such aircraft

type and month, minus (ii) the sum of (a) the Appendix 4 Block

Hour Rate set forth on Appendix 4 for such aircraft type and

month, (b) the Appendix 5 Block Hour Rate set forth on

Appendix 5 for such aircraft type and month and (c) the

Appendix 6 Block Hour Rate set forth on Appendix 6 for such

aircraft type and month, plus (iii) the sum of (x) the Second

Adjusted Block Hour Rate for such aircraft type and month, (y)

the Third Adjusted Block Hour Rate for such aircraft type and

month and (z) the Fourth Adjusted Block Hour Rate for such

aircraft type and month.

The "Second Adjusted Block Hour Rate" for a particular

aircraft type and a particular month is obtained by

multiplying the Appendix 4 Block Hour Rate for such aircraft

type and month by the Appendix 7 Block Hours set forth on

Appendix 7 for such aircraft type and dividing such product by

the average scheduled block hours per departure for such

aircraft type as set forth on the Final Monthly Schedule.

The "Third Adjusted Block Hour Rate" for a particular aircraft

type and a particular month equals the quotient of (1) the sum

of (a) the product of (i) the First Forecast Rate-Component 1

for the applicable month as set forth on Appendix 8 multiplied

by (ii) the First Weighted Average Number for such aircraft

type, plus (b) the product of (i) the First Forecast

Rate-Component 2 for the applicable month as set forth on

Appendix 8 multiplied by (ii) the Second Weighted Average

Number for

 

 

 

 

 

Schedule 3-1

 

 

such aircraft type, divided by (2) the product of (w) the

total number of scheduled block hours for such aircraft type

as set forth in the Final Monthly Schedule, multiplied by (x)

the First Benchmark Factor, multiplied by (y) the Cost

Difference as set forth on Appendix 23.

The "First Weighted Average Number" for a particular aircraft

type equals the product of (1) the number of scheduled

departures of such aircraft type from a Continental airport,

excluding airport codes YHZ, YOW, and YQB, as set forth in the

Final Monthly Schedule multiplied by (2) the Weighted

Departure Number for such aircraft type.

The "Second Weighted Average Number" for a particular aircraft

type equals the product of (1) the number of scheduled

departures of such aircraft type from a Continental Airport as

set forth in the Final Monthly Schedule multiplied by (2) the

Weighted Departure Number for such aircraft type.

The "Weighted Departure Number" for (1) the Embraer ERJ-145XR

is {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT}, (2) the Embraer ERJ-145 is

{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT}, (3) the Embraer ERJ-135 is

{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT}, (4) the ATR-42-320 is {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT}, (5) the Embraer 120 is {CONFIDENTIAL MATERIAL

OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}

and (6) the Beech 1900-D is {CONFIDENTIAL MATERIAL OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}.

The "Fourth Adjusted Block Hour Rate" for a particular

aircraft type and a particular month equals the quotient of

(i) the product of (a) the Contract Fuel Rate multiplied by

(b) the Appendix 9 Rate Per Block Hour set forth

 

 

 

Schedule 3-2

 

 

in Appendix 9 for such aircraft type based on the average

scheduled stage length per departure for such aircraft type as

set forth in the Final Monthly Schedule using the nearest

lower stage length set forth in Appendix 9 divided by (ii) the

Cost Difference set forth on Appendix 23.

2. Incentive Compensation. With respect to each calendar month,

incentive compensation shall be calculated as follows:

a. Headstart Bonus. Contractor shall receive a payment

of {CONFIDENTIAL MATERIAL OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT} for each Scheduled Flight that is an

On-time Headstart Flight during a calendar month, if

any, in excess of the product of the number of

Headstart Flights during such calendar month and the

Headstart On-time Benchmark. The Headstart On-time

Benchmark for each month in 2001 is set forth in

Appendix 2.

b. Baggage Handling Bonus. Contractor shall receive a

payment in an amount equal to the product of (i)

{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT

TO A REQUEST FOR CONFIDENTIAL TREATMENT} and (ii) the

excess, if any, of (a) the quotient of (1) the total

number of Enplanements for Continental and Contractor

during such calendar month at Contractor Airports of

the type described in clause (i) of the definition

thereof, multiplied by the Baggage Handling

Benchmark, divided by (2) 1,000 over (b) each bag

improperly handled (as measured by claims filed for

mishandled baggage) for Continental and Contractor by

Contractor during such calendar month at Contractor

Airports of the type described in clause (i) of the

definition thereof. The Baggage Handling Benchmark

for each month in 2001 is set forth in Appendix 2.

c. Appendix 10 Fee. Contractor will receive a fee equal

to the quotient of (i) the Appendix 10 invoice rate

set forth in Appendix 10 for the applicable month

multiplied by the number of Forecasted Passengers for

the applicable month, which fee represents payment

for interrupted trip expense, passenger liability

insurance, baggage handling, claims, repairs and

delivery (Contractor Airports only), and security and

screening (Contractor Airports only) expenses,

divided by (ii) the Cost Difference set forth in

Appendix 23. This incentive compensation will be

reconciled, in the monthly reconciliation described

in

 

 

 

 

Schedule 3-3

 

 

Section 3.06(b) of the Agreement, to the number of

Actual Passengers for such calendar month multiplied

by the Appendix 10 reconciliation rate set forth in

Appendix 10 for the applicable month, which fee

represents the same categories of expense as

represented by the per passenger invoice rate, other

than passenger liability insurance and third-party

security and screening (Contractor Airports only),

which category of expense is reconciled pursuant to

Paragraph B(9)(a).

3. Fleet Size Adjustments. Upon the withdrawal of one or more

Covered Aircraft (excluding Turboprop Aircraft) from the

capacity purchase provisions of this Agreement, the Appendix 1

Expenses shall be adjusted as follows:

a. Expenses set forth in column 2 of Appendix 1 (after

giving effect to any adjustments thereto pursuant to

this Paragraph A(3)(a)) for each applicable month

shall decrease by the quotient of (i) the actual

expenses of the type reflected in column 2 relating

to the specific aircraft (identified by tail number)

withdrawn from the Agreement, divided by (ii) the

Cost Difference set forth on Appendix 23.

b. Expenses set forth in columns 4, 6, 9, 11, 12 and 13

of Appendix 1 for each applicable month will be

reduced by an amount equal to the product of (i) the

amount of each of such expenses included in Appendix

1 Expenses (after giving effect to any previous

adjustments thereto pursuant to this Paragraph

A(3)(b)) and (ii) the quotient of (1) the number of

aircraft so withdrawn from the Agreement (after

giving effect to any previous adjustments pursuant to

this Paragraph A(3)(b)) and (2) the number of

aircraft constituting Covered Aircraft immediately

prior to such withdrawal.

c. The remainder of the Appendix 1 Expenses will

decrease as follows:

I. For the first {CONFIDENTIAL MATERIAL OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT} aircraft (other

than Turboprop Aircraft) to be withdrawn

from the Agreement (taking into account all

withdrawals under the Agreement), the

remainder of the Appendix 1 Expenses after

giving effect to any other adjustments

provided in this Paragraph A(3) will be

reduced by the product of (a) such remainder

of the Appendix 1 Expenses,

 

 

 

Schedule 3-4

 

 

multiplied by (b) {CONFIDENTIAL MATERIAL

OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT

TO A REQUEST FOR CONFIDENTIAL TREATMENT}

multiplied by (c) the quotient of (1) the

number of aircraft so withdrawn and (2) the

number of aircraft constituting Covered

Aircraft immediately prior to such

withdrawal.

II. For the next {CONFIDENTIAL MATERIAL OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT} aircraft (other

than Turboprop Aircraft) to be withdrawn

from the Agreement (taking into account all

withdrawals from the Agreement), the

remainder of the Appendix 1 Expenses after

giving effect to any other adjustments

provided in this Paragraph A(3) will be

reduced by the product of (a) such remainder

of the Appendix 1 Expenses, multiplied by

(b) {CONFIDENTIAL MATERIAL OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT} multiplied by (c)

the quotient of (1) the number of aircraft

so withdrawn and (2) the number of aircraft

constituting Covered Aircraft immediately

prior to such withdrawal.

III. For all other aircraft (other than Turboprop

Aircraft) to be withdrawn from the

Agreement, Continental and Contractor shall

meet and confer to agree on a reasonable

reduction of the remainder of the Appendix 1

Expenses after giving effect to any other

adjustments provided in this Paragraph A(3)

to give effect to the reduction in

Contractor's Appendix 1 Expenses as a result

of such withdrawal.

B. Expenses and Reconciliation.

1. Passenger and Cargo Revenue-Related Expenses. With respect to

Scheduled Flights, passenger and cargo revenue-related

expenses, including without limitation commissions, food and

beverage costs, charges for fare or tariff filings, sales and

advertising costs, computer reservation system fees, credit

card discount fees, reservation costs, revenue accounting

costs, and OnePass participation costs, shall be incurred

directly by Continental.

 

 

 

Schedule 3-5

 

 

2. Fuel Reconciliation. If during any calendar month actual

Fuel-Related Expense for Scheduled Flights varies from the

assumed Fuel-Related Expense included in the First Adjusted

Block Hour Rates for each applicable aircraft type (based on

the Second Forecast Rate), then a reconciliation payment for

such calendar month shall be made in accordance with this

Paragraph B(2). The reconciliation set forth below in this

Paragraph B(2) shall be made separately for each Fuel-Related

Component Expense.

a. If Contractor's actual applicable Fuel-Related

Component Expense per gallon during a particular

month for Scheduled Flights is lower than the

Contract Fuel Rate for the applicable Fuel-Related

Component, and Contractor's actual number of gallons

consumed for such month for Scheduled Flights is

lower than the Second Forecast Rate, Contractor shall

reimburse Continental an amount equal to the sum of:

I. the quotient of (1) the product of (a) the

difference between the Contract Fuel Rate

for the applicable Fuel-Related Component

and such actual Fuel-Related Component

Expense per gallon multiplied by (b) the

Second Forecast Rate divided by (2) the Cost

Difference set forth on Appendix 23, plus

II. the quotient of (1) the product of (a) the

difference between the Second Forecast Rate

and such actual number of gallons consumed

and (b) such actual Fuel-Related Component

Expense per gallon divided by (2) the Cost

Difference set forth on Appendix 23.

The "Second Forecast Rate" for any particular month

is equal to the aggregate sum of the following

product for each aircraft type: (i) the Appendix 9

Rate Per Block Hour set forth in Appendix 9 for such

aircraft type based on the average scheduled stage

length per departure for such aircraft type as set

forth in the Final Monthly Schedule using the nearest

lower stage length set forth in Appendix 9 multiplied

by (ii) the number of scheduled block hours for such

aircraft type in the Final Monthly Schedule for such

month multiplied by (iii) the First Benchmark Factor.

b. If Contractor's actual applicable Fuel-Related

Component Expense per gallon during a particular

month for Scheduled Flights is lower than the

Contract Fuel Rate for the applicable Fuel-Related

Component, and Contractor's actual number of gallons

consumed for such month for Scheduled Flights is

higher than the Second Forecast Rate, then:

 

 

Schedule 3-6

 

 

I. Contractor shall reimburse Continental an

amount equal to the quotient of (1) the

product of (a) the difference between the

Contract Fuel Rate for the applicable

Fuel-Related Component and such actual

Fuel-Related Component Expense per gallon

multiplied by (b) the Second Forecast Rate

divided by (2) the Cost Difference set forth

on Appendix 23, and

II. Continental shall reimburse Contractor an

amount equal to the quotient of (1) the

product of (a) the difference between such

actual number of gallons consumed and the

Second Forecast Rate multiplied by (b) such

actual Fuel-Related Component Expense per

gallon divided by (2) the Cost Difference

set forth on Appendix 23.

c. If Contractor's actual applicable Fuel-Related

Component Expense per gallon during a particular

month for Scheduled Flights equals the Contract Fuel

Rate for the applicable Fuel-Related Component, then:

I. if Contractor's actual number of gallons

consumed for such month for Scheduled

Flights is lower than the Second Forecast

Rate, Contractor shall reimburse Continental

an amount equal to the quotient of (1) the

product of (a) the difference between the

Second Forecast Rate and such actual number

of gallons consumed multiplied by (b) the

Contract Fuel Rate for the applicable

Fuel-Related Component divided by (2) the

Cost Difference set forth on Appendix 23;

and

II. if Contractor's actual number of gallons

consumed for such month for Scheduled

Flights is greater than the Second Forecast

Rate, Continental shall reimburse Contractor

an amount equal to the quotient of (1) the

product of (a) the difference between such

actual number of gallons consumed and the

Second Forecast Rate multiplied by (b) the

Contract Fuel Rate for the applicable

Fuel-Related Component divided by (2) the

Cost Difference set forth on Appendix 23.

d. If Contractor's actual number of gallons consumed

during a particular month for Scheduled Flights

equals the Second Forecast Rate, and if Contractor's

actual applicable Fuel-Related Component Expense per

gallon during a particular month for Scheduled

Flights is lower than the Contract Fuel Rate for the

applicable Fuel-Related Component, Contractor shall

reimburse Continental an amount equal to the quotient

of (1) the product of (a) the difference between the

Contract Fuel Rate for the

 

 

 

 

Schedule 3-7

 

 

applicable Fuel-Related Component and such actual

Fuel-Related Component Expense per gallon multiplied

by (b) the Second Forecast Rate divided by (2) the

Cost Difference set forth on Appendix 23;

3. Certain Parts:

a. Contractor shall be reimbursed for the cost of all

engine life limited components when replaced so long

as, at the time of such replacement of the component,

the applicable aircraft is a Covered Aircraft.

b. If, with Continental's prior written consent,

Contractor amends the Flight Hour Agreement to cover

engine life limited components on Covered Aircraft,

then the Appendix 3 Block Hour Rates shall be

increased for the months following the effectiveness

of such amendment to reimburse Contractor for the

additional expense at cost (without any amount in

respect of the Cost Factor).

4. Administrative and Facilities Expenses.

a. Administrative Costs. The Appendix 3 Block Hour Rates

and the Appendix 1 Expenses include allocations of

administrative compensation costs. The parties hereto

have entered into the Administrative Support and

Information Services Provisioning Agreement, pursuant

to which Continental has agreed to provide Contractor

with certain administrative services. Pursuant to the

Administrative Support and Information Services

Provisioning Agreement, the parties hereto have

agreed to enter into a transition plan, which plan

will provide for the termination of the services

provided by Continental to Contractor thereunder over

a certain period of time. As a result, certain of

such services may be terminated during the term of

this Agreement. Contractor and Continental hereby

agree that in connection with the transition plan

Contractor and Continental shall meet and confer to

adjust the Appendix 3 Block Hour Rates and Appendix 1

Expenses to reasonably reflect any increases or

decreases in Contractor's administrative compensation

costs or other administrative costs and the costs

payable to Continental pursuant to the Administrative

Support and Information Services Provisioning

Agreement as a result of Contractor's having to

replace any of such terminated services.

 

 

Schedule 3-8

 

 

b. Facility and Ground Handling Costs. In consideration

of the services provided by Continental to Contractor

pursuant to Paragraph 1.1.1 of the Continental Ground

Handling Agreement during a particular month,

Contractor will pay Continental a fee equal to the

product of (i) the First Forecast Rate - Component 1

set forth on Appendix 8 for such month, multiplied by

(ii) the First Weighted Average Number for such

month. In addition, if at any time Contractor shall

relocate its headquarters, the parties agree to meet

and confer pursuant to Paragraph B(11) regarding such

event.

5. Flight Overfly Reconciliation.

a. With respect to Scheduled Flights, for any calendar

month Contractor's actual block hours flown per

departure for any particular aircraft type exceeds

the scheduled block hours per departure for such

aircraft type for such calendar month as set forth in

the Final Monthly Schedule, then the reconciliation

for such period shall include a payment for such

aircraft type by Continental to Contractor in an

amount equal to the product of (i) the First

Incremental Cost Rate set forth on Appendix 11 with

respect to such aircraft type and such month,

multiplied by (ii) the quotient of (1) the difference

between such actual number of block hours per

departure and such number of scheduled block hours

per departure divided by (2) such number of scheduled

block hours per departure, multiplied by (iii) the

number of scheduled block hours for such aircraft

type as set forth on the Final Monthly Schedule

multiplied by (iv) the First Benchmark Factor for

such calendar month.

b. With respect to Scheduled Flights, for any calendar

month the scheduled block hours per departure for any

particular aircraft type as set forth on the Final

Monthly Schedule exceeds Contractor's actual block

hours flown per departure for such aircraft type for

such calendar month, then the reconciliation for such

period shall include a payment for such aircraft type

by Contractor to Continental in an amount equal to

the product of (i) the Second Incremental Cost Rate,

set forth on Appendix 12 with respect to such

aircraft type and month, multiplied by (ii) the

quotient of (1) the difference between such number of

scheduled block hours per departure and such actual

number of block hours per departure, divided by (2)

such number of scheduled block hours per departure,

multiplied by (iii) the number of scheduled block

hours for such aircraft type as set forth on the

Final Monthly Schedule multiplied by (iv) the First

Benchmark Factor for such calendar month.

 

 

Schedule 3-9

 

 

6. Flight Cancellation Reconciliation.

a. If the product of the total number of Scheduled

Flights for a particular aircraft type during a

calendar month as set forth in the Final Monthly

Schedule multiplied by the First Cancellation Rate

exceeds the actual number of Uncontrollable

Cancellations of such aircraft type in such calendar

month (such excess number of flights of such aircraft

type being the "First Cancellation Number" for such

aircraft type), then the reconciliation for such

period shall include a payment by Continental to

Contractor in an amount equal to the product of (i)

the First Incremental Cost Rate, as set forth on

Appendix 11 for such aircraft type and such month,

multiplied by (ii) the First Cancellation Number for

such aircraft type, multiplied by (iii) the actual

number of block hours per departure for such aircraft

type for such calendar month.

b. If the actual number of Uncontrollable Cancellations

for a particular aircraft type during a calendar

month exceeds the product of the total number of

Scheduled Flights for such aircraft type during such

calendar month multiplied by the First Cancellation

Rate (such excess number of flights of such aircraft

type being the "Second Cancellation Number" for such

aircraft type), then the reconciliation for such

period shall include a payment by Contractor to

Continental in an amount equal to the product of (i)

the Second Incremental Cost Rate, as set forth on

Appendix 12 for such aircraft type and such month,

multiplied by (ii) the Second Cancellation Number for

such aircraft type, multiplied by (iii) the average

number of block hours per Scheduled Flight for such

aircraft type for such calendar month.

c. If the product of the total number of Scheduled

Flights for a particular aircraft type during a

calendar month multiplied by the Second Cancellation

Rate exceeds the actual number of Controllable

Cancellations for such aircraft type in such calendar

month (such excess number of flights of such aircraft

type being the "Third Cancellation Number" for such

aircraft type), then the reconciliation for such

period shall include a payment by Continental to

Contractor in an amount equal to the product of (i)

the Third Incremental Cost Rate multiplied by (ii)

the Third Cancellation Number for such aircraft type,

multiplied by (iii) the actual number of block hours

per flight for such aircraft type for such calendar

month.

The "Third Incremental Cost Rate" for a particular

aircraft type equals the Fourth Incremental Cost Rate

for such aircraft type plus the Fifth Incremental

Cost Rate for such aircraft type.

 

 

Schedule 3-10

 

 

The "Fourth Incremental Cost Rate" for a particular

aircraft type and for a particular month equals the

product of (i) the sum of (a) the applicable Appendix

13 Incremental Cost Rate set forth on Appendix 13 for

such aircraft type and month, minus the sum of (1)

the Appendix 14 Block Hour Rate set forth on Appendix

14 for such aircraft type and month plus (2) the

Appendix 5 Block Hour Rate set forth on Appendix 5

for such aircraft type and month, plus (b) the

Adjusted Appendix 14 Block Hour Rate for such

aircraft type and month plus (c) the Third Adjusted

Block Hour Rate for such aircraft type and month and

(ii) the First Benchmark Factor for such month.

The "Adjusted Appendix 14 Block Hour Rate" for a

particular aircraft type and a particular month is

obtained by multiplying the Appendix 14 Block Hour

Rate by the Appendix 7 Block Hours set forth on

Appendix 7 for such aircraft type and dividing such

product by the average scheduled block hours per

departure for such aircraft type as set forth on the

Final Monthly Schedule.

The "Fifth Incremental Cost Rate" is obtained by

allocating the Appendix 1 Expenses among the

different aircraft types by each type's allocable

share of statistics from the Final Monthly Schedule

based on the methodology set forth in Appendix 15,

and dividing such allocation to a specific aircraft

type by the scheduled block hours for such aircraft

type set forth in the Final Monthly Schedule, then

multiplying such quotient by the First Benchmark

Factor.

d. If the actual number of Controllable Cancellations

for a particular aircraft type in a calendar month

exceeds the product of the total number of Scheduled

Flights for such aircraft type during such calendar

month multiplied by the Second Cancellation Rate

(such excess number of flights of such aircraft type

being the "Fourth Cancellation Number" for such

aircraft type), then the reconciliation for such

period shall include a payment by Contractor to

Continental in an amount equal to the product of (i)

the Third Incremental Cost Rate for such aircraft

type multiplied by (ii) the Fourth Cancellation

Number, multiplied by (iii) the average number of

block hours per Scheduled Flight for such aircraft

type for such calendar month.

e. For purposes of this Paragraph B(6), for any month

during which a Labor Strike occurs, the Second

Cancellation Rate for such month shall be adjusted to

equal the difference between (a) the Second

Cancellation Rate for such month (before any such

adjustment)

 

 

 

 

Schedule 3-11

 

 

and (b) the product of (1) the quotient of (i) the

Second Cancellation Rate for such month (before any

such adjustment) divided by (ii) the number of days

in the particular month, multiplied by (2) the number

of days in such month (not to exceed the number of

days in the particular month) during which such Labor

Strike was occurring. For purposes of this Paragraph

B(6), for any month during which a Labor Strike

occurs, the First Cancellation Rate for such month

shall be adjusted to equal the difference between (a)

the First Cancellation Rate for such month (before

any such adjustment) and (b) the product of (1) the

quotient of (i) the First Cancellation Rate for such

month (before any such adjustment) divided by (ii)

30, multiplied by (2) the number of days in such

month (not to exceed 30 days) during which such Labor

Strike was occurring.

f. For all purposes of this Agreement, the term

Uncontrollable Cancellations shall include the

following:

I. After presentation of the Final Monthly

Schedule pursuant to Section 2.01(b) of the

Agreement, if Continental makes any changes

to such schedule that result in a

cancellation of a Scheduled Flight, then

such cancellation shall constitute an

Uncontrollable Cancellation.

II. If any proposed Scheduled Flight on a

planned flight schedule involves a flight to

a new airport which will be a Contractor

Airport, and Contractor experiences a delay

in preparing the required facilities and

making all necessary arrangements to

complete a flight to such airport, which

delay either (i) is caused by the

Environmental Protection Agency, airport or

any other governmental authority, or (ii)

occurs after Contractor received less than

90 days' advance notice of such Scheduled

Flight to a new airport and used its

commercially reasonable efforts to prepare

the required facilities and make all

necessary arrangements (all in accordance

with the Master Facility and Ground Handling

Agreement), and in either case such

Scheduled Flight is cancelled, then such

cancellation shall constitute an

Uncontrollable Cancellation.

g. Subject to the provisions of Paragraph B(6)(f),

Contractor hereby agrees that each cancellation of a

Scheduled Flight shall be designated as either a

Controllable Cancellation or an Uncontrollable

Cancellation on a basis consistent with Contractor's

historical experience, including specifically the

methodology used to create the data set forth in

Appendix 2.

 

 

 

Schedule 3-12

 

 

7. Insurance Costs.

a. If Contractor elects not to participate in a combined

placement for a particular insurance policy,

Contractor shall not be reimbursed or otherwise

compensated (through adjustments to Block Hour Rates,

reconciliation amounts, amounts in respect of the

Cost Factor or otherwise) for any Excess Insurance

Costs with respect to such policy.

b. If Continental elects not to participate in a

combined placement for a particular insurance policy,

Continental shall pay to Contractor an amount equal

to the Excess Insurance Costs with respect to such

policy, up to the Average Peer Group Rates.

Contractor shall not be reimbursed or otherwise

compensated (through adjustments to Block Hour Rates

or otherwise) to the extent that its insurance costs

exceed the Average Peer Group Rates.

c. Contractor will pay to Continental its proportionate

share of all combined-placement insurance premiums

not later than the date that Continental is required

under the terms of the applicable policy to pay the

policy premiums. The cost allocation for such

combined placements shall be as follows:

I. Hull and War Risk Coverage Rate. To be

determined each year; a dollar amount equal

to the combined placement program's

composite whole rate as set forth in the

current group policy, multiplied by

Contractor's average fleet value for the

policy period, as determined by recognized

standard industry methods of valuation

consistent with prior practice.

II. Liability Rates. To be determined each year;

an amount equal to the combined placement

program's composite liability rate as set

forth in the current group policy,

multiplied by revenue passenger miles, as

determined by recognized standard industry

methods consistent with prior practice.

III. Miscellaneous Insurance (Property, Casualty

and D&O, etc.) Rates. The parties agree to

meet annually to determine the cost

allocation for all other insurance coverage

based on Contractor's portion of the "total

exposure base" for such coverage, as

determined by recognized standard industry

methods consistent with prior practice.

 

 

Schedule 3-13

 

 

d. In the Performance Period subsequent to the next

combined policy insurance renewal following a Major

Loss caused by Continental (or, if such a Major Loss

occurs so close to the combined policy insurance

renewal date that the effects are not reflected in

the next combined policy insurance renewal premium

amount, then in the Performance Period subsequent to

the renewal in which the effects are first included),

Continental and Contractor agree to determine the

amount of increase in the combined policy insurance

premiums, if any, to be attributed to such Major Loss

(as opposed to a general increase in the premiums) as

follows:

I. The parties will compare the combined policy

premium increase to premium increases

experienced by the five Major Carriers

closest to Continental in aggregate revenue

passenger miles at the time of such

determination, excluding any Major Carrier

that experienced a Major Loss within the

previous three years.

II. The average annual increase in insurance

costs for such Major Carriers shall be

calculated by (i) subtracting the expiring

rates of each such Major Carrier from its

new rates, (ii) adding the total of such

differences and (iii) dividing the total by

the number of Major Carriers whose rates

were included in the calculation.

III. The amount that the increase in the combined

premiums for Continental and Contractor

exceeds the average annual increase in

insurance costs calculated pursuant to

clause (II) above shall be deemed to be the

portion of the increase for such year due to

such Major Loss (the "Continental Premium

Surcharge Amount").

IV. The Continental Premium Surcharge Amount for

the subsequent two years shall be

{CONFIDENTIAL MATERIAL OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT} and {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT}, respectively, of the Continental

Premium Surcharge Amount for the first year,

and shall be {CONFIDENTIAL MATERIAL OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT} thereafter.

 

 

Schedule 3-14

 

 

V. The Continental Premium Surcharge Amount

shall be borne solely by Continental and

that amount shall be deducted from the

aggregate premium amounts included in all

cost-sharing calculations between

Continental and Contractor.

e. In the Performance Period subsequent to the next

combined policy insurance renewal following a Major

Loss caused by Contractor (or, if such a Major Loss

occurs so close to the combined policy insurance

renewal date that the effects are not reflected in

the next combined policy insurance renewal premium

amount, then in the Performance Period subsequent to

the renewal in which the effects are first included),

Continental and Contractor agree to determine the

amount of increase in the combined policy insurance

premiums, if any, to be attributed to such Major Loss

(as opposed to a general increase in the premiums) as

follows:

I. The parties will compare the combined policy

premium increase to premium increases

experienced by the five regional airlines

with annual revenues closest to those of

Contractor, excluding any such regional

airline that experienced a Major Loss within

the previous three years.

II. The average annual increase in insurance

costs for such regional airlines shall be

calculated by (i) subtracting the expiring

rates of each such regional airlines from

its new rates, (ii) adding the total of such

differences and (iii) dividing the total by

the number of such regional airlines whose

rates were included in the calculation.

III. The parties will also calculate the maximum

permitted increase in annual premiums which

would be permitted if the policy coverage

was limited to the insurance limits required

to be maintained by Contractor (the

"Contractor Premium Surcharge Limit").

IV. The amount that the Contractor Premium

Surcharge Limit exceeds the average annual

increase in insurance costs calculated

pursuant to clause (II) above shall be

deemed to be the portion of the increase for

such year due to such Major Loss and payable

by Contractor (the "Contractor Premium

Surcharge Amount").

 

 

 

 

Schedule 3-15

 

 

V. The amount that the increase in the combined

premiums for Continental and Contractor

exceeds the sum of (x) the average annual

increase in insurance costs calculated

pursuant to clause (II) above and (y) the

Contractor Premium Surcharge Amount shall be

deemed to be the portion of the increase for

such year due to such Major Loss and payable

by Continental (the "Contractor Premium

Surcharge Overflow Amount").

VI. The Contractor Premium Surcharge Amount for

the subsequent two years shall be

{CONFIDENTIAL MATERIAL OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT} and {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT}, respectively, of the Contractor

Premium Surcharge Amount for the first year,

and shall be {CONFIDENTIAL MATERIAL OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO A REQUEST

FOR CONFIDENTIAL TREATMENT} thereafter.

VII. The Contractor Premium Surcharge Overflow

Amount for the subsequent two years shall be

{CONFIDENTIAL MATERIAL OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT} and {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT}, respectively, of the Contractor

Premium Surcharge Overflow Amount for the

first year, and shall be {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT} thereafter.

 

 

 

Schedule 3-16

 

 

VIII. The Contractor Premium Surcharge Amount

shall be borne solely by Contractor and that

amount shall be deducted from the aggregate

premium amounts included in all cost-sharing

calculations between Continental and

Contractor.

IX. The Contractor Premium Surcharge Overflow

Amount shall be borne solely by Continental

and that amount shall be deducted from the

aggregate premium amounts included in all

cost-sharing calculations between

Continental and Contractor.

f. Contractor shall be reimbursed in full for the

aggregate of all insurance deductibles paid in any

calendar year up to an amount equal to the historical

average of such deductibles paid by Contractor during

the last five full calendar years for which such

calculations are available as of such date of

determination.

8. Volume Reconciliation.

a. Hotel Volume Reconciliation. The following expenses

incurred in connection with Scheduled Flights as

allocated pursuant to Section 3.05(a) shall be

reconciled as follows:

I. Pilot Contract Hotel Stays. Included in the

Appendix 3 Block Hour Rates is an assumed

cost associated with an assumed number of

Contract Hotel Stays for pilots per

scheduled block hour set forth in the Final

Monthly Schedule. If the actual number of

Contract Hotel Stays for pilots per

scheduled block hour set forth in the Final

Monthly Schedule for a particular month

exceeds the number of assumed Contract Hotel

Stays for pilots per scheduled block hour

for such month as set forth in Appendix 16a,

then Continental shall pay an amount to

Contractor equal to the quotient of (a) the

product of (i) the difference between (1)

such actual number of Contract Hotel Stays

for pilots per scheduled block hour during

such month and (2) such assumed number of

Contract Hotel Stays for pilots per

scheduled block hour during such month,

multiplied by (ii) the number of scheduled

block hours for such month multiplied by

(iii) the assumed cost per Contract Hotel

Stay for pilots for such month as set forth

in Appendix 16a divided by (b) the Cost

Difference set forth on Appendix 23. If the

actual number of Contract Hotel Stays for

pilots per scheduled block hour set forth in

the Final Monthly Schedule for a particular

month is less than the number of assumed

Contract Hotel Stays for pilots per

scheduled block hour for such month as set

forth in Appendix 16a, then Contractor shall

pay an amount to

 

 

 

Schedule 3-17

 

 

Continental equal to the quotient of (a) the

product of (i) the difference between (1)

such assumed number of Contract Hotel Stays

for pilots per scheduled block hour during

such month and (2) such actual number of

Contract Hotel Stays for pilots per

scheduled block hour during such month,

multiplied by (ii) the number of scheduled

block hours for such month, multiplied by

(iii) the assumed cost per Contract Hotel

Stay for pilots for such month as set forth

in Appendix 16a divided by (b) the Cost

Difference set forth on Appendix 23.

II. Flight Attendant Contract Hotel Stays.

Included in the Appendix 3 Block Hour Rates

is an assumed cost associated with an

assumed number of Contract Hotel Stays for

flight attendants per scheduled block hour

set forth in the Final Monthly Schedule. If

the actual number of Contract Hotel Stays

for flight attendants per scheduled block

hour set forth in the Final Monthly Schedule

for a particular month exceeds the number of

assumed Contract Hotel Stays for flight

attendants per scheduled block hour for such

month as set forth in Appendix 16b, then

Continental shall pay an amount to

Contractor equal to the quotient of (a) the

product of (i) the difference between (1)

such actual number of Contract Hotel Stays

for flight attendants per scheduled block

hour during such month and (2) such assumed

number of Contract Hotel Stays for flight

attendants per scheduled block hour during

such month, multiplied by (ii) the number of

scheduled block hours for such month

multiplied by (iii) the assumed cost per

Contract Hotel Stay for flight attendants

for such month as set forth in Appendix 16b

divided by (b) the Cost Difference set forth

on Appendix 23. If the actual number of

Contract Hotel Stays for flight attendants

per scheduled block hour set forth in the

Final Monthly Schedule for a particular

month is less than the number of assumed

Contract Hotel Stays for flight attendants

per scheduled block hour for such month as

set forth in Appendix 16b, then Contractor

shall pay an amount to Continental equal to

the quotient of (a) the product of (i) the

difference between (1) such assumed number

of Contract Hotel Stays for flight

attendants per scheduled block hour during

such month and (2) such actual number of

Contract Hotel Stays for flight attendants

per scheduled block hour during such month,

multiplied by (ii) the number of scheduled

block hours for such month, multiplied by

(iii) the assumed cost per Contract Hotel

Stay for flight attendants for such month as

 

 

 

 

Schedule 3-18

 

 

set forth in Appendix 16b divided by (b) the

Cost Difference set forth on Appendix 23.

b. Pilot Training Volume Reconciliation. The following

expenses incurred in connection with Scheduled

Flights, as allocated pursuant to Section 3.05(a),

shall be reconciled as follows:

I. New Hire Training Cycles. Included in the

Appendix 1 Expenses is an assumed cost

associated with an assumed number of Pilot

New Hire Training Cycles for each aircraft

type. If the actual number of Pilot New Hire

Training Cycles for a particular month and a

particular aircraft type exceeds the number

of assumed Pilot New Hire Training Cycles

for such month and aircraft type as set

forth in Appendix 17b, then Continental

shall pay an amount to Contractor equal to

the quotient of (a) the product of (i) the

difference between (1) such actual number of

Pilot New Hire Training Cycles during such

month for such aircraft type and (2) such

assumed number of Pilot New Hire Training

Cycles during such month for such aircraft

type, multiplied by (ii) the assumed cost of

each Pilot New Hire Training Cycle for such

month and such aircraft type as set forth in

Appendix 17a divided by (b) the Cost

Difference set forth on Appendix 23. If the

actual number of Pilot New Hire Training

Cycles for a particular month and aircraft

type is less than the assumed number of

Pilot New Hire Training Cycles for such

month and aircraft type as set forth in

Appendix 17b, then Contractor shall pay an

amount to Continental equal to the quotient

of (a) the product of (i) the difference

between (1) such assumed number of Pilot New

Hire Training Cycles during such month for

such aircraft type and (2) such actual

number of Pilot New Hire Training Cycles

during such month for such aircraft type,

multiplied by (ii) the assumed cost of each

Pilot New Hire Training Cycle for such month

and such aircraft type as set forth in

Appendix 17a divided by (b) the Cost

Difference set forth on Appendix 23.

II. Pilot Transitional Training Cycles. Included

in the Appendix 1 Expenses is an assumed

cost associated with an assumed number of

Pilot Transitional Training Cycles for each

aircraft type. If the actual number of Pilot

Transitional Training Cycles for a

particular month and a particular aircraft

type exceeds the number of assumed Pilot

Transitional Training Cycles for such month

and aircraft type as set forth in Appendix

17c, then Continental

 

 

 

 

 

Schedule 3-19

 

 

shall pay an amount to Contractor equal to

the quotient of (a) the product of (i) the

difference between (1) such actual number of

Pilot Transitional Training Cycles during

such month for such aircraft type and (2)

such assumed number of Pilot Transitional

Training Cycles during such month for such

aircraft type, multiplied by (ii) the

assumed cost of each Pilot Transitional

Training Cycle for such month and aircraft

type as set forth in Appendix 17a divided by

(b) the Cost Difference set forth on

Appendix 23. If the actual number of Pilot

Transitional Training Cycles for a

particular month and aircraft type is less

than the number of assumed Pilot

Transitional Training Cycles for such month

and aircraft type as set forth in Appendix

17c, then Contractor shall pay an amount to

Continental equal to the quotient of (a) the

product of (i) the difference between (1)

such assumed number of Pilot Transitional

Training Cycles during such month for such

aircraft type and (2) such actual number of

Pilot Transitional Training Cycles during

such month for such aircraft type,

multiplied by (ii) the assumed cost of each

Pilot Transitional Training Cycle for such

month and aircraft type as set forth in

Appendix 17a divided by (b) the Cost

Difference set forth on Appendix 23.

III. Pilot Upgrade Training Cycles. Included in

the Appendix 1 Expenses is an assumed cost

associated with an assumed number of Pilot

Upgrade Training Cycles for each aircraft

type. If the actual number of Pilot Upgrade

Training Cycles for a particular month and a

particular aircraft type exceeds the number

of assumed Pilot Upgrade Training Cycles for

such month and such aircraft type as set

forth in Appendix 17d, then Continental

shall pay an amount to Contractor equal to

the quotient of (a) the product of (i) the

difference between (1) such actual number of

Pilot Upgrade Training Cycles during such

month for such aircraft type and (2) such

assumed number of Pilot Upgrade Training

Cycles during such month for such aircraft

type, multiplied by (ii) the assumed cost of

each Pilot Upgrade Training Cycle for such

month and such aircraft type as set forth in

Appendix 17a divided by (b) the Cost

Difference set forth on Appendix 23. If the

actual number of Pilot Upgrade Training

Cycles for a particular month and a

particular aircraft type is less than the

number of assumed Pilot Upgrade Training

Cycles for such month and such aircraft type

as set forth in Appendix 17d, then

Contractor shall pay an amount to

Continental equal to the quotient of (a) the

 

 

 

 

Schedule 3-20

 

 

 

 

 

product of (i) the difference between (1)

such assumed number of Pilot Upgrade

Training Cycles during such month for such

aircraft type and (2) such actual number of

Pilot Upgrade Training Cycles during such

month for such aircraft type, multiplied by

(ii) the assumed cost of each Pilot Upgrade

Training Cycles for such month and aircraft

type as set forth in Appendix 17a divided by

(b) the Cost Difference set forth on

Appendix 23.

IV. Pilot Recurrent Flight Training Cycles.

Included in the Appendix 1 Expenses is an

assumed cost associated with an assumed

number of Pilot Recurrent Flight Training

Cycles for each aircraft type. If the actual

number of Pilot Recurrent Flight Training

Cycles for a particular month and a

particular aircraft type exceeds the number

of assumed Pilot Recurrent Flight Training

Cycles for such month and such aircraft type

and as set forth in Appendix 17e, then

Continental shall pay an amount to

Contractor equal to the quotient of (a) the

product of (i) the difference between (1)

such actual number of Pilot Recurrent Flight

Training Cycles during such month and such

aircraft type and (2) such assumed number of

Pilot Recurrent Flight Training Cycles

during such month for such aircraft type,

multiplied by (ii) the assumed cost of each

Pilot Recurrent Flight Training Cycle for

such month and such aircraft type as set

forth in Appendix 17a divided by (b) the

Cost Difference set forth on Appendix 23. If

the actual number of Pilot Recurrent Flight

Training Cycles for a particular month and a

particular aircraft type is less than the

number of assumed Pilot Recurrent Flight

Training Cycles for such month and such

aircraft type as set forth in Appendix 17e,

then Contractor shall pay an amount to

Continental equal to the quotient of (a) the

product of (i) the difference between (1)

such assumed number of Pilot Recurrent

Flight Training Cycles during such month for

such aircraft type and (2) such actual

number of Pilot Recurrent Flight Training

Cycles during such month for such aircraft

type, multiplied by (ii) the assumed cost of

each Pilot Recurrent Flight Training Cycles

for such month and such aircraft type as set

forth in Appendix 17a divided by (b) the

Cost Difference set forth on Appendix 23.

V. Pilot Recurrent Ground Training Cycles.

Included in the Appendix 1 Expenses is an

assumed cost associated with an assumed

number of Pilot Recurrent Ground Training

Cycles for each aircraft type. If the actual

number of Pilot

 

Schedule 3-21

 

 

Recurrent Ground Training Cycles for a

particular month and a particular aircraft

type exceeds the number of assumed Pilot

Recurrent Ground Training Cycles for such

month and such aircraft type and as set

forth in Appendix 17f, then Continental

shall pay an amount to Contractor equal to

the quotient of (a) the product of (i) the

difference between (1) such actual number of

Pilot Recurrent Ground Training Cycles

during such month and such aircraft type and

(2) such assumed number of Pilot Recurrent

Ground Training Cycles during such month for

such aircraft type, multiplied by (ii) the

assumed cost of each Pilot Recurrent Ground

Training Cycle for such month and such

aircraft type as set forth in Appendix 17a

divided by (b) the Cost Difference set forth

on Appendix 23. If the actual number of

Pilot Recurrent Ground Training Cycles for a

particular month and a particular aircraft

type is less than the number of assumed

Pilot Recurrent Ground Training Cycles for

such month and such aircraft type as set

forth in Appendix 17f, then Contractor shall

pay an amount to Continental equal to the

quotient of (a) the product of (i) the

difference between (1) such assumed number

of Pilot Recurrent Ground Training Cycles

during such month for such aircraft type and

(2) such actual number of Pilot Recurrent

Ground Training Cycles during such month for

such aircraft type, multiplied by (ii) the

assumed cost of each Pilot Recurrent Ground

Training Cycles for such month and such

aircraft type as set forth in Appendix 17a

divided by (b) the Cost Difference set forth

on Appendix 23.

 a. Pilot and Flight Attendant Per Diem Reconciliation.

I. Pilot Per Diem. Included in the Appendix 3

Block Hour Rates is an assumed cost

associated with an assumed number of Pilot

Per Diem Hours per scheduled block hour. If

the actual number of Pilot Per Diem Hours

per scheduled block hour for a particular

month exceeds the number of assumed Pilot

Per Diem Hours per scheduled block hour in

such month as set forth in Appendix 18a,

then Continental shall pay an amount to

Contractor equal to the quotient of (a) the

product of (i) the difference between (1)

such actual number of Pilot Per Diem Hours

per scheduled block hour during such month

and (2) such assumed number of Pilot Per

Diem Hours per scheduled block hour during

such month, multiplied by (ii) the number of

scheduled block hours for such month,

multiplied by (iii) the assumed

 

 

 

 

Schedule 3-22

 

 

amount payable for each Pilot Per Diem Hour

for such month as set forth in Appendix 18a

divided by (b) the Cost Difference set forth

on Appendix 23. If the actual number of

Pilot Per Diem Hours per scheduled block

hour for a particular month is less than the

number of assumed Pilot Per Diem Hours per

scheduled block hour in such month as set

forth in Appendix 18a, then Contractor shall

pay an amount to Continental equal to the

quotient of (a) the product of (i) the

difference between (1) such assumed number

of Pilot Per Diem Hours per scheduled block

hour during such month and (2) such actual

number of Pilot Per Diem Hours per scheduled

block hour during such month, multiplied by

(ii) the number of scheduled block hours for

such month, multiplied by (iii) the assumed

amount payable for each Pilot Per Diem Hour

for such month as set forth in Appendix 18a

divided by (b) the Cost Difference set forth

on Appendix 23.

II. Flight Attendants Per Diem. Included in the

Appendix 3 Block Hour Rates is an assumed

cost associated with an assumed number of

Flight Attendant Per Diem Hours per

scheduled block hour. If the actual number

of Flight Attendant Per Diem Hours per

scheduled block hour for a particular month

exceeds the number of assumed Flight

Attendant Per Diem Hours per scheduled block

hour in such month as set forth in Appendix

18b, then Continental shall pay an amount to

Contractor equal to the quotient of (a) the

product of (i) the difference between (1)

such actual number of Flight Attendant Per

Diem Hours per scheduled block hour during

such month and (2) such assumed number of

Flight Attendant Per Diem Hours per

scheduled block hour during such month,

multiplied by (ii) the number of scheduled

block hours for such month, multiplied by

(iii) the assumed amount payable for each

Flight Attendant Per Diem Hour for such

month as set forth in Appendix 18b divided

by (b) the Cost Difference set forth on

Appendix 23. If the actual number of Flight

Attendant Per Diem Hours per scheduled block

hour for a particular month is less than the

number of assumed Flight Attendant Per Diem

Hours per scheduled block hour in such month

as set forth in Appendix 18b, then

Contractor shall pay an amount to

Continental equal to the quotient of (a) the

product of (i) the difference between (1)

such assumed number of Flight Attendant Per

Diem Hours per scheduled block hour during

such month and (2) such actual number of

Flight Attendant Per Diem Hours per

 

 

 

Schedule 3-23

 

 

scheduled block hour during such month,

multiplied by (ii) the number of scheduled

block hours for such month, multiplied by

(iii) the assumed amount payable for each

Flight Attendant Per Diem Hour for such

month as set forth in Appendix 18b divided

by (b) the Cost Difference set forth on

Appendix 23.

d. Pilot Soft Time Reconciliation. Included in the

Appendix 3 Block Hour Rates is an assumed cost

associated with an assumed number of Pilot Flight

Paid Hours per scheduled Pilot Block Hour. If the

actual number of Pilot Flight Paid Hours per

scheduled Pilot Block Hour for a particular month

exceeds the number of assumed Pilot Flight Paid Hours

per scheduled Pilot Block Hour in such month as set

forth in Appendix 19, then Continental shall pay an

amount to Contractor equal to the quotient of (a) the

product of (i) the difference between (1) such actual

number of Pilot Flight Paid Hours per scheduled Pilot

Block Hour during such month and (2) such assumed

number of Pilot Flight Paid Hours per scheduled Pilot

Block Hour during such month, multiplied by (ii) the

number of scheduled Pilot Block Hours for such month,

multiplied by (iii) the assumed amount payable for

each Pilot Flight Paid Hour as set forth in Appendix

19, divided by (b) the Cost Difference set forth in

Appendix 23. If the actual number of Pilot Flight

Paid Hours per scheduled Pilot Block Hour for a

particular month is less than the number of assumed

Pilot Flight Paid Hours per scheduled Pilot Block

Hour in such month as set forth in Appendix 19, then

Contractor shall pay an amount to Continental equal

to the quotient of (a) the product of (i) the

difference between (1) such assumed number of Pilot

Flight Paid Hours per scheduled Pilot Block Hour

during such month and (2) such actual number of Pilot

Flight Paid Hours per scheduled Pilot Block Hour

during such month, multiplied by (ii) the number of

scheduled Pilot Block Hours for such month,

multiplied by (iii) the assumed amount payable for

each Pilot Flight Paid Hour as set forth in Appendix

19, divided by (b) the Cost Difference set forth in

Appendix 23. The reconciliation described in this

Paragraph 8(d) will cease upon the earlier to occur

of (1) Contractor hiring a New Contractor Pilot and

(2) Contractor no longer employing any Continental

Pilots.

e. Pilot Seniority Reconciliation. Included in the

Appendix 1 Expenses and the Appendix 3 Block Hour

Rates is an assumed cost associated with an assumed

number of Continental Pilots continuing to be

employed by Contractor. If the aggregate number of

Continental Pilots whose employment is actually

terminated by Contractor in a particular month

exceeds the aggregate number of Continental Pilots

whose employment by Contractor is assumed to

 

 

 

Schedule 3-24

 

 

be terminated in such particular month as set forth

in Appendix 20, then Contractor shall pay an amount

to Continental equal to the quotient of (a) the

product of (i) the difference between (1) such

aggregate number of Continental Pilots whose

employment is actually terminated by Contractor

during such month and (2) such aggregate number of

Continental Pilots whose employment is assumed to be

terminated by Contractor during such month,

multiplied by (ii) the assumed amount payable per

Continental Pilot being terminated by Contractor as

set forth in Appendix 20, divided by (b) the Cost

Difference set forth on Appendix 23. If the aggregate

number of Continental Pilots whose employment is

assumed to be terminated by Contractor for a

particular month as set forth in Appendix 20 exceeds

the aggregate number of Continental Pilots whose

employment is actually terminated by Contractor

during such month, then Continental shall pay an

amount to Contractor equal to the quotient of (a) the

product of (i) the difference between (1) such

aggregate number of Continental Pilots whose

employment is assumed to be terminated by Contractor

during such month and (2) such aggregate number of

Continental Pilots whose employment is actually

terminated by Contractor during such month,

multiplied by (ii) the assumed amount payable per

Continental Pilot being terminated by Contractor as

set forth in Appendix 20, divided by (b) the Cost

Difference set forth on Appendix 23. The

reconciliation described in this Paragraph 8(e) will

cease when Contractor no longer employs any

Continental Pilots.

f. Airport Agent Volume Reconciliation. Included in the

Appendix 1 Expenses is an assumed cost associated

with an assumed number of Agent Paid Hours. If the

lower of the Staffing Model Agent Paid Hours or

actual number of Agent Paid Hours for a particular

month exceeds the assumed number of Agent Paid Hours

as set forth in Appendix 21, then Continental shall

pay an amount to Contractor equal to the quotient of

(a) the product of (i) the difference between (1) the

lower of such Staffing Model Agent Paid Hours or such

actual number of Agent Paid Hours during such month

and (2) such assumed Agent Paid Hours during such

month, multiplied by (ii) the assumed amount payable

per Agent Paid Hour as set forth in Appendix 21,

multiplied by (iii) 1.1681, divided by (b) the Cost

Difference forth on Appendix 23. If the lower of the

Staffing Model Agent Paid Hours or actual number of

Agent Paid Hours for a particular month is less than

the assumed number of Agent Paid Hours as set forth

in Appendix 21, then Contractor shall pay an amount

to Continental equal to the quotient of (a) the

product of (i) the difference between (1) such

assumed Agent Paid Hours during such month and (2)

the lower of such

 

 

 

 

 

Schedule 3-25

 

 

Staffing Model Agent Paid Hours or such actual number

of Agent Paid Hours during such month, multiplied by

(ii) the assumed amount payable per Agent Paid Hour

as set forth in Appendix 21, multiplied by (iii)

1.1681, divided by (b) the Cost Difference set forth

on Appendix 23.

9. Reconciliation of Other Expenses.

 

a. Except to the extent that payments are made by

Contractor to Continental pursuant to Paragraph

B(6)(e) in respect of any of the following expenses

for any Controllable Cancellation resulting solely

from any Labor Strike or from a non-carrier specific

airworthiness directive or other non-carrier specific

regulatory order, the following expenses incurred in

connection with Scheduled Flights, as allocated

pursuant to Section 3.05(a), shall be reconciled

monthly (except as specifically set forth below) to

actual costs: (i) all payments made by Contractor

under any Covered Aircraft Sublease, except for any

Supplemental Rent (as defined therein) payable as a

result of any action or inaction by Contractor, other

than actions taken or not taken specifically at the

direction of Continental; (ii) all payments made by

Contractor for Incremental Passenger-Related

Facilities; (iii) all employer-matching payments made

by Contractor pursuant to any Contractor 401(K)

(provided that, upon Continental owning less than 50%

of the voting power of Holdings (the date upon which

such event occurs being referred to herein as the

"Distribution Date"), Continental shall not be

required to reconcile any such payments made by

Contractor to the extent that such payments are

attributable to a change in the 401(K) or the

company-match on or after the Distribution Date);

(iv) property and ad valorem taxes, other similar

taxes imposed specifically on property or assets,

sales and use taxes and franchise taxes (but

excluding all other taxes, such as income, profits,

withholding, employment, social security, disability,

occupation, severance, excise and fuel taxes); (v)

subject to Paragraph B(7) of this Schedule 3,

passenger liability, hull and war risk insurance

costs; (vi) ARINC/SITA network expenses; (vii)

landing fees; (viii) glycol, de-icing and snow

removal costs; (ix) payments by Contractor to

employees in respect of any profit-sharing and

on-time performance plans of Contractor existing on

or prior to the Distribution Date (provided that

Continental shall not be required to reconcile actual

profit-sharing and on-time performance expenses to

the extent that such additional expenses are

attributable to a change in target benchmarks or

payment rates under such plans on or after the

Distribution Date, and provided further that

reconciliation for profit-sharing plans shall occur

on a year-to-date basis at the end of each calendar

month); (x) administrative fees paid to Continental

under the Administrative Support and Information

Services Provisioning Agreement; (xi)

 

 

 

 

Schedule 3-26

 

 

amounts paid for the provision of ground handling

services pursuant to Paragraph B(4)(b); (xii)

payments made by Contractor for "power-by-the-hour"

services under the Flight Hour Agreement; (xiii) all

expenses of Contractor associated with Extraordinary

Hotel Stays during the Performance Period (provided

that reconciliation for this item (xiii) shall occur

quarterly at the end of each Performance Period);

(xiv) depreciation expense (until December 31, 2004),

excluding any expenditure not specifically approved

by Continental or otherwise contemplated by a capital

expenditure plan agreed to by Contractor and

Continental; and (xv) third-party security and

screening expense at Contractor Airports

(collectively, the "Reconciled Expenses"). The Base

Compensation includes allocations of the Reconciled

Expenses as set forth in Appendix 22 and with respect

to certain Reconciled Expenses, as further provided

in Paragraph B(9)(f) below. If in any month the

Contractor's actual Reconciled Expenses, in the

aggregate, exceed the amount of Reconciled Expenses

included in the Base Compensation in accordance with

Appendix 22 and with respect to certain Reconciled

Expenses as further provided in Paragraph B(9)(f)

below for such month, Continental shall pay to

Contractor an amount equal to the quotient of (i)

such difference divided by (ii) the Cost Difference

set forth on Appendix 23. If in any month the amount

of Reconciled Expenses included in the Base

Compensation in accordance with Appendix 22 and with

respect to certain Reconciled Expenses as further

provided in Paragraph B(9)(f) below for such month

exceeds Contractor's actual Reconciled Expenses,

Contractor shall pay to Continental an amount equal

to the quotient of (i) such difference and (ii) the

Cost Difference set forth on Appendix 23.

b. Reconciliation amounts will include the payment to

Continental, if any, provided in Section 4.05(a) of

the Agreement.

c. Incentive payments are paid as reconciliation

amounts.

d. At any time that Contractor or Continental reasonably

believes the Prevailing Margin for the current or

next Performance Period will be greater than 11.5% or

less than 8.5%, then Continental and Contractor will

meet and will adjust the Base Compensation for such

Performance Period; provided that in no event will

such calculation reduce the Base Compensation below

an amount necessary so as to achieve an 11.5%

Prevailing Margin for such Performance Period or

increase Base Compensation above the rate necessary

so as to achieve an 8.5% Prevailing Margin for such

Performance Period. At the end of each Performance

Period in respect of which adjustments were in

effect, a calculation shall be

 

 

 

 

Schedule 3-27

 

 

made by Contractor not later than the sixth Business

Day of the immediately succeeding month to calculate

the Prevailing Margin for the previous Performance

Period. For adjustments made as a result of a

Prevailing Margin expected to exceed 11.5%: (i) if

the actual resulting Prevailing Margin for such

Performance Period was greater than 11.5%, then the

Base Compensation for such Performance Period will be

further decreased to the extent required to lower the

actual Prevailing Margin for such Performance Period

to 11.5% and Contractor shall make a payment to

Continental in an amount equal to such reduction in

Base Compensation within five Business Days of such

calculation and (ii) if the actual resulting

Prevailing Margin for such Performance Period was

less than 11.5%, then the Base Compensation for such

Performance Period will be increased (but only up to

the Base Compensation in effect prior to its

adjustment pursuant to the first sentence of this

Paragraph B(9)(d) of Schedule 3) to the extent

required to raise the actual Prevailing Margin for

such Performance Period to 11.5% and Continental

shall make a payment to Contractor in an amount equal

to such increase in Base Compensation within five

Business Days of such calculation. For adjustments

made as a result of a Prevailing Margin expected to

be less than 8.5%: (i) if the actual resulting

Prevailing Margin for such Performance Period was

less than 8.5%, then the Base Compensation for such

Performance Period will be further increased to the

extent required to raise the actual Prevailing Margin

for such Performance Period to 8.5% and Continental

shall make a payment to Contractor in an amount equal

to such increase in Base Compensation within five

Business Days of such calculation and (ii) if the

Prevailing Margin for such Performance Period was

greater than 8.5%, then the Base Compensation for

such Performance Period will be decreased (but only

down to the Base Compensation in effect prior to its

adjustment pursuant to the first sentence of this

Paragraph B(9)(d) of Schedule 3) to the extent

required to lower the actual Prevailing Margin for

such Performance Period to 8.5% and Contractor shall

make a payment to Continental in an amount equal to

such reduction in Base Compensation within five

Business Days of such calculation.

e. If any of the provisions set forth herein adjust the

Base Compensation or the Appendix 1 Expenses,

Continental will, within a reasonable period of time

following such adjustment, deliver to Contractor

revised Appendices, to the extent applicable, to this

Schedule 3 to reflect such adjustment; provided that

Contractor shall cooperate with Continental in

providing to Continental any information required to

prepare such Appendices.

 

 

 

 

Schedule 3-28

 

 

f. The Base Compensation, Flight Overfly Reconciliation,

and Flight Cancellation Reconciliation for any

particular month includes allocations of the

following Reconciled Expenses as provided below:

I. The amount of assumed employer-matching

payments referred to in clause (iii) of the

second sentence of Paragraph B(9)(a)

included in the Base Compensation for any

particular month will be equal to the

product of (1) the sum of (a) the aggregate

sum of the following products for each

aircraft type set forth in the Final Monthly

Schedule: (i) the First Implied Rate for

such month for each aircraft type set forth

on Appendix 22a, multiplied by (ii) the

scheduled block hours for such month and

aircraft type as set forth on the Final

Monthly Schedule multiplied by the First

Benchmark Factor for such month, (b) the

aggregate sum of the following products for

each aircraft type set forth in the Final

Monthly Schedule: (i) the Second Implied

Rate for such month for each aircraft type

set forth on Appendix 22a, multiplied by

(ii) the Appendix 7 Block Hours for such

aircraft type set forth on Appendix 7,

multiplied by (iii) the scheduled departures

for such month and aircraft type as set

forth on the Final Monthly Schedule

multiplied by the First Benchmark Factor for

such month, plus (c) the product of (i) the

Third Implied Expenses for such month set

forth in Appendix 22a, multiplied by (ii)

1000, multiplied by (2) {CONFIDENTIAL

MATERIAL OMITTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT}.

II. The amount of assumed passenger liability

costs referred to in clause (v) of the

second sentence of Paragraph B(9)(a)

included in the Base Compensation for any

particular month will be equal to the

product of (1) the rate for such month as

set forth on Appendix 22 multiplied by (2)

the Forecasted Passengers for such month.

III. The amount of assumed ARINC/SITA network

expenses referred to in clause (vi) of the

second sentence of Paragraph B(9)(a)

included in the Base Compensation for any

particular month will be equal to the

aggregate sum of the following products for

each aircraft type set forth in the Final

Monthly Schedule: (1) the Fourth Implied

Rate for such month for each aircraft type

as set forth on Appendix

 

 

 

Schedule 3-29

 

 

22b, multiplied by (2) the Appendix 7 Block

Hours set forth on Appendix 7 for such

aircraft type, multiplied by (3) the

scheduled departures for such month and

aircraft type as set forth on the Final

Monthly Schedule, multiplied by (4) the

First Benchmark Factor for such month.

IV. The amount of assumed landing fees referred

to in clause (vii) of the second sentence of

Paragraph B(9)(a) included in the Base

Compensation for any particular month will

be equal to the aggregate sum of the

following products for each aircraft type

set forth in the Final Monthly Schedule: (1)

the Fifth Implied Rate for such month for

each aircraft type as set forth on Appendix

22c, multiplied by (2) the Appendix 7 Block

Hours set forth on Appendix 7 for such

aircraft type, multiplied by (3) the

scheduled departures for such month and

aircraft type as set forth on the Final

Monthly Schedule multiplied by (4) the First

Benchmark Factor for such month.

V. The amount of assumed variable ground

handling expenses referred to in clause (xi)

of the second sentence of Paragraph B(9)(a)

included in the Base Compensation for any

particular month will be equal to the

aggregate sum of the following products for

each aircraft type set forth in the Final

Monthly Schedule: (1) the Third Adjusted

Block Hour Rate for such aircraft type and

such month, multiplied by (2), the Cost

Difference set forth on Appendix 23,

multiplied by (3) the number of scheduled

block hours for such aircraft type during

such month as set forth in the Final Monthly

Schedule, multiplied by (4) the First

Benchmark Factor for such month.

VI. The amount of assumed expenses associated

with Extraordinary Hotel Stays referred to

in clause (xiii) of the second sentence of

Paragraph B(9)(a) included in the Base

Compensation for any particular month will

be equal to (1) the product of (a) the sum

of the Pilot Hotel Room Rate Per Block Hour

for Extraordinary Hotel Stays set forth on

Appendix 16a for the applicable month and

the Flight Attendant Hotel Room Rate Per

Block Hour for Extraordinary Hotel Stays set

forth on Appendix 16b for the applicable

month, multiplied by (2) the scheduled block

hours for such month as set forth on the

Final Monthly Schedule, multiplied by (3)

the First Benchmark Factor for such month.

 

Schedule 3-30

 

 

VII. The amount of assumed expenses associated

with "power-by-the-hour" services under the

Flight Hour Agreement referred to in clause

(xii) of the second sentence of Paragraph

B(9)(a) included in the Base Compensation

for any particular month will be equal to

the aggregate sum of the following products

for each aircraft type set forth in the

Final Monthly Schedule: (1) the Sixth

Implied Rate for such month for each

aircraft type as set forth on Appendix 22d,

multiplied by (2) the scheduled block hours

for such month and aircraft type, multiplied

by (3) the First Benchmark Factor for such

month.

VIII. The amount of assumed third-party security

and screening costs at Contractor Airports

referred to in clause (xv) of the second

sentence of Paragraph B(9)(a) included in

the Base Compensation for any particular

month will be equal to the product of (1)

the rate for such month as set forth on

Appendix 22 multiplied by (2) the Forecasted

Passengers for such month.

10. No Reconciliation for Fines, Etc. Notwithstanding anything to the contrary
contained in this Paragraph B, Continental shall not be required to make any
reconciliation payment pursuant to this Paragraph B to the extent that such
reconciliation payment is attributable to any costs, expenses or losses
(including fines, penalties and any costs and expenses associated with any
related investigation or defense) incurred by Contractor as a result of any
violation by Contractor of any law, statute, judgment, decree, order, rule or
regulation of any governmental or airport authority.

11. Material Change in Underlying Assumptions. If there is a material change in
the parties' underlying assumptions regarding the cost of providing Regional
Airline Services, the parties hereto shall meet and confer to discuss such
change and whether the Base Compensation, the Appendix 1 Expenses or any of the
provisions of this Schedule 3 shall be adjusted; provided, however, that this
provision shall not obligate the parties hereto to amend any of the provisions
of the Agreement or this Schedule 3 nor shall it obligate the parties to adjust
the Base Compensation or the Appendix 1 Expenses.

 

 

Schedule 3-31

 

 

 

 

Appendix 1 Appendix 1 Expenses

Appendix 2 Benchmark Rates

Appendix 3 Appendix 3 Block Hour Rates

Appendix 4 Appendix 4 Block Hour Rates

Appendix 5 Appendix 5 Block Hour Rates

Appendix 6 Appendix 6 Block Hour Rates

Appendix 7 Appendix 7 Block Hours

Appendix 8 First Forecast Rates

Appendix 9 Appendix 9 Rates Per Block Hour

Appendix 10 Appendix 10 Fees

Appendix 11 First Incremental Cost Rates

Appendix 12 Second Incremental Cost Rates

Appendix 13 Appendix 13 Incremental Cost Rates

Appendix 14 Appendix 14 Block Hour Rates

Appendix 15 Appendix 15 Incremental Cost Allocation

Appendix 16 Hotel Volume

Appendix 17 Pilot Training Volume

Appendix 18 Per Diem

Appendix 19 Pilot Soft Time

Appendix 20 Pilot Seniority

Appendix 21 Agent Volume

Appendix 22 Reconciliation Of Expenses

Appendix 23 Cost Difference

 

Schedule 3-32

 

 

APPENDIX 1

------------------------------------------------------------------------------------------------------------------------------

APPENDIX 1 EXPENSES (000'S)

------------------------------------------------------------------------------------------------------------------------------

COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
COLUMN COLUMN COLUMN COLUMN

Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------

Jan-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

 

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 2

----------------------------------------------------------------------------------------------------------------------------------

2002 BENCHMARK RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

 

----------------------------------------------------------------------------------------------------------------------------------

2001 ACTUAL RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

 

----------------------------------------------------------------------------------------------------------------------------------

2000 ACTUAL RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-00 XXX XXX XXX XXX XXX

Feb-00 XXX XXX XXX XXX XXX

Mar-00 XXX XXX XXX XXX XXX

Apr-00 XXX XXX XXX XXX XXX

May-00 XXX XXX XXX XXX XXX

Jun-00 XXX XXX XXX XXX XXX

Jul-00 XXX XXX XXX XXX XXX

Aug-00 XXX XXX XXX XXX XXX

Sep-00 XXX XXX XXX XXX XXX

Oct-00 XXX XXX XXX XXX XXX

Nov-00 XXX XXX XXX XXX XXX

Dec-00 XXX XXX XXX XXX XXX

 

 

 

 

 

 

 

----------------------------------------------------------------------------------------------------------------------------------

1999 ACTUAL RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-99 XXX XXX XXX XXX XXX

Feb-99 XXX XXX XXX XXX XXX

Mar-99 XXX XXX XXX XXX XXX

Apr-99 XXX XXX XXX XXX XXX

May-99 XXX XXX XXX XXX XXX

Jun-99 XXX XXX XXX XXX XXX

Jul-99 XXX XXX XXX XXX XXX

Aug-99 XXX XXX XXX XXX XXX

Sep-99 XXX XXX XXX XXX XXX

Oct-99 XXX XXX XXX XXX XXX

Nov-99 XXX XXX XXX XXX XXX

Dec-99 XXX XXX XXX XXX XXX

 

----------------------------------------------------------------------------------------------------------------------------------

1998 ACTUAL RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-98 XXX XXX XXX XXX XXX

Feb-98 XXX XXX XXX XXX XXX

Mar-98 XXX XXX XXX XXX XXX

Apr-98 XXX XXX XXX XXX XXX

May-98 XXX XXX XXX XXX XXX

Jun-98 XXX XXX XXX XXX XXX

Jul-98 XXX XXX XXX XXX XXX

Aug-98 XXX XXX XXX XXX XXX

Sep-98 XXX XXX XXX XXX XXX

Oct-98 XXX XXX XXX XXX XXX

Nov-98 XXX XXX XXX XXX XXX

Dec-98 XXX XXX XXX XXX XXX

 

----------------------------------------------------------------------------------------------------------------------------------

1997 ACTUAL RATES

----------------------------------------------------------------------------------------------------------------------------------

FIRST FIRST SECOND HEADSTART ONTIME BAGGAGE HANDLING

DATE BENCHMARK FACTOR CANCELLATION RATE CANCELLATION RATE BENCHMARK BENCHMARK

---- ---------------- ----------------- ----------------- ----------------
----------------

Jan-97 XXX XXX XXX XXX XXX

Feb-97 XXX XXX XXX XXX XXX

Mar-97 XXX XXX XXX XXX XXX

Apr-97 XXX XXX XXX XXX XXX

May-97 XXX XXX XXX XXX XXX

Jun-97 XXX XXX XXX XXX XXX

Jul-97 XXX XXX XXX XXX XXX

Aug-97 XXX XXX XXX XXX XXX

Sep-97 XXX XXX XXX XXX XXX

Oct-97 XXX XXX XXX XXX XXX

Nov-97 XXX XXX XXX XXX XXX

Dec-97 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 3

----------------------------------------------------------------------------------------------

APPENDIX 3 BLOCK HOUR RATES

----------------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

BENCHMARK SL XXX XXX XXX XXX XXX

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 4

----------------------------------------------------------------------------------------

APPENDIX 4 BLOCK HOUR RATES

----------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 5

-----------------------------------------------------------------------------------------

APPENDIX 5 BLOCK HOUR RATES

-----------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 6

----------------------------------------------------------------------------------------

APPENDIX 6 BLOCK HOUR RATES

----------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

APPENDIX 7

----------------------------------------------------------------------------------------

APPENDIX 7 BLOCK HOURS

----------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Row 1 XXX XXX XXX XXX XXX

Row 2 XXX XXX XXX XXX XXX

Row 3 XXX XXX XXX XXX XXX

Appendix 7 Block Hours XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

 

 

 

 

 

APPENDIX 8

---------------------------------------------------------------------------------------

FIRST FORECAST FIRST FORECAST FIRST FORECAST

DATE RATES RATE - COMPONENT 1 RATE - COMPONENT 2

------ -------------- ------------------ ------------------

Jan-01 XXX XXX XXX

Feb-01 XXX XXX XXX

Mar-01 XXX XXX XXX

Apr-01 XXX XXX XXX

May-01 XXX XXX XXX

Jun-01 XXX XXX XXX

Jul-01 XXX XXX XXX

Aug-01 XXX XXX XXX

Sep-01 XXX XXX XXX

Oct-01 XXX XXX XXX

Nov-01 XXX XXX XXX

Dec-01 XXX XXX XXX

Jan-02 XXX XXX XXX

Feb-02 XXX XXX XXX

Mar-02 XXX XXX XXX

Apr-02 XXX XXX XXX

May-02 XXX XXX XXX

Jun-02 XXX XXX XXX

Jul-02 XXX XXX XXX

Aug-02 XXX XXX XXX

Sep-02 XXX XXX XXX

Oct-02 XXX XXX XXX

Nov-02 XXX XXX XXX

Dec-02 XXX XXX XXX

Jan-03 XXX XXX XXX

Feb-03 XXX XXX XXX

Mar-03 XXX XXX XXX

Apr-03 XXX XXX XXX

May-03 XXX XXX XXX

Jun-03 XXX XXX XXX

Jul-03 XXX XXX XXX

Aug-03 XXX XXX XXX

Sep-03 XXX XXX XXX

Oct-03 XXX XXX XXX

Nov-03 XXX XXX XXX

Dec-03 XXX XXX XXX

Jan-04 XXX XXX XXX

Feb-04 XXX XXX XXX

Mar-04 XXX XXX XXX

Apr-04 XXX XXX XXX

May-04 XXX XXX XXX

Jun-04 XXX XXX XXX

Jul-04 XXX XXX XXX

Aug-04 XXX XXX XXX

Sep-04 XXX XXX XXX

Oct-04 XXX XXX XXX

Nov-04 XXX XXX XXX

Dec-04 XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 9

------------------------------------------------------------------------------------------------------------------------

APPENDIX 9 RATES PER BLOCK HOUR

------------------------------------------------------------------------------------------------------------------------

ATR42 B1900 EMB120 EMB135 EMB145

STAGE GALLONS STAGE GALLONS STAGE GALLONS STAGE GALLONS STAGE GALLONS

LENGTH PER BLK HR LENGTH PER BLK HR LENGTH PER BLK HR LENGTH PER BLK HR LENGTH
PER BLK HR

------ ---------- ------ ---------- ------ ---------- ------ ---------- ------
----------

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX

XXX XXX XXX XXX

XXX XXX XXX XXX

* On January of each year (beginning January 2002), fuel burn rates increase XXX
on a compounded basis

 

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

 

 

 

APPENDIX 10

----------------------------------------------------------

APPENDIX 10 FEES

----------------------------------------------------------

DATE INVOICE RATE RECONCILIATION RATE

---- ------------ -------------------

Jan-01 XXX XXX

Feb-01 XXX XXX

Mar-01 XXX XXX

Apr-01 XXX XXX

May-01 XXX XXX

Jun-01 XXX XXX

Jul-01 XXX XXX

Aug-01 XXX XXX

Sep-01 XXX XXX

Oct-01 XXX XXX

Nov-01 XXX XXX

Dec-01 XXX XXX

Jan-02 XXX XXX

Feb-02 XXX XXX

Mar-02 XXX XXX

Apr-02 XXX XXX

May-02 XXX XXX

Jun-02 XXX XXX

Jul-02 XXX XXX

Aug-02 XXX XXX

Sep-02 XXX XXX

Oct-02 XXX XXX

Nov-02 XXX XXX

Dec-02 XXX XXX

Jan-03 XXX XXX

Feb-03 XXX XXX

Mar-03 XXX XXX

Apr-03 XXX XXX

May-03 XXX XXX

Jun-03 XXX XXX

Jul-03 XXX XXX

Aug-03 XXX XXX

Sep-03 XXX XXX

Oct-03 XXX XXX

Nov-03 XXX XXX

Dec-03 XXX XXX

Jan-04 XXX XXX

Feb-04 XXX XXX

Mar-04 XXX XXX

Apr-04 XXX XXX

May-04 XXX XXX

Jun-04 XXX XXX

Jul-04 XXX XXX

Aug-04 XXX XXX

Sep-04 XXX XXX

Oct-04 XXX XXX

Nov-04 XXX XXX

Dec-04 XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 11

-----------------------------------------------------------------------------------

FIRST INCREMENTAL COST RATES

-----------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 12

-------------------------------------------------------------------------------

SECOND INCREMENTAL COST RATES

-------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 13

-------------------------------------------------------------------------------------------

APPENDIX 13 INCREMENTAL COST RATES

-------------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 14

------------------------------------------------------------------------------------

APPENDIX 14 BLOCK HOUR RATES

------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

---- ----- ----- ------ ----- -----

BENCHMARK SL XXX XXX XXX XXX XXX

Jan-01 XXX XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX XXX

May-01 XXX XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX XXX

May-02 XXX XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX XXX

May-03 XXX XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX XXX

May-04 XXX XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 15

-----------------------------------------------------------------------------

FIFTH INCREMENTAL COST RATE ALLOCATION

-----------------------------------------------------------------------------

EXPENSE ALLOCATION METHODOLOGY

------- ----------------------

Aircraft Rent XXX

Maintenance Overhead XXX

Hull Insurance XXX

Employee Incentives XXX

Property Taxes XXX

Depreciation XXX

Management Fee XXX

General & Administrative XXX

Airport Overhead XXX

CAL Fixed Pool of Expenses XXX

Glycol XXX

Snow Removal XXX

De-icing XXX

Airport Facility Rent XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 16a

------------------------------------------------------------------------------------------------------------------------

PILOT HOTEL VOLUME

------------------------------------------------------------------------------------------------------------------------

COST PER CONTRACT CONTRACT HOTEL STAYS PER RATE PER BLOCK HOUR FOR

DATE HOTEL STAY SCHEDULED BLOCK HOUR EXTRAORDINARY HOTEL STAYS

---- ----------------- ------------------------ -------------------------

Jan-01 XXX XXX XXX

Feb-01 XXX XXX XXX

Mar-01 XXX XXX XXX

Apr-01 XXX XXX XXX

May-01 XXX XXX XXX

Jun-01 XXX XXX XXX

Jul-01 XXX XXX XXX

Aug-01 XXX XXX XXX

Sep-01 XXX XXX XXX

Oct-01 XXX XXX XXX

Nov-01 XXX XXX XXX

Dec-01 XXX XXX XXX

Jan-02 XXX XXX XXX

Feb-02 XXX XXX XXX

Mar-02 XXX XXX XXX

Apr-02 XXX XXX XXX

May-02 XXX XXX XXX

Jun-02 XXX XXX XXX

Jul-02 XXX XXX XXX

Aug-02 XXX XXX XXX

Sep-02 XXX XXX XXX

Oct-02 XXX XXX XXX

Nov-02 XXX XXX XXX

Dec-02 XXX XXX XXX

Jan-03 XXX XXX XXX

Feb-03 XXX XXX XXX

Mar-03 XXX XXX XXX

Apr-03 XXX XXX XXX

May-03 XXX XXX XXX

Jun-03 XXX XXX XXX

Jul-03 XXX XXX XXX

Aug-03 XXX XXX XXX

Sep-03 XXX XXX XXX

Oct-03 XXX XXX XXX

Nov-03 XXX XXX XXX

Dec-03 XXX XXX XXX

Jan-04 XXX XXX XXX

Feb-04 XXX XXX XXX

Mar-04 XXX XXX XXX

Apr-04 XXX XXX XXX

May-04 XXX XXX XXX

Jun-04 XXX XXX XXX

Jul-04 XXX XXX XXX

Aug-04 XXX XXX XXX

Sep-04 XXX XXX XXX

Oct-04 XXX XXX XXX

Nov-04 XXX XXX XXX

Dec-04 XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 16b

-------------------------------------------------------------------------------------------------------------

FLIGHT ATTENDANT HOTEL VOLUME

-------------------------------------------------------------------------------------------------------------

COST PER CONTRACT CONTRACT HOTEL STAYS PER RATE PER BLOCK HOUR FOR

DATE HOTEL STAY SCHEDULED BLOCK HOUR EXTRAORDINARY HOTEL STAYS

---- ----------------- ------------------------ -------------------------

Jan-01 XXX XXX XXX

Feb-01 XXX XXX XXX

Mar-01 XXX XXX XXX

Apr-01 XXX XXX XXX

May-01 XXX XXX XXX

Jun-01 XXX XXX XXX

Jul-01 XXX XXX XXX

Aug-01 XXX XXX XXX

Sep-01 XXX XXX XXX

Oct-01 XXX XXX XXX

Nov-01 XXX XXX XXX

Dec-01 XXX XXX XXX

Jan-02 XXX XXX XXX

Feb-02 XXX XXX XXX

Mar-02 XXX XXX XXX

Apr-02 XXX XXX XXX

May-02 XXX XXX XXX

Jun-02 XXX XXX XXX

Jul-02 XXX XXX XXX

Aug-02 XXX XXX XXX

Sep-02 XXX XXX XXX

Oct-02 XXX XXX XXX

Nov-02 XXX XXX XXX

Dec-02 XXX XXX XXX

Jan-03 XXX XXX XXX

Feb-03 XXX XXX XXX

Mar-03 XXX XXX XXX

Apr-03 XXX XXX XXX

May-03 XXX XXX XXX

Jun-03 XXX XXX XXX

Jul-03 XXX XXX XXX

Aug-03 XXX XXX XXX

Sep-03 XXX XXX XXX

Oct-03 XXX XXX XXX

Nov-03 XXX XXX XXX

Dec-03 XXX XXX XXX

Jan-04 XXX XXX XXX

Feb-04 XXX XXX XXX

Mar-04 XXX XXX XXX

Apr-04 XXX XXX XXX

May-04 XXX XXX XXX

Jun-04 XXX XXX XXX

Jul-04 XXX XXX XXX

Aug-04 XXX XXX XXX

Sep-04 XXX XXX XXX

Oct-04 XXX XXX XXX

Nov-04 XXX XXX XXX

Dec-04 XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 17a

---------------------------------------------------------------------------------------

ASSUMED PILOT TRAINING COST PER CYCLE

---------------------------------------------------------------------------------------

TRAINING CYCLE 2001 2002 2003 2004

-------------- ---- ---- ---- ----

RJ

Transitional XXX XXX XXX XXX

Upgrade XXX XXX XXX XXX

New Hire XXX XXX XXX XXX

Recur Ground XXX XXX XXX XXX

Recur Flight XXX XXX XXX XXX

ATR

Transitional XXX XXX XXX XXX

Upgrade XXX XXX XXX XXX

New Hire XXX XXX XXX XXX

Recur Ground XXX XXX XXX XXX

Recur Flight XXX XXX XXX XXX

120

Transitional XXX XXX XXX XXX

Upgrade XXX XXX XXX XXX

New Hire XXX XXX XXX XXX

Recur Ground XXX XXX XXX XXX

Recur Flight XXX XXX XXX XXX

BEECH

Transitional XXX XXX XXX XXX

Upgrade XXX XXX XXX XXX

New Hire XXX XXX XXX XXX

Recur Ground XXX XXX XXX XXX

Recur Flight XXX XXX XXX XXX

TOTAL

Transitional XXX XXX XXX XXX

Upgrade XXX XXX XXX XXX

New Hire XXX XXX XXX XXX

Recur Ground XXX XXX XXX XXX

Recur Flight XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 17b

----------------------------------------------------------------

PILOT NEW HIRE TRAINING CYCLES

----------------------------------------------------------------

DATE B1900 ATR EMB120 RJ

---- ----- --- ------ ---

Jan-01 XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX

May-01 XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX

May-02 XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX

May-03 XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX

May-04 XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 17c

----------------------------------------------------------------

PILOT TRANSITIONAL TRAINING CYCLES

----------------------------------------------------------------

DATE B1900 ATR EMB120 RJ

---- ----- --- ------ --

Jan-01 XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX

May-01 XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX

May-02 XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX

May-03 XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX

May-04 XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

APPENDIX 17d

----------------------------------------------------------------

PILOT UPGRADE TRAINING CYCLES

----------------------------------------------------------------

DATE B1900 ATR EMB120 RJ

---- ----- --- ------ --

Jan-01 XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX

May-01 XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX

May-02 XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX

May-03 XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX

May-04 XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

 

 

APPENDIX 17e

----------------------------------------------------------------

PILOT RECURRENT FLIGHT TRAINING CYCLES

----------------------------------------------------------------

DATE B1900 ATR EMB120 RJ

---- ----- --- ------ ---

Jan-01 XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX

May-01 XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX

May-02 XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX

May-03 XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX

May-04 XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 17f

---------------------------------------------------------------

PILOT RECURRENT GROUND TRAINING CYCLES

---------------------------------------------------------------

DATE B1900 ATR EMB120 RJ

---- ----- --- ------ ---

Jan-01 XXX XXX XXX XXX

Feb-01 XXX XXX XXX XXX

Mar-01 XXX XXX XXX XXX

Apr-01 XXX XXX XXX XXX

May-01 XXX XXX XXX XXX

Jun-01 XXX XXX XXX XXX

Jul-01 XXX XXX XXX XXX

Aug-01 XXX XXX XXX XXX

Sep-01 XXX XXX XXX XXX

Oct-01 XXX XXX XXX XXX

Nov-01 XXX XXX XXX XXX

Dec-01 XXX XXX XXX XXX

Jan-02 XXX XXX XXX XXX

Feb-02 XXX XXX XXX XXX

Mar-02 XXX XXX XXX XXX

Apr-02 XXX XXX XXX XXX

May-02 XXX XXX XXX XXX

Jun-02 XXX XXX XXX XXX

Jul-02 XXX XXX XXX XXX

Aug-02 XXX XXX XXX XXX

Sep-02 XXX XXX XXX XXX

Oct-02 XXX XXX XXX XXX

Nov-02 XXX XXX XXX XXX

Dec-02 XXX XXX XXX XXX

Jan-03 XXX XXX XXX XXX

Feb-03 XXX XXX XXX XXX

Mar-03 XXX XXX XXX XXX

Apr-03 XXX XXX XXX XXX

May-03 XXX XXX XXX XXX

Jun-03 XXX XXX XXX XXX

Jul-03 XXX XXX XXX XXX

Aug-03 XXX XXX XXX XXX

Sep-03 XXX XXX XXX XXX

Oct-03 XXX XXX XXX XXX

Nov-03 XXX XXX XXX XXX

Dec-03 XXX XXX XXX XXX

Jan-04 XXX XXX XXX XXX

Feb-04 XXX XXX XXX XXX

Mar-04 XXX XXX XXX XXX

Apr-04 XXX XXX XXX XXX

May-04 XXX XXX XXX XXX

Jun-04 XXX XXX XXX XXX

Jul-04 XXX XXX XXX XXX

Aug-04 XXX XXX XXX XXX

Sep-04 XXX XXX XXX XXX

Oct-04 XXX XXX XXX XXX

Nov-04 XXX XXX XXX XXX

Dec-04 XXX XXX XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 18a

-------------------------------------------------------------------

PILOT PER DIEM

-------------------------------------------------------------------

AMOUNT PAYABLE PER DIEM HOURS PER

DATE PER DIEM HOUR SCHEDULED BLOCK HOUR

---- -------------- --------------------

Jan-01 XXX XXX

Feb-01 XXX XXX

Mar-01 XXX XXX

Apr-01 XXX XXX

May-01 XXX XXX

Jun-01 XXX XXX

Jul-01 XXX XXX

Aug-01 XXX XXX

Sep-01 XXX XXX

Oct-01 XXX XXX

Nov-01 XXX XXX

Dec-01 XXX XXX

Jan-02 XXX XXX

Feb-02 XXX XXX

Mar-02 XXX XXX

Apr-02 XXX XXX

May-02 XXX XXX

Jun-02 XXX XXX

Jul-02 XXX XXX

Aug-02 XXX XXX

Sep-02 XXX XXX

Oct-02 XXX XXX

Nov-02 XXX XXX

Dec-02 XXX XXX

Jan-03 XXX XXX

Feb-03 XXX XXX

Mar-03 XXX XXX

Apr-03 XXX XXX

May-03 XXX XXX

Jun-03 XXX XXX

Jul-03 XXX XXX

Aug-03 XXX XXX

Sep-03 XXX XXX

Oct-03 XXX XXX

Nov-03 XXX XXX

Dec-03 XXX XXX

Jan-04 XXX XXX

Feb-04 XXX XXX

Mar-04 XXX XXX

Apr-04 XXX XXX

May-04 XXX XXX

Jun-04 XXX XXX

Jul-04 XXX XXX

Aug-04 XXX XXX

Sep-04 XXX XXX

Oct-04 XXX XXX

Nov-04 XXX XXX

Dec-04 XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 18b

------------------------------------------------------------------------------

FLIGHT ATTENDANT PER DIEM

------------------------------------------------------------------------------

AMOUNT PAYABLE PER DIEM HOURS PER

DATE PER DIEM HOUR SCHEDULED BLOCK HOUR

---- ------------- --------------------

Jan-01 XXX XXX

Feb-01 XXX XXX

Mar-01 XXX XXX

Apr-01 XXX XXX

May-01 XXX XXX

Jun-01 XXX XXX

Jul-01 XXX XXX

Aug-01 XXX XXX

Sep-01 XXX XXX

Oct-01 XXX XXX

Nov-01 XXX XXX

Dec-01 XXX XXX

Jan-02 XXX XXX

Feb-02 XXX XXX

Mar-02 XXX XXX

Apr-02 XXX XXX

May-02 XXX XXX

Jun-02 XXX XXX

Jul-02 XXX XXX

Aug-02 XXX XXX

Sep-02 XXX XXX

Oct-02 XXX XXX

Nov-02 XXX XXX

Dec-02 XXX XXX

Jan-03 XXX XXX

Feb-03 XXX XXX

Mar-03 XXX XXX

Apr-03 XXX XXX

May-03 XXX XXX

Jun-03 XXX XXX

Jul-03 XXX XXX

Aug-03 XXX XXX

Sep-03 XXX XXX

Oct-03 XXX XXX

Nov-03 XXX XXX

Dec-03 XXX XXX

Jan-04 XXX XXX

Feb-04 XXX XXX

Mar-04 XXX XXX

Apr-04 XXX XXX

May-04 XXX XXX

Jun-04 XXX XXX

Jul-04 XXX XXX

Aug-04 XXX XXX

Sep-04 XXX XXX

Oct-04 XXX XXX

Nov-04 XXX XXX

Dec-04 XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 19

------------------------------------------------------------------------------

PILOT SOFT TIME RECONCILIATION

------------------------------------------------------------------------------

AMOUNT PAYABLE PER FLIGHT PAID HOURS PER SCHEDULED

DATE FLIGHT PAID HOUR PILOT BLOCK HOUR

---- ------------------ -------------------------------

Jan-01 XXX XXX

Feb-01 XXX XXX

Mar-01 XXX XXX

Apr-01 XXX XXX

May-01 XXX XXX

Jun-01 XXX XXX

Jul-01 XXX XXX

Aug-01 XXX XXX

Sep-01 XXX XXX

Oct-01 XXX XXX

Nov-01 XXX XXX

Dec-01 XXX XXX

Jan-02 XXX XXX

Feb-02 XXX XXX

Mar-02 XXX XXX

Apr-02 XXX XXX

May-02 XXX XXX

Jun-02 XXX XXX

Jul-02 XXX XXX

Aug-02 XXX XXX

Sep-02 XXX XXX

Oct-02 XXX XXX

Nov-02 XXX XXX

Dec-02 XXX XXX

Jan-03 XXX XXX

Feb-03 XXX XXX

Mar-03 XXX XXX

Apr-03 XXX XXX

May-03 XXX XXX

Jun-03 XXX XXX

Jul-03 XXX XXX

Aug-03 XXX XXX

Sep-03 XXX XXX

Oct-03 XXX XXX

Nov-03 XXX XXX

Dec-03 XXX XXX

Jan-04 XXX XXX

Feb-04 XXX XXX

Mar-04 XXX XXX

Apr-04 XXX XXX

May-04 XXX XXX

Jun-04 XXX XXX

Jul-04 XXX XXX

Aug-04 XXX XXX

Sep-04 XXX XXX

Oct-04 XXX XXX

Nov-04 XXX XXX

Dec-04 XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

 

APPENDIX 20

---------------------------------------------------------------------------------------

PILOT SENIORITY RECONCILIATION

---------------------------------------------------------------------------------------

AGGREGATE CONTINENTAL PILOTS AMOUNT PAYABLE PER AGGREGATE

DATE TERMINATED BY CONTRACTOR CONTINENTAL PILOT TERMINATED

------- ---------------------------- ----------------------------

Jan-01 XXX XXX

Feb-01 XXX XXX

Mar-01 XXX XXX

Apr-01 XXX XXX

May-01 XXX XXX

Jun-01 XXX XXX

Jul-01 XXX XXX

Aug-01 XXX XXX

Sep-01 XXX XXX

Oct-01 XXX XXX

Nov-01 XXX XXX

Dec-01 XXX XXX

Jan-02 XXX XXX

Feb-02 XXX XXX

Mar-02 XXX XXX

Apr-02 XXX XXX

May-02 XXX XXX

Jun-02 XXX XXX

Jul-02 XXX XXX

Aug-02 XXX XXX

Sep-02 XXX XXX

Oct-02 XXX XXX

Nov-02 XXX XXX

Dec-02 XXX XXX

Jan-03 XXX XXX

Feb-03 XXX XXX

Mar-03 XXX XXX

Apr-03 XXX XXX

May-03 XXX XXX

Jun-03 XXX XXX

Jul-03 XXX XXX

Aug-03 XXX XXX

Sep-03 XXX XXX

Oct-03 XXX XXX

Nov-03 XXX XXX

Dec-03 XXX XXX

Jan-04 XXX XXX

Feb-04 XXX XXX

Mar-04 XXX XXX

Apr-04 XXX XXX

May-04 XXX XXX

Jun-04 XXX XXX

Jul-04 XXX XXX

Aug-04 XXX XXX

Sep-04 XXX XXX

Oct-04 XXX XXX

Nov-04 XXX XXX

Dec-04 XXX XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 21

------------------------------------------------------------------------------------------------------------------------

AIRPORT AGENT VOLUME RECONCILIATION

------------------------------------------------------------------------------------------------------------------------

AMOUNT PAYABLE PER AGENT IMPLIED IMPLIED IMPLIED IMPLIED

DATE AGENT PAID HOUR PAID HOURS SICK TIME % OVERTIME % HOLIDAY % VACATION %

------ ------------------ ---------- ----------- ---------- --------- ----------

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 22

-----------------------------------------------------------------------------------------------------------------

RECONCILIATION OF EXPENSES (000'S)

-----------------------------------------------------------------------------------------------------------------

B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a)
B(9)(a) B(9)(a)

DATE (i) (ii) (iii) (iv) (v) (v) (vi) (vii) (viii) (viii) (viii) (ix)

------ ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- -------

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-----------------------------------------------------

RECONCILIATION OF EXPENSES (000'S)

-----------------------------------------------------

B(9)(a) B(9)(a) B(9)(a) B(9)(a) B(9)(a)

DATE (x) (xi) (xii) (xiv) (xv)

------ ------- ------- ------- ------- -------

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

APPENDIX 22A

------------------------------------------------------------------------

FIRST IMPLIED RATES

------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

------ ----- ----- ------ ----- -----

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----------------------------------------------------------------------------
----------------

SECOND IMPLIED RATES THIRD IMPLIED

----------------------------------------------------------------------------
----------------

DATE B1900 ATR42 EMB120 RJ135 RJ145 EXPENSES (000'S)

------ ----- ----- ------ ----- ----- ----------------

Jan-01 XXX XXX XXX XXX XXX XXX

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

APPENDIX 22b

-------------------------------------------------------------------------------------

FOURTH IMPLIED RATES

-------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

------------ ----- ----- ------ ----- -----

BENCHMARK SL XXX XXX XXX XXX XXX

Jan-01 XXX XXX XXX XXX XXX

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

APPENDIX 22c

-------------------------------------------------------------------------------------

FIFTH IMPLIED RATES

-------------------------------------------------------------------------------------

DATE B1900 ATR42 EMB120 RJ135 RJ145

------------ ----- ----- ------ ----- -----

BENCHMARK SL XXX XXX XXX XXX XXX

Jan-01 XXX XXX XXX XXX XXX

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

APPENDIX 22d

---------------------------------------------------------------------

SIXTH IMPLIED RATES

DATE B1900 ATR42 EMB120 RJ135 RJ145

---------------------------------------------------------------------

Jan-01 XXX XXX XXX XXX XXX

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XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

APPENDIX 23

 

 

 

COST DIFFERENCE = XXX

XXX REPRESENTS CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

 

 

 

 

 

EXHIBIT A

DEFINITIONS

 

Actual Passengers - means, for any period, the actual Revenue Onboards on
Scheduled Flights during such period.

Adjusted Appendix 14 Block Hour Rate - is defined in Paragraph B(6)(c) of
Schedule 3.

Administrative Support and Information Services Provisioning Agreement - means
that certain Administrative Support and Information Services Provisions
Agreement, dated as of January 1, 2001, among Continental, Holdings and
ExpressJet, in the form attached hereto as Exhibit E (or as otherwise agreed or
amended).

Agent Paid Hours - means the hours (including sick, holiday, overtime, and
vacation) for which agents at Contractor Airports are paid to ground handle
Scheduled Flights.

Agreement - means the Amended and Restated Capacity Purchase Agreement, dated as
of April 17, 2002, among Continental, Holdings, XJT and ExpressJet.

Ancillary Agreements - means each of the agreements entered into by Continental
and Contractor substantially in the form of Exhibits B, C, E, and F hereto,
together with all amendments, exhibits, schedules and annexes thereto.

Appendix 1 Expenses - are set forth on Appendix 1 to Schedule 3.

Appendix 3 Block Hour Rate - is set forth for each aircraft type and month on
Appendix 3 to Schedule 3.

Appendix 4 Block Hour Rate - is set forth for each aircraft type and month on
Appendix 4 to Schedule 3.

Appendix 5 Block Hour Rate - is set forth for each aircraft type and month on
Appendix 5 to Schedule 3.

Appendix 6 Block Hour Rate - is set forth for each aircraft type on Appendix 6
to Schedule 3.

Appendix 7 Block Hours - is set forth for each aircraft type on Appendix 7 to
Schedule 3.

Appendix 9 Rate Per Block Hour - is set forth for each aircraft type on Appendix
9 to Schedule 3.

Appendix 13 Incremental Cost Rate - is set forth for each aircraft type and
month on Appendix 13 to Schedule 3.

Appendix 14 Block Hour Rate - is set forth for each aircraft type and month on
Appendix 14 to Schedule 3.

 

 

 

Exhibit A-1

 

 

Average Peer Group Rates - means, with respect to any insurance coverage, the
average cost of such insurance coverage to the five regional airlines with
annual revenues closest to those of Contractor, as determined by available
information obtained from public sources or reputable insurance brokers.

Baggage Handling Benchmark - means, for any applicable month, the number of bags
that were not properly handled (as measured by claims filed for mishandled
baggage) at Contractor Airports, per 1,000 Enplanements at Contractor Airports
during the last five full calendar years immediately preceding such month for
which such calculations are available as of such date of determination (but
excluding from these calculations all data for September 2001 and for any month
in which a Labor Strike shall have occurred); provided that in no event shall
the Baggage Handling Benchmark be above {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}.

Base Compensation - is defined in Paragraph A(1) of Schedule 3.

Base Term - is defined in Section 9.01.

Block Hour Rate - means, for any month, the Base Compensation for such month
divided by the total number of block hours comprising the Scheduled Flights
during such month.

Business Day - means each Monday, Tuesday, Wednesday, Thursday and Friday unless
such day shall be a day when financial institutions in New York, New York or
Houston, Texas are authorized by law to close.

Cause - means (i) bankruptcy of ExpressJet, XJT or Holdings, (ii) the suspension
or revocation of Contractor's authority to operate as a scheduled airline, (iii)
the ceasing of Contractor's operations as a scheduled airline, other than as a
result of a Labor Strike and other than any temporary cessation not exceeding 14
days in length, (iv) the occurrence of a Labor Strike that shall have continued
for 90 days or (v) a willful or intentional material breach of this Agreement by
ExpressJet, XJT or Holdings that substantially deprives Continental of the
benefits of this Agreement, which breach shall have continued for 90 days after
notice thereof is delivered to ExpressJet, XJT or Holdings, as the case may be.

Change of Control - means:

(i) ExpressJet, XJT or Holdings consolidates with, or merges with or into,

another Person or conveys, transfers, leases or otherwise disposes of

all or substantially all of its assets to any Person, or any Person

consolidates with, or merges with or into, ExpressJet, XJT or Holdings,

in any such event pursuant to a transaction in which the voting

securities of ExpressJet, XJT or Holdings are converted into or

exchanged for cash or securities, except where the holders of voting

securities of ExpressJet, XJT or Holdings immediately prior to such

transaction own not less than a majority of the voting securities of

the surviving or transferee corporation

 

 

 

 

Exhibit A-2

 

 

immediately after such transaction, in each case other than any such

transaction between ExpressJet, XJT and/or Holdings, on the one hand,

and Continental and/or any of its Subsidiaries on the other;

(ii) a transaction, other than one described in clause (i) above, as a

result of which ExpressJet, XJT or Holdings and a Major Carrier (other

than Continental) are legally combined;

(iii) a transaction, other than one described in clause (i) above, as a

result of which ExpressJet, XJT or Holdings acquires, directly or

indirectly, beneficial ownership of 10% or more of the capital stock or

voting power of an air carrier (other than Continental and its

successors and any Subsidiary thereof), the consolidated annual

revenues of which for the most recently completed fiscal year for which

audited financial statements are available are in excess of $1 billion

as of the date of determination (or the U.S. dollar equivalent

thereof);

(iv) the direct or indirect acquisition by a Major Carrier (other than

Continental) or any Person directly or indirectly controlling a Major

Carrier of beneficial ownership of 10% or more of the capital stock or

voting power of ExpressJet, XJT or Holdings;

(v) the direct or indirect acquisition by any "person" or "group" (as such

terms are used in Section 13(d) of the Securities Exchange Act of 1934)

not described in clause (iv) above, of beneficial ownership of more

than 25% of the capital stock or voting power of ExpressJet, XJT or

Holdings, other than (A) Continental or its Subsidiaries or (B) any

"person" or "group" that is a Person who has a Schedule 13G on file

with the Securities and Exchange Commission pursuant to the

requirements of Rule 13d-1 under the Securities Exchange Act of 1934

(the "Exchange Act") with respect to its holdings of ExpressJet's,

XJT's or Holdings' voting securities (a "13G Person"), so long as (1)

such 13G Person is principally engaged in the business of managing

investment funds for unaffiliated securities investors and, as part of

such 13G Person's duties as agent for fully managed accounts, holds or

exercises voting or dispositive power over ExpressJet's, XJT's or

Holdings' voting securities, (2) such 13G Person acquires and continues

to have beneficial ownership of ExpressJet's, XJT's or Holdings' voting

securities pursuant to trading activities undertaken in the ordinary

course of such 13G Person's business and not with the purpose nor the

effect, either alone or in concert with any 13G Person, of exercising

the power to direct or cause the direction of the management and

policies of ExpressJet, XJT or Holdings or of otherwise changing or

influencing the control of ExpressJet, XJT or Holdings, nor in

connection with or as a participant in any transaction having such

purpose or effect, including any transaction subject to Rule 13d-3(b)

of the Exchange Act and (3) such 13G Person is not obligated to, and

does not, file a Schedule 13D with respect to the securities of

ExpressJet, XJT or Holdings; provided, that a "Change of Control" shall

not occur pursuant to this clause (v) if such "person" or "group"

reduces its ownership of the capital stock or voting power of

ExpressJet,

 

 

 

 

Exhibit A-3

 

 

XJT or Holdings, as the case may be, to less than 25% within 30 days of

the acquisition of ownership of at least 25% of such capital stock or

voting power;

(vi) the liquidation or dissolution of ExpressJet, XJT or Holdings in

connection with which Contractor ceases operations as an air carrier;

(vii) the sale, transfer or other disposition of all or substantially all of

the airline assets of ExpressJet, XJT or Holdings on a consolidated

basis directly or indirectly to a Major Carrier (other than

Continental) or its affiliate, whether in a single transaction or a

series of related transactions;

(viii) the direct or indirect acquisition, whether in a single transaction or

a series of related transactions, by ExpressJet, XJT or Holdings of

airline assets and associated employees, which airline assets on a

stand-alone basis would have pro forma annual passenger revenues for

the most recently completed four fiscal quarters for which financial

statements can be reasonably prepared in excess of the Revenue

Threshold;

(ix) individuals who constitute the Board of Directors of ExpressJet, XJT or

Holdings as of March 1, 2002 (each such individual, an "Incumbent

Director") cease for any reason to constitute at least a majority of

the applicable Board of Directors (each such board constituted of a

majority of Incumbent Directors, an "Incumbent Board"); provided that

any individual becoming a director subsequent to March 1, 2002 whose

appointment to fill a vacancy or to fill a new position on an Incumbent

Board or whose nomination for election by the shareholders of

ExpressJet, XJT or Holdings, as the case may be, was approved by a vote

of at least a majority of the directors of the applicable Incumbent

Board shall be considered as though such individual were an Incumbent

Director; or

(x) the execution by ExpressJet, XJT or Holdings of bona fide definitive

agreements, the consummation of the transactions contemplated by which

would result in a transaction described in the immediately preceding

clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) or (ix).

Continental - means Continental Airlines, Inc., a Delaware corporation, and its
successors and permitted assigns.

Continental Airport - means any airport at which Continental provides or
arranges for the provision of ground handling services pursuant to the
Continental Ground Handling Agreement.

Continental Ground Handling Agreement - means that certain IATA Standard Ground
Handling Agreement (April 1993 version) between Continental and Contractor,
together with Annex A thereto (Ground Handling Services, April 1993 version) and
Annex B thereto substantially in the form of Exhibit C to the Master Facility
and Ground Handling Agreement (or as otherwise agreed or amended) providing for
the provision by or on

 

 

 

 

 

Exhibit A-4

 

 

behalf of Continental to Contractor of ground handling services at the airports
specified therein.

Continental Marks - is defined in Exhibit G.

Continental Pilot - means a pilot who was employed by Continental as a pilot on
September 10, 2001.

Continental Premium Surcharge Amount - is defined in Paragraph B(7)(d)(III) of
Schedule 3.

Contract Fuel Rate - means the sum of the aircraft fuel capped rate of $0.6110
per gallon for 2002 and $0.6600 per gallon thereafter, the intoplane capped rate
of $0.0571 per gallon, and tax capped rate of $0.0520 per gallon.

Contract Hotel Stay - means a 24 hour or less stay in a hotel room by a pilot or
flight attendant that was contracted for by Contractor no less than 12 hours in
advance of such stay in connection with a Scheduled Flight, in accordance with
current practices as of the date hereof; provided that in no event shall a
Contract Hotel Stay include an Extraordinary Hotel Stay or include a hotel stay
as a result of pilot or flight attendant training.

Contractor - means, collectively, ExpressJet, XJT and Holdings.

Contractor Airport - means (i) any airport at which Contractor provides or
arranges for the provision of ground handling services pursuant to the
Contractor Ground Handling Agreement, and (ii) any other airport into or out of
which Contractor operates any Scheduled Flight and which is not a Continental
Airport.

Contractor Ground Handling Agreement - means that certain IATA Standard Ground
Handling Agreement (April 1993 version) between Continental and Contractor,
together with Annex A thereto (Ground Handling Services, April 1993 version) and
Annex B thereto substantially in the form of Exhibit D to the Master Facility
and Ground Handling Agreement (or as otherwise agreed or amended) providing for
the provision by or on behalf of Continental to Contractor of ground handling
services at the airports specified therein

Contractor Marks - is defined in Exhibit H.

Contractor Premium Surcharge Amount - is defined in Paragraph B(7)(e)(IV) of
Schedule 3.

Contractor Premium Surcharge Limit - is defined in Paragraph B(7)(e)(III) of
Schedule 3.

Contractor Premium Surcharge Overflow Amount - is defined in Paragraph
B(7)(e)(V) of Schedule 3.

 

 

 

 

Exhibit A-5

 

 

Contractor Services - is defined in the Master Facility and Ground Handling
Agreement.

Controllable Cancellation - means a cancellation of a Scheduled Flight that is
not an Uncontrollable Cancellation.

Cost Factor - means 0.10 (or, where such term is to be expresses as a
percentage, 10%).

Cost Difference - is defined in Appendix 23 to Schedule 3.

Covered Aircraft - means all aircraft listed on Schedule 1 acquired or to be
acquired under the Embraer Contract, as adjusted from time to time for
additional aircraft pursuant to Section 2.05 and for early withdrawals pursuant
to Section 2.02.

Covered Aircraft Sublease - means a sublease (or lease) substantially in the
form of Exhibit B (or as otherwise agreed or amended) between Continental and
Contractor pursuant to which Contractor subleases (or leases) a Covered Aircraft
from Continental.

Delivered Covered Aircraft - means, as of any date of determination, the Covered
Aircraft that have been delivered to Contractor, excluding all Turboprop
Aircraft.

DOT - means the United States Department of Transportation.

Early Withdrawal Schedule - means the schedule, determined as provided in
Section 2.02 of this Agreement, for Covered Aircraft to become Uncovered
Aircraft.

Effective Date - means, with respect to any initial notice of reduction
delivered by Continental pursuant to Section 2.02 hereunder, the date selected
by Continental that is not more than 18 and not less than 12 months after the
date of such notice.

Eighth Implied Rate - is set forth for each aircraft type and month on Appendix
22f.

Embraer - means Empresa Brasileira de Aeronautica S.A., a Brazilian corporation
with its principal place of business in Sao Paulo, Brazil.

Embraer Contract - means, collectively, Purchase Agreement No. GPJ-003/96
between Embraer and XJT dated August 5, 1996, Letter of Agreement No. GPJ-004/96
between Embraer and XJT dated August 5, 1996, Letter of Agreement No.
PCJ-004A/96 among Embraer, Continental and XJT dated August 31, 1996, Purchase
Agreement No. DCT-054/98, between Embraer and XJT dated December 23, 1998,
Letter of Agreement No. DCT-059/2000 between Embraer and XJT dated October 27,
2000, Letter of Agreement No. DCT-055/98 between Embraer and XJT dated December
23, 1998, Letter of Agreement No. DCT-058/2000 between Embraer and XJT dated
October 27, 2000, and EMB-135 Financing Letter of Agreement among Continental,
Embraer and XJT dated March 23, 2000, in each case including such amendments and
supplements as incorporated by reference in Holding's registration statement on
Form S-1 (Registration No. 333-64808) as Exhibits 10.12 - 10.19.

Embraer ERJ-145 Fleet - means all Covered Aircraft that are ERJ-145 aircraft.

 

 

Exhibit A-6

 

 

Embraer ERJ-135 Fleet - means all Covered Aircraft that are ERJ-135 aircraft.

Embraer Fleets - means any of the Embraer ERJ-135 Fleet, the Embraer ERJ-145
Fleet or the Embraer XRJ-145 Fleet

Embraer Option Aircraft - means any of the 100 Embraer regional jet aircraft
that Contractor has an option to purchase under the Embraer Contract as of the
date hereof.

Embraer XRJ-145 Fleet - means all Covered Aircraft that are XRJ-145 aircraft.

Engine - means any jet aircraft engine that constitutes an "Engine," as such
term is defined in a Covered Aircraft Sublease for a jet aircraft, under such
Covered Aircraft Sublease.

Enplanement - means one passenger for such passenger's entire one-way flight
itinerary, regardless of how many Scheduled Flights or flight segments comprise
such itinerary.

Excess Insurance Costs - means, in respect of any insurance policy obtained by
Contractor, the cost of such insurance coverage, if any, in excess of the amount
such insurance coverage would have cost if Contractor and Continental had
participated in a combined placement pursuant to Section 7.04.

Excess Inventory - means, at any time of determination, the spare engines and
other rotable parts, repairable parts, expendable parts and other miscellaneous
spare parts comprising components of the Covered Aircraft that are, in the
reasonable judgment of Contractor and as a result of a reduction in the number
of Covered Aircraft, in excess of the needs of Contractor for the provision of
Regional Airline Services at such time of determination.

Excluded Costs - means, for any Performance Period, (i) labor costs (including
all wages, salaries and other benefits to all Contractor officers and other
employees, including contract employees) incurred in such period in excess of
those for which Contractor is entitled to reimbursement pursuant to the Block
Hour Rates then in effect and, with respect to certain benefits, the
reconciliation provisions of Schedule 3, (ii) all costs allocable to Scheduled
Flights cancelled during such period as a result of strikes and other labor
actions, disputes or interruptions, and other costs incurred during such period
outside of the ordinary course of business in connection with such events, (iii)
costs resulting from allocable to Scheduled Flights cancelled during such period
as a result of an event constituting Cause, and other costs incurred during such
period outside of the ordinary course of business in connection with such event,
(iv) costs of litigation and threatened litigation (including investigations,
attorney's fees, adverse judgments and settlements not covered by insurance)
incurred during such period and (v) other expenses incurred during such period
that do not comprise a portion of the Block Hour Rates reflected in Schedule 3
and are not reasonable and customary in the industry, or were not otherwise
approved in advance by Continental (it being understood that the expenses
reimbursed pursuant to reconciliation provisions of Schedule 3 constitute
expenses that comprise a portion of the Block Hour Rates reflected in Schedule
3).

 

 

 

 

Exhibit A-7

 

 

Excluded Revenue - means, for any Performance Period, all incentive compensation
payable in respect of such period pursuant to Paragraph A(2)(a) and Paragraph
A(2)(b) of Schedule 3, and all Incentive Amounts payable pursuant to Paragraph
B(6)(c) and Paragraph B(6)(d) of Schedule 3 in respect of such period.

Existing Hub Airports - means George Bush Intercontinental Airport in Houston,
Texas, Hopkins International Airport in Cleveland, Ohio and Newark International
Airport in Newark, New Jersey.

ExpressJet - means ExpressJet Airlines, Inc., a Delaware corporation (formerly
New ExpressJet Airlines, Inc.), and its successors and permitted assigns.

Extension Term - is defined in Section 9.02.

Extraordinary Hotel Stay - means a 24 hour or less stay in a hotel room by a
pilot or flight attendant that was reserved by Contractor no more than 12 hours
in advance of such stay as a result of an unexpected event in connection with a
Scheduled Flight, in accordance with current practices as of the date hereof,
such as a cancellation or delay of the Scheduled Flight as a result of weather
or air traffic control; provided that in no event shall an Extraordinary Hotel
Stay include a Contract Hotel Stay or include a hotel stay as a result of pilot
or flight attendant training.

Fifth Implied Rate - is set forth for each aircraft type and month on Appendix
22c.

Fifth Incremental Cost Rate - is defined in Paragraph B(6)(c) of Schedule 3.

Final Monthly Schedule - means the final schedule of Scheduled Flights for the
next calendar month delivered by Continental to Contractor pursuant to Section
2.01(b).

FINAME - means Agencia Especial de Financiamento Industrial, a Brazilian federal
public company with its principal place of business in Rio de Janeiro, Brazil.

First Adjusted Block Hour Rate - is defined in Paragraph A(1) of Schedule 3.

First Benchmark Factor - is defined in Paragraph A(1) of Schedule 3.

First Cancellation Number - is defined in Paragraph B(6)(a) of Schedule 3.

First Cancellation Rate - means for any calendar month, the average percentage
(expressed as a decimal fraction) of Contractor's Scheduled Flights (or, for all
periods prior to the date hereof, scheduled flights) which constituted
Uncontrollable Cancellations during such month in each of the last five full
calendar years for which such calculations are available as of such date of
calculation (but excluding from these calculations all data for September 2001
and for any month in which a Labor Strike shall have occurred).

First Forecast Rate-Component 1 - is set forth for each month on Appendix 8 to
Schedule 3.

 

 

 

 

Exhibit A-8

 

 

First Forecast Rate-Component 2 - is set forth for each month on Appendix 8 to
Schedule 3.

First Implied Rate - is set forth for each aircraft type and month on Appendix
22a.

First Incremental Cost Rate - is set forth for each aircraft type and month on
Appendix 11 to Schedule 3.

First Weighted Average Number - is defined in Paragraph A(1) of Schedule 3.

Flight Attendant Per Diem Hour - means each hour that a flight attendant accrues
the right to receive a per diem payment as a result of a Scheduled Flight.

Flight Cancellation Reconciliation - is defined in Paragraph B(6) of Schedule 3.

Flight Hour Agreement - means that certain AE3007A Series Engine Fleet Hour
Agreement, dated as of March 6, 2000, between Allison Engine Company, Inc.,
doing business as Rolls-Royce Allison, and XJT.

Flight Overfly Reconciliation - is defined in Paragraph B(5) of Schedule 3.

Forecasted Passengers - means, for any month, the forecasted Revenue Onboards
derived from the Final Monthly Schedule for the previous month.

Fourth Block Hour Rate - is defined in Paragraph A(1) of Schedule 3.

Fourth Cancellation Number - is defined in Paragraph B(6)(d) of Schedule 3.

Fourth Implied Rate - is set forth for each aircraft type and month on Appendix
22b.

Fourth Incremental Cost Rate - is defined in Paragraph B(6)(c) of Schedule 3.

Fuel Price - means Contractor's cost of fuel, exclusive of costs associated with
intoplane and fuel taxes.

Fuel Purchasing Agreement - means that certain Fuel Purchasing Agreement, dated
as of January 1, 2001, between Continental and Contractor, in the form attached
hereto as Exhibit F (or as otherwise agreed or amended).

Fuel-Related Component - means any of the three components of fuel-related
expense: (i) fuel, (ii) intoplane and (iii) fuel tax.

Fuel-Related Component Expense - means the expense, on a component-by-component
basis, of any of the Fuel-Related Components.

Fuel-Related Expense - means, collectively, fuel, intoplane and fuel tax
expenses.

Funding Agreement - means the Funding Agreement, dated as of October 27, 2000,
among Continental, XJT and FINAME, as amended and supplemented from time to
time.

 

 

 

Exhibit A-9

 

 

Headstart Flight - means a flight that is the first departure of the day for an
aircraft; provided that such departure is before 10am local time and that the
aircraft has been on the ground for at least four hours prior to departure.

Headstart On-time Benchmark - means, for any month on or prior to December 31,
2001, the percentage (expressed as a decimal fraction) of Contractor's Headstart
Flights that were On-time Headstart Flights during the years 1997 through 2000,
and for any month on or after January 1, 2002, the percentage (expressed as a
decimal fraction) of Contractor's Headstart Flights that were On-time Headstart
Flights in the last five full calendar years immediately preceding such month
for which such calculations are available as of such date of determination (but
excluding from these calculations all data for September 2001 and for any month
in which a Labor Strike shall have occurred); provided that in no event shall
the Headstart On-time Benchmark be lower than {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT}.

Holdings - means ExpressJet Holdings, Inc., a Delaware corporation, and its
successors and permitted assigns.

Hub Airports - means (i) the Existing Hub Airports and (ii) any other airport at
which Continental, together with its Subsidiaries and all other regional jets
operating under Continental's code, operates an average of more than 50
flights/day during a relevant Performance Period.

Identification - means the Continental Marks, the aircraft livery set forth on
Exhibit H, the Continental flight code and other trade names, trademarks,
service marks, graphics, logos, employee uniform designs, distinctive color
schemes and other identification selected by Continental in its sole discretion
for the Regional Airline Services to be provided by Contractor, whether or not
such identification is copyrightable or otherwise protected or protectable under
federal law.

Immediate Withdrawal Election - is defined in Section 9.04(b)(i).

Incremental Passenger-Related Facilities - means Passenger-Related Terminal
Facilities used by Contractor for the provision of Contractor Services, but only
to the extent that such facilities are incremental to the facilities required by
Continental at such airport, it being understood that facilities used by
Continental for scheduled flights (including seasonally-scheduled flights and
scheduled charter service) shall be deemed not to be incremental to
Continental's requirements, notwithstanding the availability of alternative
facilities for Continental's use.

Incentive Amount - means either (1) the portion of the reconciliation amount
payable from Continental to Contractor pursuant to Paragraph B(6)(c) of Schedule
3 for a particular month and aircraft type equal to the product of (a) the
difference between the Third Incremental Cost Rate and the First Incremental
Cost Rate for such month and aircraft type, multiplied by (b) the Third
Cancellation Number for such aircraft type, multiplied by (c) the actual number
of block hours per flight for such aircraft type and

 

 

 

 

Exhibit A-10

 

 

calendar month, or (2) the portion of the reconciliation amount payable from
Contractor to Continental pursuant to Paragraph B(6)(d) of Schedule 3 for a
particular month and aircraft type equal to the product of (a) the difference
between the Third Incremental Cost Rate and the First Incremental Cost Rate for
such month and aircraft type, multiplied by (b) the Fourth Cancellation Number
for such aircraft type, multiplied by (c) the average number of block hours per
Scheduled Flight for such aircraft type and calendar month.

Labor Strike - means a labor dispute, as such term is defined in 29 U.S.C.
Section 113(c) involving Contractor and some or all of its employees, which
dispute results in a union-authorized strike occurring after the National
Mediation Board has released the Contractor and such employees to self-help and
the 30-day "cooling-off" period relating thereto shall have expired.

LIBOR - means, with respect to any Interest Period (as defined below), the rate
of interest per annum appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Telerate Page 3750, the applicable rate shall be
the arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term "LIBOR" shall mean, with respect to any Interest Period, the
rate of interest per annum appearing on such other service as may be nominated
by the British Bankers' Association as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified, the
applicable rate shall be the arithmetic mean of all such rates. For purposes of
this definition, the term "Interest Period" means a period of one, two, three or
six months' duration, as Continental may elect, commencing, in each case, on the
date of the relevant borrowing (including continuations and conversions of
borrowings); provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (b) no Interest Period shall extend beyond any applicable maturity date
and (c) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest Period
is to end, such Interest Period shall end on the last Business Day of such
calendar month.

Major Carrier - means an air carrier (other than Continental and its successors
and any Subsidiary thereof), the consolidated annual revenues of which for the
most recently completed fiscal year for which audited financial statements are
available are in excess of the Revenue Threshold as of the date of determination
(or the U.S. dollar equivalent thereof).

Major Loss - means an aviation-related accident or incident that results in the
combined policy insurance providers establishing a reserve in an amount greater
than the aggregate combined base premium amount for the year in which such
accident or incident occurs, net of contribution from or subrogation against any
third parties.

 

 

 

Exhibit A-11

 

 

Master Facility and Ground Handling Agreement - means that certain Master
Facility and Ground Handling Agreement, dated as of January 1, 2001, between
Continental and Contractor, in the form attached hereto as Exhibit C (or as
otherwise agreed or amended).

New Contractor Pilot - means any Person actively employed by Contractor as a
pilot whose employment began after January 1, 2002.

Original Capacity Purchase Agreement - means that certain Capacity Purchase
Agreement, dated as of January 1, 2001, among Continental, Holdings and XJT.

On-time Headstart Flight - means a Headstart Flight that departed at or before
the scheduled departure time.

Passenger-Related Terminal Facilities - is defined in the Master Facility and
Ground Handling Agreement.

Performance Period - means a fiscal quarter.

Person - means an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity.

Pilot Block Hours - means the product of scheduled block hours as set forth on
the Final Monthly Schedule, multiplied by two.

Pilot Flight Paid Hours - means the hours for which Contractor's pilots are paid
in connection with providing Regional Airline Services, excluding hours
associated with training.

Pilot New Hire Training Cycle - means the training required to be provided by
Contractor to qualify a newly-hired pilot to commence flying (whether as a first
officer or a captain) an aircraft on behalf of Contractor as recorded in such
pilot's training records pursuant to the requirements of the FAA.

Pilot Per Diem Hour - means each hour that a pilot accrues the right to receive
a per diem payment as a result of a Scheduled Flight, excluding any per diem
payments that are accrued as a result of pilot training.

Pilot Recurrent Flight Training Cycle - means the cycle of in-flight training
required to be provided by Contractor to an existing pilot to maintain such
pilot's qualifications to fly the aircraft type such pilot flies immediately
before such training as recorded in such pilot's records pursuant to the
requirements of the FAA.

 

 

 

 

Exhibit A-12

 

 

Pilot Recurrent Ground Training Cycle - means the cycle of on-the-ground
training required to be provided by Contractor to an existing pilot to maintain
such pilot's qualifications to fly the aircraft type such pilot flies
immediately before such training as recorded in such pilot's records pursuant to
the requirements of the FAA.

Pilot Transitional Training Cycle - means the training required to be provided
by Contractor to qualify an existing pilot to fly another type of aircraft as
recorded in such pilot's training records pursuant to the requirements of the
FAA.

Pilot Upgrade Training Cycle - means the training required to be provided by
Contractor to qualify a first officer as a captain in the aircraft type such
pilot flies immediately before such training as recorded in such pilot's
training records pursuant to the requirements of the FAA.

Prevailing Margin - means, for any Performance Period, the decimal fraction (in
any event not less than zero) equal to Contractor's earnings before interest,
taxes and extraordinary items derived from the Scheduled Flights (as determined
by the separate books maintained by Contractor for the Regional Airline Services
pursuant to Section 3.05(a)), divided by Contractor's aggregate revenues
allocable to Scheduled Flights, in each case as reflected on the books and
records of Contractor after giving effect to the provisions of Section 3.06(b),
except for any reconciliation pursuant to Paragraph B(9)(d) of Schedule 3, and
excluding Excluded Costs and Excluded Revenue.

Reasonable Operating Constraints - means the reasonable constraints on the
operation of Scheduled Flights imposed by the aircraft type, maintenance
requirements, crew training requirements, aircraft rotation requirements, and
route authorities, slots and other applicable regulatory restrictions on flight
schedules.

Reconciled Expenses - is defined in Paragraph B(9)(a) of Schedule 3.

Regional Airline Services - means the provisioning by Contractor to Continental
of Scheduled Flights using the Covered Aircraft in accordance with this
Agreement.

Replacement Aircraft - means an aircraft that is the same aircraft type, is
substantially the same age (or newer), has substantially the same passenger
configuration and is in substantially the same operating condition (or better)
as the aircraft that is being so replaced.

Revenue Onboard - means one revenue-generating passenger on one flight segment,
regardless of whether such flight segment is all or part of such passenger's
entire one-way flight itinerary.

Revenue Threshold - means five hundred million dollars ($500,000,000), as such
amount may be increased based on the amount by which, for any date of
determination, the most recently published Consumer Price Index for all-urban
consumers published by the Department of Labor (the "CPI") has increased to such
date above the CPI for calendar year 2000. For purposes hereof, the CPI for
calendar year 2000 is the monthly average of the CPI for the 12 months ending on
December 31, 2000.

Scheduled ASMs - means, for any period of calculation, the available seat miles
for all Scheduled Flights during such period of calculation.

 

 

Exhibit A-13

 

 

Scheduled Flight - means a flight by a Covered Aircraft as determined by
Continental pursuant to Section 2.01(b).

Second Block Hour Rate - is defined in Paragraph A(1) of Schedule 3.

Second Cancellation Number - is defined in Paragraph B(6)(b) of Schedule 3.

Second Cancellation Rate - means for any calendar month, the average percentage
(expressed as a decimal fraction) of Contractor's Scheduled Flights (or, for all
periods prior to the date hereof, scheduled flights) which constituted
Controllable Cancellations during such month in each of the last five full
calendar years for which such calculations are available as of such date of
calculation (but excluding from these calculations all data for September 2001
and for any month in which a Labor Strike shall have occurred); provided that in
no event shall the Second Cancellation Rate be above {CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}.

Second Forecast Rate - is defined in Paragraph B(2) of Schedule 3.

Second Implied Rate - is set forth for each aircraft type and month on Appendix
22a.

Second Incremental Cost Rate - is set forth for each aircraft type and month on
Appendix 12 to Schedule 3.

Second Weighted Average Number - is defined in Paragraph A(1) of Schedule 3.

Seventh Implied Rate - is set forth for each aircraft type and month on Appendix
22e.

Sixth Implied Rate - is set forth for each aircraft type and month on Appendix
22d.

Staffing Model - means the mathematical model used by Continental to predict the
number of ground handling employee man-hours necessary to provide ground
handling services for Scheduled Flights at Contractor Stations for a particular
calendar month.

Staffing Model Agent Paid Hours - means, for any calendar month, the product of
the base hours obtained from the Staffing Model for such month, multiplied by 1
plus the percentage amounts for sick time, overtime, holiday time, and vacation
time set forth in Appendix 21 for such month.

Subsidiary - means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries and
(b) any partnership, association, joint venture, limited liability company,
joint stock company or any other form of business or professional

 

 

 

Exhibit A-14

 

 

entity, in which such Person directly or indirectly through Subsidiaries has
more than 50% equity interest at any time.

System Flight Disruption - means the failure by Contractor to complete at least
90% of the aggregate Scheduled ASMs in any three consecutive calendar months, or
at least 75% of the aggregate Scheduled ASMs in any consecutive 45-day period,
in each case excluding the effect of Uncontrollable Cancellations and flight
cancellations caused solely by non-carrier specific airworthiness directives or
other non-carrier specific regulatory order; provided, that if the average
number of Block Hours flown per Covered Aircraft during such period is more than
the Trailing Utilization Rate, then the calculation for purposes of this
definition shall disregard that number of Scheduled ASMs for such period as is
necessary to reduce the average number of Block Hours flown per Covered Aircraft
during such period to such Trailing Utilization Rate; provided further, that a
System Flight Disruption shall be deemed to continue until the next occurrence
of a single calendar month in which Contractor completes at least 90% of the
aggregate Scheduled ASMs; and provided further, that completions and
cancellations of Scheduled Flights on any day during which a Labor Strike is
continuing shall not be taken into account in the foregoing calculations.

Term - means the Base Term and any Extension Terms as set forth in Sections 9.01
and 9.02, as earlier terminated pursuant to Section 9.03, and any Wind-Down
Period.

Termination Date - means the date of early termination of this Agreement, as
provided in a notice delivered from one party to the others pursuant to Section
9.03, or, if no such early termination shall have occurred and the Term shall
not have been further extended pursuant to Section 9.02, the date of the end of
the Base Term or the then-occurring Extension Term, as the case may be.

Third Block Hour Rate - is defined in Paragraph A(1) of Schedule 3.

Third Cancellation Number - is defined in Paragraph B(6)(c) of Schedule 3.

Third Implied Expenses - are set forth for each aircraft type and month on
Appendix 22a.

Third Incremental Cost Rate - is defined in Paragraph B(6)(c) of Schedule 3.

Trailing Utilization Rate - means, as of any date of determination, the average
number of Block Hours flown per Covered Aircraft for the last completed
Performance Period.

Turboprop Aircraft - means any of the aircraft identified as turboprop aircraft
on Schedule 1.

Uncontrollable Cancellation - means a cancellation of a Scheduled Flight that is
solely weather-related, air traffic control-related or described in Paragraph
B(6)(f) of Schedule 3, in each case as coded on Contractor's operations reports
in accordance with Continental's standard coding policies and consistent with
Contractor's past practices.

 

 

 

 

Exhibit A-15

 

 

Uncovered Aircraft - means aircraft owned, leased or operated by Contractor,
other than Covered Aircraft.

Uncovered Aircraft Sublease - means a sublease (or lease) substantially in the
form of Exhibit B (or as otherwise agreed or amended) between Continental and
Contractor pursuant to which Contractor subleases (or leases) an Uncovered
Aircraft from Continental for an increased lease rate (over the lease rate for a
Covered Aircraft) equal to amount calculated pursuant to Schedule 2.

Undelivered Covered Aircraft - means, as of any date of determination, the
Covered Aircraft that have not yet been delivered to Contractor.

Weighted Departure Number- is defined in Paragraph A(1) of Schedule 3.

Wind-Down Period - means the period after the Termination Date and until the
time when the last Covered Aircraft has become an Uncovered Aircraft or has been
returned to Continental (or its designee), as applicable.

Wind-Down Schedule - means the schedule, determined as provided in Article IX of
this Agreement, for Covered Aircraft to become Uncovered Aircraft or be returned
to Continental (or its designee), as applicable.

XJT - means XJT Holdings, Inc., a Delaware corporation (formerly ExpressJet
Airlines, Inc.), and its successor and permitted assigns.

 

 

 

Exhibit A-16

 

 

 

 

EXHIBIT B

FORM OF AIRCRAFT SUBLEASE

 

 

 

 

 

 

Exhibit B-1

 

 

 

 

--------------------------------------------------------------------------------

FORM OF

[AMENDED AND RESTATED]

AIRCRAFT SUBLEASE AGREEMENT (XJT-___)

DATED AS OF ___________, 20__

BETWEEN

CONTINENTAL AIRLINES, INC.

SUBLESSOR,

 

AND

EXPRESSJET AIRLINES, INC.

SUBLESSEE

 

--------------------------------------------------------------------------------

The right, title and interest of Sublessor in and to, among other things, this
Sublease Agreement has been assigned to and is subject to a security interest in
favor of [___________], a [___________], as Security Trustee, under the Aircraft
Security Agreement (XJT-___), dated as of [___________], for the benefit of the
holders of the Notes referred to in such Aircraft Security Agreement, all to the
extent provided in such Aircraft Security Agreement. This Sublease Agreement has
been executed in multiple counterparts; to the extent, if any, that this
Sublease Agreement constitutes chattel paper (as defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in Sublessor's right, title and interest in and to this Sublease
Agreement may be perfected through the delivery or possession of any counterpart
of this Sublease Agreement other than the counterpart of this Sublease Agreement
that contains the original receipt executed by [___________], as Security
Trustee.

 

 

 

Exhibit B-2

 

 

 

 

 

 

FORM OF

[AMENDED AND RESTATED]

AIRCRAFT SUBLEASE AGREEMENT (XJT-___)

This Amended and Restated Aircraft Sublease Agreement (XJT-___) dated as of
______________, 200__ (the "Sublease") by and between CONTINENTAL AIRLINES,
INC., a Delaware corporation, as sublessor ("Sublessor"), and EXPRESSJET
AIRLINES, INC., a Delaware corporation, as sublessee ("Sublessee").

RECITALS

Sublessor leases the airframe, engines and related equipment described in
Exhibit A hereto pursuant to a lease agreement that is also described in Exhibit
A.

[Include if subleased prior to 1/1/01: Sublessor and Sublessee entered into a
sublease agreement of such airframe, engines and equipment described on Exhibit
A (the "Original Sublease"). The parties desire to amend and restate the
original sublease agreement as set forth herein.]

NOW THEREFORE, in consideration of the premises and the mutual promises herein
contained, the parties hereto agree as follows:

1. Definitions. As used in this Sublease, the following terms shall have the
following definitions, and each such definition shall be equally applicable to
the singular and plural forms of such term:

"Aircraft" means the Airframe and the Engines.

"Airframe" means the airframe described on Exhibit A hereto.

"Basic Rent" means the rental amount payable at the times and

in the amounts set forth in Schedule 1 hereto under the caption "Basic

Rent" subject to adjustment as provided in the proviso to the first

sentence of Section 3.

"Capacity Purchase Agreement" means that certain Capacity

Purchase Agreement dated as of January 1, 2001, as amended, modified

and supplemented from time, among Sublessor and Sublessee and certain

affiliates of Sublessee, and any agreement between Sublessor and

Sublessee that by its terms replaces such capacity purchase agreement.

"Covered Aircraft" has the meaning specified in the Capacity

Purchase Agreement.

"Delivery Date" means [include if subleased prior to 1/1/01:

the date of the Original Sublease] [include if subleased on or after

1/1/01: _____________].

 

 

 

 

Exhibit B-3

 

 

"Engine" means any of the engines described on Exhibit A

hereto or any engine substituted for any such engine by Sublessee

hereunder but pursuant to the terms of the Head Lease as if Sublessee

were "lessee" thereunder.

"Head Lease" means the lease agreement described on Exhibit A

hereto as the same may be amended or modified from time to time.

"Head Lessor" means at any time, the entity then serving as

the "Lessor" under the Head Lease.

"Operative Agreements" means all agreements or documents

defined as "Operative Agreements" or "Operative Documents" in or as

provided by the Head Lease, and all letter agreements pertaining

thereto, and all other similar agreements or documents entered into in

connection with and specifically relating to the Head Lease.

[Include if subleased prior to 1/1/01: "Original Sublease" has

the meaning specified in the recitals to this Sublease.]

[Include if aircraft is BNDES-financed and subleased while

Sublessee remains a Specified Affiliate of Sublessor: "Revised Basic

Rent" the monthly rental amount payable at the times and in the amounts

set forth in Schedule 1 hereto opposite the caption "Revised Basic

Rent", subject to adjustment as provided in the proviso to the second

sentence of Section 3.]

"Sublease" means this Sublease Agreement as the same may be

amended or modified from time to time.

"Sublessee" means ExpressJet Airlines, Inc., a Delaware

corporation, and its successors and assigns.

"Sublessor" means Continental Airlines, Inc., a Delaware

corporation, and its successors and assigns.

"Supplemental Rent" means an amount equal to (i) all amounts

payable under the Head Lease as "Supplemental Rent" thereunder, (ii)

without duplication, all other amounts payable by the Sublessor under

any other Operative Agreement and (iii) without duplication, all

amounts payable by the Sublessee under this Sublease other than Basic

Rent [Include if aircraft is BNDES-financed and subleased while

Sublessee remains a Specified Affiliate of Sublessor: and Supplemental

Rent].

"Uncovered Aircraft" means aircraft owned, leased or operated

by Sublessee, other than Covered Aircraft.

All other capitalized terms used herein and not otherwise defined shall have the
meaning provided therefor in the Head Lease.

2. Sublease. On the terms and subject to the conditions of this Sublease, the
Sublessor agrees to sublease the Aircraft to the Sublessee, and the Sublessee
agrees to sublease the Aircraft from the Sublessor, for a term beginning on the
Delivery Date and ending on the date on which the term of the Head Lease
terminates in accordance with its terms, whether as a

 

 

 

 

Exhibit B-4

 

result of the expiration of the term thereof, or as a result of earlier
termination following the occurrence of a Lease Event of Default thereunder or
otherwise, unless this Sublease is terminated earlier pursuant to the Capacity
Purchase Agreement. If the Sublessor has the right, by exercise of a renewal or
similar option, to extend the term of the Head Lease, Sublessor shall, at the
request of the Sublessee, exercise any such right so as to extend the term of
this Sublease; provided that Sublessee may not request such an extension and
Sublessor shall have no obligation to exercise any such renewal or similar
option to extend the term of the Head Lease if, on or prior to the date on which
Sublessor would otherwise exercise such renewal or similar option, (A) an Event
of Default under Section 7 of this Sublease shall have occurred and be
continuing, (B) the Aircraft has become, or Sublessor has notified Sublessee
that the Aircraft is scheduled to become, an Uncovered Aircraft pursuant to the
terms of the Capacity Purchase Agreement, (C) Sublessor has notified Sublessee
that this Sublease will be terminated pursuant to the terms of the Capacity
Purchase Agreement, or (D) Sublessor and Sublessee shall not have agreed on the
amount of Basic Rent [Include if aircraft is BNDES-financed and subleased while
Sublessee remains a Specified Affiliate of Sublessor: or Revised Basic Rent, as
the case may be] applicable during such extension of the term. Notwithstanding
the foregoing, if the Sublessor is not entitled to possession of the Aircraft
under the Head Lease for any reason, the right of the Sublessee to possession of
the Aircraft under this Sublease shall likewise terminate and the Sublessee
shall immediately redeliver possession of the Aircraft to the Sublessor, or if
required under the Head Lease, to the Head Lessor. This Sublease shall be for
all purposes a sublease of the Aircraft, and not an assignment of the Head Lease
to the Sublessee.

3. Rent. The Sublessee shall pay as rent under this Sublease Basic Rent to
Sublessor, which shall be paid at the times provided on Schedule 1, [Include if
aircraft is BNDES-financed and subleased while Sublessee remains a Specified
Affiliate of Sublessor: for so long as Sublessee shall be a Specified
Affiliate,] and Supplemental Rent to the person entitled thereto immediately
upon demand thereof, to the end that the Sublessee will pay directly to the
party entitled thereto any and all Supplemental Rent amounts payable by the
Sublessor; provided, that if the Aircraft shall become an Uncovered Aircraft
under the terms of the Capacity Purchase Agreement, then from and after the date
on which the Aircraft becomes an Uncovered Aircraft, the amount of Basic Rent
payable under this Sublease shall be recalculated by increasing the relevant
interest rate used in the original calculations of Basic Rent on the Delivery
Date by the number of basis points set forth in Schedule 2 hereto opposite the
caption "Uncovered Aircraft Basic Rent Adjustment". [Include if aircraft is
BNDES-financed and subleased while Sublessee remains a Specified Affiliate of
Sublessor: If Sublessee shall cease to be a Specified Affiliate, then Sublessee
shall pay as rent under this Sublease Revised Basic Rent, which shall be paid at
the times provided on Schedule 1; provided, that if the Aircraft shall become an
Uncovered Aircraft under the terms of the Capacity Purchase Agreement, then from
and after the date on which the Aircraft becomes an Uncovered Aircraft, the
amount of Revised Basic Rent payable under this Sublease shall be recalculated
by increasing the relevant interest rate used in the original calculations of
Revised Basic Rent by the number of basis points set forth in Schedule 2 hereto
opposite the caption "Uncovered Aircraft Basic Rent Adjustment".]

4. Terms of the Sublease. Except as expressly provided in this Sublease, the
obligations of the Sublessee under this Sublease to the Sublessor or in respect
of the Aircraft shall be identical in all respects to the obligations of the
Sublessor as "Lessee" under the Head Lease to the Head Lessor or in respect of
the Aircraft. In furtherance thereof, except as set forth in Section 5(c) below:

(a) The Sublessee shall take or cause to be taken any and all

actions required of the "Lessee" under the Head Lease as if the

Sublessee was Lessee thereunder, and

(b) The Sublessee will refrain from taking, and shall cause

any other person to refrain from taking, any action which the "Lessee"

under the Head Lease is prohibited from taking or is required to

prohibit any party from taking, in each case as if the Sublessee was

"Lessee" thereunder.

 

 

 

Exhibit B-5

 

 

The terms of the Head Lease are incorporated herein by reference in their
entirety with the same effect as if such terms were set out herein and, unless
the context in the Head Lease otherwise requires, as if the Sublessor were
"Lessor" and the Sublessee were "Lessee" thereunder, and Sublessee agrees to be
bound by the same as though the same were set forth herein in full. Without
intending to limit the scope of the foregoing provisions of this Section 4, the
Sublessee agrees (i) to maintain the aircraft (including the Airframe and
Engines) and cause the Aircraft to be registered as required by the Head Lease,
(ii) to operate and possess the Aircraft only as permitted by the Head Lease,
(iii) to provide inspection rights and the insurance required by the Head Lease,
which policies of insurance shall name, in addition to any parties required by
the Head Lease, Sublessor as an additional named insured and as an additional
recipient of all notices to be received by the Head Lessor with respect to any
such policies of insurance, (iv) to keep the Aircraft free of any and all Liens
as required by the Head Lease, (v) to return the Aircraft in the condition
required by the Head Lease, including any provisions relating to time or cycles
remaining on any time or cycle controlled parts, at the termination of this
Sublease, except as set forth in Section 5(c) below, and (vi) not to permit a
Lease Default or Lease Event of Default to occur under the Head Lease, and the
Sublessor shall have all of the rights of the "Lessor" under the Head Lease with
respect to enforcement of such rights. Notwithstanding any other provision
hereof, this Sublease and Sublessee's rights hereunder shall be subject and
subordinate to all the terms of the Head Lease, including, without limitation,
the Lessor's (or, acting as Lessor's assignee under the Security Agreement,
Security Trustee's) right to repossession under Section 15 of the Head Lease and
the Lessor's (or, acting as Lessor's assignee under the Security Agreement, the
Security Trustee's) rights to avoid this Sublease for any reason upon the
occurrence and during the continuance of a Lease Event of Default under the Head
Lease. Sublessee shall not be permitted to take any action hereunder not
permitted to be taken by Sublessor under the Head Lease. Sublessee agrees to
execute such further documents confirming such subordination of this Sublease as
may be reasonably requested by Sublessor. In addition, the Sublessee agrees to
perform all other obligations of the Sublessor under the Operative Agreements,
except for those obligations of the Sublessor thereunder that are not capable of
being performed or satisfied by the Sublessee, including without limitation
those obligations that pertain to the maintenance of the Sublessor's status as a
corporation and as a certificated United States air carrier, the Sublessor's
qualification as a foreign corporation in good standing, financial reporting
obligations that depend for their fulfillment the provision of information
pertaining to the Sublessor and similar obligations. Sublessee acknowledges
receipt of an executed copy of the Head Lease and the Operative Agreements (as
in effect on the date of this Sublease).

5. Delivery Acceptance and Return.

(a) Sublessor hereby delivers and Sublessee hereby accepts

delivery of the Aircraft and the Aircraft is hereby subject to the

terms and conditions of this Sublease.

(b) At the termination of this Sublease, the Aircraft shall be

delivered in the condition required by the Head Lease, except as set

forth below in clause (c) to this Section 5, at a location designated

by Sublessor.

(c) Notwithstanding the provisions of clause (v) of the fourth

sentence of the last paragraph of Section 4 and the preceding clause

(b) of this Section 5, if this

 

 

 

 

 

Exhibit B-6

 

 

Sublease is terminated prior to its then current scheduled expiration

date pursuant to the Capacity Purchase Agreement for any reason other

than the exercise of remedies by Sublessor under Section 8 of this

Sublease, the return conditions applicable to the Aircraft upon return

shall be as provided in Annex A to this Sublease. For the avoidance of

doubt, if (I) this Sublease is not terminated prior to its then current

scheduled expiration date pursuant to the Capacity Purchase Agreement,

or (II) this Sublease is terminated pursuant to the exercise of

remedies by Sublessor under Section 8 of this Sublease, or (III)

Sublessee retains the Aircraft as an Uncovered Aircraft in accordance

with the terms of the Capacity Purchase Agreement, then in any such

case, at the time when the Aircraft is required hereunder to be

returned, Sublessee shall be required to meet the return conditions

applicable to the Aircraft under clause (v) of the fourth sentence of

the last paragraph of Section 4, including those conditions and

financial adjustments relating to time or cycles remaining between

maintenance events or to any time- or cycle-controlled part.

6. NO REPRESENTATIONS OR WARRANTIES AS TO CONDITION BY SUBLESSOR. SUBLESSEE
ACKNOWLEDGES THAT THE AIRCRAFT HAS BEEN SELECTED FOR USE BY IT, THAT IT HAS HAD
AMPLE OPPORTUNITY TO INSPECT, AND IN FACT HAS INSPECTED, THE AIRCRAFT AND THAT
IT TAKES THE AIRCRAFT "AS IS". SUBLESSEE FURTHER ACKNOWLEDGES THAT SUBLESSOR
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED,
AS TO THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION OR FITNESS FOR ANY
USE OR PURPOSE OF THE AIRCRAFT.

7. Defaults. The following events shall constitute Events of Default hereunder:

(a) The Sublessee shall fail to make any payment of Basic

Rent, Renewal Rent, Stipulated Loss Value or Termination Value within

three (3) Business Days after the same shall have become due; or the

Sublessee shall fail to pay any Supplemental Rent (other than

Stipulated Loss Value or Termination Value) when due and such failure

shall continue for a period in excess of five (5) Business Days from

and after the date of any written notice to Sublessee from Sublessor.

(b) The Sublessee shall fail to perform or observe any

covenant or agreement of the "Lessee" under the Head Lease as if the

Sublessee were "Lessee" and the Sublessor were "Lessor" thereunder (all

of which covenants and agreements are incorporated herein by reference

pursuant to Section 4 hereof) and any applicable grace period contained

in the Head Lease shall have expired.

(c) Any other "Lease Event of Default" shall occur under the

Head Lease as if the Sublessee were "Lessee" and the Sublessor were

"Lessor" thereunder.

(d) The Sublessee shall fail to perform or observe any

covenant or agreement of Sublessee under this Sublease or any

representation or warranty of the Sublessee contained in this Sublease

shall be false or misleading in any material respect and shall remain

uncured for a period in excess of 15 days from and after the date of

written notice thereof from Sublessor to Sublessee.

 

 

Exhibit B-7

 

 

8. Remedies. Upon the occurrence of an Event of Default under this Sublease,
Sublessor shall have the rights and remedies with respect to the Sublessee and
this Sublease enjoyed by the Head Lessor under the Head Lease as if the
Sublessor were "Lessor" and the Sublessee were "Lessee" thereunder, and the
remedies provisions of the Head Lease are incorporated herein by reference and
made a part hereof.

9. Entire Agreement, Waivers and Amendments. This Sublease constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof, superseding all prior discussions and agreements, written or oral;
provided that, except for the obligations of the Sublessee pursuant to Section 4
above (which are not subordinate in any respect), the rights of the Sublessee
under this Sublease are subject in all respects to the provisions of the
Capacity Purchase Agreement. This Sublease may not be amended, nor may any of
its provisions be waived, except by writing signed by both parties. No delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver hereof, nor shall any waiver operate as a
continuing waiver of any right, power or privilege.

10. Notices. All notices given hereunder shall be in writing delivered by hand,
certified mail, or telecopy to the parties hereto at the following addresses:

If to Sublessor:

Continental Airlines, Inc. Telephone No.: 713-324-2544

1600 Smith Street, Dept. HQSFN Telecopier No.: 713-324-2447

Houston, Texas 77002

Attention: Senior Vice President-Finance & Treasurer

If to Sublessee:

ExpressJet Airlines, Inc. Telephone No.: 713-324-3958

1600 Smith Street, Dept. HQSCE Telecopier No.: 713-324-4420

Houston, Texas 77002

Attention: Chief Financial Officer

11. Successors and Assigns. Neither party may assign its rights or delegate its
duties under this Sublease without the prior written consent of the other party,
or in a manner inconsistent with the Head Lease.

12. Severability. Any provision of this Sublease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provision hereof, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

13. Headings. The headings in this Sublease are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.

 

 

 

Exhibit B-8

 

 

14. Counterparts. This Sublease may be executed in counterparts, all of which
taken together shall constitute one agreement.

15. Governing Law. This Sublease shall be governed by and construed in
accordance with the laws of the State of New York.

 

 

[Remainder of this page is blank.]

 

 

 

Exhibit B-9

 

 

 

IN WITNESS WHEREOF, the parties hereto have cause this Sublease to be executed
as of the date first above written.

CONTINENTAL AIRLINES, INC. EXPRESSJET AIRLINES, INC.

By: By:

---------------------------------- ----------------------------------

Vice President Vice President

 

 

 

Exhibit B-10

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have cause this Sublease to be executed
as of the date first above written.

CONTINENTAL AIRLINES, INC. EXPRESSJET AIRLINES, INC.

By: By:

---------------------------------- ----------------------------------

Vice President Vice President

 

 

 

Receipt of this original counterpart of the foregoing Sublease is hereby
acknowledged on this ____ day of _________, 20__.

-------------------------

as Security Trustee

By

-----------------------------------

Name:

------------------------------

Title:

-----------------------------

 

Exhibit B-11

 

 

EXHIBIT A

LEASE

Lease Agreement (XJT-___), dated as of _______, 20__, between
___________________, not in its individual capacity except as expressly provided
but solely as Owner Trustee, as lessor, and Continental Airlines, Inc., as
lessee, as supplemented by Supplement No. 1 thereto, dated as of _______, 20___,
[and amended by Amendment No. ___ thereto among ___________________, not in its
individual capacity but solely as Owner Trustee, as lessor, Continental
Airlines, Inc., as lessee, and ExpressJet Airlines, Inc., as sublessee, dated as
of _______, 20__,] which were recorded as a single instrument with the FAA on
_______, 20__, as conveyance no. ______.

SUBLEASE

Sublease Agreement (XJT-___), dated as of _______, 20__ between Continental
Airlines, Inc., as sublessor, and ExpressJet Airlines, Inc., as sublessee, which
was recorded with the FAA on _______, 20__, as conveyance no._____

AIRCRAFT

 

Airframe Embraer Model EMB-_____

U.S. Registration No.: ______

Manufacturer's Serial No.: _____

Engines: Two Allison Model AE3007A Engines

bearing Engine Manufacturer's Serial

Nos: ______ and ______

Each of the above engines has take-off horsepower of 750 or more of the
equivalent of such horsepower.

 

 

 

Exhibit B-12

 

 

 

Annex A

To Aircraft Sublease Agreement (XJT-___)

Alternative Return Conditions

 

 

If this Sublease is terminated prior to its then current scheduled expiration
date pursuant to the Capacity Purchase Agreement for any reason other than the
exercise of remedies by Sublessor under Section 8 of this Sublease, then unless
Sublessee retains the Aircraft as an Uncovered Aircraft in accordance with the
terms of the Capacity Purchase Agreement, at the return of the Aircraft by
Sublessee to Sublessor (or its designee), Sublessee shall not be required to
meet the return conditions applicable to the Aircraft relating to time or cycles
remaining between maintenance events or to any time- or cycle-controlled part
under clause (v) of the fourth sentence of Section 4 of this Sublease; provided
that Sublessee shall remain obligated to comply with all other provisions of
this Sublease applicable at the time, including without limitation provisions
generally applicable to the maintenance, airworthiness, repair and general
operating condition and cleanliness of the Aircraft; and provided further, that
the general condition of the Aircraft shall not have materially changed relative
to the condition of Sublessee's fleet of the same aircraft type since the
Sublessor delivered the notice of withdrawal or termination (as the case may be)
to Sublessee pursuant to the Capacity Purchase Agreement, and the Aircraft shall
not have been discriminated against or operated, maintained or otherwise treated
differently (including with respect to the removal of any part for convenience
or without cause) than other Covered Aircraft.

 

 

 

 

 

Exhibit B-13

 

 

Schedule 1

To Aircraft Sublease Agreement (XJT-___)

Basic Rent: Basic Rent shall be payable during the Term in [arrears]

[advance] in the amounts and on the dates set forth below;

provided that if such day for a particular payment of Basic

Rent is not a "Business Day" (as defined below), then payment

of Basic Rent shall be due on the next Business Day. "Business

Day" for purposes of this provision means any day other than a

Saturday, Sunday or any other day on which commercial banks

are authorized or required by law to close in New York, New

York or Houston, Texas.

 

[For non-BNDES-financed aircraft, insert amount of

monthly Basic Rent payments, and monthly due date]

[For BNDES-financed aircraft, insert the following:

Basic Rent in the amounts and on the dates required under the Head Lease]

[Insert the following for BNDES-financed aircraft:

Revised Basic Rent: Revised Basic Rent shall be payable during the Term in

[arrears] [advance] in the amounts and on the dates

set forth below; provided that if such day for a

particular payment of Revised Basic Rent is not a

"Business Day" (as defined below), then payment of

Basic Rent shall be due on the next Business Day.

"Business Day" for purposes of this provision means

any day other than a Saturday, Sunday or any other day

on which commercial banks are authorized or required

by law to close in New York, New York or Houston,

Texas.

 

[Insert amount of monthly Revised Basic Rent payments, and monthly due date]

 

 

 

 

 

 

 

 

 

 

 

Schedule 2

To Aircraft Sublease Agreement (XJT-___)

Uncovered Aircraft

Basic Rent Adjustment

 

 

 

 

 

 

EXHIBIT C

MASTER FACILITY AND GROUND HANDLING AGREEMENT

 

 

 

 

 

 

 

 

 

Exhibit C-1

 

 

 

MASTER FACILITY AND GROUND HANDLING AGREEMENT

This Master Facility and Ground Handling Agreement (this "Agreement"), dated as
of January 1, 2001, is among Continental Airlines, Inc., a Delaware corporation
("Continental"), ExpressJet Holdings, Inc., a Delaware corporation ("Holdings"),
and ExpressJet Airlines, Inc., a Delaware corporation ("ExpressJet" and,
collectively with Holdings, "Contractor").

WHEREAS, Continental and Contractor are entering into a Capacity Purchase
Agreement contemporaneously with the execution of this Agreement (the "Capacity
Purchase Agreement");

WHEREAS, Continental and Contractor desire to establish the terms by which both
Continental and Contractor will use and share airport facilities in furtherance
of the Capacity Purchase Agreement, to include, without limitation, the mutual
or coordinated use of airport facilities at any airport in or out of which
Continental operates any flight or Contractor operates any Scheduled Flight; and

WHEREAS, Continental and Contractor desire to establish the terms by which each
of them will provide certain ground handling services for the other at certain
airports in furtherance of the Capacity Purchase Agreement;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, Continental and Contractor agree as follows:

Section 1. Defined Terms. Capitalized terms used in this Agreement (including,
unless otherwise defined therein, in the Exhibits, Schedules and Annexes to this
Agreement) and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Capacity Purchase Agreement. The following terms
shall have the meanings set forth below:

"Airport Facilities" shall mean all Terminal Facilities and Non-Terminal
Facilities.

"Airport Authority" shall mean any municipal, county, state or federal
governmental authority, or any private authority, owning or operating any
Applicable Airport with authority to lease, convey or otherwise grant rights to
use any Airport Facilities.

"Applicable Airport" shall mean any Continental Airport or Contractor Airport.

"CLE Primary Hangar" shall mean the aircraft maintenance hangar located at 19200
Primary Road, Cleveland, Ohio, 44135.

"Continental Airport" shall mean any airport at which Continental provides or
arranges for the provision of ground handling services pursuant to the
Continental Ground Handling Agreement.

 

 

-1-

 

 

"Continental Ground Handling Agreement" shall mean that certain IATA Standard
Ground Handling Agreement (April 1993 version) between Continental and
Contractor, together with Annex A thereto (Ground Handling Services, April 1993
version), and Annex B thereto substantially in the form of Exhibit C hereto (or
as otherwise agreed) providing for the provision by or on behalf of Continental
to Contractor of ground handling services at the airports specified therein.

"Contractor Airport" shall mean any airport at which Contractor provides or
arranges for the provision of ground handling services pursuant to the
Contractor Ground Handling Agreement, and any other airport into or out of which
Contractor operates any Scheduled Flight and which is not a Continental Airport.

"Contractor Facilities" shall mean the Contractor Terminal Facilities and the
Contractor Non-Terminal Facilities.

"Contractor Ground Handling Agreement" shall mean that certain IATA Standard
Ground Handling Agreement (April 1993 version) between Contractor and
Continental, together with Annex A thereto (Ground Handling Services, April 1993
version), and Annex B thereto substantially in the form of Exhibit D hereto (or
as otherwise agreed) providing for the provision by or on behalf of Contractor
to Continental and, at Continental's request from time to time, its codeshare
partners, of ground handling services at the airports specified therein.

"Contractor Non-Terminal Facility" shall mean any Non-Terminal Facility to the
extent owned, leased, subleased or otherwise retained or used by Contractor as
of the date hereof, and any Non-Terminal Facility to the extent owned, leased,
subleased or otherwise retained or used by Contractor pursuant to Section 2
after the date hereof for the provision of Contractor Services.

"Contractor Services" shall mean Regional Airline Services as contemplated by
the Capacity Purchase Agreement and the ground handling services contemplated by
the Contractor Ground Handling Agreement.

"Contractor Terminal Facility" shall mean any Terminal Facility to the extent
owned, leased, subleased or otherwise retained or used by Contractor as of the
date hereof, and any Terminal Facility to the extent owned, leased, subleased or
otherwise retained or used by Contractor pursuant to Section 2 after the date
hereof for the provision of Contractor Services.

"IAH Express Training Center" shall mean the training center located at 17445
JFK Boulevard, Houston, Texas, 77032.

"Incremental Facilities" shall mean all Airport Facilities used by Contractor
for the provision of Contractor Services, but only to the extent that such
facilities are incremental to the facilities required by Continental, it being
understood that facilities used by Continental for scheduled flights (including
seasonally-scheduled flights and scheduled charter service) shall be deemed not
to be incremental to Continental's requirements, notwithstanding the
availability of alternative facilities for Continental's use.

 

 

-2-

 

 

"Non-Terminal Facilities" shall mean all maintenance, training, office and other
facilities and spaces leased, subleased or otherwise retained or used by a party
at an Applicable Airport or adjacent thereto that are not Terminal Facilities.

"Passenger-Related Terminal Facilities" shall mean all passenger-related
terminal facilities and spaces leased, subleased or otherwise retained or used
by a party at an Applicable Airport, including without limitation all passenger
lounges, passenger holding areas, aircraft parking positions (which may or may
not be adjacent to a passenger holding area) and associated ramp spaces, gates
(including loading bridges and associated ground equipment parking areas),
ticketing counters and curbside check-in facilities.

"Terminal Facilities" shall mean (i) all Passenger-Related Terminal Facilities
and (ii) all other terminal facilities and spaces leased, subleased or otherwise
retained or used by a party at an Applicable Airport, including without
limitation all baggage makeup areas, inbound baggage areas, crew rooms,
in-terminal office spaces, associated employee parking areas and other terminal
facilities.

"Transfer" shall mean any lease, sublease, assignment, disposition or other
transfer.

Section 2. Lease, Use and Modification of Airport Facilities.

(a) Continental and Contractor agree that the use by

Contractor of all Airport Facilities at all Applicable Airports for the

provision of Contractor Services shall be at the direction of

Continental. In furtherance of this Section 2(a), from time to time at

the request and direction of Continental and subject to Section 2(b)

and Section 2(c), and subject to the provisions of Sections 6(c) and

6(f) relating to Transfers in connection with certain terminations,

Contractor shall:

(i) use its commercially reasonable efforts to enter

into a lease, sublease or other appropriate agreement with any

Airport Authority at any Applicable Airport for the lease,

sublease or use of any Airport Facilities used or to be used

in connection with the provision of Contractor Services;

(ii) use its commercially reasonable efforts to

amend, modify or terminate any agreement with any Airport

Authority at any Applicable Airport for the lease, sublease or

use of any Contractor Facilities;

(iii) use its commercially reasonable efforts to

obtain the consent of any relevant Airport Authority at any

Applicable Airport for the Transfer to Continental or its

designee of any lease, sublease or other agreement in respect

of any Contractor Facilities, or for the right of Continental

or its designee to use any Contractor Facilities;

(iv) enter into a sublease substantially in the form

of Exhibit A hereto (or as otherwise agreed) for the sublease

to Continental or its designee of Contractor's interest in any

Contractor Facility;

 

 

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(v) enter into an assignment substantially in the

form of Exhibit B hereto (or as otherwise agreed) for the

assignment to Continental or its designee of Contractor's

interest in any Contractor Facility;

(vi) enter into a sublease substantially in the form

of Exhibit A hereto (or as otherwise agreed) for the sublease

to Contractor of Continental's interest in any Airport

Facility at any Applicable Airport used or to be used in

connection with the provision of Contractor Services;

(vii) enter into an assignment substantially in the

form of Exhibit B hereto (or as otherwise agreed) for the

assignment to Contractor of Continental's interest in any

Airport Facility at any Applicable Airport used or to be used

in connection with the provision of Contractor Services; and

(viii) take any other action reasonably requested by

Continental in furtherance of this Section 2(a).

(b) The assignments and subleases to be entered into pursuant

to Section 2(a) shall be subject to the rights of the Applicable

Airports in such Airport Facilities and to the receipt of all necessary

consents from Airport Authorities and other third parties to such

sublease or assignment.

(c) Notwithstanding any other provision of this Section 2, but

without limiting any other provision hereof, including without

limitation Section 7 hereof, Contractor shall not be required to

sublease or assign to Continental or its designee any interest of

Contractor in any Contractor Non-Terminal Facility; provided that the

provisions of this Section 2(c) shall not apply at any time from and

after any Termination Date occurring pursuant to Continental's

termination of the Capacity Purchase Agreement pursuant to Section

9.03(b) or 9.03(c) thereof.

(d) Each of Contractor and Continental shall pay for all

landing fees for its flights at all Applicable Airports, and to the

extent that the other party is obligated to make such payments under

any applicable lease or other agreement, the first party hereby

indemnifies and agrees to hold harmless the other party for all such

amounts.

(e) Contractor shall perform in a timely manner all

obligations under all leases, subleases and other agreements to which

Contractor is or becomes a party for the use of Contractor Facilities,

including without limitation making in a timely manner all payments of

rent and other amounts due under such agreement, and shall use

commercially reasonable efforts to keep such agreements in effect (or

to promptly renew or extend such agreements on substantially similar

terms as directed by Continental); provided that Continental shall

indemnify Contractor for any amounts owed to any Airport Authority or

other third party under any such agreement as a direct result of any

breach by Continental of such agreement.

 

 

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(f) Contractor shall obtain the written consent of Continental

prior to entering into any lease or other agreement for the use or

modification of, or otherwise relating to, any Contractor Terminal

Facilities (or other airport facilities which would become Contractor

Terminal Facilities), or amending or modifying in any manner any such

agreement, or consenting to any of the same. Subject to the provisions

of Section 5(e), Contractor may enter into an agreement for the use or

modification of, or otherwise relating to, any Contractor Non-Terminal

Facility that is not leased or subleased from Continental without the

consent of Continental; provided that such agreement permits (or does

not prohibit) Continental's right of first refusal (or the exercise

thereof) pursuant to Section 7. Contractor may not enter into an

agreement for the use or modification of, or otherwise relating to, any

Contractor Non-Terminal Facility that is leased or subleased from

Continental without the consent of Continental, which consent shall not

be unreasonably withheld; provided that it shall be reasonable for

Continental to withhold any such consent until any required Airport

Authority's consent is obtained or if such agreement would prohibit

Continental's right of first refusal pursuant to Section 7.

(g) If Contractor shall make any payment pursuant to Section

2(e), which payment is in whole or in part in respect of facilities

other than Incremental Facilities, then Continental shall promptly

reimburse Contractor for the portion of such payment in respect of

facilities other than Incremental Facilities; provided that there shall

be no duplication of payment if, for example, Continental is a

sublessee of Contractor with respect to some or all of these

facilities; provided, further, that any payment made by Contractor to

an Airport Authority in respect of shared or common facilities for

which charges are made based on the number of passengers on Scheduled

Flights shall be deemed to be a payment in respect of Incremental

Facilities (notwithstanding any use of such facilities by Continental).

If Continental shall make any payment pursuant to any lease, sublease

or other agreement for the use of Airport Facilities, which payment is

in whole or in part in respect of Incremental Facilities, then

Contractor shall promptly reimburse Continental for the portion of such

payment in respect of Incremental Facilities; provided that there shall

be no duplication of payment if, for example, Contractor is a sublessee

of Continental with respect to some or all of these facilities.

(h) Contractor shall give Continental at least 30 days' prior

written notice before ceasing to use any Airport Facilities for the

provision of Contractor Services, provided that no such notice shall be

required with respect to Terminal Facilities at locations where such

use is ceasing because Continental has informed Contractor that no

Scheduled Flights will be scheduled in or out of such location.

Section 3. Exclusivity. Each Contractor Terminal Facility constituting a
Passenger-Related Terminal Facility used for the provision of Regional Airline
Services shall be used by Contractor exclusively for the provision of Contractor
Services, and may not be used by Contractor in connection with any other
flights, including any flights using an Uncovered Aircraft, or for any other
purpose; provided that the foregoing limitation shall not apply to:

(i) baggage claim and other similar facilities that are leased or otherwise made
available to all air carriers at such airport on a common-use or joint-use
basis; or

(ii) to any facilities that are properly required by an Airport Authority to be
made available for use by others in accordance with any applicable agreement
that is in place as of the date hereof or has been approved by Continental under
Section 2(f).

 

 

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Subject to the provisions of Article IX of the Capacity Purchase Agreement, each
Contractor Terminal Facility that is not a Passenger-Related Terminal Facility
used for the provision of Regional Airline Services, and each Contractor
Non-Terminal Facility may be used by Contractor in connection with other
flights, including flights using Uncovered Aircraft, or for other purposes;
provided that, for so long as the number of Scheduled Flights in a calendar
month represent at least 50% of the aggregate number of Contractor's scheduled
flights of Covered and Uncovered Aircraft in such month, Contractor shall use
such facilities for the provision of Regional Airline Services in priority to
any other use of Contractor, and any other use of such facilities by Contractor
shall be subordinate to Contractor's use for the provision of Regional Airline
Services.

Section 4. Ground Handling.

(a) Each of Continental and Contractor shall enter into the

Continental Ground Handling Agreement. Notwithstanding the identity of

the lessee, sublessor or sublessee under any lease or other agreement

relating to any Airport Facilities, Continental shall use commercially

reasonable efforts to provide Contractor with access to all Terminal

Facilities at each Continental Airport, and at any Contractor Airport

where Continental is the lessee or sublessee, in each case as

reasonably necessary for the provision of Regional Airline Services. In

connection with Continental granting to Contractor access to any

Airport Facilities leased by Continental pursuant to this Section 4(a),

Contractor covenants and agrees, for the benefit of Continental and its

lessor, that Contractor shall not, by its use and occupancy of such

facilities, violate any of the provisions of such lease or other

agreements relating thereto which have been made available to

Contractor, and that it shall not knowingly permit any breach of any of

the obligations of Continental under such agreements, and Contractor

further agrees to release and indemnify Continental in respect of such

facilities to the same extent as provided in Section 11 of the Form of

Sublease Agreement attached hereto as Exhibit A (which provisions are

hereby incorporated by reference), as if a sublease in respect of such

facilities had been entered into by Continental and Contractor.

(b) Each of Continental and Contractor shall enter into the

Contractor Ground Handling Agreement. Notwithstanding the identity of

the lessee, sublessor or sublessee under any lease or other agreement

relating to any Airport Facilities, Contractor shall use commercially

reasonable efforts to provide Continental or its designee with access

to all Terminal Facilities at each Contractor Airport, and at any

Continental Airport where Contractor is the lessee or sublessee, in

each case as reasonably necessary for Continental's or such designee's

operations for which Contractor is providing ground handling services

pursuant to the Contractor Ground Handling Agreement. In connection

with Contractor granting to Continental access to any Airport

Facilities leased by Contractor pursuant to this Section 4(b),

Continental covenants and agrees, for the benefit of Contractor and its

lessor, that Continental shall not, by its use and occupancy of such

facilities, violate any of the provisions of such lease or other

agreements relating thereto which have been made available to

Contractor, and that it shall not knowingly permit any breach of any of

the obligations of Contractor under such agreements, and Continental

 

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further agrees to release and indemnify Contractor in respect of such

facilities to the same extent as provided in Section 11 of the Form of

Sublease Agreement attached hereto as Exhibit A (which provisions are

hereby incorporated by reference), as if a sublease in respect of such

facilities had been entered into by Contractor and Continental.

Section 5. Capital Costs and Modification Designs.

(a) Contractor Funded. Contractor shall fund all capital

expenditures required to be made by Continental or Contractor under any

lease or other appropriate agreement to which either of them is a

party:

(i) in connection with any Terminal Facility used for

the provision of Contractor Services at any Contractor

Airport; provided, that Contractor shall not be required to

fund any expenditures that are subject to the provisions of

Section 5(b)(i);

(ii) in connection with any non-passenger-related

Terminal Facility (including crew rooms, break rooms and

office space) used exclusively or dedicated exclusively to

Contractor at any Continental Airport;

(iii) in connection with any Non-Terminal Facility

used for the provision of Contractor Services, which

Non-Terminal Facility is not also regularly used by

Continental, and regardless of whether such Non-Terminal

Facility is located at a Continental Airport or a Contractor

Airport;

(iv) in respect of ground handling equipment of the

type described in Paragraph 1.1.3 of the Continental Ground

Handling Agreement as being supplied by the Carrier (as

defined therein); and

(v) in respect of any Airport Facility used for the

provision of Contractor Services at any Contractor Airport not

described in clauses (i) through (iv) above and not described

in Section 5(b) below;

provided, however, that Contractor shall not make any capital

expenditures pursuant to the foregoing clauses (i) and (iii) without

the express written consent of Continental, which consent shall not be

unreasonably withheld if such capital expenditures are required by an

applicable Airport Authority or under the terms of an applicable lease

or other applicable agreement in effect as of the date hereof or to

which Continental shall have consented pursuant to Section 2(f); and

provided, further, that Contractor shall not be required to make any

capital expenditures in respect of ground handling equipment of the

type described in Paragraph 1.1.3 of the Contractor Ground Handling

Agreement as being supplied by the Carrier (as defined therein).

(b) Continental Funded. Continental shall fund all capital

expenditures required to be made by Continental or Contractor under any

lease or other appropriate agreement to which either of them is a

party:

 

 

-7-

 

 

(i) in respect of any Terminal Facility used for the

provision of Contractor Services as required in connection

with a change to the Continental Marks or the other

Identification, except for such capital expenditures made as a

part of Contractor's customary refurbishment expenditures;

(ii) in respect of any Terminal Facility used for the

provision of Contractor Services at any Continental Airport;

provided, that Continental shall not be required to fund any

expenditures that are subject to the provisions of Section

5(a)(ii);

 

(iii) in connection with any Non-Terminal Facility

regularly used by Continental, regardless of whether such

Non-Terminal Facility is also used by Contractor for the

provision of Contractor Services or whether such Non-Terminal

Facility is located at a Continental Airport or a Contractor

Airport;

(iv) in respect of ground handling equipment of the

type described in Paragraph 1.1.3 of the Contractor Ground

Handling Agreement as being supplied by the Carrier (as

defined therein); and

(v) in respect of any Airport Facility used for the

provision of Contractor Services at any Continental Airport

not described in clauses (i) through (iv) above and not

described in Section 5(a) above;

provided, however, that Continental shall not be required to make any

capital expenditures in respect of ground handling equipment of the

type described in Paragraph 1.1.3 of the Continental Ground Handling

Agreement as being supplied by the Carrier (as defined therein).

(c) Airport Conversion. If during the Term a Contractor

Airport becomes a Continental Airport, then Continental shall purchase

from Contractor at their book value at such time (as reflected on

Contractor's books) all fixtures and other unremovable capitalized

items that either (i) have been paid for by Contractor pursuant to

clauses (i) or (iii) of Section 5(a) and consented to by Continental

pursuant to the proviso to Section 5(a), or (ii) are reflected on

Contractor's books as of the date of this Agreement; and provided that

any payment under this Section 5(c) shall not be in duplication of any

payment made under Section 6. If a Continental Airport becomes a

Contractor Airport, then Contractor shall have no obligation to

Continental in respect of expenditures made pursuant to Section 5(b).

(d) Reimbursements. Any reimbursement (whether or not made in

the form of a rental credit) by any Airport Authority of any capital

expenditures made by Contractor or Continental and referenced in this

Section 5 shall be remitted to the party (Contractor or Continental)

that funded such capital expenditures, except that any such

reimbursement in respect of fixtures or other capitalized items

purchased by Continental pursuant to Section 5(c) shall be remitted to

Continental, and provided that any such

 

 

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reimbursement to Contractor shall be applied, for all purposes relating

to the Capacity Purchase Agreement, as a reduction of book value of the

asset or assets in respect of which such capital expenditure was made.

(e) Modification Designs. The designs (including the design

and construction specifications and scope of work) for any modification

of Contractor Facilities, including without limitation all

modifications funded by capital expenditures pursuant to Section 5, or

any Contractor Non-Terminal Facility that is at or adjacent to an

Existing Hub Airport, shall be generated by Continental and shall be

consistent with the Continental Marks and other Identification. The

contractors hired to make such modifications shall be selected by

Continental. All such modifications, including without limitation all

modifications funded by capital expenditures pursuant to Section 5,

shall be consistent with the requirements of the applicable leases or

other relevant agreements in respect of such Airport Facilities.

Section 6. Transfer of Terminal Facilities.

(a) Except as otherwise provided in Section 2(a), Section 5(c)

or this Section 6, during the Term Contractor shall not Transfer all or

any portion of its interest in any Contractor Terminal Facility. Any

purported Transfer of an interest in a Contractor Terminal Facility in

violation of Section 2(a), Section 5(c) or this Section 6 shall be void

and ineffectual ab initio.

(b) Upon the termination or other non-temporary cessation of

all Scheduled Flights into or out of any Applicable Airport at which

there are any Contractor Terminal Facilities (including in connection

with the termination of the Capacity Purchase Agreement), Continental

shall provide written notice as soon as practicable (but in no event

later than 20 Business Days after such termination or other

non-temporary cessation) to Contractor of Continental's intention to

retain for itself or its designee any Contractor Terminal Facilities at

such Applicable Airport.

(c) If, pursuant to a notice delivered pursuant to Section

6(b), Continental or its designee is retaining any or all of the

Contractor Terminal Facilities, then Continental shall purchase from

Contractor, at their book value (as reflected on Contractor's books) at

the time such notice is delivered, all fixtures and other unremovable

capitalized items paid for by Contractor (with Continental's approval

pursuant to Section 5) in connection with the use of such Contractor

Terminal Facilities; provided that any payment under this Section 6(c)

shall not be in duplication of any payment made under Section 5(c). In

addition, Contractor shall use commercially reasonable efforts to

assign the rights and obligations of the lease or other applicable

agreements with regard to such Contractor Terminal Facilities to

Continental or its designee, in which event Continental shall assume

such rights and obligations applicable to such Contractor Terminal

Facilities, including without limitation the obligation to make all

rental or similar payments from and after the date of such assignment,

but not including any amounts owed in respect of any breach by

Contractor of such lease or applicable agreements. Prior to the

consummation of such assignment, Contactor shall continue to fulfill

its obligations

 

 

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under such lease or other applicable agreements; provided that

Continental shall promptly reimburse Contractor for all rental or

similar payments applicable to such Contractor Terminal Facilities from

the date of such notice until the lease or applicable agreements are

assigned, but not including any amounts owed in respect of any breach

by Contractor of such lease or applicable agreements.

(d) If, pursuant to a notice delivered pursuant to Section

6(b), Continental is not retaining one or more of the Contractor

Terminal Facilities (such Contractor Terminal Facilities not so

retained, the "Continental Rejected Facilities"), then Contractor shall

provide written notice as soon as practicable (but in no event later

than 20 Business Days after receipt of a notice pursuant to Section

6(b)) to Continental of Contractor's intention to retain or reject the

Continental Rejected Facilities; provided that if such termination of

Scheduled Flights is pursuant to a termination of the Capacity Purchase

Agreement for Cause, then, without limiting any of Continental's

remedies under the Capacity Purchase Agreement, Contractor shall retain

all of the Continental Rejected Facilities.

(e) If, pursuant to a notice delivered pursuant to, or the

proviso of, Section 6(d), Contractor is retaining any of the

Continental Rejected Facilities, then Continental's obligations under

this Agreement shall terminate with respect to those Continental

Rejected Facilities as of the date of such notice.

(f) If pursuant to a notice delivered pursuant to Section

6(d), Contractor is not retaining one or more of the Continental

Rejected Facilities (such Continental Rejected Facilities not so

retained, the "Contractor Rejected Facilities"), then Continental shall

purchase from Contractor, at their book value (as reflected on

Contractor's books) at the time such notice is delivered, all fixtures

and other unremovable capitalized items paid for by Contractor (with

Continental's approval pursuant to Section 5) in connection with the

use of the Contractor Rejected Facilities. In addition, at

Continental's direction, Contractor shall use commercially reasonable

efforts to either (i) terminate the lease or other agreement applicable

with respect to any such Contractor Rejected Facility, (ii) assign the

rights and obligations of such leases or other applicable agreements to

Continental or its designee, in which event Continental shall assume

such rights and obligations applicable to such Contractor Rejected

Facilities, including without limitation the obligation to make all

rental or similar payments from and after the date of such assignment,

including any termination payments, but not including any amounts owed

in respect of any breach by Contractor of such lease or applicable

agreements; provided that any payment under this Section 6(f) shall not

be in duplication of any payment made under Section 5(c), or (iii)

continue to fulfill its obligations under such lease or other

applicable agreements; provided that Continental shall promptly

reimburse Contractor for all rental or similar payments applicable to

such Contractor Rejected Facilities from the date of Contractor's

notice until the leases or applicable agreements terminate or are

otherwise assigned, but not including any amounts owed in respect of

any breach by Contractor of such lease or applicable agreements.

(g) Notwithstanding any other provision of this Section 6, if

Contractor returns to or otherwise reuses any Contractor Rejected

Facility or begins the use of any

 

 

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other Airport Facilities at such airport reasonably similar to any

Contractor Rejected Facility (other than at the written direction of

Continental pursuant to Section 2 or otherwise pursuant to the Capacity

Purchase Agreement) within six months of the termination or other

non-temporary cessation of all Scheduled Flights to such airport, then

Contractor shall reimburse Continental for all amounts paid to

Contractor pursuant to this Section 6.

(h) For purposes of this Agreement, the parties agree that the

cessation of seasonal Scheduled Flights upon the end of the relevant

season shall constitute a temporary cessation if such Scheduled Flights

are expected to resume in the subsequent relevant season.

Section 7. Right of First Refusal for Certain Transfers.

(a) Until the fifth anniversary of the Termination Date under

the Capacity Purchase Agreement, Contractor shall not accept any offer

that, if consummated, would result in a Transfer of all or any portion

of an interest in a Contractor Facility, or a facility that was at any

time during the Term a Contractor Facility (including any Contractor

Terminal Facility that was retained by Contractor pursuant to Section

6(d) (an "Offer"), unless (x) Contractor shall have provided written

notice (an "Offer Notice") to Continental of such Offer, setting forth

all material terms and conditions upon which the proposed Transfer is

to be made, and (y) a period of 20 Business Days shall have expired

after receipt of the Offer Notice by Continental (the "Option Period"),

or Continental shall have earlier declined the Offer in writing

delivered to Contractor. Transmittal of the Offer Notice to Continental

shall constitute an offer by Contractor to Transfer the specified

interest in the Contractor Facility to Continental or its designee

subject to the terms and conditions set forth in the Offer Notice;

provided that, if the Offer Notice contains non-financial terms and

conditions that are not capable of being matched by Continental on

commercially reasonably terms, then Continental and Contractor shall

use commercially reasonable efforts to determine the economic value of

such terms and conditions (and the Option Period will be deemed not to

have commenced until the parties have so determined such economic

value), and Continental shall be entitled to accept the Offer Notice

without matching such terms and conditions, but rather by matching the

economic value of such terms and conditions.

(b) Continental shall have the exclusive option during the

Option Period to accept Contractor's offer to Transfer the specified

interest in the Contractor Facility to Continental or its designee,

subject to the terms and conditions set forth in the Offer Notice,

which option shall be exercisable during the Option Period by written

notice from Continental to Contractor. During the Option Period,

Contractor shall fully cooperate with Continental in the determination

of any material data relevant to the Transfer of the specified interest

in the Contractor Facility.

(c) If Continental shall accept the Offer in writing delivered

to Contractor during the Option Period, then Continental and Contractor

shall consummate the Transfer of the specified interest in the

Contractor Facility to Continental or its designee, subject

 

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to the terms and conditions of the Offer, within 20 Business Days after

receipt of such written notice.

(d) If Continental does not accept the Offer in writing

delivered to Contractor during the Option Period, then Contractor shall

be entitled to Transfer the specified interest in the Contractor

Facility within 20 Business Days after the end of the Option Period on

terms and conditions no more favorable to the transferee than those set

forth in the Offer Notice. If the Transfer is not completed within such

time period, then Contractor must again comply with all of the

provisions of this Section 7 prior to making any Transfer of the

specified interest in the Contractor Facility.

(e) Any purported Transfer of an interest in a Contractor

Facility in violation of this Section 7 shall be void and ineffectual

ab initio.

8. Term. This Agreement shall terminate at the end of the Term; provided that,
any right or obligation hereunder that is specifically extended beyond the
termination of this Agreement shall be so extended.

9. Special CLE Primary Hangar Provisions. With regard to that certain Sublease
Agreement, dated effective as of January 1, 2001, between Continental and
ExpressJet relating to the CLE Primary Hangar, Continental agrees that it shall
use commercially reasonable efforts to keep in full force and effect that
certain Lease By Way of Concession, dated February 28, 2001, between Continental
and the City of Cleveland, until the Termination Date and for a period of three
years thereafter, subject to the provisions of Section 2(c) and any other
provisions hereof, and provided that nothing contained herein shall impose any
obligation on Continental to cure any default by Contractor under the Sublease
Agreement referenced above.

10. Special IAH Express Training Center Provisions. With regard to that certain
Sublease Agreement, dated effective as of January 1, 2001, between Continental
and ExpressJet relating to the IAH Express Training Center, Continental agrees
that it shall use commercially reasonable efforts to keep in full force and
effect that certain First Amended and Restated Special Facilities Lease
Agreement, dated effective as of December 1, 1998, between Continental and the
City of Houston, but only to the extent that such lease relates to the IAH
Express Training Center, until December 30, 2027, subject to the provisions of
Section 2(c) and the other provisions hereof, and provided that nothing
contained herein shall impose any obligation on Continental to cure any default
by Contractor under the Sublease Agreement referenced above.

11. Continental Inventory. After receipt of notice by Continental from time to
time of inventory or equipment available for acquisition from Continental,
Contractor agrees to use reasonable commercial efforts to satisfy all of its
inventory or equipment acquisition requirements by acquiring items of such
inventory and equipment from Continental.

12. Cooperation. Notwithstanding any other provision of this Agreement, each of
the parties hereto shall use commercially reasonable efforts to comply in a
timely manner with all reasonable requests of the other parties made from time
to time that are in furtherance of this Agreement.

 

 

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13. Relationship of the Parties. Nothing in this Agreement shall be interpreted
or construed as establishing among the parties a partnership, joint venture or
other similar arrangement.

14. Binding Effect; Assignment. This Agreement and all of the provisions hereof
shall be binding upon the parties hereto and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by a party hereto without the prior written consent of the other
parties.

15. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The Agreement may be executed by
facsimile signature.

16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (excluding Texas choice-of-law
principles that might call for the application of the law of another
jurisdiction) as to all matters, including matters of validity, construction,
effect, performance and remedies. Any action arising out of this Agreement or
the rights and duties of the parties arising hereunder may be brought, if at
all, only in the state or federal courts located in Harris County, Texas.

17. Confidentiality. Except as required by law or in any proceeding to enforce
the provisions of this Agreement, Continental, ExpressJet and Holdings hereby
agree not to publicize or disclose to any third party the terms or conditions of
this Agreement or any exhibit, schedule or appendix hereto without the prior
written consent of the other parties hereto. Except as required by law or in any
proceeding to enforce the provisions of this Agreement, Continental, ExpressJet
and Holdings hereby agree not to disclose to any third party any confidential
information or data, both oral and written, received from the other in
connection with this Agreement and designated as such by the other, without the
prior written consent of the party providing such confidential information or
data. If any party is served with a subpoena or other process requiring the
production or disclosure of any of such agreements or information, then the
party receiving such subpoena or other process, before complying with such
subpoena or other process, shall immediately notify the other parties of same
and permit said other parties a reasonable period of time to intervene and
contest disclosure or production. Upon termination of this Agreement, each party
must return to each other any confidential information or data received from the
other and designated as such by the party providing such confidential
information or data which is still in the recipient's possession or control.

18. Equitable Remedies. Each of Continental and Contractor acknowledges and
agrees that under certain circumstances the breach by Continental or Contractor
of a term or provision of this Agreement will materially and irreparably harm
the other party, that money damages will accordingly not be an adequate remedy
for such breach and that the non-defaulting party, in its sole discretion and in
addition to its rights under this Agreement and any other remedies it may have
at law or in equity, may apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any breach of the
provisions of this Agreement.

 

 

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19. Subject to Capacity Purchase Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the provisions of this Agreement shall be
subject in all respects to the provisions of the Capacity Purchase Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date and year first written above.

CONTINENTAL AIRLINES, INC.

By:

-----------------------------

Name:

---------------------------

Title:

--------------------------

 

EXPRESSJET HOLDINGS, INC.

By:

-----------------------------

Name:

---------------------------

Title:

--------------------------

EXPRESSJET AIRLINES, INC.

By:

-----------------------------

Name:

---------------------------

Title:

--------------------------

 

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EXHIBIT A

to the Master Facility and Ground Handling Agreement

FORM OF SUBLEASE AGREEMENT

This Sublease Agreement (this "Agreement"), dated as of the __ day of
__________, by and between __________, a __________ corporation ("Sublessor"),
whose address is __________, and __________, a __________ corporation
("Sublessee"), whose address is __________.

WITNESSETH:

WHEREAS, Sublessor and Sublessee are parties to that certain Master Facility and
Ground Handling Agreement dated as of January 1, 2001 ("Master Facility
Agreement");

WHEREAS, Sublessor has entered into various agreements (such agreements, as the
same may have been or may from time to time be amended, the "Prime Agreements")
with other parties ("Prime Lessors") pursuant to which the Prime Lessors have
conferred upon Sublessor the right to use certain premises;

WHEREAS, Sublessor desires to allow Sublessee the right to use certain portions
of the premises that Sublessor has the right to use pursuant to the Prime
Agreements (such portions, together with such associated rights and privileges,
such as reasonable and necessary ingress and egress thereto to the extent
permitted by the applicable Prime Agreement, are described on Schedule 1
attached hereto and are hereinafter referred to as the "Subleased Premises");
and,

WHEREAS, Sublessee desires to hire and take said Subleased Premises as provided
herein, in accordance with the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, Sublessor and Sublessee agree as follows:

1 -- Subleased Premises

a) Sublessor hereby lets unto Sublessee and Sublessee hereby hires and

takes from Sublessor the Subleased Premises in accordance with the

terms and conditions hereof.

b) Sublessee agrees and accepts the associated rights and privileges

granted under the Prime Agreements, subject, however, to the following

limitations and reservations, and subject to other terms and conditions

set forth in this Agreement:

(1) The Prime Agreements, insofar as they relate to the Subleased

Premises, and such Prime Agreements are hereby incorporated by

this reference as if fully set forth herein.

 

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(2) Sublessee covenants and agrees, for the benefit of Sublessor

and the Prime Lessors, that it shall not, by its use and

occupancy of the Subleased Premises, violate any of the

provisions of the Prime Agreements relating thereto, and that

it shall not knowingly permit any breach of any of the

obligations of Sublessor under such Prime Agreements.

Sublessee covenants and agrees that this Agreement shall be in

all respects subject and subordinate to the Prime Agreements

relating thereto. Nothing contained in this Agreement shall be

deemed to confer upon Sublessee any rights that are not

granted by or are in conflict with the applicable Prime

Agreement.

(3) Sublessor reserves the right to enter upon the Subleased

Premises at any time during an emergency to take such action

therein as may be required for the protection of persons or

property and at other reasonable times for the purpose of

inspection, maintenance, making repairs, replacements,

alterations or improvements (to the Subleased Premises or to

other areas), showing to prospective subtenants or other

users, and for other purposes permitted elsewhere in this

Agreement.

2 -- CONDITION OF SUBLEASED PREMISES AND ALTERATIONS

Except to the extent that Sublessor has been granted representations or
warranties under the Prime Agreements regarding the condition of the Subleased
Premises the benefit of which may, pursuant to the applicable Prime Agreement
and applicable law, inure to Sublessee (in which case such representations and
warranties shall be deemed made by Sublessor in favor of Sublessee), Sublessee
accepts the Subleased Premises AS-IS, WITH ALL FAULTS, LATENT OR KNOWN. Subject
to the foregoing, Sublessor MAKES NO WARRANTIES, GUARANTEES, OR REPRESENTATIONS
OF ANY KIND EITHER EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, PERTAINING
TO THIS AGREEMENT OR THE PROPERTY DESCRIBED IN THIS AGREEMENT. Subject to the
foregoing, SUBLESSEE HEREBY WAIVES, AND SUBLESSOR EXPRESSLY DISCLAIMS ALL
WARRANTIES, GUARANTEES AND REPRESENTATIONS, EXPRESS OR IMPLIED, ARISING BY LAW
OR OTHERWISE, INCLUDING BUT NOT LIMITING THE GENERALITY OF THE FOREGOING, ANY
IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR REGARDING THE CONDITION
OF THE PROPERTY. Subject to the forgoing, IN NO EVENT SHALL SUBLESSOR'S
LIABILITY OF ANY KIND UNDER THIS AGREEMENT INCLUDE ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES EVEN IF SUBLESSOR SHALL HAVE BEEN ADVISED OF
THE POSSIBILITY OF POTENTIAL LOSS OR DAMAGE.

Any alterations will be the sole responsibility and expense of the Sublessee and
will require the prior written approval of Sublessor and, if required under the
applicable Prime Agreement, the respective Prime Lessor.

 

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3 -- TERM

The term of this Agreement shall commence as of the date of first occupancy of
the Subleased Premises by Sublessee and (unless sooner terminated as hereinafter
provided) shall continue in effect thereafter until termination of the Master
Facility Agreement, but under no circumstances shall it continue beyond the term
of the Prime Agreement relating to such portion of the Subleased Premises.

4 -- RENTAL

For the use of the Subleased Premises, Sublessee agrees to pay to Sublessor the
amounts set forth for each separate Subleased Premises location on Schedule 2
attached hereto.

5 -- UTILITIES AND SERVICES

Sublessor shall not be liable for any interruptions of utilities or services
arising from repairs, alterations, or improvements on or about the Subleased
Premises, except (and only) to the extent that the Prime Lessor of such portion
of the Subleased Premises is liable to Sublessor for such event. Sublessee shall
pay Sublessor an equitably allocated pro rata share of any electrical, gas,
water or other utility costs associated with the use by Sublessee of the
Subleased Premises.

6 -- GOVERNMENT REQUIREMENTS

Sublessee shall procure from all governmental authorities having jurisdiction
over the operations of Sublessee at the Subleased Premises, all licenses,
certificates, permits or other authorization which may be necessary for the
conduct of its operations. Sublessee shall also at all times promptly observe,
comply with, and execute the provisions of any and all present and future
governmental laws, rules, regulations, requirements, orders and directives which
may apply to the operations of Sublessee on the Subleased Premises or its
occupancy thereof.

7 -- RULES, REGULATION & ADMINISTRATION

Sublessee covenants and agrees to observe and obey the applicable rules and
regulations promulgated by the applicable Prime Lessor and all reasonable rules
and regulations promulgated by Sublessor for the conduct of tenants and
subtenants at the Subleased Premises; and to observe and obey all present rules
and regulations issued by Sublessor and/or the respective Prime Lessor for
safety, health, preservation of the Subleased Premises, security and all
reasonable rules and regulations promulgated in writing in the future by
Sublessor and/or the respective Prime Lessor.

8 -- OTHER OBLIGATIONS OF SUBLESSEE

Sublessee, in its use of all of the Subleased Premises and related facilities,
and in the conduct of its operations, shall:

 

 

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a) Conduct its operations in an orderly and proper manner. Sublessee shall

not create or generate or permit the creation or generation of

vibrations that could reasonably be regarded as posing a material risk

of damage to the Subleased Premises; unreasonably loud noises; the

emission of steam, gases or unpleasant or noxious odors; nor in any

other manner annoy, disturb or be offensive to other tenants or users

of the premises or common areas.

b) Comply with all applicable federal, state and local laws, ordinances,

regulations and orders. Without limiting the generality of the

foregoing, to the extent that the activities of Sublessee shall be

subject to the same, Sublessee shall comply with the following:

1. Compliance with Regulations. Sublessee shall comply with the

regulations relative to nondiscrimination in federally

assisted programs of the United States Department of

Transportation (hereinafter "DOT") Title 49, Code of Federal

Regulations, Part 21, as they may be amended from time to time

("Regulations"), which are herein incorporated by reference

and made a part of this Agreement.

2. Nondiscrimination Generally. Sublessee shall not discriminate

on the grounds of race, color, sex, creed or national origin

in the selection and retention of subcontractors, including

procurements of materials and leases of equipment.

3. Solicitations for Subcontractors, Including Procurements of

Materials and Equipment. If required by the Regulations, in

all solicitations either by competitive bidding or negotiation

made by Sublessee for work to be performed under a

subcontract, including procurements of materials or leases of

equipment, each potential subcontractor or supplier shall be

notified by Sublessee of Sublessee's obligations under the

Regulations relative to nondiscrimination on the grounds of

race, color, or national origin.

4. Information and Reports. Sublessee shall provide all

information and reports required by the Regulations or

directives issued pursuant thereto and shall permit access to

its books, records, accounts other sources of information, and

its facilities as may be determined by the airport sponsor or

the Federal Aviation Administration (the "FAA") to be

pertinent to ascertain --- compliance with such Regulations,

orders, and instructions. Where any information required of

Sublessee is in the exclusive possession of another who fails

or refuses to furnish this information, Sublessee shall so

certify to the airport sponsor or the FAA, as appropriate, and

shall set forth what efforts it has made to obtain the

information.

5. Nondiscrimination Covenant. Sublessee hereby covenants and

agrees, as a covenant running with the land, that in the event

facilities are constructed, maintained, or otherwise operated

by Sublessee on the Subleased Premises for a purpose for which

a DOT program or activity is extended or for another purpose

involving the provision of similar services or benefits,

Sublessee shall maintain and operate such facilities and

services in compliance with all other requirements imposed

pursuant to 49 CFR Part 21, Nondiscrimination in Federally

Assisted

 

 

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Programs of the Department of Transportation, and as said

Regulations may be amended. Sublessee hereby covenants and

agrees, as a covenant running with the land: (1) that no

person on the grounds of race, color, sex, creed or national

origin shall be excluded from participation in, denied the

benefits of, or be otherwise subjected to discrimination in

the use of the Subleased Premises, (2) that in the

construction of any improvements on, over, or under such

Subleased Premises and the furnishing of services thereon, no

person on the grounds of race, color, sex, creed or national

origin shall be excluded from participation in, denied the

benefits of, or otherwise be subjected to discrimination, (3)

that Sublessee shall use the Subleased Premises in compliance

with all other requirements imposed by or pursuant to 49 CFR

Part 21, Nondiscrimination in Federally Assisted Programs of

the Department of Transportation, and as said Regulations may

be amended. Sublessee assures that it will comply with

pertinent statutes, Executive Orders and such rules as are

promulgated to assure that no person shall, on the grounds of

race, creed, color, national origin, sex, age, or handicap be

excluded from participating in any activity conducted with or

benefiting from Federal assistance.

c) Control the demeanor and appearance of its officers, and employees so

as to maintain professional standards and upon objection from Sublessor

or the respective Prime Lessor concerning the conduct, demeanor, or

appearance of any person, Sublessee shall immediately take all steps

necessary to remove the cause of the objection.

d) Not allow garbage, debris, or other waste materials (whether solid,

liquid or gaseous) to collect or accumulate on the Subleased Premises

or in access and service areas of the Subleased Premises used by

Sublessee, and Sublessee shall cause to be removed from the Subleased

Premises any debris and other waste material generated by Sublessee.

Sublessee shall use all due care when effecting removal of all such

waste and shall effect such removal pursuant to the applicable

regulations existing at Subleased Premises for the removal of waste as

promulgated by the respective Prime Lessor, Sublessor or others having

jurisdiction. Sublessee shall keep all lobbies, vestibules and steps

within the Subleased Premises free from dirt and rubbish.

e) Sublessee is responsible to maintain at all times the Subleased

Premises and all equipment, fixtures, and materials used by Sublessee

thereon, or in other areas, in a clean and sanitary manner.

It is intended that the standards and obligations imposed by this section shall
be maintained or complied with by Sublessee in addition to its compliance with
any applicable governmental laws, ordinances and regulations currently in effect
or which may be enacted.

9 -- MAINTENANCE AND REPAIR

a) Sublessee shall take good care of the Subleased Premises while they are

under Sublessee's control and shall make or cause to be made at its own

expense all installations, repairs, replacements, redecorating and

other maintenance necessary to keep

 

 

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the Subleased Premises, and equipment, fixtures, furnishings and signs

therein clean and in good condition and repair; all of which shall be

in accordance with the standards of the facility and of a quality and

class not inferior to the original material or workmanship. All

maintenance and repair work undertaken by Sublessee shall be done in a

good and workmanlike manner, leaving the Subleased Premises free of

liens for labor and materials.

b) Sublessee shall maintain the Subleased Premises and conduct its

operations in such manner that at no time during the letting hereunder

will it do or knowingly permit to be done any act or thing upon the

Subleased Premises which will invalidate or conflict with any fire and

casualty insurance policies covering the Subleased Premises, or any

part thereof, or the Subleased Premises, or any part thereof, or which

may create a hazardous condition so as to increase the risk normally

attendant upon the operations contemplated hereunder, and Sublessee

shall promptly observe and comply with any and all present and future

rules and regulations, requirements, orders and directions of Fire

Underwriters Association or of any other board or organization which

may exercise similar functions. Any increase in fire or casualty

insurance premiums attributable to Sublessee's acts or omissions under

this Agreement shall be promptly reimbursed by Sublessee, upon receipt

of Sublessor's invoice therefor.

10 -- RELATIONSHIP

It is expressly understood and agreed that Sublessee is and shall be an
independent contractor and operator, responsible for its acts or omissions in
connection with its use and occupancy of the Subleased Premises and any related
areas used by Sublessee.

11 -- RELEASE AND INDEMNITY

Release

Sublessee agrees that Sublessor shall not be liable for any loss or damage to
any property of any persons (including property of Sublessee, its officers,
directors, employees, agents, customers, concessionaires, vendors, contractors
or invitees), occasioned by theft, fire, acts of God, or any governmental body
or authority, injunction, riot, war, other tenants of the Subleased Premises or
the premises of which the Subleased Premises are a part, or any damage or
inconvenience which may arise through repair, or alteration of the Subleased
Premises, or failure to make repairs in a timely manner, or the unavailability
of utilities, or for any other cause, EXCEPT TO THE EXTENT CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUBLESSOR OR THE RESPECTIVE PRIME LESSOR, IT
BEING AGREED THAT THIS RELEASE SHALL APPLY TO CLAIMS RESULTING FROM THE
NEGLIGENCE OF SUBLESSOR OR SUCH PRIME LESSOR. Sublessor agrees that any waivers
of claims for property damage contained in the respective Prime Agreement made
by the Prime Lessor thereunder shall inure to the benefit of Sublessee to the
extent permitted by the applicable Prime Agreement and applicable law.

 

 

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Indemnity

Anything in this Agreement to the contrary notwithstanding, and without limiting
Sublessee's obligation to provide insurance pursuant to Article 12 hereunder,
Sublessee covenants and agrees that it shall indemnify, defend and save harmless
Sublessor, its affiliates (other than Sublessee), any affected Prime Lessor, and
their respective directors, officers, employees, agents, successors and assigns
("Indemnitees"), from and against all liabilities, losses, damages, penalties,
claims, costs, charges and expenses, causes of action and judgments of any
nature whatsoever, including without limitation reasonable attorney's fees,
costs and related expenses that may be imposed upon or incurred by the
Indemnitees by reason or arising out of any of the following, except if caused
by the negligence or willful misconduct of any such Indemnitee (it being
acknowledged, however, that if the indemnification obligations of Sublessor
under the respective Prime Agreement requires Sublessor to indemnify such Prime
Lessor (or other parties therein identified) Sublessee shall be required to
indemnify such Prime Lessor and other identified parties to the same extent; AND
THAT SUCH INDEMNIFICATION DUTIES MAY APPLY EVEN WHERE AN INDEMNITEE UNDER THE
APPLICABLE PRIME AGREEMENT IS NEGLIGENT OR OTHERWISE AT FAULT):

a) Any occupancy, management or use of the Subleased Premises, or areas

surrounding the Subleased Premises or the service areas, parking areas,

or pedestrian areas in or around the Subleased Premises, by Sublessee

or any of its directors, officers, agents, contractors, servants,

employees, licensees, invitees, successors and assigns;

b) Any negligence on the part of Sublessee or any of its directors,

officers, agents, contractors, servants, employees, licensees,

invitees, successors and assigns;

c) Any accident, injury to or death of any person, or damage to or

destruction of any property of Sublessee or its officers, directors,

employees, agents, customers, concessionaires, vendors, contractors or

invitees occurring in or on the Subleased Premises; or

d) Any failure on the part Sublessee to comply with any of the covenants,

agreements, terms or conditions contained in this Agreement.

12 -- INSURANCE

Without limiting Sublessee's obligation to indemnify Sublessor as provided for
in this Agreement, Sublessee shall procure and maintain, at its own cost and
expense, at all times during the term of this Agreement, insurance of the
following types in amounts not less than those indicated with insurers
satisfactory to Sublessor:

Comprehensive public liability insurance with limits of not less than $5,000,000
per occurrence for death or bodily injury; workers compensation insurance with
statutory limits; and employer's liability insurance of not less than
$10,000,000 in limits.

 

 

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Such insurance shall contain the following endorsements:

(1) Name Sublessor and the respective Prime Lessor, its parents and

subsidiaries, their respective directors, officers, employees, agents,

successors and assigns, as Additional Insureds as it pertains to this

Agreement and the respective Subleased Premises. Upon written notice

from Sublessor, Sublessee shall promptly cause any other party required

to be named by as an Additional Insured under the Prime Agreement to be

so named.

(2) Include a Severability of Interest (Cross Liability) provision whereby

such insurance applies separately to each insured to the extent of

Sublessee's indemnity obligations hereunder.

(3) Include a breach of warranty clause in favor of the Additional

Insureds, whereby such insurance shall not be invalidated by any breach

of warranty by Sublessee.

(4) Include a blanket contractual liability clause to cover the liability

and indemnity assumed by the Sublessee under this Agreement.

(5) Provide that such insurance is primary without right of contribution

from Sublessor's insurance.

(6) Provide that Sublessor is not obligated for payment of any premiums,

deductibles, retention or other self-insurances thereunder.

(7) Provide for 30 days advance notice to Sublessor and the respective

Prime Lessor, by registered or certified mail, of any cancellation,

reduction, lapse or other material change.

(8) Include a Waiver of Subrogation clause in favor of the Additional

Insureds.

The indemnities and insurance provisions contained or referred to herein shall
survive the expiration or other termination of this Agreement.

13 -- ASSIGNMENT

This Agreement and the rights and obligations created hereunder may not be
assigned or delegated by Sublessee without the prior written consent of
Sublessor and, if required of Sublessor under the applicable Prime Agreement,
the applicable Prime Lessor; but subject to the foregoing, this Agreement and
the rights and obligations of the parties hereby created, shall be binding upon
and inure to the benefit of the parties hereto, their respective successors,
assigns and legal representatives. Sublessor reserves the right to assign or
transfer its interest hereunder without notice.

14 -- WAIVER

The observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but such waiver shall be effective only if it is
in writing signed by the party against which

 

 

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such waiver is to be asserted. Unless otherwise expressly provided in this
Agreement, no delay or omission on the part of any party in exercising any right
or privilege under this Agreement shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right or privilege under this
Agreement operate as a waiver of any other right or privilege under this
Agreement nor shall any single or partial exercise of any right or privilege
preclude any other or further exercise thereof or the exercise of any other
right or privilege under this Agreement. No failure by either party to take any
action or assert any right or privilege hereunder shall be deemed to be a waiver
of such right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.

15 -- FORCE MAJEURE

Neither party shall be deemed in violation of this Agreement if it is prevented
from performing any of its non-monetary obligations hereunder by any labor or
industrial dispute; civil disturbance; vandalism or act of a public enemy;
shortage of labor, energy or material; court order, regulation, action or
non-action of any governmental authority; weather condition; natural disaster;
act of God; or other circumstances not reasonably within its control, and which,
with the exercise of due diligence, it is unable to overcome; provided that, the
provisions of this Article 15 shall not apply where the time period for
Sublessor to perform its obligations under the Prime Agreement would not be
extended upon the occurrence of any of the foregoing. Each party shall give the
other immediate notice of such interruption, shall make all reasonable efforts
to eliminate it as soon as possible, and at its conclusion, shall resume
performance in accordance with its obligations hereunder; provided that, neither
party shall be required to settle or compromise any strike or other labor
dispute to so eliminate such interruption.

16 -- NOTICE

All notices made pursuant to this Agreement shall be in writing and shall be
deemed given upon (a) a transmitter's confirmation of a receipt of a facsimile
transmission (but only if followed by confirmed delivery of a standard overnight
courier the following Business Day or if delivered by hand the following
Business Day), or (b) confirmed delivery of a standard overnight courier or
delivered by hand, to the parties at the following addresses:

if to Sublessor:

[insert]

if to Sublessee:

[insert]

or to such other address as either party hereto may have furnished to the other
party by a notice in writing in accordance with this Article 16.

 

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17 -- TERMINATION

Without limiting any rights of Sublessor, either at law or in equity, to
exercise any remedies available to Sublessor as may be afforded by operation of
law, this Agreement may be terminated as follows:

a) Immediately upon termination or expiration of the respective Prime

Agreement (notwithstanding that such agreement may remain in effect as

to space other than the Subleased Premises), or upon expiration or

termination of Sublessor's right to grant Sublessee the right to occupy

and use the applicable portion of the Subleased Premises.

b) Immediately without notice to Sublessee if Sublessee files a voluntary

petition in bankruptcy or if proceedings in bankruptcy shall be

instituted against it and not dismissed within 30 days, or that a court

shall take jurisdiction of Sublessee or its assets pursuant to

proceedings brought under the provisions of any Federal Reorganization

Act, or that a receiver of Sublessee's assets shall be appointed and

such taking or appointment shall not be stayed or vacated within a

period of 30 days.

c) Immediately upon written notice to Sublessee, if Sublessee fails to pay

any installment of rent or additional rent within 10 days after receipt

of written notice that the same was not paid when due.

d) Immediately upon written notice to Sublessee, if Sublessee fails to

perform, keep, and observe any of the terms, covenants or conditions

herein contained on the part of Sublessee to be performed, kept, or

observed and such failure continues for 30 days after the date of

written notice thereof is sent to Sublessee; provided that, if

Sublessor would have a lesser period of time to cure such default under

the applicable Prime Agreement, then Sublessee shall only be permitted

the time period that Sublessor would be permitted to cure such default,

less 48 hours; it being further agreed that Sublessor may, but shall

not be obligated to, take any action it reasonably deems necessary or

advisable at Sublessee' expense to cure such default if such default

causes interference with Sublessor's operations or if it is determined

by Sublessor, acting reasonably, that such default is likely to result

in Sublessor's loss of the use of the Subleased Premises pursuant to

the Prime Agreement.

e) Immediately by either party upon the acquisition or condemnation of the

Subleased Premises by eminent domain, in which event Sublessee shall

have no claim for the unexpired term nor a claim for any part of the

award made for the Subleased Premises.

In the event that this Agreement is terminated in accordance with the foregoing
provisions prior to the expiration of the term after a default by Sublessee
hereunder, Sublessor may (but shall not be obligated to) relet the Subleased
Premises for a term and upon any conditions it may deem proper. In no event will
Sublessee be entitled to receive any payment from Sublessor if the profits from
such reletting exceed the rental reserved to be paid hereunder by Sublessee. Any
termination by Sublessor under this section shall not affect or impair the right

 

 

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of Sublessor to recover actual damages occasioned by any default by Sublessee
that may be recoverable under applicable law.

18 -- SURRENDER OF SUBLEASED PREMISES

Upon expiration or other termination of this Agreement, Sublessee shall remove
all its signs, trade fixtures and any other personal property, repair all damage
caused by removal, and surrender the Subleased Premises in good order and
condition, reasonable wear and tear excepted. If Sublessee fails to surrender
possession as aforestated, Sublessor may re-enter and repossess the Subleased
Premises without further notice (any personal property therein being deemed
abandoned by Sublessee) and Sublessee hereby waives service of any notice of
intention to re-enter and/or right to redeem that may be granted by applicable
laws.

Sublessor agrees that on payment of the rents and any other payments due, and
performance of the covenants and agreements on the part of Sublessee to be
performed hereunder, Sublessee shall peaceably have and enjoy the Subleased
Premises for the uses granted to Sublessee hereunder, subject to Sublessor's
continued rights under the applicable Prime Agreement and any limitations
otherwise stated herein.

20 -- CONDITIONS

It is agreed that if required under the terms of the applicable Prime Agreement,
the use of the Subleased Premises by Sublessee is subject to the consent and
approval of the applicable Prime Lessor. If written consent by any Prime Lessor
is denied after reasonable efforts by the parties hereto to obtain such consent,
then either party may, at its option (but without limiting any of Sublessor's
rights in respect of any breach of the terms hereof prior to such rescission)
rescind its signature hereon and thereafter this Agreement shall become null and
void (but only as to the portion of the Subleased Premises covered by such Prime
Agreement), and the parties shall become discharged from all further unaccrued
liabilities hereunder. If the consent of any Prime Lessor is required, then for
purposes of submittal of this Agreement for the consent of such Prime Lessor, it
is agreed that Schedule 1 may be redacted so as to describe only the portion of
the Subleased Premises as are leased by Sublessor from such Prime Lessor and so
as to set forth only the respective Prime Agreements that pertain to the
Subleased Premises.

21 -- TAXES

If Sublessor shall be assessed for taxes on any of the Sublessee's leasehold
improvements, equipment, furniture, fixtures, personal property or business
operations, Sublessee shall pay to Sublessor the amount of such taxes within 10
days after delivery of a written statement thereof.

22 -- SUBJECT IN ALL RESPECTS TO OTHER AGREEMENTS

Notwithstanding anything to the contrary contained in this Agreement, the
provisions of this Agreement shall be subject in all respects to the provisions
of the Master Facility Agreement and to the provisions of that certain Capacity
Purchase Agreement, dated as of January 1, 2001, among Continental Airlines,
Inc., ExpressJet Holdings, Inc., and ExpressJet Airlines, Inc.

[SIGNATURE PAGE FOLLOWS]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.

 

 

SUBLESSOR SUBLESSEE

BY: BY:

-------------------------- ---------------------------

------------------ ------------------

------------------ ------------------

------------------ ------------------

DATE: DATE:

------------------------- ---------------------------

 

Schedules to be added:

Schedule 1 -- Description of Subleased Premises

Schedule 2 -- Rental Amounts for Subleased Premises

 

 

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EXHIBIT B

to the Master Facility and Ground Handling Agreement

FORM OF ASSIGNMENT

This Agreement (this "Agreement") is made and entered into, and is to be
effective on, this the ____ day of ____________ (the "Effective Date"), by
____________, a ____________ corporation ("Assignor") and ____________, a
____________ corporation ("Assignee"), [and the ____________ ("Airport
Lessor")].

WITNESSETH:

WHEREAS, Assignor leases space], designated on Exhibit(s) _____ attached hereto
and made a part hereof (together the "Premises"), at ____________ at the
____________ Airport, ____________ (the "Airport") under a certain [Airport Use
and Lease Agreement dated ____________, (as amended, hereinafter referred to as
the "Lease")] between Assignor and the Airport Lessor;

WHEREAS, a copy of the Lease has been provided to Assignee and is incorporated
herein by reference;

WHEREAS, Assignee operates at the Airport and from portions of the Premises;

WHEREAS, Assignor desires to assign to Assignee [all] [a portion] of Assignor's
remaining right, title and interest in the Lease [insofar (and only insofar) as
the Lease pertains to certain leased premises and improvements described on the
attached Annex 1], such space herein called the "Assigned Space" and the
improvements located within the Assigned Space are herein called the "Assigned
Space Improvements". The Assigned Space and Assigned Space Improvements are
herein called the "Assigned Premises";

WHEREAS, Assignee desires to accept such assignment from Assignor;

[WHEREAS, such assignment requires the prior written consent of the Airport
Lessor];

[WHEREAS, pursuant to the Lease, such assignment does not require the consent of
the Airport Lessor (but written notice of such assignment is required to be
given to the Airport Lessor)].

NOW, THEREFORE, in consideration of the assignment herein made and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:

1. DEMISE AND USE

Effective on the Effective Date, Assignor hereby assigns to Assignee all of the
interest of the lessee under the Lease [insofar (and only insofar) as the Lease
pertains to the Assigned Premises].

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

B-1

 

 

2. ACCEPTANCE OF ASSIGNMENT

Assignee accepts the foregoing assignment of the Lease [insofar (and only
insofar) as the Lease pertains to the Assigned Premises] and covenants with
Assignor, from and after the Effective Date, to pay all rent and other charges
provided for in the Lease, as amended and to perform and observe all of the
other covenants, conditions and provisions in the Lease, as amended, to be
performed or observed by or on the part of Assignor as tenant under the Lease
[in respect of the Assigned Premises].

3. WARRANTIES

Assignor hereby warrants and covenants that (i) except for the rights and
interests of the Airport Lessor under the Lease, Assignor is now the sole owner
of all rights and interests in and to the Assigned Premises, (ii) the Lease[, as
it relates to the Assigned Premises,] is in full force and effect, (iii)
Assignor has complied with all terms and provisions of the Lease [as it relates
to the Assigned Premises] and same is not currently in default and Assignor
knows of no condition which with the passage of time or giving of notice might
constitute a default under the Lease by any party, and (iv) the Assigned
Premises and the Lease[, insofar as it relates to the Assigned Premises,] are
free from all liens and encumbrances. A copy of the Lease (and all amendments
thereto) are attached as Annex 2.

Subject to the foregoing, Assignee accepts the Assigned Premises and equipment
thereon "AS IS" and acknowledges that there is, with respect to the Assigned
Premises and equipment thereon, NO WARRANTY, REPRESENTATION, OR CONDITION OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE, and that none shall be implied by law. Except
as stated in this Agreement, Assignee acknowledges that Assignor has made no
representations with respect to the Assigned Premises or equipment. Final
determination of the suitability of the Assigned Premises or equipment for the
use contemplated by Assignee is the sole responsibility of Assignee, and
Assignor shall have no responsibility in connection with such suitability.

4. ASSIGNEE TO COMPLY WITH LEASE TERMS

Assignee agrees to perform and observe all of the covenants, conditions and
terms of the Lease relating to the period of time from and after the Effective
Date [(insofar, but only insofar, as the same related to the Assigned
Premises)], and to protect, defend, indemnify and hold harmless Assignor from
and against all claims, damages, and expenses of any kind asserted by any person
or entity, including the Lessor, arising out of the nonperformance,
nonobservance or improper performance or observance of the covenants, conditions
or terms of the Lease [(insofar, but only insofar, as the same relates to the
Assigned Premises)]. Assignor shall comply with all remaining terms of the
Lease, to the extent any non-compliance could adversely affect Assignee rights
in or to the Assigned Premises. Assignor agrees to protect, defend, indemnify
and hold harmless Assignee from and against all claims, damages, and expenses of
any kind asserted by any person or entity, including the Airport Lessor, arising
out of the nonperformance, nonobservance or improper performance or observance
prior to the Effective Date of the covenants, conditions or terms of the Lease
[(insofar, but only insofar as the same relates to or

 

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

B-2

 

 

effects the Assigned Premises)]. Nothing herein shall be construed as to
obligate Assignee to be responsible in any way for any hazardous material
located in, or the environmental condition of, the Assigned Premises as of the
Effective Date to the extent not caused by or arising from Assignee's
operations.

5. APPROVALS

[This Agreement shall not become effective unless and until the consent of the
Airport Lessor is given by execution of consents for the assignments herein
made, which consents shall be requested on the standard form for such consents
by the lessor as attached hereto as Annex 3. Assignor and Assignee hereby
mutually agree to expeditiously take any and all actions, and to cooperate fully
with each other, with respect to obtaining any approvals, authorizations,
licenses or similar items that may be necessary or desirable in order to carry
out the agreements set forth herein or contemplated hereby. The parties hereto
agree to request the consent of the Lessor on the consent form attached hereto
as Annex 3. The parties agree to make such reasonable changes to such form as
may be required by Lessor.]

[Consent by Airport Lessor. Airport Lessor, as evidenced by its execution below,
does hereby consent to this Assignment, [releases Assignor from all of its
responsibilities and obligations under the Lease that are attributable to the
period of time after the Effective Date, and] agrees to look solely to Assignee
for performance of all obligations thereafter under the Lease [as it relates to
the Assigned Premises].]

[Acknowledgement. Assignor and Airport Lessor hereby represent to Assignee that
the Lease is currently in full force and effect, and that they know of no events
of default relating to the Lease or the Assigned Premises as of the date
hereof.]

6. APPLICABLE LAW

[The laws of the State where the Assigned Premises are located shall be used in
interpreting this Agreement and in determining the rights of the parties under
it.]

7. SEVERABILITY

If any part of this Agreement is held to be invalid by final judgment of any
court of competent jurisdiction, the part held invalid shall be modified to the
extent necessary to make it valid or, if necessary, excised, and the remainder
of the Agreement shall continue to remain effective.

8. ENTIRE AGREEMENT

This Agreement contains the entire agreement between the parties with respect to
its subject matter and may not be changed in any way, except by a written
instrument executed by the parties and, if necessary, approved by the Airport
Lessor.

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

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9. SUCCESSORS AND ASSIGNS

The provisions of this Agreement shall be binding on the parties, their
successors and assigns.

IN WITNESS WHEREOF, the parties have properly executed this Agreement effective
the date first above written.

ATTEST: [ASSIGNOR]

BY:

---------------------------- ----------------------------

TITLE:

-------------------------

DATE:

--------------------------

ATTEST: [ASSIGNEE]

BY:

---------------------------- ----------------------------

TITLE:

-------------------------

DATE:

--------------------------

[Consent of Airport Lessor

 

By:

-------------------------

Name:

Title:

Date: ]

-----------------------

Exhibits to be Attached:

Annex 1 -- Description of Assigned Space

Annex 2 -- Copy of Lease

Annex 3 -- Request for Consent

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

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EXHIBIT C

to the Master Facility and Ground Handling Agreement

FORM OF CONTINENTAL GROUND HANDLING AGREEMENT

(Continental as Handling Company, Contractor as Carrier)

-----------------

AHM 810 - ANNEX B

-----------------

STANDARD GROUND HANDLING AGREEMENT

SIMPLIFIED PROCEDURE

ANNEX B.SYS.0 -- LOCATIONS AGREED SERVICES, FACILITIES AND CHARGES

to the Standard Ground Handling Agreement (SGHA) of April 1993

Between: ExpressJet Airlines, Inc.

1600 Smith

Mail Stop HQSCE

Houston, Texas 77002

(hereinafter referred to as the "Carrier")

And: Continental Airlines, Inc.

1600 Smith

Mail Stop HQSLG

Houston, Texas 77002

(hereinafter referred to as the "Handling Compan y")

effective from: January 1, 2001

This Annex B.SYS.0

for the location: The Handling Company shall provide ground handling services

for Scheduled Flights at the airports set forth on

Schedule 1 hereto.

In addition to the airports on Schedule 1 and except for the

airports set forth on Schedule 3 (at which Carrier currently

provides ground handling), the Handling Company shall also

provide ground handling services to the Carrier pursuant to

the terms hereof at each additional airport to which Scheduled

Flights are scheduled to fly after the date hereof (each, a

"New Airport") unless (i) at the time of commencement of

Scheduled Flights to such New Airport, the Handling Company

does not fly any flights to such airport; (ii) in the calendar

month in which such Scheduled Flights commence, such New

Airport would be the first, second or third New Airport at

which the Handling

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

C-1

 

 

Company would not provide services to the Carrier pursuant to

the terms hereof; and (iii) the Handling Company gives at

least 90 days' prior written notice (or such shorter period of

time as is reasonably practicable) before the commencement of

Scheduled Flights to such New Airport that the Handling

Company will not provide ground handling services at such

airport. Schedule 1 shall be amended to reflect each such

addition.

The Handling Company may elect, upon at least 90 days' prior

written notice to the Carrier, to provide ground handling

services to the Carrier at any other airport to which

Scheduled Flights fly at the time of such election. Schedule 1

shall be amended to reflect each such addition.

Notwithstanding the foregoing, the Handling Company may elect

to terminate the provision of services by the Handling Company

pursuant hereto at any airport to which the Handling Company

does not fly any flights, upon at least 90 days' prior written

notice to the Carrier and in any event only at such time as

the Carrier, using its commercially reasonable efforts, is

able to provide the ground handling services provided by the

Handling Company hereunder with respect to Scheduled Flights

at such airport. In addition, the provisions of this agreement

shall terminate with respect to any airport to which Scheduled

Flights cease to be scheduled (other than a temporary

cessation, it being understood that the cessation of seasonal

Scheduled Flights upon the end of the relevant season shall

constitute a temporary cessation if such Scheduled Flights are

expected to resume in the subsequent relevant season).

Schedule 1 shall be amended to reflect each such termination.

is valid from: January 1, 2001

and replaces: N/A

Capitalized terms used herein that are not defined herein or in the Standard
Ground Handling Agreement of April 1993 as published by the International Air
Transport Association (the "Main Agreement") or in Annex A thereto, shall have
the meanings given to such terms in the Capacity Purchase Agreement among the
Carrier, the Handling Company and ExpressJet Holdings, Inc., the Carrier's
parent.

This Annex B is prepared in accordance with the simplified procedure whereby the
Carrier and the Handling Company agree that the terms and conditions of the Main
Agreement and Annex A to the Main Agreement shall apply as if such terms were
repeated here in full, except as otherwise modified pursuant to this Annex B. By
signing this Annex B, the parties confirm that they are familiar with the
aforementioned Main Agreement and Annex A. The Main Agreement and Annex A, as
modified pursuant to this Annex B shall be referred to herein as the
"Agreement."

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

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PARAGRAPH 1 - HANDLING CHARGES

1.1 The Handling Company shall provide the services of Annex A enumerated

below for the Carrier's Scheduled Flights at the locations set forth

above:

1.1.1. For services of the Annex A in its:

SECTION 1 -- REPRESENTATION AND ACCOMMODATION:

1.1.2., 1.1.3., 1.1.4.

1.2.1., 1.2.2, 1.2.3.

SECTION 2 -- LOAD CONTROL AND COMMUNICATION:

2.1.3.

2.2.1., 2.2.2., 2.2.3.

SECTION 4 -- PASSENGERS AND BAGGAGE:

4.1.1., 4.1.2., 4.1.3., 4.1.4., 4.1.5., 4.1.6, 4.1.7.(in

accordance with the Baggage Resolution System Agreement, 4.2.,

4.3., 4.4.1., 4.4.2. (a), 4.4.4. (a)(c), 4.4.5., 4.4.6.,

4.4.7.

SECTION 5 -- CARGO AND MAIL:

5.1. thru 5.5 (CO's cargo products)

SECTION 6 -- RAMP:

6.1., 6.2.1., 6.2.2. (a), 6.2.3. (on request at ad hoc rate),

6.3., 6.4.3., 6.4.4., 6.4.5., 6.4.6. (a)(b), 6.4.7., 6.4.8.,

6.4.9., 6.4.12., 6.5.1. (on request at ad hoc rate), 6.6.1.,

6.7.1.

SECTION 7 -- AIRCRAFT SERVICING:

7.2.2., 7.3., 7.6.2. (ad hoc rates apply)

1.1.2. NO SEPARATE FEES FOR SERVICES COVERED UNDER THE SECTIONS

LISTED ABOVE:

The ground handling services to be provided hereunder shall be

provided in consideration of the mutual obligations of the

Handling Company and the Carrier set forth in the Capacity

Purchase Agreement among the Carrier, the Handling Company and

ExpressJet Holdings, Inc., the Carrier's parent, with no

separate fee charged hereunder; provided that the additional

charges specified in Paragraph 2 below shall apply when

applicable; and provided further that the Carrier will be

responsible for all airport landing fees and other airport

taxes or charges, and shall make payment directly therefor.

1.1.3 EQUIPMENT PROVIDED BY CARRIER:

Notwithstanding anything contained in Paragraph 1.1.1 to the

contrary, at each

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

C-3

 

 

airport that does not constitute a Hub Airport, the Carrier

shall be responsible for supplying all ground handling

equipment that is usable only for regional jets or turboprops

of the type used by Contractor for Scheduled Flights (as

opposed to other types of jets flown by the Handling Company),

which, as of the date hereof, is the equipment set forth on

Schedule 2 hereto, and which equipment shall not be used by

Handling Company for any purpose other than providing ground

handling services to Carrier. At all Hub Airports, the

Handling Company shall be responsible for supplying such

equipment. As between Handling Company and Carrier, Handling

Company shall be responsible for supplying all other ground

handling equipment necessary for the provision of ground

handling services hereunder.

 

PARAGRAPH 2 -- ADDITIONAL CHARGES

2.1 Services in Annex A which are not included in Paragraph 1 of this Annex

and all other additional services when available will be charged for as

follows:

2.1.1. Overtime. If, upon Carrier's request, the Handling Company

agrees to provide additional personnel in order to handle a

flight outside of the scheduled arrival and departure times or

for any other reason, the Handling Company not will charge

Carrier more than the Handling Company's actual cost of

providing such additional personnel.

2.1.2. Supplies. The Carrier will furnish the Handling Company those

items specific to its operation, such as, but not limited to,

cabin appearance supplies, (i.e. safety cards, pillows and

blankets), baggage tags, forms, ticket envelopes, tariffs,

timetables, etc. Any materials or supplies provided to the

Carrier by the Handling Company will not be charged back to

the Carrier at more than the Handling Company's replacement

cost.

2.1.3. Third Party Services. The Carrier shall, at the Handling

Company's discretion, be responsible for the cost and/or a

pro-rata share of the cost, whichever is applicable, incurred

by the Handling Company for outside vendor services, such as,

but not limited to, water/lavatory services, cabin appearance,

ramp handling services, bussing services, aircraft de-icing,

aircraft washing and aircraft maintenance services, skycaps,

security screening, armed guard and armored car services,

baggage claim security, janitorial services, baggage delivery

services, wheel chair services, electric cart services, denied

boarding compensation, distressed passenger meals and

overnight accommodation, etc.

2.1.4. De-Icing. For de-icing services provided by the Handling

Company, the Handling Company shall not charge the Carrier

more than the procurement cost of fluids and all other actual

costs of the Handling Company for providing such

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

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de-icing services including the Handling Company's actual

labor costs associated with such services.

2.1.6. Training. At the Handling Company's request, the Carrier

agrees to reimburse the Handling Company for all associated

out-of-pocket expenses required to train the Handling

Company's employees in the Carrier's procedures and

administrative requirements.

 

PARAGRAPH 3 -- DISBURSEMENTS

3.1 At the Handling Company's request, disbursements made on behalf of the

Carrier shall be reimbursed to the Handling Company at cost.

PARAGRAPH 4 --SETTLEMENT OF ACCOUNT

4.1 All payments to be made pursuant to this Agreement shall be subject to

the setoff provisions of Section 11.16 of the Capacity Purchase

Agreement. Notwithstanding Article 7.2 of the Main Agreement, and

subject to such setoff provisions of the Capacity Purchase Agreement,

settlement of account shall be effected through the IATA Clearing House

via the Airlines Clearing House in accordance with the Rules and

Regulations of the IATA Clearing House and the Airlines Clearing House.

PARAGRAPH 5 -- TERMINATION OF AGREEMENT

5.1 This Agreement may be terminated by either party at any time following

the termination of the Capacity Purchase Agreement; provided, that this

Agreement may not be terminated pursuant to this sentence during the

Wind-Down Period with respect to any location to which Scheduled

Flights continue to fly during such Wind-Down Period. If the Carrier

fails to make payments as agreed upon in Paragraph 4.1., the Handling

Company may terminate the agreement upon twenty-four (24) hours notice

by letter, teletype or facsimile.

 

PARAGRAPH 6 -- TRANSFER OF SERVICES

6.1 In accordance with Article 3.1 of the Main Agreement, the Handling

Company may subcontract the services of Annex A as necessary in order

to support the Carrier's operation.

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

C-5

 

 

PARAGRAPH 7 -- OTHER MODIFICATIONS TO MAIN AGREEMENT

7.1 Sections 11.4, 11.5, 11.6, and 11.10 of the Main Agreement shall not

apply to this Agreement.

7.2 Handling Company and Carrier agree that all third-parties engaged by

Carrier or Handling Company as of the date hereof to provide of ground

handling services to Carrier at any of the airports listed on Schedule

1 hereto are hereby approved for all purposes of Section 3.1 and

Section 3.2, as appropriate, of the Main Agreement.

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

C-6

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers duly authorized thereunto, as of the 1st day of
January, 2001.

Handling Company: Carrier:

CONTINENTAL AIRLINES, INC. EXPRESSJET AIRLINES, INC.

BY: BY:

----------------------------- -----------------------------

TITLE: TITLE:

-------------------------- --------------------------

DATE: DATE:

--------------------------- ---------------------------

 

Schedule 1 Airports

Schedule 2 Carrier Equipment

Schedule 3 1/1/01 Carrier-Handled Airports

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

C-7

 

 

EXHIBIT D

to the Master Facility and Ground Handling Agreement

FORM OF CONTRACTOR GROUND HANDLING AGREEMENT

(Contractor as Handling Company, Continental as Carrier)

-----------------

AHM 810 - ANNEX B

-----------------

STANDARD GROUND HANDLING AGREEMENT

SIMPLIFIED PROCEDURE

ANNEX B.SYS.0 -- LOCATIONS AGREED SERVICES, FACILITIES AND CHARGES

to the Standard Ground Handling Agreement (SGHA) of April 1993

Between: Continental Airlines, Inc.

1600 Smith

Mail Stop HQSLG

Houston, Texas 77002

(hereinafter referred to as the "Carrier")

And: ExpressJet Airlines, Inc.

1600 Smith

Mail Stop HQSCE

Houston, Texas 77002

(hereinafter referred to as the "Handling Company")

effective from: January 1, 2001

This Annex B.SYS.0

for the location: The Handling Company shall provide ground handling

services at the airports set forth on Schedule 1 hereto.

The Carrier may elect, at its sole discretion and upon at

least 90 days notice to the Handling Company, to require

the Handling Company to provide ground handling services

to the Carrier at any airport to which the Handling

Company already flies Scheduled Flights at the time of

such election, but only if the Carrier does not provide

ground handling services to the Handling Company at

such airport. Schedule 1 shall be amended to reflect

each such addition.

Notwithstanding the foregoing, the Carrier may elect, at

its sole discretion and upon at least 90 days' prior

written notice to the Handling Company, to terminate the

provision of services covered hereunder by the Handling

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

D-1

 

 

Company at any airport. In addition, the provisions of

this agreement shall terminate with respect to any

airport to which Scheduled Flights cease to be scheduled

(other than a temporary cessation, it being understood

that the cessation of seasonal Scheduled Flights upon the

end of the relevant season shall constitute a temporary

cessation if such Scheduled Flights are expected to resume

in the subsequent relevant season). Schedule 1 shall be

amended to reflect each such termination.

is valid from: January 1, 2001

and replaces: N/A

Capitalized terms used herein that are not defined herein or in the Standard
Ground Handling Agreement of April 1993 as published by the International Air
Transport Association (the "Main Agreement") or in Annex A thereto, shall have
the meanings given to such terms in the Capacity Purchase Agreement among the
Carrier, the Handling Company and ExpressJet Holdings, Inc., the Handling
Company's parent.

This Annex B is prepared in accordance with the simplified procedure whereby the
Carrier and the Handling Company agree that the terms and conditions of the Main
Agreement and Annex A to the Main Agreement shall apply as if such terms were
repeated here in full, except as otherwise modified pursuant to this Annex B. By
signing this Annex B, the parties confirm that they are familiar with the
aforementioned Main Agreement and Annex A. The Main Agreement and Annex A, as
modified pursuant to this Annex B shall be referred to herein as the
"Agreement."

 

PARAGRAPH 1 -- HANDLING CHARGES

1.1 The Handling Company shall provide the services of Annex A enumerated

below for the Carrier's scheduled flights at the locations set forth

above:

1.1.1. For services of the Annex A in its:

SECTION 1 -- REPRESENTATION AND ACCOMMODATION:

1.1.2., 1.1.3., 1.1.4.

1.2.1., 1.2.2, 1.2.3.

SECTION 2 -- LOAD CONTROL AND COMMUNICATION:

2.1.3.

2.2.1., 2.2.2., 2.2.3.

SECTION 4 -- PASSENGERS AND BAGGAGE:

4.1.1., 4.1.2., 4.1.3., 4.1.4., 4.1.5., 4.1.6, 4.1.7.(in

accordance with the Baggage Resolution System Agreement, 4.2.,

4.3., 4.4.1., 4.4.2. (a), 4.4.4. (a)(c), 4.4.5., 4.4.6.,

4.4.7.

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

D-2

 

 

 

 

 

SECTION 5 -- CARGO AND MAIL:

5.1. thru 5.5 (CO's cargo products)

SECTION 6 -- RAMP:

6.1., 6.2.1., 6.2.2. (a), 6.2.3. (on request at ad hoc rate),

6.3., 6.4.3., 6.4.4., 6.4.5., 6.4.6. (a)(b), 6.4.7., 6.4.8.,

6.4.9., 6.4.12., 6.5.1. (on request at ad hoc rate), 6.6.1.,

6.7.1.

SECTION 7 -- AIRCRAFT SERVICING:

7.2.2., 7.3., 7.6.2. (ad hoc rates apply)

1.1.2. FEES FOR SERVICES COVERED UNDER THE SECTIONS LISTED ABOVE:

The charges set forth below do not include airport landing

fees, or any other airport taxes or charges. The Carrier will

be responsible for such charges at its own expense and shall

make payment directly therefor.

Flight Fee:

The Carrier shall pay to the Handling Company a Base Per

Flight Fee for the ground handling services to be provided

hereunder, which fee shall equal the Handling Company's cost

of providing such services, as reasonably determined by the

Handling Company and subject to the audit rights of the

Carrier as set forth in Section 3.05 of the Capacity Purchase

Agreement.

1.1.3 EQUIPMENT PROVIDED BY CARRIER:

Notwithstanding anything contained in Paragraph 1.1.1 to the

contrary, at each airport, the Carrier shall be responsible

for supplying all ground handling equipment that is usable

only for jet aircraft other than regional jets, which, as of

the date hereof, is the equipment set forth on Schedule 2

hereto, and which equipment shall not be used by Handling

Company for any purpose other than providing ground handling

services to Carrier. As between Handling Company and Carrier,

Handling Company shall be responsible for supplying all other

ground handling equipment necessary for the provision of

ground handling services hereunder.

 

PARAGRAPH 2 -- ADDITIONAL CHARGES

2.1 Services in Annex A which are not included in Paragraph 1 of this Annex

and all other additional services when available will be charged for as

follows:

2.1.1. Overtime. If, upon Carrier's request, the Handling Company

agrees to provide additional personnel in order to handle a

flight outside of the scheduled arrival

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

D-3

 

 

 

 

 

and departure times or for any other reason, the Handling

Company will charge Carrier the Handling Company's actual cost

of providing such additional personnel.

2.1.2. Supplies. The Carrier will furnish the Handling Company those

items specific to its operation, such as, but not limited to,

cabin appearance supplies, (i.e. safety cards, pillows and

blankets), baggage tags, forms, ticket envelopes, tariffs,

timetables, etc. Any materials or supplies provided to the

Carrier by the Handling Company will be charged back to the

Carrier at the Handling Company's replacement cost.

2.1.3. Third Party Services. The Carrier shall, at the Handling

Company's discretion, be responsible for the cost and/or a

pro-rata share of the cost, whichever is applicable, incurred

by the Handling Company for outside vendor services, such as,

but not limited to, water/lavatory services, cabin appearance,

ramp handling services, bussing services, aircraft de-icing,

aircraft washing and aircraft maintenance services, skycaps,

security screening, armed guard and armored car services,

baggage claim security, janitorial services, baggage delivery

services, wheel chair services, electric cart services, denied

boarding compensation, distressed passenger meals and

overnight accommodation, etc.

2.1.4. De-Icing. For de-icing services provided by the Handling

Company, the Handling Company shall charge the Carrier the

procurement cost of fluids and all other actual costs of the

Handling Company for providing such de-icing services

including the Handling Company's actual labor costs associated

with such services.

2.1.6. Training. The Carrier agrees to reimburse the Handling Company

for all associated out-of-pocket expenses required to train

the Handling Company's employees in the Carrier's procedures

and administrative requirements.

 

PARAGRAPH 3 -- DISBURSEMENTS

3.1 Disbursements made on behalf of the Carrier shall be reimbursed to the

Handling Company at cost.

 

PARAGRAPH 4 -- SETTLEMENT OF ACCOUNT

4.1 Notwithstanding Article 7.2 of the Main Agreement and subject to the

setoff provisions of the Capacity Purchase Agreement, settlement of

account shall be effected through the IATA Clearing House via the

Airlines Clearing House in accordance with the Rules and Regulations of

the IATA Clearing House and the Airlines Clearing House.

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

D-4

 

 

 

 

 

PARAGRAPH 5 -- TERMINATION OF AGREEMENT

5.1 This Agreement may be terminated by either party at any time following

the termination of the Capacity Purchase Agreement; provided, that this

Agreement may not be terminated pursuant to this sentence during the

Wind-Down Period with respect to any location to which Scheduled

Flights continue to fly during such Wind-Down Period. If the Carrier

fails to make payments as agreed upon in Paragraph 4.1., the Handling

Company may terminate the agreement upon twenty-four (24) hours notice

by letter, teletype or facsimile.

 

PARAGRAPH 6 -- TRANSFER OF SERVICES

6.1 In accordance with Article 3.1 of the Main Agreement, the Handling

Company may subcontract the services of Annex A as necessary in order

to support the Carrier's operation.

PARAGRAPH 7 -- OTHER MODIFICATIONS TO MAIN AGREEMENT

7.1 Upon the request of the Carrier from time to time at its sole

discretion, and for so long as requested by the Carrier during the Term

of this Agreement, the Handling Company shall provide ground handling

services pursuant to this Agreement at any location covered by this

Annex B to any of the Carrier's codeshare partners.

7.2 Sections 11.4, 11.5, 11.6, and 11.10 of the Main Agreement shall not

apply to this Agreement.

7.3 Handling Company and Carrier agree that all third-parties engaged by

Carrier or Handling Company as of the date hereof to provide of ground

handling services to Carrier at any of the airports listed on Schedule

1 hereto are hereby approved for all purposes of Section 3.1 and

Section 3.2, as appropriate, of the Main Agreement.

7.4 In connection with the determination of the Base Per Flight Fee

pursuant to Section 1.1.2 above and the charges pursuant to Section 2

above, Handling Company shall make available for inspection by Carrier

and its outside auditors, within a reasonable period of time after

Carrier makes a written request therefor, all of Handling Company's

books and records (including all financial and accounting records)

relating to this Agreement and the provision of services hereunder by

Handling Company. Each of Carrier and its outside auditors shall be

entitled to make copies and notes of such information as it deems

necessary and to discuss such records with Handling Company's Chief

Financial Officer or such other employees or agents of Handling Company

knowledgeable about such records. Upon the reasonable written request

of Carrier or its outside auditors, Handling Company will cooperate

with Carrier and its outside auditors to permit Carrier and its outside

auditors access to Handling Company's outside auditors for purposes of

reviewing such records.

 

Annex B.SYS.0

Continental Airlines/ExpressJet Airlines, Inc.[ExpressJet as Handling Company]
Dated: January 1, 2001

 

 

D-5

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers duly authorized thereunto, as of the 1st day of
January, 2001.

Carrier: Handling Company: CONTINENTAL AIRLINES, INC. EXPRESSJET AIRLINES, INC.

BY: BY:

----------------------------- -----------------------------

TITLE: TITLE:

-------------------------- --------------------------

DATE: DATE:

--------------------------- ---------------------------

Schedule 1 Airports

Schedule 2 Carrier Equipment

 

 

D-6

 

 

EXHIBIT D

TERMS OF CODESHARE ARRANGEMENTS

 

1. Contractor's use of CO code. During the Term of the Agreement, Continental
shall be permitted to place its two-letter designator code "CO" on all flights
operated by Contractor and shall place its designator code, "CO", on all flights
operated by Contractor with Covered Aircraft. Continental may suspend the
display of its code on flights operated by Contractor if Contractor is in breach
of any of its operational or safety-related obligations under the Agreement
during the period that such breach continues. All Contractor operated flights
that display the CO code are referred to herein as "CO* Flights".

2. Contractor's display of CO code.

(a) All CO* Flights will be included in the schedule,

availability and fare displays of all computerized

reservations systems in which Continental and

Contractor participate, the Official Airline Guide

(to the extent agreed upon) and Continental's and

Contractor's internal reservation systems, under the

CO code, to the extent possible. Continental and

Contractor will take the appropriate measures

necessary to ensure the display of the schedules of

all CO* Flights in accordance with the preceding

sentence.

(b) Continental and Contractor will disclose and identify

the CO* Flights to the public as actually being a

flight of and operated by Contractor, in at least the

following ways:

(i) a symbol will be used in timetables and

computer reservation systems indicating that

CO* Flights are actually operated by

Contractor;

(ii) to the extent reasonable, messages on

airport flight information displays will

identify Contractor as the operator of

flights shown as CO* Flights;

(iii) Continental and Contractor advertising

concerning CO* Flights and Continental and

Contractor reservationists will disclose

Contractor as the operator of each CO*

Flight; and

 i.  in any other manner prescribed by law.
 ii. 

3. Terms and Conditions of Carriage. In all cases the contract of carriage
between a passenger and a carrier will be that of the carrier whose code is
designated on the ticket. Continental and Contractor shall each cooperate with
the other in the

 

 

 

 

 

Exhibit D-1

 

 

exchange of information necessary to conform each carrier's contract of carriage
to reflect service offered by the other carrier.

4. Notification of irregularities in operations. Contractor shall promptly
notify Continental of all irregularities involving a CO* Flight which result in
any material damage to persons or property as soon as such information is
available and shall furnish to Continental as much detail as practicable. For
purposes of this section, notification shall be made as follows:

Continental Airlines System Operations Control Center (SOCC)

1600 Smith

Houston, Texas 77002

Attention: Operations Director

Phone no. (713) 324-7209

Fax no. (713) 324-2138,

SITA FCFDDCO.

5. Code Sharing License.

(a) Grant of License. Subject to the terms and conditions of

the Agreement, Continental hereby grants to Contractor a nonexclusive,

nontransferable, revocable license to use the CO* designator code on

all of its flights operated as a CO* Flight.

(b) Control of CO* Flights. Subject to the terms and

conditions of the Agreement, Contractor shall have sole responsibility

for and control over, and Continental shall have no responsibility for,

control over or obligations or duties with respect to, each and every

aspect of Contractor's operation of CO* Flights.

6. Display of other codes. During the Term of the Agreement, Continental shall
have the exclusive right to determine which other airlines ("Alliance
Airlines"), if any, may place their two letter designator codes on flights
operated by Contractor with Covered Aircraft and to enter into agreements with
such Alliance Airlines with respect thereto. Contractor will cooperate with
Continental and any Alliance Airlines in the formation of a code share
relationship between Contractor and the Alliance Airlines and enter into
reasonably acceptable agreements and make the necessary governmental filings, as
requested by Continental, with respect thereto.

7. Customer First. During the period that Continental places its designator code
on flights operated by Contractor, Contractor will adopt and follow plans and
policies comparable (to the extent applicable and permitted by law and subject
to operational constraints) to Continental's Customer First Commitments as
presently existing and hereafter modified. Contractor acknowledges that it has
received a copy of Continental's presently existing Customer First Commitments.
Continental will provide Contractor with any modifications thereto promptly
after they are made.

 

 

Exhibit D-2

 

 

 

 

EXHIBIT E

ADMINISTRATIVE SUPPORT AND INFORMATION SERVICES PROVISIONING AGREEMENT

 

 

 

 

 

 

 

Exhibit E-1

 

 

 

 

 

ADMINISTRATIVE SUPPORT AND INFORMATION SERVICES

PROVISIONING AGREEMENT

This ADMINISTRATIVE SUPPORT AND INFORMATION SERVICES PROVISIONING AGREEMENT is
made and entered into as of January 1, 2001 by and among Continental Airlines,
Inc., a Delaware corporation ("Continental"), ExpressJet Holdings, Inc., a
Delaware corporation ("Holdings"), and ExpressJet Airlines, Inc., a Delaware
corporation and a wholly owned subsidiary of Holdings ("ExpressJet" and
collectively with Holdings, "Express").

WHEREAS, Continental and Express desire to enter into this Administrative
Support and Information Services Provisioning Agreement with respect to the
provision of certain administrative support and information services in
connection with entering into the Capacity Purchase Agreement , dated as of
January 1, 2001, among Continental, Holdings and ExpressJet;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties hereby agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the
following definitions:

"Agreement" means this Administrative Support and Information Services
Provisioning Agreement, as the same may be amended or supplemented from time to
time.

"Business Day" means any day other than a Saturday, a Sunday, or a day on which
banking institutions located in the State of Texas are authorized or obligated
by law or executive order to close.

"Capacity Purchase Agreement" means that certain Capacity Purchase Agreement
among Continental, Holdings and ExpressJet dated as of January 1, 2001, as the
same may be amended or supplemented from time to time.

"Continental" has the meaning set forth in the Preamble.

"Continental's Cost" means, with respect to any Service, the cost to Continental
of providing such Service, including the associated overhead or general and
administrative expenses.

"Express" has the meaning set forth in the Preamble.

"ExpressJet" has the meaning set forth in the Preamble.

"Holdings" has the meaning set forth in the Preamble.

1

 

 

"Person" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

"Services" means the services provided by Continental to Express pursuant to
Section 2.

2. Provision of Services.

Continental agrees, in consideration of the payments described in Section 3
hereof, to provide Express with the Services described on Exhibit A hereto.
Subject to the availability of Continental personnel and resources, Services
shall be provided on an "as-needed" basis, as determined in good faith by
Continental, with Express receiving the same priority in the provision of such
Services as is received by Continental's internal operations.

3. Payment for Services.

3.1 Subject to the provisions of Section 4, the Services shall be billed at the
applicable monthly rates set forth on Exhibit A for each period through December
31, 2003 Where feasible, Continental may cause third-party vendors of Services
to bill Express for such services directly.

3.2 The amounts specified in Exhibit A for Services shall, at Continental's
option, either be set off by Continental against any payment of any Invoiced
Amount under Section 3.06(a) of the Capacity Purchase Agreement, or, to the
extent such amounts are not so set off prior to the 15th Business Day of the
month following the month during which such Services were provided (the
"Services Payment Date"), be payable by Express to Continental on the Services
Payment Date.

4. Changes in Services or Prices.

4.1 Adjustments to Pricing. The pricing or billing classification of, or other
charges related to, Services to be provided pursuant to Section 2 hereof may be
adjusted by Continental to reflect changes in Continental's Cost of providing
such Services. If Continental desires to adjust the pricing or billing
classification of, or other charges related to, any Service, it shall provide
Express with written notice of the adjustment at least 90 days prior to the
effective date of the proposed change, which notice shall be accompanied with
detailed information supporting the adjustment.

4.2 Deletions of Services. Upon not less than 30 days prior written notice,
Express may elect to cease receiving any of the Services provided pursuant
hereto, and, in such case, the prices or billing classifications of Services
shall be adjusted pursuant to Section 4.1 to reflect such deletion, effective
upon the date such Services are no longer provided.

2

 

 

5. Purchasing and Third-Party Vendors

5.1 Purchasing. If and to the extent that the Services provided pursuant to this
Agreement include the services of Continental's purchasing department or any
affiliate of Continental organized therefor for the purchase on Express's behalf
of supplies or other materials (excluding fuel), Continental or such affiliate
may either purchase such supplies or other material in its own name or in the
name of Express, and to the extent that Express is not billed directly for any
such supplies or other material by the provider thereof, Express shall promptly
reimburse Continental or such affiliate for the actual cost thereof, including
freight, storage and any applicable taxes, but excluding any allocation by
Continental or such affiliate of overhead or general and administrative
expenses.

5.2 Use of Third-Party Vendors. It is expressly acknowledged by Express that
certain of the Services to be provided by Continental pursuant to this Agreement
may be provided by, or using services supplied by, third parties under contracts
or other arrangements with Continental. Express consents to the use by
Continental of such third-party vendors or subcontractors as Continental, in the
exercise of its sole discretion, may from time to time select.

6. Standard of Care; Disclaimer of Warranties; Limitation of Liabilities.
Continental's standard of care with respect to the provision of Services
pursuant to this Agreement shall be limited to providing services of the same
general quality as Continental provides for its own internal operations, and
Express's sole and exclusive remedy for the failure by Continental to meet such
standard of care shall be to terminate this Agreement pursuant to Section 8
hereof. Continental makes no representations or warranties of any kind, whether
express or implied (i) as to the quality or timeliness or fitness for a
particular purpose of Services it provides or any Services provided hereunder by
third-party vendors or subcontractors, or (ii) with respect to any supplies or
other material purchased on behalf of Express pursuant to this Agreement, the
merchantability or fitness for any purpose of any such supplies or other
materials. Under no circumstances shall Continental have any liability hereunder
for damages in excess of amounts paid by Express under this Agreement or for
consequential or punitive damages, including, without limitation, lost profits.

7. Independent Parties.

7.1 Independent Contractors. It is expressly recognized and agreed that each
party, in its performance and otherwise under this Agreement, is and shall be
engaged and acting as an independent contractor and in its own independent and
separate business; and that each party shall retain complete and exclusive
control over its staff and operations and the conduct of its business. Neither
Continental nor Express nor any officer, employee, representative, or agent of
Continental or Express shall in any manner, directly or indirectly, expressly or
by implication, be deemed to be in, or make any representation or take any
action which may give rise to the existence of, any employment, agent,
partnership or other similar relationship as between Continental and Express,
but each party's relationship as respects the other parties in connection with
this Agreement is and shall remain that of an independent contractor.

3

 

 

7.2 Employees. The employees, agents and independent contractors of Express are
employees, agents, and independent contractors of Express for all purposes, and
under no circumstances will be deemed to be employees, agents or independent
contractors of Continental. The employees, agents and independent contractors of
Continental are employees, agents and independent contractors of Continental for
all purposes, and under no circumstances will be deemed to be employees, agents
or independent contractors of Express. Continental will have no supervision or
control over any such Express employees, agents and independent contractors and
any complaint or requested change in procedure made by Continental will be
transmitted by Continental to Express. Express will have no supervision or
control over any such Continental employees, agents and independent contractors
and any complaint or requested change in procedure made by Express will be
transmitted by Express to Continental.

8. Transition and Termination.

8.1 Transition; Term. Promptly after June 30, 2002, the parties hereby agree to
negotiate in good faith and enter into a Transition Services Agreement with
terms reasonably acceptable to each party. The Transition Services Agreement
will provide for the termination of all administrative support and information
services provided by Continental to Express over a period of time to be set
forth therein. Unless terminated earlier pursuant to another provision hereof,
this Agreement shall terminate upon the effectiveness of the Transition Services
Agreement referred to in the preceding sentences or, if no Transition Services
Agreement is entered into, on December 31, 2003.

8.2 By Express for Breach. Express may terminate this Agreement upon the
occurrence of any material breach of this Agreement by Continental, including
Continental's failure to meet the standard of care described in Section 6
hereof, which breach shall not have been cured within 60 days after written
notice of such breach is delivered by Express to Continental.

8.3 By Continental for Breach. Continental may terminate this Agreement upon the
occurrence of any material breach of this Agreement by Express, which breach
shall not have been cured within 60 days after written notice of such breach is
delivered by Continental to Express.

9. Miscellaneous.

9.1 Entire Agreement. Except as otherwise set forth in this Agreement, this
Agreement and the exhibit hereto constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, among the parties with
respect to the subject matter hereof.

9.2 Authority. Each of the parties hereto represents to the other that (a) it
has the corporate power and authority to execute, deliver and perform this
Agreement, (b) the execution,

4

 

 

delivery and performance of this Agreement by it has been duly authorized by all
necessary corporate action, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.

9.3 Consent to Exclusive Jurisdiction. Any action, suit or proceeding arising
out of any claim that the parties cannot settle through good faith negotiations
shall be litigated exclusively in the state courts of Harris County of the State
of Texas. Each of the parties hereto hereby irrevocably and unconditionally (a)
submits to the jurisdiction of such state courts of Texas for any such action,
suit or proceeding, (b) agrees not to commence any such action, suit or
proceeding except in such state courts of Texas, (c) waives, and agrees not to
plead or to make, any objection to the venue of any such action, suit or
proceeding in such state courts of Texas, (d) waives, and agrees not to plead or
to make, any claim that any such action, suit or proceeding brought in such
state courts of Texas has been brought in an improper or otherwise inconvenient
forum, (e) waives, and agrees not to plead or to make, any claim that such state
courts of Texas lack personal jurisdiction over it, and (f) waives its right to
remove any such action, suit or proceeding to the federal courts except when
such courts are vested with sole and exclusive jurisdiction by statute. The
parties shall cooperate with each other in connection with any such action, suit
or proceeding to obtain reliable assurances that confidential treatment will be
accorded any information that any party shall reasonably deem to be confidential
or proprietary. Each of the parties hereto further covenants and agrees that,
until the expiration of all applicable statutes of limitations relating to
potential claims under this Agreement, each such party shall maintain a duly
appointed agent for the service of summonses and other legal process in the
State of Texas.

9.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the laws regarding
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.

9.5 Notices. All notices shall be in writing and shall be deemed given upon (a)
a transmitter's confirmation of a receipt of a facsimile transmission (but only
if followed by confirmed delivery by a standard overnight courier the following
Business Day or if delivered by hand the following Business Day), or (b)
confirmed delivery by a standard overnight courier or delivered by hand, to the
parties at the following addresses:

if to Continental:

Continental Airlines, Inc.

1600 Smith Street, HQSCD

Houston, Texas 77002

Attention: Senior Vice President - Corporate Development

Telecopy No.: (713) 324-3229

5

 

 

with a copy to:

Continental Airlines, Inc.

1600 Smith Street, HQSLG

Houston, Texas 77002

Attention: General Counsel

Telecopy No.: (713) 324-5161

if to Express, to:

ExpressJet Holdings, Inc.

1600 Smith Street, HQSCE

Houston, Texas 77002

Attention: Chief Financial Officer

Telecopy No.: (713) 324-4420

or to such other address as a party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 9.5.

9.6 Amendment and Modification. This Agreement may not be amended or modified in
any respect except by a written agreement signed by each of the parties hereto.

9.7 Binding Effect; Assignment. This Agreement and all of the provisions hereof
shall be binding upon the parties hereto and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except with
respect to a merger of a party with another Person, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by a
party hereto without the prior written consent of the other parties, which
consent shall not be unreasonably withheld or delayed.

9.8 Third Party Beneficiaries. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
and no Person shall be deemed a third party beneficiary under or by reason of
this Agreement.

9.9 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signature.

9.10 Waiver. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but such waiver shall be effective
only if it is in writing signed by the party against which such waiver is to be
asserted. Unless otherwise expressly provided in this Agreement, no delay or
omission on the part of any party in exercising any right or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right or privilege under this Agreement operate as a
waiver of any other right or privilege under this Agreement nor shall any single
or partial exercise of any right or privilege preclude any other or further
exercise thereof or the exercise of any other right or

6

 

 

privilege under this Agreement. No failure by a party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.

9.11 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

9.12 Equitable Remedies. Each of Continental and Express acknowledges and agrees
that under certain circumstances the breach by Continental or any of its
affiliates or Express or any of its affiliates of a term or provision of this
Agreement will materially and irreparably harm the other party, that money
damages will accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may,
notwithstanding the provisions contained in Section 9.3, apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Agreement.

9.13 References; Construction. The section and other headings and subheadings
contained in this Agreement and the exhibits hereto are solely for the purpose
of reference, are not part of the agreement of the parties hereto, and shall not
in any way affect the meaning or interpretation of this Agreement or any exhibit
hereto. All references to days or months shall be deemed references to calendar
days or months. All references to "$" shall be deemed references to United
States dollars. Unless the context otherwise requires, any reference to a
"Section" or an "Exhibit" shall be deemed to refer to a section of this
Agreement or an exhibit to this Agreement, as applicable. The words "hereof,"
"herein" and "hereunder" and words of similar import referring to this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, unless otherwise specifically provided, they shall be deemed to
be followed by the words "without limitation." This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be drafted.

9.14 Equal Opportunity. EEO clauses contained at 11 C.F.R. Sections 60-1.4,
60-250.4 and 60-741.4 are hereby incorporated by reference. Each party shall
comply with all equal opportunity laws and regulations which apply to or must be
satisfied by that party as a result of this Agreement.

7

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

CONTINENTAL AIRLINES, INC. EXPRESSJET HOLDINGS, INC.

By: By:

------------------------------- -------------------------------------

Title: Title:

---------------------------- ----------------------------------

EXPRESSJET AIRLINES, INC.

By:

-------------------------------------

Title:

----------------------------------

8

 

 

 

 

 

 

 

 

EXHIBIT F

FUEL PURCHASING AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

FUEL PURCHASING AGREEMENT

This Fuel Purchasing Agreement (this "Agreement") is made as of this 1st day of
January 2001, by and between CONTINENTAL AIRLINES, INC., a Delaware corporation
("Continental"), and EXPRESSJET AIRLINES, INC., a Delaware corporation
("ExpressJet").

WHEREAS, Continental, ExpressJet and ExpressJet Holdings, ExpressJet's parent
("Holdings"), are entering into a Capacity Purchase Agreement contemporaneously
with the execution of this Agreement (the "Capacity Purchase Agreement");

WHEREAS, ExpressJet has requested that Continental purchase on ExpressJet's
behalf and supply it with all of the jet fuel needed to provide the Regional
Airline Services, and Continental is willing to do so on the terms and subject
to the conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

1. Definitions. All capitalized terms that are used and not otherwise defined
herein shall have the meanings given to such terms in the Capacity Purchase
Agreement.

2. Products Covered. The product covered by this Agreement shall be aviation jet
fuel meeting ASTM Specification D 1655-99 (such fuel being referred to herein as
"Fuel"). The definition of future products and the scope of this Agreement may
be revised from time to time upon mutual consent of the parties.

3. Services to Be Provided. Continental shall supply or cause to be supplied to
ExpressJet all Fuel that ExpressJet shall require to provide the Regional
Airline Services, and ExpressJet shall purchase and pay for such Fuel in
accordance with the terms and conditions of Section 5 of this Agreement. In
connection with the provision of Fuel to ExpressJet pursuant to this Agreement,
Continental shall manage all aspects of procuring, transporting and delivering
Fuel to ExpressJet in respect of Regional Airline Services, including without
limitation selecting the source of Fuel, negotiating and consummating agreements
with fuel suppliers and into-plane service providers, providing consortium
representation and furnishing day-to-day management pertaining to any
fuel-related services. Continental shall be the exclusive provider of Fuel and
fuel-related services used to provide Regional Airline Services during the term
of this Agreement.

4. Planning. ExpressJet will provide Continental each month with a rolling
twelve-month forecast of fuel needs not later than the 5th day of such month,
which forecast shall reflect the Final Monthly Schedule for such month,
Continental's proposed schedule for Scheduled Flights for the two months
following such month as presented to ExpressJet pursuant to Section 2.01(b) of
the Capacity Purchase Agreement and such other information published by
Continental regarding scheduled ExpressJet flights over the next twelve-month
period.

 

 

 

 

F-1

 

 

5. Price and Payment.

(a) In consideration of Continental providing Fuel and other

services to ExpressJet pursuant to this Agreement, ExpressJet

shall pay Continental, in accordance with the terms of Section

5(b) with respect to any applicable period, an amount in cash

equal to the Contract Fuel Rate multiplied by the amount of

Fuel so provided during such period. For the avoidance of

doubt, the parties agree that all of Continental's costs,

gains or losses resulting from engaging in any fuel-price

hedging transactions with respect to Fuel provided to

ExpressJet under this Agreement shall be for Continental's

account.

(b) Not later than two (2) Business Days prior to the beginning of

each calendar month during the term of this Agreement,

Continental shall send an invoice to ExpressJet setting forth

the estimated amount payable by ExpressJet to Continental for

Fuel and services to be rendered hereunder for the following

calendar month, which amounts shall, at Continental's option,

either be set off by Continental against any payment of any

Invoiced Amount under Section 3.06(a) of the Capacity Purchase

Agreement, or be immediately payable by ExpressJet on or

before the beginning of each calendar month. Not later than 12

days following the end of each calendar month, Continental and

ExpressJet shall reconcile actual amounts due in respect of

such calendar month pursuant to Section 5(a) with the

estimated amounts paid by ExpressJet pursuant to the first

sentence of this Section 5(b), such reconciliation to occur

pursuant to Section 3.06(b) of the Capacity Purchase

Agreement.

6. Fuel Storage Consortia. Continental may, in its sole discretion and at its
sole expense, direct ExpressJet to do any of the following (in which event
ExpressJet shall comply with Continental's directions): (i) join any fuel
consortium selected by Continental at any airport at which Continental provides
Fuel to ExpressJet, (ii) terminate any membership that it has or may have in any
such consortium or (iii) not join any such consortium at any such airport and,
in lieu thereof, pay a non-member fee to such consortium for the right to use
fuel stored at such consortium's storage facilities.

7. Term. This agreement is coterminous with the Capacity Purchase Agreement and
may be terminated by either party upon the termination of the Capacity Purchase
Agreement; provided, however, that if a party hereto elects to terminate this
Agreement as a result of the Capacity Purchase Agreement being terminated, the
terms of this Agreement shall continue with respect to any locations to which
Scheduled Flights are flown during the Wind-Down Period.

8. Authority. Each of the parties hereto represents to the other that (a) it has
the corporate power and authority to execute, deliver and perform this
Agreement, (b) the execution, delivery and performance of this Agreement by it
has been duly authorized by all necessary corporate action, (c) it has duly and
validly executed and delivered this Agreement, and (d) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.

 

 

 

 

F-2

 

 

9. Consent to Exclusive Jurisdiction. Any action, suit or proceeding arising out
of any claim that the parties cannot settle through good faith negotiations
shall be litigated exclusively in the state courts of Harris County of the State
of Texas. Each of the parties hereto hereby irrevocably and unconditionally (a)
submits to the jurisdiction of such state courts of Texas for any such action,
suit or proceeding, (b) agrees not to commence any such action, suit or
proceeding except in such state courts of Texas, (c) waives, and agrees not to
plead or to make, any objection to the venue of any such action, suit or
proceeding in such state courts of Texas, (d) waives, and agrees not to plead or
to make, any claim that any such action, suit or proceeding brought in such
state courts of Texas has been brought in an improper or otherwise inconvenient
forum, (e) waives, and agrees not to plead or to make, any claim that such state
courts of Texas lack personal jurisdiction over it, and (f) waives its right to
remove any such action, suit or proceeding to the federal courts except when
such courts are vested with sole and exclusive jurisdiction by statute. The
parties shall cooperate with each other in connection with any such action, suit
or proceeding to obtain reliable assurances that confidential treatment will be
accorded any information that any party shall reasonably deem to be confidential
or proprietary. Each of the parties hereto further covenants and agrees that,
until the expiration of all applicable statutes of limitations relating to
potential claims under this Agreement, each such party shall maintain a duly
appointed agent for the service of summonses and other legal process in the
State of Texas.

10. Binding Effect; Assignment. This Agreement and all of the provisions hereof
shall be binding upon the parties hereto and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
Notwithstanding the foregoing, Continental may assign its rights and delegate
its duties hereunder to a successor that is a certificated air carrier and that
will continue to operate a significant portion of Continental's current airline
operations.

11. Employees of Continental. The employees, agents and independent contractors
of Continental engaged in performing any of the services Continental is to
perform pursuant to this Agreement are employees, agents and independent
contractors of Continental for all purposes, and under no circumstances will be
deemed to be employees, agents or independent contractors of ExpressJet. In its
performance under this Agreement, Continental will act, for all purposes, as an
independent contractor and not as an agent for ExpressJet. ExpressJet will have
no supervisory power or control over any employees, agents or independent
contractors engaged by Continental in connection with its performance hereunder.

12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than laws regarding
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.

13. Notices. All notices shall be in writing and shall be deemed given upon (a)
a transmitter's confirmation of a receipt of a facsimile transmission (but only
if followed by confirmed delivery of a standard overnight courier the following
Business Day or if delivered by hand the following Business Day), or (b)
confirmed delivery of a standard overnight courier or delivered by hand, to the
parties at the following addresses:

 

 

 

 

F-3

 

 

if to Continental:

Continental Airlines, Inc.

1600 Smith Street, HQSCD

Houston, Texas 77002

Attention: Senior Vice President - Corporate Development

Telecopy No.: (713) 324-3229

with a copy to:

Continental Airlines, Inc.

1600 Smith Street, HQSCD

Houston, Texas 77002

Attention: General Counsel

Telecopy No.: (713) 324-5161

if to ExpressJet, to:

ExpressJet Airlines, Inc.

1600 Smith Street, HQSCE

Houston, Texas 77002

Attention: Chief Financial Officer

Telecopy No.: (713) 324-4420

or to such other address as either party hereto may have furnished to the other
party by a notice in writing in accordance with this Section 2.

14. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

15. Entire Agreement. Except as otherwise set forth in this Agreement, this
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, whether written or oral, between the parties with respect to
such subject matter.

16. Amendment and Modification. This Agreement may not be amended or modified in
any respect except by a written agreement signed by both of the parties hereto.

 

 

 

F-4

 

 

17. Third Party Beneficiaries. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
and no Person shall be deemed a third party beneficiary under or by reason of
this Agreement.

18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The Agreement may be executed by
facsimile signature.

19. Waiver. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but such waiver shall be effective
only if it is in writing signed by the party against which such waiver is to be
asserted. Unless otherwise expressly provided in this Agreement, no delay or
omission on the part of any party in exercising any right or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right or privilege under this Agreement operate as a
waiver of any other right or privilege under this Agreement nor shall any single
or partial exercise of any right or privilege preclude any other or further
exercise thereof or the exercise of any other right or privilege under this
Agreement. No failure by either party to take any action or assert any right or
privilege hereunder shall be deemed to be a waiver of such right or privilege in
the event of the continuation or repetition of the circumstances giving rise to
such right unless expressly waived in writing by the party against whom the
existence of such waiver is asserted.

20. Equitable Remedies. Each of Continental and ExpressJet acknowledges and
agrees that under certain circumstances the breach by Continental or any of its
affiliates or ExpressJet or any of its affiliates of a term or provision of this
Agreement will materially and irreparably harm the other party, that money
damages will accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may,
notwithstanding the provisions contained in Section 10, apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Agreement.

21. References; Construction. The section and other headings and subheadings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties hereto, and shall not in any way affect the
meaning or interpretation of this Agreement. All references to days or months
shall be deemed references to calendar days or months. Unless the context
otherwise requires, any reference to a "Section" shall be deemed to refer to a
section of this Agreement. The words "hereof," "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, unless
otherwise specifically provided, they shall be deemed to be followed by the
words "without limitation." This Agreement shall be construed without regard to
any presumption or rule requiring construction or interpretation against the
party drafting or causing the document to be drafted.

 

 

 

 

F-5

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers duly authorized thereunto, as of the 1st day of
January, 2001.

 

CONTINENTAL AIRLINES, INC. EXPRESSJET AIRLINES, INC.

 

By: By:

------------------------------- -------------------------------------

Name: Name:

------------------------------ ------------------------------------

Title: Title:

---------------------------- ----------------------------------

 

 

 

F-6

 

 

 

 

EXHIBIT G

USE OF CONTINENTAL MARKS AND OTHER IDENTIFICATION

1. Grant. Continental hereby grants to Contractor, and Contractor accepts,

a non-exclusive, personal, non-transferable, royalty-free right and

license to adopt and use the Continental Marks and other Identification

in connection with the rendering by Contractor of Regional Airline

Services, subject to the conditions and restrictions set forth herein.

2. Ownership of the Continental Marks and Other Identification.

a. Continental shall at all times remain the owner of the

Continental Marks and the other Identification and any

registrations thereof and Contractor's use of any Continental

Marks or other Identification shall clearly identify

Continental as the owner of such marks (to the extent

practical) to protect Continental's interest therein.

b. Contractor acknowledges Continental's ownership of the

Continental Marks and the other Identification and further

acknowledges the validity of the Identification. Contractor

agrees that it will not do anything that in any way infringes

or abridges Continental's rights in the Identification or

directly or indirectly challenges the validity of the

Identification.

3. Use of the Continental Marks and the Other Identification.

a. Contractor shall use the Continental Marks and other

Identification only as authorized herein by Continental and in

accordance with such standards of quality as Continental may

establish.

b. Contractor shall use the Identification on all Covered

Aircraft and all facilities, equipment, uniforms and printed

materials used in connection with the Regional Airline

Services.

c. Contractor shall not use the Identification for any purpose

other than as set forth in this Exhibit G, and specifically

shall have no right to use the Continental Marks or other

Identification on or in any Uncovered Aircraft or in

connection with any other operations of Contractor.

d. Continental shall have exclusive control over the use and

display of the Continental Marks and other Identification, and

may change the Identification at any time and from time to

time (including by adding or deleting marks from the list

specified in this Exhibit G), in which case Contractor shall

as soon as practicable make such changes as are requested by

Continental to utilize the new Identification; provided that

Continental shall either pay directly the reasonable costs of

making such changes to

 

 

 

 

 

Exhibit G-1

 

 

the Identification or shall promptly reimburse Contractor for

its reasonable expenses incurred in making such changes.

e. Nothing shall abridge Continental's right to use and/or to

license the Identification, and Continental reserves the right

to the continued use of all the Identification, to license

such other uses of the Identification and to enter into such

agreements with other carriers providing for arrangements

similar to those with Contractor as Continental may desire. No

term or provision of this Agreement shall be construed to

preclude the use of the Continental Marks or other

Identification by other persons or for similar or other uses

not covered by this Agreement.

4. Continental-Controlled Litigation. Continental at its sole expense

shall take all steps that in its opinion and sole discretion are

necessary and desirable to protect the Continental Marks and other

Identification against any infringement or dilution. Contractor agrees

to cooperate fully with Continental in the defense and protection of

the Continental Marks and other Identification as reasonably requested

by Continental. Contractor shall report to Continental any infringement

or imitation of, or challenge to, the Continental Marks and other

Identification, immediately upon becoming aware of same. Contractor

shall not be entitled to bring, or compel Continental to bring, an

action or other legal proceedings on account of any infringements,

imitations, or challenges to any element of the Continental Marks and

other Identification without the written agreement of Continental.

Continental shall not be liable for any loss, cost, damage or expense

suffered or incurred by Contractor because of the failure or inability

to take or consent to the taking of any action on account of any such

infringements, imitations or challenges or because of the failure of

any such action or proceeding. If Continental shall commence any action

or legal proceeding on account of such infringements, imitations or

challenges, Contractor agrees to provide all reasonable assistance

requested by Continental in preparing for and prosecuting the same.

5. Revocation of License. Continental shall have the right to cancel the

license provided herein in whole or in part at any time and for any

reason, in which event all terminated rights to use the Identification

provided Contractor herein shall revert to Continental and shall not be

used by Contractor in connection with any operations of Contractor. The

following provisions shall apply to the termination of the license

provided herein: (i) in the case of a termination of the license to use

the globe element of the Continental Marks, Contractor shall cease all

use of the globe element of the Continental Marks with respect to each

Covered Aircraft within 90 days of such aircraft being withdrawn from

the capacity purchase provisions of the Agreement, and shall cease all

use of the globe element of the Continental Marks in all other respects

within 90 days of last Covered Aircraft becoming an Uncovered Aircraft

(unless this Agreement is terminated for Cause or pursuant to Section

9.03(b) or the first sentence of Section 9.03(c), in which case

Contractor shall cease all use of the globe element of the Continental

Marks

 

 

 

 

 

 

Exhibit G-2

 

 

within 45 days of the Termination Date); (ii) in the case of a

termination of the license to use any other Continental Marks and

Identification, Contractor shall cease all use of such other

Continental Marks and Identification within 45 days of the termination

of the license for such other Continental Marks and other

Identification. Within such specified period, Contractor shall change

its facilities, equipment, uniforms and supplies to avoid any customer

confusion or the appearance that Contractor is continuing to have an

operating relationship with Continental, and Contractor shall not

thereafter make use of any word, words, term, design, name or mark

confusingly similar with the Continental Marks or other Identification

so that any such word, words, term, design, name or mark would present

a likelihood of confusion or otherwise suggest a continuing

relationship between Contractor and Continental.

6. Assignment. The non-exclusive license granted by Continental to

Contractor is personal to Contractor and may not be assigned,

sub-licensed or transferred by Contractor in any manner without the

written consent of a duly authorized representative of Continental.

7. Continental Marks. The Continental Marks are as follows:

CONTINENTAL EXPRESS

CONTINENTAL EXPRESS'S LOGO (DESIGN) IN COLOR

CONTINENTAL EXPRESS'S LOGO (DESIGN) IN BLACK & WHITE

[LOGO]

8. Aircraft Livery. The aircraft livery shall be as follows, unless

otherwise directed by Continental: The colors blue, gray, white and

gold are used on the aircraft. The color white appears on the top

approximate 2/3 of the body of the aircraft; the color gray appears

below the color white on the remainder of the bottom portion of the

body of the aircraft; the color gold is used as a stripe or band

dividing the white and gray colors. The tail of the aircraft is

primarily blue with a logo design in a gold and white combination and

the trade name is written in blue on the white portion of the body of

the aircraft. The color blue is the dominant aircraft interior color.

9. Survival. The provisions of this Exhibit G shall survive the

termination of this Agreement for a period of six years.

 

 

Exhibit G-3

 

 

 

 

EXHIBIT H

USE OF CONTRACTOR MARKS

 

1. Grant. Contractor hereby grants to Continental, and Continental

accepts, a non-exclusive, personal, non-transferable, royalty-free

right and license to adopt and use the Contractor Marks (as defined

below) in connection with Continental's entering into this Agreement,

subject to the conditions and restrictions set forth herein.

2. Ownership of the Contractor Marks.

a. Contractor shall at all times remain the owner of the

Contractor Marks and any registrations thereof and

Continental's use of any Contractor Marks shall clearly

identify Contractor as the owner of such marks (to the extent

practical) to protect Contractor's interest therein.

b. Continental acknowledges Contractor's ownership of the

Contractor Marks and further acknowledges the validity of the

Contractor Marks. Continental agrees that it will not do

anything that in any way infringes or abridges Contractor's

rights in the Contractor Marks or directly or indirectly

challenges the validity of the Contractor Marks.

3. Use of the Contractor Marks.

a. Continental shall use the Contractor Marks only as authorized

herein by Contractor and in accordance with such standards of

quality as Contractor may establish.

b. Continental shall use the Contractor Marks as necessary or

appropriate in Continental's sole discretion in connection

with the Regional Airline Services, including without

limitation the sale or disposition by Continental of the seat

inventory of the Scheduled Flights.

c. Continental shall not use the Contractor Marks for any purpose

other than as set forth in this Exhibit H, and specifically

shall have no right to use the Contractor Marks in connection

with any other operations of Continental.

d. Contractor may change the Contractor Marks at any time and

from time to time (including by adding or deleting marks from

the list specified in this Exhibit H), in which case

Continental shall as soon as practicable make such changes as

are requested by Contractor to utilize the new Contractor

Marks; provided that Contractor shall either pay directly the

reasonable costs of making such changes to the Contractor

Marks or shall promptly reimburse Continental for its

reasonable expenses incurred in making such changes.

 

 

 

 

Exhibit H-1

 

 

e. Nothing shall abridge Contractor's right to use and/or to

license the Contractor Marks, and Contractor reserves the

right to the continued use of all the Contractor Marks, to

license such other uses of the Contractor Marks and to enter

into such agreements with other carriers providing for

arrangements similar to those with Continental as Contractor

may desire. No term or provision of this Agreement shall be

construed to preclude the use of the Contractor Marks by other

persons or for other similar uses not covered by this

Agreement.

4. Contractor-Controlled Litigation. Contractor at its sole expense shall

take all steps that in its opinion and sole discretion are necessary

and desirable to protect the Contractor Marks against any infringement

or dilution. Continental agrees to cooperate fully with Contractor in

the defense and protection of the Contractor Marks as reasonably

requested by Contractor. Continental shall report to Contractor any

infringement or imitation of, or challenge to, the Contractor Marks,

immediately upon becoming aware of same. Continental shall not be

entitled to bring, or compel Contractor to bring, an action or other

legal proceedings on account of any infringements, imitations, or

challenges to any element of the Contractor Marks without the written

agreement of Contractor. Contractor shall not be liable for any loss,

cost, damage or expense suffered or incurred by Continental because of

the failure or inability to take or consent to the taking of any action

on account of any such infringements, imitations or challenges or

because of the failure of any such action or proceeding. If Contractor

shall commence any action or legal proceeding on account of such

infringements, imitations or challenges, Continental agrees to provide

all reasonable assistance requested by Contractor in preparing for and

prosecuting the same.

5. Revocation of License. Contractor shall have the right to cancel the

license provided herein in whole or in part at any time and for any

reason, in which event all terminated rights to use the Contractor

Marks provided Continental herein shall revert to Contractor and shall

not be used by Continental in connection with any operations of

Continental. Continental shall cease all use of the Contractor Marks in

all respects upon the last Covered Aircraft becoming an Uncovered

Aircraft. Continental shall not thereafter make use of any word, words,

term, design, name or mark confusingly similar with the Contractor

Marks so that any such word, words, term, design, name or mark would

present a likelihood of confusion or otherwise suggest a continuing

relationship between Continental and Contractor.

6. Assignment. The non-exclusive license granted by Contractor to

Continental is personal to Continental and may not be assigned,

sub-licensed or transferred by Continental in any manner without the

written consent of a duly authorized representative of Contractor.

 

Exhibit H-2

 

 

 7. Contractor Marks. The Contractor Marks are as follows: XJT.
 8. 

8. Survival. The provisions of this Exhibit H shall survive the

termination of this Agreement for a period of six years.

 

Exhibit H-3

 

 

 

 

EXHIBIT I

CATERING STANDARDS

 

Station Services

o Contractor will provide caterer oversight at Contractor Airports that are

non-Chelsea Catering locations. Continental will provide caterer oversight

at Continental Airports that are non-Chelsea Catering locations.

o At Contractor Airports without contract catering, Contractor will provide

supplies and beverage uplift as necessary and will remove, store and

re-board perishable supply and beverage items on RON/originating flights.

At Continental Airports without contract catering, Continental will provide

supplies and beverage uplift as necessary and will remove, store and

re-board perishable supply and beverage items on RON/originating flights.

o Contractor will provide meal ordering services at Contractor Airports that

are non-Chelsea Catering locations or where catering is downlined by

Chelsea Catering. Continental will provide meal ordering services at

Continental Airports that are non-Chelsea Catering locations or where

catering is downlined by Chelsea Catering.

o Contractor will provide trained catering truck guide person for all

Contractor Airports that are Chelsea Catering locations to assist with

backing off the aircraft. Continental will provide trained catering truck

guide person for all Continental Airports that are Chelsea Catering

locations to assist with backing off the aircraft.

o Contractor will coordinate and communicate with Chelsea Catering regarding

all flight activity, cancellations and irregular operations providing

necessary information in a timely manner.

Onboard Services

o Continental has right to determine meal/beverage service parameters and

scheduling for Scheduled Flights.

o Continental has right to conduct onboard service audits on Scheduled

Flights to ensure service standards are being met.

o Contractor flight attendants providing Regional Airline Services will be

trained on meal and beverage service procedures, including liquor and

duty-free sales and cash handling, and will collect all on-board revenue

for liquor and duty-free sales.

o Contractor will provide sufficient galley service ship's equipment to

operate, such as hot jugs, coffee makers and trash bins.

 

Exhibit I-1

 

 

 

 

EXHIBIT J

TICKET HANDLING TERMS

1. Passenger Ticket Stock and Accounting Procedures. Continental will provide
Contractor with Continental passenger ticket stock in accordance with the
following procedures:

A. Continental will supply Contractor with adequate supplies

of all necessary passenger ticket forms, bag tags, boarding passes,

validator plates and other documents and materials necessary to enable

Contractor to operate in a manner consistent with Continental

procedures, upon request to the office designated by Continental from

time to time. A receipt for all ticket forms delivered to Contractor

shall be signed by an appropriate representative of Contractor, and

Contractor shall comply with Continental's procedures with respect to

the control of, safeguarding of and accounting for ticket stock and

validator plates. All tickets and other documents and materials

supplied by Continental for use in connection with the Agreement shall

be and remain the property of Continental and shall be held in trust

for Continental by Contractor and issued or otherwise utilized only as

provided in the Agreement.

B. Contractor shall be responsible for the safe and secure

custody and care of all tickets and other documents and materials

furnished by Continental. The tickets and other documents of

Continental shall be secured in a manner satisfactory to Continental

and consistent with any applicable IATA standards and specifications.

Such tickets and documents and all records relating to them and to the

sale of transportation on Continental shall at all times be made

available for inspection by Continental or its designated

representative.

C. All tickets shall be issued by Contractor in accordance

with the currently effective tariffs and contract of carriage

applicable to the transportation being purchased and applicable trade

manuals, all in accordance with appropriate instructions, which may be

issued from time to time by Continental.

D. All tickets shall be issued by Contractor in numerical

sequence and all must be accounted for at each reporting period. All

auditors' coupons for tickets issued by Contractor and all coupons of

voided tickets shall be sent to the office or offices designated by

Continental from time to time on the workday following issuance.

E. All checks accepted for the sale of tickets on Continental

ticket stock shall be payable to Continental and acceptance of checks

shall conform to Continental's acceptance procedures. Any losses

resulting from returned checks where Contractor has failed to follow

Continental's acceptance procedures, will be charged to Contractor

after Continental exhausts reasonable efforts to collect.

 

 

Exhibit J-1

 

 

F. All tickets issued for a form of payment other than cash or

check shall be supported by such documents as shall be specified by

Continental.

G. Contractor shall assume full liability for and agrees to

defend, indemnify and hold Continental harmless from and against any

and all claims, demands, liability, expenses, losses, costs or damages

whatsoever in any manner arising out of or attributed to Contractor'

possession, issuance, loss, misapplication, theft, or forgery of

tickets, other travel documents, or supplies furnished by Continental

to Contractor including but not limited to lost ticket forms, bag tags,

boarding passes or other documents and errors in ticket issuance. In

the event Contractor loses or has stolen any ticket, fails to return

tickets or other documents to Continental upon demand, fails to remit

pursuant to the Agreement the monies to which Continental is entitled

from the sale of any such ticket or document, or fails to account

properly for any such tickets or document, Contractor shall be liable

to Continental for the agreed value of any such ticket or document,

which is agreed to be the actual damages or loss sustained by

Continental from usage of any such ticket or document, as measured by

the then current, non-discounted retail price of the transportation or

other service obtained with the ticket or document or, if such value

cannot be determined, US $2,000.00 per ticket.

H. Contractor may accept all credit cards honored by

Continental and is appointed Continental's agent for such purpose,

provided:

(i) Contractor observes the floor limits for each

credit card set by the issuer of the credit card (the "Card

Issuer") as amended by the Card Issuer from time to time;

(ii) Contractor accepts each credit card within the

terms of the contracts between Continental and Card Issuer;

(iii) Contractor complies with 14 CFR, Part 374;

(iv) Contractor does not accept blacklisted cards;

(v) Contractor shall reimburse Continental for any

losses incurred by Continental as a result of Contractor'

failure to observe the terms of this section or of the

contracts between Continental and the Card Issuer;

(vi) Contractor complies with all of Continental's

established procedures relating to credit cards; and

(vii) For tickets that are not for transportation on

Scheduled Flights, Contractor shall reimburse Continental for

all charge backs, returns and other direct charges

attributable to or arising from Contractor'

 

 

 

Exhibit J-2

 

 

acceptance of credit cards, unless either (a) Continental has

realized an offsetting credit (including through the return

and cancellation of a previously issued ticket) or (b) such

charge back, return or other charge resulted from the gross

negligence, recklessness, or willful misconduct of

Continental.

I. Contractor shall prepare and furnish to Continental all

written reports, accounts, and documentation with regard to ticket

handling that Continental may require daily or at such lesser frequency

as Continental may prescribe, at its sole discretion, from time to time

during the life of the Agreement. Contractor will comply with all

reasonable procedures specified by Continental with regard to ticket

handling.

J. Within two business days after the termination of the

Agreement for any reason, Contractor will return to Continental all

passenger ticket forms, bag tags, boarding passes and other documents

provided to Contractor by Continental pursuant to the Agreement.

2. Deposits. Contractor shall deposit all funds, both cash and checks, realized
from the sale of tickets on Continental ticket stock by it in Continental
accounts maintained at depositories from time to time designated by Continental
on or before the first banking day following receipt of such funds.

3. Ticket Acceptance. For the term of the Agreement, Continental hereby
authorizes Contractor to accept flight coupons written for CO* Flights in
accordance with any applicable restrictions. Contractor shall not endorse or
refund any such coupons without Continental's written consent, except in
accordance with Continental's contract of carriage.

 

 

 

 

Exhibit J-3