Exhibit 10.1

 

Execution Version

 

 

CAPACITY PURCHASE AGREEMENT

 

 

BETWEEN

 

 

CONTINENTAL AIRLINES, INC.

 

 

AND

 

 

EXPRESSJET AIRLINES, INC.

 

 

DATED AS OF NOVEMBER 12, 2010

 

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TABLE OF CONTENTS

 

Parties

 

1

 

 

 

Recitals

 

1

 

 

 

ARTICLE I DEFINITIONS

1

 

 

ARTICLE II CAPACITY PURCHASE, SCHEDULES AND FARES

1

 

 

Section 2.01

Capacity Purchase

1

Section 2.02

Flight-Related Revenues

2

Section 2.03

Pass Travel

3

Section 2.04

Additional Aircraft

3

Section 2.05

Early Replacement of Covered Aircraft

7

Section 2.06

Return Aircraft

10

Section 2.07

Other Withdrawal of Aircraft

11

Section 2.08

Commodity Events

13

Section 2.09

Return Conditions; Storage

16

Section 2.10

Separate Withdrawal Rights

18

Section 2.11

Rate Reset

18

 

 

 

ARTICLE III CONTRACTOR COMPENSATION

19

 

 

Section 3.01

Base and Incentive Compensation

19

Section 3.02

Periodic Adjustment of Base and Incentive Compensation and Commodity Prices

19

Section 3.03

Contractor Expenses

20

Section 3.04

Continental Expenses

20

Section 3.05

Audit Rights; Financial Information

21

Section 3.06

Billing and Payment; Reconciliation

22

Section 3.07

Synergy Savings

23

 

 

 

ARTICLE IV CONTRACTOR OPERATIONS AND AGREEMENTS WITH CONTINENTAL

24

 

 

Section 4.01

Crews, Etc.

24

Section 4.02

Governmental Regulations

24

Section 4.03

Quality of Service

25

Section 4.04

Incidents or Accidents

26

Section 4.05

Emergency Response

26

Section 4.06

Safety Matters

26

Section 4.07

Master Facility and Ground Handling Agreement

26

Section 4.08

Codeshare Terms

26

Section 4.09

Administrative Support and Information Services

26

Section 4.10

Fuel Purchasing Agreement

27

Section 4.11

Slots and Route Authorities

27

 

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Section 4.12

Use of Continental Marks

27

Section 4.13

Use of Contractor Marks

27

Section 4.14

Catering Standards

27

Section 4.15

Ticket Handling Terms

27

Section 4.16

Fuel Efficiency and Revenue Programs

28

Section 4.17

Reasonable Operating Constraints and Conditions

28

Section 4.18

Covered Aircraft Subleases

28

 

 

 

ARTICLE V CERTAIN RIGHTS OF CONTINENTAL

30

 

 

Section 5.01

Use of Covered Aircraft

30

Section 5.02

Change of Control

30

Section 5.03

Limitation on Transfers of Interest

30

 

 

 

ARTICLE VI INSURANCE

30

 

 

Section 6.01

Minimum Insurance Coverages

30

Section 6.02

Endorsements

31

Section 6.03

Evidence of Insurance Coverage

31

Section 6.04

Insurance Through Combined Placement

32

Section 6.05

Insurance Through Other Than Combined Placement

32

 

 

 

ARTICLE VII INDEMNIFICATION

32

 

 

Section 7.01

Contractor Indemnification of Continental

32

Section 7.02

Continental Indemnification of Contractor

33

Section 7.03

Indemnification Claims

34

Section 7.04

Employer’s Liability; Independent Contractors; Waiver of Control

35

Section 7.05

Survival

35

 

 

 

ARTICLE VIII TERM, TERMINATION AND DISPOSITION OF AIRCRAFT

36

 

 

Section 8.01

Term

36

Section 8.02

Early Termination

36

Section 8.03

Disposition of Aircraft during Wind-Down Period

38

 

 

 

ARTICLE IX REPRESENTATIONS, WARRANTIES AND COVENANTS

41

 

 

Section 9.01

Representations and Warranties of Contractor

41

Section 9.02

Representations and Warranties of Continental

41

 

 

 

ARTICLE X MISCELLANEOUS

43

 

 

Section 10.01

Transition Arrangements

43

Section 10.02

Notices

45

Section 10.03

Binding Effect; Assignment

46

Section 10.04

Amendment and Modification

46

Section 10.05

Waiver

46

 

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Section 10.06

Interpretation

46

Section 10.07

Confidentiality

47

Section 10.08

Survival

47

Section 10.09

Counterparts

48

Section 10.10

Severability

48

Section 10.11

Equitable Remedies; Limitation on Damages

48

Section 10.12

Relationship of Parties

48

Section 10.13

Entire Agreement; No Third-Party Beneficiaries

48

Section 10.14

Governing Law

49

Section 10.15

Guarantee

49

Section 10.16

Right of Set-Off

49

Section 10.17

Cooperation with Respect to Reporting

49

Section 10.18

Amendment of Certain Contracts

50

 

SCHEDULE 1:

Covered Aircraft

 

SCHEDULE 2:

Transition Aircraft and Spare Engines

 

SCHEDULE 3:

Compensation for Capacity Purchase

 

SCHEDULE 4:

Return Aircraft Sublease — Supplemental Terms

 

 

 

 

EXHIBIT A:

Definitions

 

EXHIBIT B:

Form of Amended and Restated Covered Aircraft Sublease

 

EXHIBIT C:

Master Facility and Ground Handling Agreement

 

EXHIBIT D:

Terms of Codeshare Arrangements

 

EXHIBIT E:

Non-Revenue Pass Travel Privileges

 

EXHIBIT F:

Fuel Purchasing Agreement

 

EXHIBIT G:

Use of Continental Marks

 

EXHIBIT H:

Use of Contractor Marks

 

EXHIBIT I:

Catering Standards

 

EXHIBIT J:

Reasonable Operating Constraints and Conditions

 

EXHIBIT K:

Ticket Handling Terms

 

EXHIBIT L:

Fuel Efficiency Program

 

EXHIBIT M:

Form of Guarantee

 

EXHIBIT N:

Administrative Support and Information Services

 

EXHIBIT O:

[Intentionally omitted]

 

EXHIBIT P:

Form of Storage Sublease

 

 

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CAPACITY PURCHASE AGREEMENT

 

This Capacity Purchase Agreement (this “Agreement”), dated as of November 12,
2010, is between Continental Airlines, Inc., a Delaware corporation and
ExpressJet Airlines, Inc., a Delaware corporation.

 

WHEREAS, Contractor, certain of its Affiliates and Continental are parties to
that certain Amended and Restated Capacity Purchase Agreement, dated as of
April 17, 2002, as amended (the “Existing CPA”);

 

WHEREAS, the Existing CPA will terminate contemporaneously with the execution
and delivery of this Agreement pursuant to that certain Letter Agreement, dated
as of August 3, 2010, between Continental and Parent; and

 

WHEREAS, the parties are entering into Ancillary Agreements (as defined herein),
including aircraft leases, in each case as an integral part of this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations hereinafter contained, the parties agree 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 each Covered Aircraft for the period
beginning on the date such aircraft becomes a Covered Aircraft under this
Agreement and ending on the earlier of (i) the sublease or lease expiration
date, as applicable, for such aircraft on Schedule 1 and (ii) the date on which
such aircraft is withdrawn pursuant to a Wind-Down Schedule or otherwise
withdrawn from this Agreement, as such date may be extended, shortened or
otherwise modified pursuant to the terms of this Agreement, all under the terms
and conditions set forth herein and for the consideration described in
Article III.  Subject to the terms and conditions of this 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, subject
to the terms and conditions of the Non-Revenue Pass Travel Privileges attached
hereto as Exhibit E, 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.

 

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(b)                                 Flight Schedules.  Subject to the terms and
conditions of this Agreement, Continental shall, in its sole discretion,
establish and publish all schedules for the Covered Aircraft (such scheduled
flights, flights otherwise made at Continental’s request, Maintenance Flights
and any flights using Spare Aircraft, referred to herein collectively as
“Scheduled Flights”), including determining the city-pairs served, frequencies,
utilization and timing of scheduled arrivals and departures, and shall, in its
sole discretion, make all determinations regarding the establishment and
scheduling of any flights other than Scheduled Flights; provided, that such
schedules shall be subject to Reasonable Operating Constraints and Conditions. 
Continental shall also be entitled, in its sole discretion and at any time prior
to takeoff, to direct Contractor to delay or cancel a Scheduled Flight,
including without limitation for delays and cancellations that are ATC or
weather related, and Contractor shall take all necessary action to give effect
to any such direction.  Not later than the fourth Wednesday of each calendar
month, Continental shall provide Contractor with a planned flight schedule for
the Covered Aircraft (other than Spare Aircraft), taking into account Reasonable
Operating Constraints and Conditions, for each of the next four months (the
“Proposed Schedule”).  On the fourth Friday of each calendar month, Contractor
and Continental shall meet to review the Proposed Schedule.  At such meeting,
Continental shall review and consider any changes to the Proposed Schedule
suggested by Contractor.  Not later than five Business Days prior to the
beginning of each calendar month, or, if later, the day after such meeting,
Continental will deliver to Contractor the Final Monthly Schedule.  Following
such monthly meetings, delivery of the Final Monthly Schedule and consideration
by Continental of such changes to the Proposed Schedule as suggested by
Contractor, however, Continental may make such adjustments to the proposed Final
Monthly Schedule as it deems appropriate (subject to Reasonable Operating
Constraints and Conditions).

 

(c)                                  Maintenance Flights.  Notwithstanding
anything to the contrary contained in this Section 2.01, Contractor shall be
entitled to use the Covered Aircraft (i) for the purpose of flying maintenance
flights as required to facilitate the proper maintenance of the Covered Aircraft
and (ii) for a reasonable number of ferry flights to accommodate Scheduled
Flights, in each case, consistent with past practice (all such flights referred
to as “Maintenance Flights”).

 

(d)                                 Spare Aircraft.  Notwithstanding anything to
the contrary contained in this Section 2.01, Contractor shall maintain one Spare
Aircraft to operate Scheduled Flights at each Continental Hub Airport where
Contractor provides Regional Airlines Services.  Contractor shall be entitled to
use the Spare Aircraft in Contractor’s reasonable discretion to replace another
aircraft in the operation of a flight scheduled in the Final Monthly Schedule. 
In addition, subject to applicable Reasonable Operating Constraints and
Conditions, Contractor shall use such Spare Aircraft to operate flights as
directed by Continental (unless such Spare Aircraft was, prior to such direction
by Continental, already scheduled as contemplated by the immediately preceding
sentence), including flights originally scheduled to be operated by other
Continental service providers.

 

Section 2.02                                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 (a) revenues relating to the
transportation of cargo or mail by Covered Aircraft, (b) revenues associated
with food, beverage, duty-free services and

 

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other onboard and related products provided in connection with the operation of
Covered Aircraft, (c) guaranteed or incentive payments from airport, state,
local or municipal authorities in connection with scheduling flights of Covered
Aircraft to such airport or locality (including without limitation incentive
payments and grants paid or payable to Continental or Contractor in connection
with or determined by any job growth deemed to result from any Scheduled
Flights) (collectively, “Flight Related Revenue”) are the sole property of and
shall be retained by Continental or, if received by Contractor or any of its
Affiliates, shall be promptly remitted to Continental.  The parties agree that
Flight Related Revenue shall not include manufacturer rebates or other
incentives attributable to the acquisition by Contractor of a Covered Aircraft. 
Contractor agrees that it shall reasonably cooperate with Continental so as to
permit Continental to receive all Flight Related Revenue (and Continental agrees
to promptly reimburse Contractor for the reasonable out-of-pocket expenses
incurred by Contractor in connection therewith).  Contractor’s and its
Affiliate’s obligations to remit funds under this Section 2.02 shall only apply
to the extent Contractor or its Affiliates actually receives Flight Related
Revenue.

 

Section 2.03                                Pass Travel.  All pass travel and
other non-revenue travel on any Scheduled Flight or other flight operated by
Continental shall be administered in accordance with the Non-Revenue Pass Travel
Privileges policy attached hereto as Exhibit E.

 

Section 2.04                                Additional Aircraft.

 

(a)                                  At any time during the period beginning on
the Effective Date and ending on the earliest of (1) the eleventh anniversary of
the Effective Date, with respect to any Expiration Aircraft (as defined below),
(2) the tenth anniversary of the Effective Date, with respect to any Growth
Aircraft (as defined below), and (3) the occurrence of a Termination Date
pursuant to Section 8.02, with respect to any Additional Aircraft (as defined
below), if Continental (i) replaces, or continues to operate within
Continental’s regional airline service, one or more Covered Aircraft for which
the Covered Aircraft Sublease terminates on or prior to the tenth anniversary of
the Effective Date (other than a termination of such Covered Aircraft Sublease
resulting directly from a breach of the applicable Covered Aircraft Sublease by
Contractor or pursuant to Section 8.02(a), 8.02(b) or 8.02(d) of this Agreement)
(an “Expiration Aircraft”), or (ii) begins the use of additional regional
aircraft in Continental’s regional airline service (other than an aircraft that
was previously withdrawn pursuant to Section 2.07(b)) (a “Growth Aircraft” and,
together with the Expiration Aircraft but subject to Section 2.04(b), an
“Additional Aircraft”), and, in each case, (iii) immediately after giving effect
to the inclusion of such Additional Aircraft in Continental’s regional airline
service, if less than the Minimum Percentage (as adjusted pursuant to
Section 2.04(c)) of the regional aircraft used in Continental’s regional airline
service are CPA Aircraft, then, at least 18 months (or such lesser period as
available aircraft or aircraft delivery positions may allow, as determined by
Continental in its reasonable discretion) prior to the entry of such Additional
Aircraft into Continental’s regional airline service, Continental agrees to give
Contractor written notice of its intention to use such Additional Aircraft, and
to offer Contractor and its Affiliates the opportunity to bid on such Additional
Aircraft.  In that regard, from time to time, at the request of Continental,
Contractor will promptly provide Continental with a schedule of aircraft
delivery positions available to Contractor.  If, at the time the foregoing
notice is given and at the time of any award referenced below, (A) Contractor
(or, if applicable, its Affiliate) has consistently satisfied in all material
respects the standards of care and service described in Section 4.03 in
connection with its

 

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obligations under this Agreement and any other similar agreement between
Continental, Contractor or any of their respective Affiliates related to any CPA
Aircraft (it being understood that any repeated failure to correct any violation
of any standard of care and service reasonably asserted by Continental to be
material shall be deemed to be a material failure) and otherwise complied in all
material respects with the terms of such agreement and any ancillary agreements,
except to the extent such non-compliance directly results from material
circumstances outside of Contractor’s or such Affiliate’s reasonable control,
and (B) Continental and Contractor (or, if applicable, Contractor’s Affiliate),
each acting reasonably, agree on economic terms and conditions relating to such
Additional Aircraft, then Contractor (or, at the election of Contractor, its
Affiliates) shall be awarded all or a portion of the Additional Aircraft such
that, after giving effect to such Additional Aircraft, the number of CPA
Aircraft is at least the Minimum Percentage (as adjusted pursuant to
Section 2.04(c)) of the regional aircraft used in Continental’s regional airline
service; provided, that if Continental shall have issued a request for proposal
or otherwise conducted a bid process for such Additional Aircraft, then
Continental shall be deemed to be acting reasonably if it refuses to agree with
Contractor to terms and conditions that are less beneficial to Continental than
the terms and conditions contained in the bona fide bid of any third party to
which Continental in good faith would intend to award the Additional Aircraft,
after providing Contractor with a certificate signed by an authorized officer of
Continental setting forth the material terms of such bid (specifically including
all terms material and beneficial to Contractor) and providing Contractor not
less than 20 days to review and match such bid.  If Contractor (or, at the
election of Contractor, its Affiliate) is awarded any Additional Aircraft, then
within 30 days after such award Contractor or such Affiliate and Continental
shall use their respective commercially reasonable efforts to enter into a
separate capacity purchase agreement (and accompanying ancillary agreements) or
amend an existing capacity purchase agreement (and accompanying ancillary
agreements) for such Additional Aircraft reflecting the agreed-upon terms and
conditions and otherwise being in a form substantially similar to the terms and
conditions set forth herein and in the Ancillary Agreements; provided, that
unless otherwise agreed by the parties, such separate agreement shall not
contain provisions substantially similar to this Section 2.04 or Sections 2.06,
2.11, 6.04, 6.05 or 10.01 and, in any provision substantially similar to
Section 6.01(a), all references to $*** million shall be $*** million with
respect to any aircraft with more than 50 passenger seats; and provided further,
that if Contractor or such Affiliate and Continental do not enter into such
separate capacity purchase agreement (and accompanying ancillary agreements) or
amend an existing capacity purchase agreement (and accompanying ancillary
agreements) within such 30-day period with respect to any Additional Aircraft,
unless due to Continental’s bad faith, then Continental shall have the option to
cancel the award of such Additional Aircraft to Contractor or such Affiliate and
thereafter to award such Additional Aircraft to any other party.  For the
purposes of this Section 2.04, references to Continental shall be deemed to
include United.

 

(b)                                 Notwithstanding anything to the contrary in
this Section 2.04, (u) Contractor’s rights arising pursuant to this Section 2.04
shall be subordinate to its rights arising pursuant to Section 2.08; (v) the
term “Additional Aircraft” shall not include (I) any aircraft that enters
Continental’s regional airline service as a result of any merger, combination or
similar transaction (other than an acquisition) of, with or by Continental or
its Affiliates, (II) any aircraft that enters Continental’s regional airline
service as a result of the acquisition by Continental or its Affiliates of all
or substantially all of the assets of another air carrier, or (III) any
Replacement Aircraft, Charter Aircraft or United Aircraft that becomes Covered

 

4

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Aircraft under this Agreement, any Affiliate CPA or any separate capacity
purchase agreement between Continental and Contractor or Contractor’s Affiliate,
pursuant to Section 2.05 or 2.06 of this Agreement; (w) the term “Growth
Aircraft” shall not include (I) any Expiration Aircraft, (II) any other aircraft
that is already in service in Continental’s regional airline service pursuant to
an agreement that is being extended or (III) any Make-Whole Aircraft; (x) the
phrase “regional aircraft used in Continental’s regional airline service” (and
similar phrases) shall (I) include only (A) Continental-branded regional
aircraft (or any successor branded regional aircraft) flying in and out of
domestic Continental Hub Airports or other domestic regional airline routes and
(B) regional aircraft operated by Gulfstream International Airlines exclusively
for flights for which the primary airline code is Continental’s code (or
Continental’s successor code) and (II) exclude (A) any aircraft operated
directly by Continental (or any successor of Continental) and (B) any aircraft
that becomes subject to a Capacity Purchase Arrangement as a result of any
matching rights, rights of first refusal, rights of last look or similar rights
to operate future aircraft contained in any Capacity Purchase Arrangement
between United and SkyWest Airlines, Inc. in effect as of the Effective Date
(which amount described in this clause (x), as of the Effective Date,
constituted *** aircraft); (y) the phrase “replaces … Covered Aircraft” in
clause (i) of Section 2.04(a) shall refer to an aircraft (but not more than one)
that enters Continental’s regional airline service within six months after a
Covered Aircraft exits such service following the termination of the Covered
Aircraft Sublease as described in clause (i) of Section 2.04(a); and
(z) references to the termination of a Covered Aircraft Sublease (and similar
phrases) shall mean the termination of such sublease at the end of the base term
or, if applicable, any extension terms pursuant to the terms thereof.

 

(c)                                  The “Minimum Percentage” shall be equal to
***% as of the Effective Date, and shall be reduced by ***% (e.g., to ***% for
the first aircraft) for (i) each Additional Aircraft that does not become a CPA
Aircraft pursuant to Section 2.04(a) or Section 2.08(h), as the case may be, as
a result of (x) Contractor’s or, if applicable, its Affiliate’s failure to agree
to terms and conditions that are as beneficial to Continental as the terms and
conditions contained in a bona fide bid of any third party to which Continental
in good faith would intend to award the Additional Aircraft, after providing
Contractor with a certificate signed by an authorized officer of Continental
setting forth the material terms of such bid (specifically including all terms
material and beneficial to Contractor) and providing Contractor not less than 20
days to review and match such bid and agree to such terms and conditions as
contemplated under Section 2.04(a) or Section 2.08(h), as the case may be;
provided, that Continental does in fact award the Additional Aircraft to such
third party under the terms of such bona fide bid, (y) Contractor’s or, if
applicable, its Affiliate’s failure to enter into a separate capacity purchase
agreement (and accompanying ancillary agreements) within the 30-day period
referenced in Section 2.04(a) or Section 2.08(h), as the case may be, due to its
bad faith, or (z) Contractor’s or, if applicable, its Affiliate’s failure to
procure and provide such Additional Aircraft pursuant to such separate capacity
purchase agreement (and accompanying ancillary agreements) as contemplated under
Section 2.04(a) or Section 2.08(h), as the case may be, (it being understood
that any failure of Contractor or, if applicable, its Affiliate to provide or
enter into an agreement with respect to a Replacement Aircraft pursuant to
Section 2.05 or with respect to a Make-Whole Aircraft, in each case, shall not
constitute a failure for purposes of this Section 2.04(c)), (ii) each CPA
Aircraft that ceases to be operated by Contractor or its Affiliates as a result
of (A) a default under the applicable Capacity Purchase Arrangement, (B) such
Affiliate ceasing to be an affiliate of Contractor or (C) withdrawal by
Continental pursuant to Section 2.07(b); provided, that the

 

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Minimum Percentage shall be increased by ***% at such time, if any, that such
aircraft is returned to service as a Covered Aircraft pursuant to
Section 2.07(e), and (iii) each Covered Aircraft subject to bid pursuant to
Section 2.11 that is withdrawn pursuant to Section 2.11 as a result of
Contractor’s failure to agree to base and incentive compensation rates that are
as beneficial to Continental as the base and incentive compensation rates
contained in a bona fide bid of any third party to which Continental in good
faith would intend to award the Covered Aircraft, after providing Contractor
with a certificate signed by an authorized officer of Continental setting forth
the material terms of such bid (specifically including all terms material and
beneficial to Contractor) and providing Contractor not less than 20 days to
review and match such bid and agree to such base and incentive compensation
rates as contemplated under Section 2.11; provided, that Continental does in
fact award such aircraft to such third party under the terms of the bona fide
bid.  In addition, at any time that aircraft enter Continental’s regional
airline service pursuant to clauses (v)(I) or (v)(II) of Section 2.04(b), then
(A) all references in this Section 2.04 to “Continental branded regional
aircraft,” “Continental’s code,” “directly operated by Continental” and
“Continental regional airlines service” (and, in each case, similar phrases)
shall mean the regional aircraft, code or services, as the case may be,
applicable to the surviving entity (or entities) of such acquisition, merger,
combination or similar transaction and (B) the then-applicable Minimum
Percentage and the ***% referenced in this Section 2.04(c) shall each be
adjusted by multiplying it by a fraction, the numerator of which shall be the
total number of “regional aircraft used in Continental’s regional airline
service” immediately before such acquisition, merger, combination or other
similar transaction, and the denominator of which shall be the total number of
“regional aircraft used in Continental’s regional airline service” immediately
after such acquisition, merger, combination or other similar transaction.

 

(d)                                 Prior to the tenth anniversary of the
Effective Date, Continental shall offer Contractor and its Affiliates the
opportunity to bid on an aggregate of 15 Additional Aircraft in accordance with
and subject to the limitations, terms and conditions contained in this
Section 2.04(d).  At least 18 months (or such lesser period as available
aircraft or aircraft delivery positions may allow, as determined by Continental
in its reasonable discretion) prior to the entry of such Additional Aircraft
into Continental’s regional airline service, Continental shall give Contractor
written notice of its intention to use such Additional Aircraft.  If, at the
time the foregoing notice is given and at the time of any award referenced
below, (A) Contractor (or, if applicable, its Affiliate) has consistently
satisfied in all material respects the standards of care and service described
in Section 4.03 in connection with its obligations under this Agreement and any
other similar agreement among Continental, Contractor or any of their respective
Affiliates related to any CPA Aircraft (it being understood that any repeated
failure to correct any violation of any standard of care and service reasonably
asserted by Continental to be material shall be deemed to be a material failure)
and otherwise complied in all material respects with the terms of this Agreement
and the Ancillary Agreements, except to the extent such non-compliance directly
results from material circumstances outside of Contractor’s or such Affiliate’s
reasonable control, and (B) Continental and Contractor (or, if applicable,
Contractor’s Affiliate), each acting reasonably, agree on economic terms and
conditions relating to such Additional Aircraft, then Contractor (or, at the
election of Contractor, its Affiliates) shall be awarded such Additional
Aircraft (each such awarded Additional Aircraft, a “Make-Whole Aircraft”);
provided, that if Continental shall have issued a request for proposal or
otherwise conducted a bid process for such Additional Aircraft, then Continental
shall be deemed to be acting reasonably if it refuses to agree with Contractor
to terms and conditions that are less

 

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beneficial to Continental than the terms and conditions contained in the bona
fide bid of any third party to which Continental in good faith would intend to
award the Additional Aircraft, after providing Contractor with a certificate
signed by an authorized officer of Continental setting forth the material terms
of such bid (specifically including all terms material and beneficial to
Contractor) and providing Contractor not less than 20 days to review and match
such bid.  Within 30 days after the award of such Make-Whole Aircraft,
Contractor or such Affiliate and Continental shall use their respective
commercially reasonable efforts to enter into a separate capacity purchase
agreement (and accompanying ancillary agreements) or amend an existing capacity
purchase agreement (and accompanying ancillary agreements) for such Make-Whole
Aircraft reflecting the agreed-upon terms and conditions and otherwise being in
a form substantially similar to the terms and conditions set forth herein and in
the Ancillary Agreements; provided, that unless otherwise agreed by the parties,
such separate agreement shall have a term of at least 10 years and shall not
contain provisions substantially similar to this Section 2.04 or Sections 2.06,
2.11, 6.04, 6.05 or 10.01 and, in any provision substantially similar to
Section 6.01(a), all references to $*** million shall be $*** million with
respect to any aircraft with more than 50 passenger seats; and provided further,
that if Contractor or such Affiliate and Continental do not enter into such
separate capacity purchase agreement (and accompanying ancillary agreements) or
amend an existing capacity purchase agreement (and accompanying ancillary
agreements) within such 30-day period with respect to any Additional Aircraft,
unless due to Continental’s bad faith, then Continental shall have the option to
cancel the award of such Additional Aircraft to Contractor or such Affiliate and
thereafter to award such Additional Aircraft to any other party; provided, that
if Continental has issued a request for proposal or otherwise conducted a bid
process and Contractor fails to match a bona fide bid as provided above, the
award right of Contractor shall not be reduced if Continental does not in fact
award such Additional Aircraft to such third party under the terms of such bona
fide bid.  For the avoidance of doubt, Continental’s obligations under this
Section 2.04(d) are in addition to Contractor’s rights under Section 2.04(a),
but Continental may satisfy such obligations in connection with one or more
opportunities to bid on Additional Aircraft pursuant to Section 2.04(a);
provided, that the requirements of this Section 2.04(d) are also satisfied; and
provided further, that Continental shall provide notice to Contractor not later
than the date of any award of such aircraft that (a) such Additional Aircraft
awarded shall constitute Make-Whole Aircraft, and such Make-Whole Aircraft shall
not be counted in determining whether the Minimum Percentage has been met
pursuant to Section 2.04(a) or (b) in the event that such Additional Aircraft
are not awarded to Contractor, that, subject to the terms of this clause (d),
the award right of Contractor pursuant to this Section 2.04(d) shall be reduced
without otherwise reducing the Minimum Percentage as provided in
Section 2.04(c).

 

(e)                                  With respect to any “request for proposal”
or “RFP” issued by Continental to multiple parties prior to the tenth
anniversary of the Effective Date for aircraft in circumstances in which the
condition set forth in clause (iii) of Section 2.04(a) is not met, Continental
agrees to include Contractor in the parties to which such RFP is delivered.

 

Section 2.05                                Early Replacement of Covered
Aircraft.  Continental shall be entitled to withdraw and replace up to 75
Covered Aircraft from this Agreement, in accordance with and subject to the
limitations, terms and conditions contained in this Section 2.05.

 

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(a)                                  For each Covered Aircraft withdrawn from
this Agreement pursuant to this Section 2.05, Contractor and/or one of its
Affiliates (selected by Contractor) will use its commercially reasonable efforts
to procure and provide an aircraft of the type selected by Continental (a
“Replacement Aircraft”), which must be of a type that (i) on the date of the
notice of replacement provided pursuant to Section 2.05(b) below, is operated or
contracted to be operated by Contractor or its Affiliates and (ii) after taking
into account the procurement of such Replacement Aircraft pursuant to this
Section 2.05(a), Contractor and its Affiliates shall be operating at least 19
aircraft of such aircraft type as of the date of such replacement, and enter
into a separate capacity purchase agreement or amend an existing capacity
purchase agreement with Continental on or prior to the Replacement Date (as
defined below) pursuant to which such Replacement Aircraft shall be utilized on
a capacity purchase basis.  The separate or amended agreement shall contain
block hour rates and other economic terms applicable to such Replacement
Aircraft that are consistent with those contained in the most recent Capacity
Purchase Arrangement entered into by Contractor or any of its Affiliates with
respect to such aircraft type (excluding any Affiliate CPA and the United
Agreement); provided, that such rates and other economic terms shall be adjusted
to reflect the lower of then-applicable market aircraft acquisition costs or
Contractor’s actual costs for the acquisition of such Replacement Aircraft
(“Similar Economic Term Transaction”), the rates and economic terms of which
shall be set forth in a certificate delivered to Continental signed by an
authorized officer of Contractor; provided, in all events, that the term of such
separate or amended agreement (x) with respect to each Replacement Aircraft that
is a new aircraft shall be for a period no less than 15 years, and (y) with
respect to each other Replacement Aircraft shall be for a period not less than
the remaining term under this Agreement of the Covered Aircraft being replaced
by such Replacement Aircraft; and provided further, that unless otherwise agreed
by the parties, such separate agreement shall be in a form substantially similar
to the terms and conditions set forth herein and in the Ancillary Agreements
(other than as provided in this Section 2.05); provided, however, unless
otherwise agreed by the parties, such separate agreement shall not contain
provisions substantially similar to Sections 2.04, 2.06, 2.11, 6.04, 6.05 or
10.01 of this Agreement and, in any provision substantially similar to
Section 6.01(a), all references to $*** million shall be $*** million with
respect to any aircraft with more than 50 passenger seats.  Contractor
acknowledges that any failure by Contractor to timely provide the certification
required pursuant to Section 2.05(b), procure and provide a Replacement Aircraft
or enter into a separate capacity purchase agreement or amend an existing
capacity purchase agreement as contemplated above with Continental on or prior
to the Replacement Date shall not prevent Continental from exercising its right
to withdraw Covered Aircraft from this Agreement pursuant to this Section 2.05.

 

(b)                                 To effect a replacement under
Section 2.05(a), at any time and from time to time, Continental shall give
Contractor not less than 18 months’ written notice of replacement of any Covered
Aircraft (or, in the case of a Replacement Aircraft of a type for which
Contractor or such Affiliate is already certificated, such lesser period as
available aircraft or aircraft delivery positions may allow, as determined by
Continental in its reasonable discretion); provided, absent the consent of
Contractor in its sole discretion, that Continental shall not be entitled to
replace more than four Covered Aircraft in any given month.  Such notice shall
be irrevocable (except as provided below) and shall specify a replacement date
(the “Replacement Date”) for each such Covered Aircraft to be replaced and the
type and number of Covered Aircraft to be replaced.  Within 90 days of its
receipt of such notice from Continental, Contractor may, at its option,

 

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provide Continental with a certificate signed by an authorized officer of
Contractor stating that Contractor believes in good faith that it will be able
to procure and provide a Replacement Aircraft and enter into a separate capacity
purchase agreement or amend an existing capacity purchase agreement as
contemplated above with Continental on or prior to the Replacement Date.  Such
certificate shall further identify whether or not such Replacement Aircraft
shall be a new aircraft and set forth the rates and other economic terms based
on the Similar Economic Term Transaction.  If Contractor so certifies to
Continental, then Continental and Contractor shall each use their respective
reasonable commercial efforts to enter into a separate capacity purchase
agreement or amend an existing capacity purchase agreement as contemplated above
within the following 30 days.  If Contractor does not timely provide such
certification, or does not procure and provide a Replacement Aircraft on or
prior to the Replacement Date, or if Continental and Contractor do not enter
into a separate capacity purchase agreement or amend an existing capacity
purchase agreement as contemplated above within such 30-day period
notwithstanding Continental’s use of its reasonable commercial efforts, then
Continental shall have the option to cancel the withdrawal of the Covered
Aircraft to be replaced or to withdraw such aircraft without entering into
arrangements for a Replacement Aircraft.  Continental shall have complete
discretion to select the particular Covered Aircraft and the particular Engines
to be withdrawn on any Replacement Date pursuant to this Section 2.05.  Promptly
after receipt of such notice (but in any event within 20 days thereafter),
Contractor shall deliver to Continental a reasonably detailed current summary
and forecast of the maintenance and repair status and condition of each Covered
Aircraft and Engine and a list detailing the location of each Engine (by
aircraft or, if appropriate, maintenance facility).  Within 75 days after
receipt of such summary, Continental shall select the individual aircraft and
Engines to be replaced, and shall provide written notice to Contractor of its
selection.  Continental shall bear the cost of any engine swaps necessary to
accommodate its Engine selections, and shall agree to such Engine swaps under
the applicable Covered Aircraft Subleases.

 

(c)                                  Upon the Replacement Date, the applicable
Covered Aircraft to be replaced shall cease being a Covered Aircraft, and
Contractor shall immediately deliver possession of such aircraft to Continental
or its designee and the term of the Covered Aircraft Sublease for such aircraft
and the Engines shall, upon such delivery, terminate in accordance with the
terms of such Covered Aircraft Sublease.  In addition, the provisions of
Section 2.09 shall apply to such Covered Aircraft.

 

(d)                                 If any Affiliate CPAs or other Capacity
Purchase Arrangements between Continental and Contractor or its Affiliates are
in effect at the time when any rights under this Section 2.05 are exercised by
any party, and such agreements contain correlative provisions to this
Section 2.05, then all numerical limits relating to the number of aircraft
(whether aggregate or monthly) shall apply to this Agreement and to all such
other agreements in the aggregate. Notwithstanding anything to the contrary
contained in this Section 2.05, Continental’s right to withdraw aircraft under
this Section 2.05 and its corresponding provisions in any Affiliate CPA or other
Capacity Purchase Arrangement between Continental and Contractor or its
Affiliate shall apply only to aircraft leased or subleased by Continental to
Contractor or such Affiliate.

 

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Section 2.06                                Return Aircraft.

 

(a)                                  Contractor operates (i) certain aircraft
pursuant to the terms and conditions of the United Agreement, such aircraft
being identified in Section A.1 of Schedule 2 hereto (“United 8 Aircraft”), in
Section A.2 of Schedule 2 hereto (“United Other Aircraft)” and in Section B of
Schedule 2 hereto (“United Short-Term Aircraft”, and together with United 8
Aircraft and the United Other Aircraft, “United Aircraft”) and (ii) Contractor’s
Charter Services (as defined in Section 10.01(b)) with certain aircraft, such
aircraft being identified in Section B of Schedule 2 hereto (“Charter
Aircraft”).  Pursuant to the terms and conditions of Section 10.01(b) of this
Agreement, Contractor shall wind-up Contractor’s Charter Service.  Upon (A) the
termination of the United Agreement as to a United Aircraft or (B) the removal
of any Charter Aircraft from Contractor’s Charter Service as contemplated by
Section 10.01(b), Continental, at its option, may designate such United Aircraft
or Charter Aircraft as Covered Aircraft under this Agreement.  Continental shall
give Contractor not less than 45 days advance written notice of such United
Aircraft or Charter Aircraft becoming a Covered Aircraft (except that, for any
notice delivered during the first 120 days following the Effective Date,
Continental shall be required to give only 30 days advance written notice). 
Continental’s notice to Contractor shall designate an effective date for such
United Aircraft or Charter Aircraft to become a Covered Aircraft.  On such
effective date, the Return Aircraft Sublease relating to such United Aircraft or
Charter Aircraft shall be terminated and replaced with a Covered Aircraft
Sublease.

 

(b)                                 With respect to any United Aircraft or
Charter Aircraft that is not designated by Continental as a Covered Aircraft
pursuant to clause (a) of this Section 2.06, upon the termination of the United
Agreement as to such United Aircraft or its removal from Contractor’s Charter
Service as contemplated by Section 10.01(b), as applicable, Contractor shall
immediately deliver possession of such aircraft to Continental or its designee
and the provisions of Section 2.09 shall apply (except that references in such
Section 2.09 to “Covered Aircraft” and “Covered Aircraft Sublease” shall mean
“Charter Aircraft,” “United Aircraft,” and “Return Aircraft Sublease,” as
applicable, to the extent they apply to Charter Aircraft or United Aircraft, as
applicable, covered by this Section 2.06(b)).

 

(c)                                  Subject to Section 4.18, the Return
Aircraft Sublease shall remain in effect with respect to any United Aircraft or
Charter Aircraft until its termination pursuant to Section 2.06(a) or
2.06(b) above or Section 2.09 below.  The Return Aircraft Subleases for United
Aircraft are amended and supplemented by the terms set forth on Schedule 4
hereto.

 

(d)                                 For each United Aircraft or Charter Aircraft
that becomes a Covered Aircraft pursuant to Section 2.06(a), Continental shall
have the right to withdraw from the capacity purchase provisions of this
Agreement one of the ERJ-145 Covered Aircraft listed in Schedule 1 hereto
(unless all of such aircraft shall already have been withdrawn).  Continental
shall be entitled to give Contractor notice of such withdrawal not later than 90
days after such United Aircraft or Charter Aircraft becomes a Covered Aircraft,
and Continental shall have complete discretion in the selection of the
particular Covered Aircraft and the particular Engines to be withdrawn pursuant
to this Section 2.06(d).  In addition, the provisions of Section 2.09 shall
apply to the Covered Aircraft and Engines being withdrawn.  Continental shall
bear the cost

 

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of any engine swaps necessary to accommodate its Engine selections, and shall
agree to such Engine swaps under the applicable Covered Aircraft Subleases.

 

Section 2.07                                Other Withdrawal of Aircraft.

 

(a)                                  Intentionally Omitted

 

(b)                                 In the event of a Labor Strike, or during
any 30-day cooling-off period under the Railway Labor Act applicable to
Contractor and one of its collective bargaining units or within 30 days after
the end of any such period, or at such other times as Continental and Contractor
shall agree from time to time, Continental shall be entitled to withdraw Covered
Aircraft (other than any Covered Aircraft that is not subject to a Covered
Aircraft Sublease) from the capacity purchase provisions of this Agreement in
accordance with and subject to the limitations, terms and conditions contained
in this Section 2.07, by providing written notice of the withdrawal of Covered
Aircraft from this Agreement, which notice shall be revocable and shall specify
the total number of Covered Aircraft to be withdrawn pursuant to such notice and
a desired withdrawal schedule, specifying, for each particular aircraft, the
date of withdrawal.  If such notice is delivered during the 30-day cooling off
period referenced above or within 30 days after the end of such cooling off
period (provided that a Labor Strike has not been initiated during such period),
then the withdrawal schedule in such notice shall be subject to Reasonable
Operating Constraints and Conditions.  For each Covered Aircraft withdrawn
pursuant to this Section 2.07(b), such aircraft shall be operated by an
Affiliate of Contractor and become subject to an Affiliate CPA if
(i) Continental and Contractor mutually agree that such Affiliate of Contractor
is capable of performing its obligations under such Affiliate CPA immediately
upon the execution of such Affiliate CPA, (ii) at the time of such withdrawal,
neither Contractor nor, if any Affiliate CPA is then in effect, each Affiliate
of Contractor that is a party to an Affiliate CPA shall be, and Contractor and,
if applicable, each such Affiliate shall certify to Continental that it is not,
in material default under, or in material breach of, this Agreement or any
Ancillary Agreement or, if applicable, such Affiliate CPA, (iii) such withdrawn
aircraft shall become subject to the Affiliate CPA on the day following the date
of its withdrawal from this Agreement, and (iv) such operation by an Affiliate
is not prohibited by any collective bargaining agreements or similar
arrangements then in effect between Contractor and any labor union.  If any of
the conditions set forth in clauses (i) through (iv) above is not satisfied,
Continental shall be entitled to withdraw Covered Aircraft pursuant to this
Section 2.07(b) without entering into an Affiliate CPA.  Subject to Continental
identifying the Covered Aircraft and particular Engines to be withdrawn pursuant
to Section 2.07(c) below, the withdrawal schedule may begin immediately upon its
delivery, and shall not provide for the withdrawal of more than 75 Covered
Aircraft per month (subject, in the case of any notice delivered during the
30-day cooling off period or the subsequent 30-day period referenced above
(provided that a Labor Strike has not been initiated during such period), to
Reasonable Operating Constraints and Conditions).

 

(c)                                  Taking into account the aircraft type
specified in the notice of withdrawal, Continental shall have complete
discretion to select the particular Covered Aircraft and the particular Engines
to be withdrawn during any particular month pursuant to this Section 2.07;
provided, that if the Covered Aircraft are to be withdrawn pursuant to
Section 2.07(b), then (i) Continental shall use reasonable efforts to avoid
Engine swaps prior to such withdrawal, (ii) Contractor shall carry out such
Engine swaps as are requested prior to such withdrawal and

 

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facilitate such Engine swaps as are requested following such withdrawal, and
(iii) Continental shall bear the direct costs of Engine swaps requested
following such withdrawal.  Not more than 2 days after its receipt or delivery
of any withdrawal notice pursuant to this Section 2.07, Contractor shall deliver
to Continental a reasonably detailed current summary and forecast of the
maintenance and repair status and condition of each Covered Aircraft and Engine
and a list detailing the location of each Engine (by aircraft or, if
appropriate, maintenance facility).  Within 10 days after receipt of such
summary, Continental shall select the individual aircraft (other than any
Covered Aircraft that is not subject to a Covered Aircraft Sublease) and Engines
to be replaced, and shall provide written notice to Contractor of its
selection.  Continental shall bear the cost of any engine swaps necessary to
accommodate its engine selections.  Notwithstanding the provisions of this
Section 2.07, Continental’s and Contractor’s rights to withdraw any or all
aircraft pursuant to this Section 2.07 shall be superseded by any rights of
either Continental or Contractor arising under Article VIII (including without
limitation any withdrawal rights, and any Wind-Down Schedule provided pursuant
to Article VIII shall be controlling).  In addition, the provisions of
Section 2.09 shall apply to the withdrawal of any Covered Aircraft pursuant to
this Section 2.07; provided, however, that Contractor and Continental agree
(because such lease shall be reinstated if such aircraft are deemed Covered
Aircraft pursuant to Section 2.07(e)) not to file with the FAA or the
international registry a termination of the applicable Covered Aircraft Sublease
in the case of a withdrawal of a Covered Aircraft under this Section 2.07 until
the earlier of (1) the 30th calendar day after such withdrawal or (2) the date
such aircraft becomes subject to a Capacity Purchase Arrangement with any third
party.

 

(d)                                 In connection with the foregoing, Contractor
agrees that each of its Affiliates that operate ERJ Aircraft shall adopt
Contractor’s maintenance program as soon as reasonably practicable.

 

(e)                                  Upon the resolution of any Labor Strike or
expiration of any 30-day cooling-off period under the Railway Labor Act, 50%
(rounded downward to the nearest whole number) of any Covered Aircraft (i) that
have been withdrawn by Continental pursuant to Section 2.07(b) and (ii) that
have not otherwise become subject to a Capacity Purchase Arrangement with
Contractor or any third party as of the date of such resolution or expiration
(each, an “Available Labor Strike Withdrawn Aircraft”), consisting of those
Available Labor Strike Withdrawn Aircraft with the longest remaining term under
the applicable Covered Aircraft Sublease, shall immediately become a Covered
Aircraft under this Agreement (and not subject to any Termination Date or
Wind-Down Schedule provided as a result of Continental’s exercise of rights
described in this Section 2.07) and the Covered Aircraft Sublease shall be
reinstated without further act.  Continental, at its option, may elect to ground
all or a portion of the remaining Available Labor Strike Withdrawn Aircraft by
providing Contractor written notice of such election within 30 days following
the resolution of the applicable Labor Strike or expiration of the applicable
30-day cooling-off period.  Such notice shall identify the individual Available
Labor Strike Withdrawn Aircraft to remain withdrawn.  Any remaining Available
Labor Strike Withdrawn Aircraft that are not so designated within such 30 days
shall immediately become a Covered Aircraft under this Agreement (and any
Termination Date or Wind-Down Schedule provided for in a withdrawal notice
delivered pursuant to this Section 2.07 shall be null and void) and the Covered
Aircraft Sublease shall be reinstated without further act.

 

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Section 2.08                                Commodity Events.

 

(a)                                  If a Commodity Withdrawal Event shall
occur, then at any time during the sixty days following any such event (the
“Commodity Withdrawal Period”), Continental shall be entitled to withdraw
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 2.08.

 

(b)                                 At any time and from time to time during a
Commodity Withdrawal Period, Continental may give Contractor written notice of
the occurrence of such Commodity Withdrawal Event and of Continental’s election
to exercise its right under Section 2.08(a) to withdraw Covered Aircraft from
this Agreement, which notice shall specify the total number of Covered Aircraft
to be withdrawn pursuant to such notice and a withdrawal schedule, specifying
the aircraft type and the date of withdrawal; provided, that the first
withdrawal shall not be scheduled for any date prior to the 30th day after the
date of such notice; and provided further, that the withdrawal schedules for all
Commodity Withdrawal Events shall not provide for the withdrawal of more than 25
Covered Aircraft per month in the aggregate.  Covered Aircraft shall be
withdrawn from the capacity purchase provisions of this Agreement on the date of
return set forth in any such notice that is in compliance with the provisions of
this Section 2.08.

 

(c)                                  Taking into account the aircraft type
specified in the notice of withdrawal, Continental shall have complete
discretion to select the particular Covered Aircraft and particular Engines to
be withdrawn during any particular month pursuant to this Section 2.08. 
Promptly after its receipt or delivery of any withdrawal notice pursuant to this
Section 2.08 (but in any event within three Business Days thereafter),
Contractor shall deliver to Continental a reasonably detailed current summary
and forecast of the maintenance and repair status and condition of each Covered
Aircraft and Engine.  Within three Business Days of receipt of such summary,
Continental shall select the individual aircraft and Engines to be replaced, and
shall provide written notice to Contractor of its selection.  Continental shall
bear the cost of any engine swaps necessary to accommodate its Engine
selections, and shall agree to such Engine swaps under the applicable Covered
Aircraft Subleases.

 

(d)                                 In connection with any withdrawal pursuant
to this Section 2.08, Continental shall be responsible for the direct severance
and crew training expenses (if any) incurred by Contractor (using commercially
reasonable efforts to mitigate such costs) and reasonably documented in
connection with such withdrawal of such aircraft.  In addition, the provisions
of Section 2.09 shall apply to the withdrawal of any Covered Aircraft pursuant
to this Section 2.08.

 

(e)                                  Once a Covered Aircraft has been withdrawn
pursuant to this Section 2.08, Continental may not operate such aircraft, or
cause such aircraft to be operated, within Continental’s regional airline
service without returning such aircraft to the capacity purchase provisions of
this Agreement pursuant to Section 2.08(g).

 

(f)                                    If a Commodity Replacement Event shall
occur, then at any time during the sixty days following any such event (the
“Commodity Replacement Period”), Contractor shall be entitled to require
Continental to return to the capacity purchase provisions of this

 

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Agreement (and to execute a Covered Aircraft Sublease with respect to) each
Covered Aircraft withdrawn from the capacity purchase provisions of this
Agreement pursuant to any First Commodity Withdrawal Event (if the Commodity
Replacement Event is a First Commodity Replacement Event) or any Second
Commodity Withdrawal Event (for any Commodity Replacement Event) in accordance
with and subject to the limitations, terms and conditions contained in this
Section 2.08; provided, that such Covered Aircraft to be returned is not, at the
time of such return, a Disposed Aircraft (in which case Contractor shall not be
entitled to require the return of such aircraft, and references in
Section 2.08(g) to Covered Aircraft shall not include Disposed Aircraft).

 

(g)                                 At any time and from time to time during a
Commodity Replacement Period, Contractor may give Continental written notice of
the occurrence of such Commodity Replacement Event and of Contractor’s election
to exercise its right under Section 2.08(f) to return Covered Aircraft to this
Agreement.  At any time and from time to time, Continental may give Contractor
written notice of Continental’s election to exercise its right to return to this
Agreement Covered Aircraft withdrawn pursuant to Section 2.08(a).  Any notice
delivered pursuant to this Section 2.08(g) shall specify the total number of
Covered Aircraft to be returned pursuant to such notice and a return schedule
specifying the date of return; provided, that the first return shall not be
scheduled for any date prior to the 60th day after the date of such notice; and
provided further, that the return schedules pursuant to all notices delivered
pursuant to this Section 2.08(g) shall not provide for the return of more than
10 Covered Aircraft per month, or more than 2 Covered Aircraft per day, in each
case in the aggregate (with preference given to schedules set forth in earlier
notices).  Covered Aircraft shall be returned to the capacity purchase
provisions of this Agreement, and each of Continental and Contractor shall enter
into a Covered Aircraft Sublease with respect to such aircraft, on the date of
return set forth in any such notice that is in compliance with the provisions of
this Section 2.08.  Notwithstanding anything in this Section 2.08 to the
contrary, (x) if any Covered Aircraft is scheduled to be withdrawn pursuant to a
Commodity Withdrawal Event on any date subsequent to the 60th day after
Contractor delivers written notice to Continental of a Commodity Replacement
Event occurring subsequent to such Commodity Withdrawal Event, then such
withdrawal shall automatically deemed to be canceled, and no return in respect
of such aircraft shall be necessary, and (y) if any Covered Aircraft is
scheduled to be returned pursuant to a Commodity Replacement Event on any date
subsequent to the 30th day after Continental delivers written notice to
Contractor of a Commodity Withdrawal Event occurring subsequent to such
Commodity Replacement Event, then such return shall automatically deemed to be
canceled, and no withdrawal in respect of such aircraft shall be necessary.  In
connection with any return pursuant to this Section 2.08(g), Continental shall
be responsible for the following direct expenses (if any) incurred by Contractor
or its Affiliate (using commercially reasonable efforts to mitigate such costs)
and reasonably documented in connection with such return: initial crew training
costs and aircraft repositioning costs.

 

(h)                                 If at any time the aggregate number of
Covered Aircraft withdrawn pursuant to Section 2.08(b) exceeds (x) the aggregate
number of Covered Aircraft returned pursuant to Section 2.08(g) plus (y) the
aggregate number of Additional Aircraft previously included in Continental’s
regional airline service and operated by Contractor or its Affiliates pursuant
to this Section 2.08(h) (such excess number of aircraft, as adjusted pursuant to
the last sentence of this Section 2.08(h), constituting a “Commodity Aircraft
Deficit”), then, at least 18

 

14

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months (or such lesser period as available aircraft or aircraft delivery
positions may allow, as determined by Continental in its reasonable discretion)
prior to the entry of any Additional Aircraft into Continental’s regional
airline service on or before the earlier of the eleventh anniversary of the
Effective Date and the occurrence of a Termination Date pursuant to
Section 8.02, Continental agrees to give Contractor written notice of its
intention to use Additional Aircraft (up to the number of aircraft constituting
a Commodity Aircraft Deficit), and to offer Contractor and its Affiliates the
opportunity to bid on such Additional Aircraft, and the provisions of
Sections 2.04(a) (other than the first sentence thereof, and subject to the
immediately following sentence of this Section 2.08(h)) and 2.04(b) shall apply
to such notice and offer and to any award of such Additional Aircraft pursuant
thereto.  The obligation to award Additional Aircraft to Contractor (or, at the
election of Contractor, its Affiliates) arising pursuant to this Section 2.08
shall apply only to the extent of any Commodity Aircraft Deficit, and shall
apply without regard to any measurement of the Minimum Percentage and shall be
in addition to any Make-Whole Aircraft.  The Commodity Aircraft Deficit shall be
reduced by one aircraft for each Additional Aircraft that does not become
subject to a separate capacity purchase agreement (and accompanying ancillary
agreements) or any amendments to an existing capacity purchase agreement (and
accompanying ancillary agreements) between Continental and Contractor or its
Affiliate as a result of (i) Contractor’s or its Affiliate’s failure to agree to
terms and conditions that are as beneficial to Continental as the terms and
conditions contained in a bona fide bid of any third party to which Continental
in good faith would intend to award the Additional Aircraft (and in fact does
award such aircraft pursuant to such bona fide bid) (or, if no bona fide bid has
been received, then those terms and conditions contained in the most recent
Similar Economic Term Transaction as set forth in a certificate delivered to
Continental signed by an authorized officer of Contractor), after providing
Contractor with a certificate signed by an authorized officer of Continental
setting forth the material terms of such bid (specifically including all terms
material and beneficial to Contractor) and providing Contractor not less than 20
days to review and match such bid and agree to such terms and conditions as
contemplated under this Section 2.08(h), (ii) Contractor’s or its Affiliate’s
failure to enter into a separate capacity purchase agreement (and accompanying
ancillary agreements) or any amendments to an existing capacity purchase
agreement (and accompanying ancillary agreements) within the 30-day period
referenced in Section 2.04(a) due to its bad faith, or (iii) Contractor’s or its
Affiliate’s failure to procure and provide such Additional Aircraft pursuant to
such separate capacity purchase agreement (and accompanying ancillary
agreements) or any amendments to an existing capacity purchase agreement (and
accompanying ancillary agreements) as contemplated under Section 2.04(a) (it
being understood that any failure of Contractor or its Affiliates to provide or
enter into an agreement with respect to a Replacement Aircraft pursuant to
Section 2.05 or a Make-Whole Aircraft pursuant to Section 2.04(d) shall not
constitute a failure for purposes of this Section 2.08(h)).

 

(i)                                     The aggregate number of Covered Aircraft
withdrawn pursuant to Section 2.08(b) in respect of all First Commodity
Withdrawal Events, net of the aggregate number of Covered Aircraft returned
pursuant to this Section 2.08(g), shall not be more than 50 in the aggregate. 
The aggregate number of Covered Aircraft withdrawn pursuant to Section 2.08(b)
in respect of all Commodity Withdrawal Events, net of the aggregate number of
Covered Aircraft returned pursuant to this Section 2.08(g), shall not be more
than 100 in the aggregate.  If any Affiliate CPAs or other Capacity Purchase
Arrangement between Continental and Contractor or its Affiliates are in effect
pursuant to this Article II at the time when any rights

 

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under this Section 2.08 are exercised by any party, and such agreements contain
correlative provisions to this Section 2.08, then all numerical limits relating
to the number of aircraft (whether aggregate or monthly) shall apply to this
Agreement and to all such other agreements in the aggregate.  Notwithstanding
anything to the contrary contained in this Section 2.08, Continental’s right to
withdraw aircraft under this Section 2.08 and its corresponding provisions in
any Affiliate CPA or other Capacity Purchase Arrangement between Continental and
Contractor or its Affiliate in effect pursuant to this Article II shall only
apply to aircraft leased or subleased by Continental to Contractor or such
Affiliate.

 

Section 2.09                                Return Conditions; Storage.

 

(a)                                  Upon the date for withdrawal from the
capacity purchase provisions of this Agreement of a Covered Aircraft subject to
a Covered Aircraft Sublease pursuant to Sections 2.05, 2.06, 2.07, 2.08, 2.11,
8.03(a), 8.03(b), 8.03(c) or 8.03(d), such aircraft shall cease being a Covered
Aircraft, Contractor shall immediately deliver possession of such aircraft to
Continental or its designee, or, in the case of Section 2.07, to the applicable
Affiliate of Contractor.  Upon such delivery of possession, if all conditions
set forth in the applicable Covered Aircraft Sublease, including any return
conditions, have been satisfied in accordance with its terms, then the Covered
Aircraft Sublease for such aircraft shall terminate as of such date in
accordance with the terms of such Covered Aircraft Sublease (regardless of the
underlying term of such Covered Aircraft Sublease); provided, that so long as
the applicable Covered Aircraft is not being withdrawn from this Agreement
pursuant to Section 8.02(c), the Covered Aircraft Sublease may remain in effect
as provided in Section 2.09(c) or, to the extent provided by Section 2.09(b),
the Covered Aircraft Sublease may be replaced with a Storage Sublease. In the
case of an applicable transfer pursuant to Section 2.07, the obligations of
Contractor shall be assumed by the applicable Affiliate of Contractor (and such
Covered Aircraft Sublease shall thereafter constitute an ancillary agreement for
purposes of the applicable Affiliate CPA).  Other than in the case of a transfer
described in Section 2.07, upon satisfaction of the foregoing return conditions
and those specified in the applicable Covered Aircraft Sublease (or, in the
event of a termination pursuant to Section 8.02(b)(x), promptly after the end of
any grounding that would prevent a ferrying of the aircraft), Contractor shall
ferry the applicable Covered Aircraft at Continental’s expense to a location
within the continental United States selected by Continental.  Promptly after
the delivery of any termination notice by any party hereto to another party, but
in no event more than five days after such delivery (and immediately in
connection with a termination pursuant to Section 8.02(a)) or 180 days prior to
the end of the Term, Contractor shall deliver to Continental a reasonably
detailed current summary and forecast of the maintenance and repair status and
condition of each aircraft and each Engine, and a list detailing the location of
each such engine (by aircraft or, if appropriate, maintenance facility).  In
addition, Contractor shall update such summary from time to time promptly upon
Continental’s request.

 

(b)                                 So long as this Agreement has not been
terminated pursuant to Section 8.02(c), with respect to (i) any aircraft being
returned to Continental by Contractor, (ii) any Parked Aircraft or (iii) any
Other Subleased Aircraft, such aircraft shall remain, or be placed, as the case
may be, on Contractor’s operator’s certificate until the expiration of the head
lease covering the aircraft and, at Continental’s request and cost, Contractor
shall (A) enter into a

 

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Storage Sublease with respect to such aircraft for such duration as may be
necessary to permit such aircraft to remain on Contractor’s operator’s
certificate until the expiration of the head lease covering the aircraft, (B)
perform such maintenance on such aircraft, consistent with Contractor’s
maintenance program, as and when requested by Continental, including maintenance
for destorage and servicing such aircraft to prepare it for returning to
passenger service, and (C) at the direction of Continental, use commercially
reasonable efforts to make arrangements for the storage of any aircraft upon its
return to Continental by Contractor, together with the Engines relating thereto,
at a location selected by Continental, and for its continued maintenance in
accordance with Contractor’s maintenance program (including, without limitation,
the Flight Hour Agreements and all other maintenance cost per hour agreements
and arrangements).  No basic rent shall be payable under any Storage Sublease. 
Contractor shall reasonably assist Continental with the return of the aircraft
to head lessor on or around the scheduled expiration date of the head lease,
and, provided that Contractor satisfies all conditions set forth in the
applicable Covered Aircraft Sublease, including any return conditions, the cost
of such assistance shall be borne by Continental.  At Continental’s option,
Contractor will provide Continental (or its designee) with all manuals and other
detailed information relating to Contractor’s maintenance program, for use by
Continental (or such designee) until Continental (or such designee) has
successfully transitioned maintenance on all aircraft returned to Continental
pursuant to this Section 2.09, or any Parked Aircraft or Other Subleased
Aircraft, to the maintenance program of Continental (or such designee), and
Contractor shall provide reasonable assistance to Continental (or such designee)
during such transition period in connection with Contractor’s maintenance
program and the transition to such other maintenance program.

 

(c)                                  In lieu of terminating any Covered Aircraft
Sublease and replacing such Covered Aircraft Sublease with a Storage Sublease
pursuant to Section 2.09(a), at the request of Continental, such Covered
Aircraft Sublease shall remain in effect for such duration as may be necessary
to permit the aircraft covered thereby to remain on Contractor’s operator’s
certificate until the expiration of the head lease covering the aircraft;
provided that Contractor shall have no further rights or obligations under such
Covered Aircraft Sublease other than (i) placing the aircraft in return
condition as if such aircraft were being returned to Continental under the
Covered Aircraft Sublease as of the applicable date of withdrawal and assisting
Continental with the return of such aircraft to the head lessor as provided in
the penultimate sentence of Section 2.09(b), (ii) at Continental’s cost and
expense, those set forth in Annex H to such Covered Aircraft Sublease and (iii)
those that survive the termination of such Covered Aircraft Sublease pursuant to
its terms.  Notwithstanding anything to the contrary in this Agreement, a
Covered Aircraft Sublease that remains in effect at the election of Continental
pursuant to this Section 2.09(c) shall be deemed (A) to have been terminated in
accordance with its terms solely for the purposes of Section 4.18(d) and (B) to
have become a Storage Sublease for the purposes of this Agreement.

 

(d)                                 Notwithstanding the foregoing, in no event
shall Contractor’s obligation under this Section 2.09 (i) require Contractor to
use Contractor’s facilities (or the facilities of any Affiliate of Contractor)
for any storage pursuant to this Section 2.09 or (ii) require Contractor to
enter into any lease (or other similar agreement) of any facility for such
storage.

 

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Section 2.10                                Separate Withdrawal Rights.  Each
withdrawal right contained in this Article II, as well as those contained in
Section 4.18 and Article VIII, shall constitute a separate and distinct right,
and shall not limit or supersede any other right (including any other withdrawal
right) contained in this Agreement.

 

Section 2.11                                Rate Reset.

 

(a)                                  Continental may withdraw any Covered
Aircraft (other than any Additional Aircraft that becomes a Covered Aircraft
pursuant to Sections 2.04 or 2.08(h) or any Replacement Aircraft that becomes a
Covered Aircraft pursuant to Section 2.05) from the capacity purchase provisions
of this Agreement in accordance with and subject to the limitations, terms and
conditions contained in this Section 2.11.

 

(b)                                 In order to withdraw Covered Aircraft
pursuant to this Section 2.11, on or before July 1, 2014 (but not prior to May
1, 2014), Continental shall give Contractor written notice (the “Withdrawal/Rate
Reset Notice”) of its intention to withdraw all or a portion of the Covered
Aircraft subject to withdrawal pursuant to this Section 2.11, and shall allow
Contractor a minimum of 30 days to bid on such Covered Aircraft, with such bid
process to be concluded on or before February 15, 2015.  If Continental is
withdrawing only a portion of the Covered Aircraft subject to withdrawal
pursuant to this Section 2.11, the portion subject to withdrawal shall be such
Covered Aircraft with the shortest remaining terms under the applicable Covered
Aircraft Subleases.  If, at the time the Withdrawal/Rate Reset Notice is given
and at the time of any award referenced below, (A) Contractor has consistently
satisfied in all material respects the standards of care and service described
in Section 4.03 in connection with its obligations under this Agreement and any
other similar agreement among Continental and Contractor (it being understood
that any repeated failure to correct any violation of any standard of care and
service reasonably asserted by Continental to be material shall be deemed to be
a material failure) and otherwise complied in all material respects with the
terms of this Agreement and the Ancillary Agreements, except to the extent such
non-compliance directly results from material circumstances outside of
Contractor’s reasonable control, and (B) Continental and Contractor, each acting
reasonably, agree on base and incentive rates relating to such Covered Aircraft
(the “Reset Rates”), then Contractor shall be awarded at least the portion of
such Covered Aircraft subject to withdrawal with the longest remaining terms
under the applicable Covered Aircraft Subleases such that, after giving effect
to any withdrawal pursuant to this Section 2.11, the number of CPA Aircraft is
at least the Minimum Percentage (as adjusted pursuant to Section 2.04(c)) of the
regional aircraft used in Continental’s regional airline service (as such phrase
is used in Section 2.04) (each Covered Aircraft so awarded, a “Rate Reset
Aircraft”), and such Rate Reset Aircraft shall not be withdrawn from the
capacity purchase provisions of this Agreement pursuant to the Withdrawal/Rate
Reset Notice.  For the purposes of this Section 2.11, if Continental shall have
issued a request for proposal or otherwise conducted a bid process for any
Covered Aircraft to be withdrawn pursuant to this Section 2.11, then Continental
shall be deemed to be acting reasonably if it refuses to agree with Contractor
to base and incentive compensation rates that are less beneficial to Continental
than the base and incentive compensation rates contained in the bona fide bid of
any third party to which Continental in good faith would intend to award such
Covered Aircraft, after providing Contractor with a certificate signed by an
authorized officer of Continental setting forth the material terms of such bid
(specifically including all terms material and beneficial to Contractor) and
providing Contractor

 

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not less than 20 days to review and match such bid.  If a Covered Aircraft
subject to withdrawal is not awarded to Contractor as a result of a bona fide
bid referenced in the immediately preceding sentence and if such Covered
Aircraft is not awarded to such third party bidder pursuant to the terms of such
bona fide bid on or before February 15, 2015, then such Covered Aircraft shall
not be subject to withdrawal pursuant to this Section 2.11.

 

(c)                                  Prior to March 15, 2015, Continental shall
provide Contractor a withdrawal schedule relating to any Covered Aircraft set
forth in the Withdrawal/Rate Reset Notice (other than any Rate Reset Aircraft
set forth in the Withdrawal/Rate Reset Notice and other than any Covered
Aircraft referenced in the last sentence of Section 2.11(b) above) specifying
the aircraft type and Engines to be withdrawn and the date of withdrawal.  Such
aircraft shall be withdrawn from the capacity purchase provisions of this
Agreement on the date of return set forth in any such schedule that is in
compliance with the provisions of this Section 2.11; provided, that such
schedule shall not provide for the withdrawal of more than 15 such aircraft per
month or that any such withdrawal shall commence prior to July 1, 2015.

 

(d)                                 Subject to Section 2.11(b) and taking into
account the aircraft type specified in the withdrawal schedule, Continental
shall have complete discretion to select the particular Covered Aircraft and
particular Engines subject to withdrawal pursuant to this Section 2.11 to be
withdrawn during any particular month pursuant to this Section 2.11.  Promptly
following its receipt of the Withdrawal/Rate Reset Notice (but in any event
within 20 days thereafter), Contractor shall deliver to Continental a reasonably
detailed current summary and forecast of the maintenance and repair status and
condition of each Covered Aircraft and Engine.  Continental shall bear the cost
of any Engine swaps necessary to accommodate its Engine selections, and shall
agree to such Engine swaps under the applicable Covered Aircraft Subleases.

 

(e)                                  The provisions of Section 2.09 shall apply
to the withdrawal of any Covered Aircraft pursuant to this Section 2.11.

 

(f)                                    On July 1, 2015, the base and incentive
compensation rates applicable to the Rate Reset Aircraft shall automatically be
deemed modified to the Reset Rates and the base and incentive compensation rates
set forth in this Agreement shall cease to apply to such Rate Reset Aircraft.

 

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 and Commodity Prices.

 

(a)                                  The rates under this Agreement set forth in
Appendix 1 and Appendix 6 to Schedule 3 hereto and the Controllable Completion
Factor Incentive Rate set forth in Appendix 2

 

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to Schedule 3 hereto shall remain in effect through the last day of the month in
which the first anniversary of this Agreement falls, and shall be adjusted on
the first day of the immediately following month and each anniversary of such
date (each, an “Adjustment Date”), as follows: the new rates, applicable
beginning on such Adjustment Date, shall equal the rates in effect on the date
immediately preceding such Adjustment Date multiplied by the higher of (x) ***
and (y) the lower of (i) *** and (ii) ***.

 

(b)                                 The Commodity Price references in the
definitions of First Commodity Replacement Event, First Commodity Withdrawal
Event, Second Commodity Replacement Event and Second Commodity Withdrawal Event
shall remain in effect through the last day of the month in which the first
anniversary of this Agreement falls, and shall be adjusted on each Adjustment
Date, as follows: the new Commodity Price, applicable beginning on such
Adjustment Date, shall equal the Commodity Price for such definition in effect
on the date immediately preceding such Adjustment Date multiplied by the Annual
Commodity CPI Change.

 

Section 3.03                                Contractor Expenses.  Except as
provided otherwise in Section 3.04, Contractor shall pay in accordance with
commercially reasonable practices all expenses or costs incurred in connection
with Contractor’s provision of Regional Airline Services.  For the avoidance of
doubt, Contractor agrees that, in connection with its provision of Regional
Airline Services to Continental hereunder and the provision of the other
services contemplated to be performed by Contractor under the Ancillary
Agreements, it shall use commercially reasonable efforts to minimize costs
incurred by it if such costs would be reimbursable by Continental to Contractor
in accordance with the terms of this Agreement or any Ancillary Agreement (it
being understood that the payment of any amount owed pursuant to Appendix 1 to
Schedule 3 shall not constitute “costs that are reimburseable by Continental”
for purposes of the foregoing sentence).  Further, with respect to any service
or item at substantially similar quality or service level and the cost of which
Continental is required to reimburse Contractor hereunder or under any Ancillary
Agreement, if (x) Continental can provide or arrange to provide such service or
item at a lower cost than the reimbursement cost that Continental would
otherwise be charged, and (y) the provision of or arrangement to provide such
service or item by Contractor would not materially adversely affect Contractor
under any contracts or agreements, then Contractor shall allow Continental to
provide or arrange to provide such service or item in order to permit
Continental to lower its costs; provided, however, that Continental shall bear
the costs of any termination, cancellation or similar fee payable by Contractor
in connection therewith.  Subject to the foregoing, including the conditions set
forth in clauses (x) and (y), Continental may elect to contract directly with
third parties for the replacement of Engine LLP associated only with Engines,
the cost of which Continental shall be responsible for in accordance with
Schedule 3.

 

Section 3.04                                Continental Expenses.

 

(a)                                  Certain Expenses.  Continental shall incur
directly those expenses relating to the Regional Airlines Services that are
described in Paragraph B(1) of Schedule 3 (“Continental Expenses”).  Continental
shall pay all Continental Expenses in accordance with commercially reasonable
practices.

 

(b)                                 Design Changes.  Continental shall be
responsible for any reasonable out-of-pocket expenses incurred by Contractor
relating to interior and exterior design changes to the

 

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Covered Aircraft and other product-related changes required by Continental,
including facility-related design changes and the cost of changes in uniforms
and other livery, in each case that occur outside of Contractor’s normal
aircraft and facility refurbishment program.

 

Section 3.05                                Audit Rights; Financial
Information.  Contractor shall make available for inspection by Continental and
its outside auditors and advisors during normal business hours, within a
reasonable period of time after Continental makes a written request therefor,
all of Contractor’s books and records relating to the Covered Aircraft or
Charter Aircraft and this Agreement or any Ancillary Agreement, in each case for
the preceding 24-month period and, with respect to books and records related to
an ongoing good faith dispute arising during such 24-month period (or, with
regard to any Reconciled Expenses or any dispute involving Reconciled Expenses,
the 24-month period following the date such Reconciled Expenses (or
documentation thereof) were presented to Continental by Contractor or a third
party), for any additional period until the final resolution of such dispute
(each such period, an “Audit Period”) as necessary to audit (a) any
reimbursement of expenses set forth on Appendix 3 of Schedule 3 hereto and/or
incentive or rebate, (b) any agreement or arrangement upon which the block hour
rates and other terms of a separate capacity purchase agreement are based
pursuant to Section 2.05(a) or 2.08(h), (c) any calculations pursuant to
Section 3.07 or (d) any costs to be reimbursed by Continental pursuant to
Section 10.01(b) (all such books and records collectively, “CPA Records”).  In
connection with such audit, Continental and its outside auditors and advisors
shall be entitled to make copies and notes of such CPA Records as they deem
necessary and to discuss such CPA Records with Contractor’s Chief Financial
Officer or such other employees or agents of Contractor knowledgeable about such
records.  Notwithstanding the foregoing, Contractor shall not be required to
provide Continental or its outside auditors and advisors access to (x) any
agreement or arrangement upon which the block hour rates and other terms of a
separate capacity purchase agreement are based pursuant to Section 2.05(a) or
2.08(h) or (y) any CPA Records in connection with an audit of the matters
described in clauses (c) or (d) of this Section 3.05, in each case to the extent
that Contractor is prohibited from doing so by any confidentiality agreement;
provided, that Contractor shall (i) upon the request of Continental, use its
commercially reasonable efforts to allow, at Continental’s cost, an independent
third party selected by Continental to review such CPA Records and provide
Continental with a summary setting forth (A) in connection with an audit of the
matters described in clause (b) of this Section 3.05, the block hour rates and
other economic terms of the Similar Economic Term Transaction, and, if
applicable, acquisition costs and (B) in connection with an audit of the matters
described in clauses (c) or (d) of this Section 3.05, a summary of any costs,
expenses or revenues used to calculate amounts pursuant to Sections 3.07 or
10.01(b), as applicable, and (ii) to the extent that Contractor, after using its
commercially reasonable efforts, is unable to comply with the preceding clause
(i), Contractor shall provide Continental with a certificate signed by an
authorized officer of Contractor setting forth (A) in connection with an audit
of the matters described in clause (b) of this Section 3.05, the block hour
rates and other economic terms of the Similar Economic Term Transaction, and, if
applicable, acquisition costs and (B) in connection with an audit of the matters
described in clauses (c) or (d) of this Section 3.05, a summary of any costs,
expenses or revenues used to calculate amounts pursuant to Sections 3.07 or
10.01(b), as applicable.  Following the termination of each respective Audit
Period, Continental’s right to audit the CPA Records for such Audit Period shall
terminate.

 

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Section 3.06                                Billing and Payment; Reconciliation.

 

(a)                                  Billing and Payment.  Within two Business
Days 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 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 or any Ancillary Agreement, net of amounts due and owing
by Contractor to Continental under this Agreement or any Ancillary Agreement, as
follows:

 

(i)                                     One-quarter of the balance of the
Invoiced Amount shall be due and payable by Continental to Contractor, by
electronic transfer of funds to a bank account designated by Contractor,
available on or before the first day 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 balance of the Invoiced
Amount shall be due and 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 balance of the Invoiced
Amount shall be due and 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 balance of the Invoiced
Amount shall be due and 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 14 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 (including incentive compensation,
if any, for such month determined as provided in Schedule 3).  On or before the
15th day following the end of such month (or if such day is not a Business Day,
the next Business Day), such reconciled amounts for such month to the extent
applicable: (i) shall be paid by Continental to Contractor, together with the
payment to be made by Continental pursuant to Section 3.06(a)(iii) above for the
applicable month, or (ii) shall be paid by Contractor to Continental or set off
by Continental against any other amounts owing to Contractor under this
Agreement or any Ancillary Agreement.  Further reconciliations shall be made on
or prior to the 22nd day following the end of such month (or if such day is not
a Business Day, the next Business Day) to the extent necessary as a result of
Continental’s review of financial information provided by Contractor in respect
of such month.  Such further reconciled amounts for such month to the extent
applicable (x) shall be paid by Continental to Contractor, together with any
other payment to be made by

 

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Continental pursuant to Section 3.06(a)(iv) above for the applicable month, or
(y) shall be paid by Contractor to Continental or set off by Continental against
any other amounts owing to Contractor under this Agreement or any Ancillary
Agreement.

 

(c)                                  Notwithstanding anything to the contrary in
this Agreement or any Ancillary Agreement, neither Continental nor Contractor
shall have any obligation to make any payment required under this Agreement or
any Ancillary Agreement that is subject to a good faith dispute or any right to
set off any amount that has been disputed in good faith by the other party;
provided, that within five Business Days following the resolution of any such
dispute in accordance with the terms of this Agreement, Continental or
Contractor, as applicable, shall make any payments required by such resolution. 
All payments made by Contractor or Continental as provided in this Agreement or
any Ancillary Agreement shall be deemed final and not subject to further review,
audit or reconciliation after the later to occur of (I) the date that is 24
months after the date of the applicable payment and (II) the date of final
resolution of any good faith dispute regarding the applicable payment arising
during the 24 months following the date of the applicable payment.

 

Section 3.07                                Synergy Savings. Immediately
following the Effective Date, Contractor and Continental will jointly determine
the reasonably anticipated annually recurring pre-tax cost savings expected with
respect to Regional Airline Service attributable to the SkyWest Merger (the
“Savings”).  The Savings shall be calculated on a “run-rate” basis (i.e. the
calculation is not intended to capture non-recurring costs or savings), assuming
that all such Savings have been fully realized and that all commercially
reasonable steps or circumstances necessary to implement, create or realize such
Savings shall have been taken or occurred, regardless of whether or when such
steps or circumstances are actually taken or occur.  For purposes of these
calculations, the amount of Savings reasonably anticipated to be necessary for
Contractor to achieve a GAAP net income of $*** million (“CPA Target Income”)
shall be referred to as the “Target Savings.”  In connection with making such a
determination, Contractor will provide Continental with information pursuant to
Section 3.05.  After determining such Savings, if Contractor and Continental
reasonably determine that the Base Compensation, together with anticipated
Savings, are projected to result in Parent achieving the CPA Target Income or
more annually on a “run-rate” basis, based on the number of Covered Aircraft as
of the Effective Date, then Contractor and Continental agree that the Base
Compensation rate “for each Covered Aircraft for each month in the Term” set
forth in Appendix 1 to Schedule 3 hereto will be adjusted to provide Continental
with an aggregate annual reduction in Base Compensation, in an amount equal to
(i) if the excess of the Savings over the Target Savings is equal to or less
than $*** million, the amount of such excess or (ii) if the excess of the
Savings over the Target Savings is greater than $*** million, the sum of $***
million plus ***% of such excess over $*** million. The foregoing rate reduction
will begin immediately after the first anniversary of the Effective Date and
will end, with respect to any Covered Aircraft, on the date such Covered
Aircraft becomes a Rate Reset Aircraft.  This rate reduction shall be without
regard to whether the amount of such GAAP net income is actually realized
subsequent to the time at which such anticipated Savings are originally
estimated, and there shall be no subsequent readjustment to the rate of Base
Compensation as a result of any discrepancy between the amount of GAAP net
income actually realized by Contractor and the GAAP net income anticipated in
connection with the determination of the Savings. For the avoidance of doubt,
the rate reduction contemplated herein shall be on a one-time basis only and no
further reduction in the Base Compensation shall

 

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occur following the reduction, if any, occurring as of the first anniversary of
the Effective Date attributable to the Savings as provided herein.

 

ARTICLE IV
CONTRACTOR OPERATIONS AND AGREEMENTS WITH CONTINENTAL

 

Section 4.01                                Crews, Etc.

 

(a)                                  Contractor shall be responsible for
providing all crews (flight and cabin, maintenance personnel, gate agents and
other ground personnel), necessary to operate the Scheduled Flights and for all
aspects (personnel and other) of dispatch control, in each case except as such
persons are provided by Continental pursuant to the Master Facility and Ground
Handling Agreement.  With respect to ground handling services, Contractor agrees
that it will not subcontract the performance of any such services to any party
that is not an Affiliate of Contractor without Continental’s prior approval;
provided that any party utilized to perform similar services at the applicable
airport by Continental for flights operated by Continental shall be deemed
approved by Continental for use by Contractor in performing such services for
Scheduled Flights.

 

(b)                                 Contractor agrees to give Continental pilots
who remain on Continental’s relevant seniority list preferential interview
status for any pilot openings that may occur at Contractor, unless such status
is in conflict with Contractor’s commitments concerning employees of other
carriers in effect as of the date hereof. Any furloughed Continental pilot hired
by Contractor shall be required to comply with all standard terms and conditions
of employment applicable to employees of Contractor, but will not be required by
Contractor to resign his or her seniority position with Continental as a
condition for applying or being employed by Contractor.

 

Section 4.02                                Governmental Regulations. 
Contractor has and shall maintain all certifications, permits, licenses,
certificates, exemptions, approvals, plans, and insurance required by
governmental authorities, including, without limitation, FAA, DOT and TSA, to
enable Contractor to perform the services required by this Agreement.  All
flight operations, dispatch operations and all other operations and services
undertaken by Contractor pursuant to this Agreement shall be conducted, operated
and provided by Contractor in compliance with all U.S. and foreign governmental
laws, regulations and requirements, including, without limitation, those
relating to airport security, the use and transportation of hazardous materials
and dangerous goods, crew qualifications, crew training and crew hours, the
carriage of persons with disabilities and without any violation of U.S. or
foreign laws, regulations or governmental prohibitions.  Without limiting
Contractor’s obligations under any Covered Aircraft Sublease, all Covered
Aircraft shall be operated and maintained by Contractor in compliance with all
laws, regulations and governmental requirements, Contractor’s own operations
manuals and maintenance manuals and procedures, and all applicable equipment
manufacturers’ manuals and instructions.  Continental shall control the use and
substitution of any and all slots, operating authorizations and similar or
successor authority issued by the FAA or any airport operator for the operation
of each flight under this Agreement to enable Continental to manage the priority
of each such flight among all flights in Continental’s network system.  In
connection with any capital improvements to any Covered Aircraft required by an
airworthiness directive, Contractor (taken together with its Affiliates) shall
not discriminate against such Covered Aircraft with regard to efforts to satisfy

 

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the requirements of the airworthiness directives including the method and date
of compliance, and shall use its reasonable commercial efforts to satisfy such
requirements, including any efforts used or applied by Contractor or its
Affiliates with regard to any similar aircraft type owned or operated by
Contractor or its Affiliates.  In connection with any grounding of any of the
Covered Aircraft, Contractor shall not discriminate against such Covered
Aircraft with regard to efforts to satisfy the applicable requirements to lift
such grounding order, and shall use its reasonable commercial efforts to satisfy
such requirements, including any efforts used or applied by Contractor or its
Affiliates with regard to any similar aircraft type owned or operated by
Contractor or its Affiliates.

 

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 Contractor in 2009. 
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; provided
that all such procedures and means of measurement shall be no more stringent
than those used by Continental with respect to the performance of all other
operators of regional jet aircraft for Continental.  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 and
its route network.  Contractor shall comply with all airline customer service
commitments and policies of Continental as of the Effective Date, including
without limitation the “CustomerFirst” commitments, and employee conduct,
appearance and training policies in place as of the Effective Date, 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, oversales, baggage services
and handling of irregular operations.  In addition, at the request of
Continental, Contractor shall comply with all such airline customer service
commitments, policies and standards of care of Continental as adopted, amended
or supplemented after the Effective Date.  Contractor shall ensure that all
Covered Aircraft are equipped with an ARINC aircraft communications addressing
and reporting system (or such other system as is designated by Continental), the
cost of which will be borne by Continental. Contractor shall make such interior
and exterior design and product-related changes as may be required by
Continental from time to time, including both those for which the cost is borne
by Continental pursuant to Section 3.04(b), and those that occur within
Contractor’s normal aircraft and facility refurbishment program.  Contractor
shall provide Continental with timely communication regarding the status of all
Scheduled Flights, and shall perform closeout procedures, in both cases, at
service levels at least as high as those of Continental at comparably-sized
airports.  Contractor shall maintain the capability of performing ACARS-based
automated weight and balance procedures for each Scheduled Flight, and shall
accurately and timely perform such procedures.  Contractor shall maintain and
utilize Contractor’s passenger and bag weight program approved by the FAA and
existing on the Effective Date (unless and until otherwise directed by the
FAA).  Contractor shall ensure that all Scheduled Flights are capable of
operating in Category 2 conditions.  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 claims,
litigation or an investigation by a governmental agency or authority.  At either
party’s request, Contractor and Continental will meet to discuss

 

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and review Contractor’s customer service and handling procedures and policies
and its employees’ conduct, appearance and training standards and policies. 
Continental shall give Contractor written notice of any non-safety-related
alleged breach of this Section 4.03, identifying with reasonable specificity
such alleged breach, not less than 15 days prior to exercising any remedy
regarding such alleged breach.

 

Section 4.04                                Incidents or Accidents.  Contractor
shall promptly notify Continental of all irregularities involving a Scheduled
Flight or Covered Aircraft operated by Contractor (including, without
limitation, aircraft accidents and incidents) which result in any damage to
persons and/or property or may otherwise result in a complaint or claim by
passengers or an investigation by a governmental agency or authority. 
Contractor 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.

 

Section 4.05                                Emergency Response.  Contractor
shall follow 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 or Scheduled Flight, Continental will have
the right, but not the obligation, to manage the emergency response efforts on
behalf of Contractor with full cooperation from Contractor.

 

Section 4.06                                Safety Matters.  At any time,
Continental shall have the right, but not the obligation, at its own cost, to
inspect, review, and observe Contractor’s operations of Scheduled Flights. 
Notwithstanding the conduct or absence of any such review, Contractor is and
shall remain solely responsible for the safe operation of its aircraft and the
safe provision of Regional Airline Services, including all Scheduled Flights,
and nothing in this Section 4.06 or otherwise in this Agreement is intended or
shall be interpreted to make Continental responsible for such safety matters. 
Contractor shall maintain its membership in the IATA Operational Safety Audit
registry and shall not be suspended from such registry.

 

Section 4.07                                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.  The parties agree
that, in the event of a conflict between the provisions of Article VII hereof
and the indemnification provisions of the Master Facility and Ground Handling
Agreement, the latter shall control.

 

Section 4.08                                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 4.09                                Administrative Support and
Information Services.  In connection with Regional Airline Services provided
pursuant to this Agreement, Continental and Contractor shall provide the
administrative and information services set forth on Exhibit N, for so long as
provided therein.

 

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Section 4.10                                Fuel Purchasing Agreement. 
Contemporaneous with the execution and delivery of this Agreement, Continental
and Contractor shall enter into a Fuel Purchasing Agreement in the form attached
hereto as Exhibit F.

 

Section 4.11                                Slots and Route Authorities.  At the
request of Continental made during the Term or 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 or
airport authorizations previously transferred to Contractor by Continental for
use in connection with Scheduled Flights, or held or acquired by Contractor and
used for Scheduled Flights, in consideration of the payment to Contractor of the
net book value on Contractor’s books, if any, of such slot, authority or
authorization.  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 4.11 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 transferred to Contractor by Continental for use in connection
with Scheduled Flights, or held or acquired 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 fair market value of such withdrawn or forfeited slot, authority or
authorization.

 

Section 4.12                                Use of Continental Marks. 
Continental hereby grants to Contractor the non-exclusive and non-transferable
rights to use the Continental Marks and other Identification as provided in, and
Contractor shall use the Continental Marks and other Identification in
accordance with the terms and conditions of, Exhibit G.  In addition, upon
notice to Contractor, Continental may also grant to Contractor, and Contractor
shall be deemed to accept, a non-exclusive and non-transferable right and
license to adopt and use, the trademarks of any Affiliate of Continental
(“Affiliate Marks”), subject to terms and conditions consistent with the terms
set forth on Exhibit G, and Contractor hereby agrees and acknowledges that the
Affiliate identified in such notice, rather than Continental, is the owner of
such Affiliate Marks and such Affiliate may enforce the terms of such license.

 

Section 4.13                                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 4.14                                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 4.15                                Ticket Handling Terms.  Continental
and Contractor shall comply with the ticket handling requirements set forth in
Exhibit K hereto.  The parties agree that, in the event of

 

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a conflict between the provisions of Exhibit K and the Contractor Ground
Handling Agreement, the provisions of Exhibit K shall control.

 

Section 4.16                                Fuel Efficiency and Revenue
Programs.  Contractor shall use commercially reasonable efforts to promptly
adopt and adhere to a Fuel efficiency program as described on Exhibit L hereto. 
Contractor shall implement any incentive program that Continental requests to be
implemented and for which Continental agrees in writing to pay the Incentive
Program Costs.

 

Section 4.17                                Reasonable Operating Constraints and
Conditions.  Contractor and Continental shall comply with the operating
parameters and requirements set forth on Exhibit J hereto.

 

Section 4.18                                Covered Aircraft Subleases.

 

(a)                                  As soon as practicable after the execution
and delivery of this Agreement for each Covered Aircraft then subject to the
terms hereof, and contemporaneous with the entry of any other aircraft into
service as a Covered Aircraft hereunder (other than aircraft that Contractor
acquires from other than Continental), Continental and Contractor shall enter
into a Covered Aircraft Sublease for each Covered Aircraft in the form attached
hereto as Exhibit B.  In connection with the entry into each Covered Aircraft
Sublease for a Covered Aircraft, Continental shall use commercially reasonable
efforts to assign to Contractor the warranties of the aircraft and engine
manufacturers available to Continental with respect to such Covered Aircraft. 
If Continental is unable to assign the foregoing warranties and is not otherwise
able to provide for an agreement directly between Contractor and the applicable
manufacturer providing for warranty coverage of such Covered Aircraft, then
Continental shall act on behalf of Contractor in dealing with the applicable
manufacturer to enable Contractor to obtain the benefit of such warranties as if
Continental had been able to make such assignment.  Continental further
covenants and agrees not to accelerate the “Head Lease Expiration Date” as
provided on Schedule 1 hereto with respect to any aircraft being operated by
Contractor pursuant to this Agreement as of the time of determination without
the prior written consent of Contractor if such acceleration would result in the
Head Lease Expiration Date occurring prior to the tenth anniversary of the
Effective Date.  In addition, as to the United Aircraft, the Return Aircraft
Sublease shall be deemed amended to provide for termination as contemplated in
Section 2.06 hereof, the lease term related thereto shall continue for such time
as the United Aircraft is subject to the United Agreement and the return
conditions shall be consistent with those contained in Annex B of the Covered
Aircraft Sublease attached hereto as Exhibit B and the Parties hereto agree to
act in accordance with such provisions, regardless of whether any formal
amendment of such sublease is entered into.  At the request of Contractor,
Continental will cooperate with Contractor to amend any such Return Aircraft
Sublease in the manner described in the immediately preceding sentence at
Contractor’s cost and expense.

 

(b)                                 Basic Rent payable under each Covered
Aircraft Sublease shall be entirely abated unless and until (A) such Covered
Aircraft has been withdrawn from this Agreement and no longer constitutes a
Covered Aircraft, or (B) the occurrence of a Labor Strike, in which case such
Basic Rent shall be payable until (x) such aircraft shall have been returned to
Continental in accordance with the terms of such Covered Aircraft Sublease and
this Agreement, or (y) such

 

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Labor Strike shall have ended, as the case may be.  In addition, in connection
with the return of aircraft to Continental pursuant to Sections 2.08, 2.11,
8.02(b)(x) or 8.02(c)(i), or in connection with the repossession of a Covered
Aircraft by a lessor, lender or other financing party under a head lease for or
mortgage of such aircraft (other than a repossession resulting from a breach of
the Covered Aircraft Sublease by Contractor), Basic Rent shall continue to be
entirely abated for the following period:

 

(i)                                     for the return of aircraft pursuant to
Section 8.02(b)(x), with respect to any such aircraft, (A) the duration (if any)
of the grounding applicable to such aircraft (but only if such grounding is a
complete grounding, as opposed to a grounding for passenger service only), plus
(B) such period as is reasonably necessary for Contractor to return such
aircraft in compliance with the provisions of the applicable Covered Aircraft
Sublease, but in any event for not more than a period of four weeks after the
later of the applicable Termination Date or the end of the Wind Down Period for
such aircraft, if any, for the first 59 such Covered Aircraft being returned,
eight weeks after such date for the next 59 such Covered Aircraft being
returned, twelve weeks after such date for the next 58 such Covered Aircraft
being returned, and sixteen weeks after such date for the remaining such Covered
Aircraft being returned (such periods to run concurrently); and

 

(ii)                                  for the return of aircraft pursuant to
Sections 2.08, Section 2.11 or 8.02(c)(i) or in connection with the repossession
of a Covered Aircraft by a lessor, lender or other financing party under a head
lease for or mortgage of such aircraft (other than a repossession resulting from
a breach of the Covered Aircraft Sublease by Contractor), such period as is
reasonably necessary for Contractor to return such aircraft in compliance with
the provisions of the applicable Covered Aircraft Sublease, but in any event for
not more than a period of two weeks after the applicable Termination Date for
the first 59 such Covered Aircraft being returned, four weeks after such date
for the next such 59 Covered Aircraft being returned, six weeks after such date
for the next such 58 Covered Aircraft being returned, and eight weeks after such
date for the remaining such Covered Aircraft being returned (such periods to run
concurrently);

 

provided, that Basic Rent shall in each case cease to be abated with respect to
any aircraft to be returned on the day following the day, if any, on which
Continental waives any unsatisfied return conditions with respect to such
aircraft.  In addition, the provisions of Section 2.09 shall apply to the
Covered Aircraft subject to a Covered Aircraft Sublease being returned to
Continental.  No Basic Rent shall be payable under any Storage Sublease.

 

(c)                                  Neither Contractor nor any of Contractor’s
Affiliates shall lease, sublease or otherwise obtain the use of any aircraft
formerly subject to a Covered Aircraft Sublease for the six months following the
termination of such sublease, unless Contractor has received prior written
notice from Continental that Continental is not attempting to lease, sublease or
otherwise obtain or retain the use of such aircraft (which notice, if true,
shall be given by Continental upon Contractor’s request).

 

(d)                                 Notwithstanding anything else contained
herein to the contrary, if and when a Covered Aircraft Sublease terminates in
accordance with its terms, then the aircraft

 

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subject to such sublease shall no longer constitute a Covered Aircraft effective
on the date on which the term of such Covered Aircraft Sublease ends, regardless
of whether the event giving rise to such sublease termination also constitutes
an independent termination or withdrawal event hereunder.  Any withdrawal
occurring upon such a termination of a Covered Aircraft Sublease shall be
separate and distinct from, and shall not limit or supersede, any other
withdrawal rights of Continental contained in this Agreement.

 

ARTICLE V
CERTAIN RIGHTS OF CONTINENTAL

 

Section 5.01                                Use of Covered Aircraft.  Contractor
agrees that, except as otherwise directed or approved in writing by Continental
in its sole discretion, the Covered Aircraft may be used only to provide
Regional Airline Services.  Without the written consent of Continental, the
Covered Aircraft may not be used by Contractor for any other purpose, including
without limitation flying for any other airline or on Contractor’s own behalf.

 

Section 5.02                                Change of Control.  Upon the
occurrence of a Change of Control, at any time during the Term, to which Change
of Control Continental shall not have consented in writing in advance, the
provisions of Section 8.02(b) shall apply.

 

Section 5.03                                Limitation on Transfers of
Interest.  Upon the occurrence of any offer, issuance, delivery, distribution,
assignment, pledge, grant, sale or other transfer of the capital stock or other
equity interest of Contractor or any Guarantor (other than Parent) as a result
of which (x) Contractor is no longer a direct or indirect wholly-owned
subsidiary of each Guarantor, or (y) each Guarantor (other than Parent) is no
longer a direct or indirect wholly owned subsidiary of Parent (any such event, a
“Prohibited Transfer”), then the provisions of Section 8.02(b) shall apply. 
Notwithstanding the foregoing, a “Prohibited Transfer” shall not include any
liquidation or merger of Contractor or any Guarantor other than Parent so long
as the successor to such Contractor or Guarantor is Parent or another Guarantor.

 

ARTICLE VI
INSURANCE

 

Section 6.01                                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 any Covered Aircraft
Sublease or Storage Sublease), or by any applicable governmental or airport
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 the greater of (i) $*** million per occurrence and (ii) the highest
single limit per occurrence of any aircraft hull and liability insurance
maintained by Contractor under any other Capacity Purchase Arrangement, and a
minimum limit in respect of personal injury (per clause AVN 60 or its
equivalent) of $*** million per occurrence and in the aggregate, and war risk
hull

 

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and liability insurance as provided by the FAA program or by commercial
providers of such insurance with a combined single limit no less than the
greater of (i) $*** million per occurrence and (ii) the highest single limit per
occurrence of any war risk hull and liability insurance maintained by Contractor
under any other Capacity Purchase Arrangement;

 

(b)                                 Workers’ compensation as required by the
appropriate jurisdiction and employer’s liability with a limit of not less than
$1 million combined single limit; and

 

(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.  All coverages
described in this Section 6.01 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 6.02                                Endorsements.  Unless Contractor and
Continental are participating in a combined policy placement, Contractor shall
cause the policies described in Section 6.01 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 6.03                                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 any
insurance coverage obtained pursuant to Section 6.04), including certificates
certifying that such insurance and endorsements are in full force and effect. 
Initially, this

 

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evidence shall be a certificate of insurance.  If Contractor fails to acquire or
maintain insurance as herein provided, Continental may at its option secure such
insurance on Contractor’s behalf at Contractor’s expense.

 

Section 6.04                                Insurance Through Combined
Placement.

 

(a)                                  Combined Placement.  Subject to
Section 6.05, Continental and Contractor shall continue to seek to obtain bids
from insurance providers with respect to Aviation Insurance, based on
Continental’s and Contractor’s combined exposures, until such time, if ever, as
Continental determines that it no longer desires to seek or maintain such
combined placement.  If Continental makes such a determination, it shall provide
Contractor 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 combined placements as provided in Paragraph B(6) 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(6) of Schedule 3.

 

Section 6.05                                Insurance Through Other Than
Combined Placement.  Contractor shall have the right, in its sole discretion, to
elect not to participate in a combined placement with Continental for a
particular insurance policy; provided, that Continental will not bear any
increased insurance costs resulting from Contractor’s election not to
participate in such a combined placement.  In no event shall an Affiliate of
Contractor be obligated to enter into a combined placement of insurance with
Continental.

 

ARTICLE VII
INDEMNIFICATION

 

Section 7.01                                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, including reasonable
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 Continental or its directors, officers,
employees or agents, including but not limited to, 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, in each case
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-

 

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performance of any and all obligations to be undertaken by Contractor or any of
its directors, officers, employees or agents pursuant to this Agreement or any
Ancillary Agreement, or (y) the operation, non-operation, or improper operation
of the Covered Aircraft, Storage Aircraft or Other Subleased Aircraft or
Contractor’s equipment or facilities at any location, in each case excluding
only claims, demands, damages, liabilities, suits, judgments, actions, causes of
action, losses, costs and expenses (A) to the extent resulting from the
negligence or willful misconduct of Continental or its directors, officers,
agents or employees (other than negligence or willful misconduct imputed to such
indemnified person by reason of its interest in a Covered Aircraft, Storage
Aircraft or Other Subleased Aircraft or a Covered Aircraft Sublease or Storage
Sublease), (B) for which Continental is obligated to indemnify or otherwise
reimburse Contractor pursuant to this Agreement or any Ancillary Agreement or
(C) directly caused by a breach by Continental of this Agreement or any
Ancillary Agreement.  Contractor will use commercially reasonable efforts to
cause and assure that Contractor will at all times 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, until such time (if any) that such
aircraft, equipment or facilities, pursuant to the terms of this Agreement and
the Ancillary Agreements, are required or intended to be, and are, in the actual
possession of Continental or any of the above listed parties and no longer in
the control of Contractor.

 

Section 7.02                                Continental Indemnification of
Contractor.  Continental shall be liable for and hereby agrees to fully 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, including reasonable
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 but not limited to, 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, in each case
arising out of, connected with, or attributable to, (x) the performance,
improper performance, or non-performance of any and all obligations to be
undertaken by Continental or any of its directors, officers, employees or agents
pursuant to this Agreement, any Ancillary Agreement or any head lease or other
financing agreement relating to any Covered Aircraft, United Aircraft or Charter
Aircraft, or (y) the operation, non-operation or improper operation of
Continental’s aircraft, equipment or facilities (excluding, for the avoidance of
doubt, Covered Aircraft and any equipment or facilities leased or subleased by
Continental to Contractor) at any location, in each case excluding only claims,
demands, damages, liabilities, suits judgments, actions, causes of action,
losses, costs and expenses (A) to the extent resulting from the negligence or
willful misconduct of Contractor or its directors, officers, agents or
employees, or (B) for which Contractor is obligated to indemnify or otherwise
reimburse Continental pursuant to this Agreement or any Ancillary Agreement or
(C) directly caused by a breach by Contractor of this Agreement or any Ancillary
Agreement.  Continental

 

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will use commercially reasonable efforts to 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, until such time (if any) that such aircraft, equipment or
facilities, pursuant to the terms of this Agreement and the Ancillary
Agreements, are required or intended to be, and are, in the actual possession of
Contractor or any of the above listed parties and no longer in the control of
Continental.

 

Section 7.03                                Indemnification Claims.  A party
(the “Indemnified Party”) that may be entitled to indemnification from another
party under the terms of this Agreement (the “Indemnifying Party”) shall provide
the Indemnifying Party with prompt written notice (an “Indemnity Notice”) of any
third-party claim which the Indemnified Party believes may give rise to a claim
for indemnity against the Indemnifying Party hereunder.  Notwithstanding the
foregoing, the failure of an Indemnified Party to promptly provide an Indemnity
Notice shall not constitute a waiver by the Indemnified Party of any right to
indemnification or otherwise relieve such Indemnifying Party from any liability
hereunder unless and only to the extent that the Indemnifying Party is
materially prejudiced as a result thereof, and in any event shall not relieve
such Indemnifying Party from any liability which it may have otherwise than on
account of this Article VII.  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.  The Indemnified Party shall promptly 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 7.03, 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.  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 without the prior consent of
the (otherwise) Indemnifying Party.  In the latter event, the Indemnified Party,
by proceeding to defend itself or settle the matter, does not waive any of its
rights hereunder to later seek reimbursement from the Indemnifying Party.

 

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Section 7.04                                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
and workers’ compensation liability to its respective 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 or retirement
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.

 

(b)                                 Employees, etc., of Contractor.  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 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.

 

(c)                                  Employees, etc., 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 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 7.05                                Survival.  The provisions of this
Article VII shall survive the termination of this Agreement for a period of
seven years.

 

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ARTICLE VIII
TERM, TERMINATION AND DISPOSITION OF AIRCRAFT

 

Section 8.01                                Term.  The Term of this Agreement
shall commence on and shall be effective as of the Effective Date and, unless
earlier terminated or extended as provided herein, shall continue until the
tenth anniversary of the Effective Date (the “Term”).

 

Section 8.02                                Early Termination.

 

(a)                                  By Continental for Cause.  Continental
shall have the right to terminate this Agreement, immediately upon written
notice (but without any prior notice) following the occurrence of any event that
constitutes Cause.  Any termination pursuant to this Section 8.02(a) shall
supersede any other termination pursuant to any other provision of this
Agreement (even if such other right of termination shall already have been
exercised), and the date of such notification of termination for Cause shall be
the Termination Date for purposes of this Agreement (and such Termination Date
pursuant to this Section 8.02(a) shall supersede any other Termination Date that
may have been previously established pursuant to another termination).  In the
event that Continental shall not have delivered written notice of termination
pursuant to this Section 8.02(a) within four months after the later of (x)
Continental receives written notice from Contractor of the occurrence of any
event that constitutes Cause and (y) such event is no longer continuing, then
Continental shall be conclusively deemed to have waived any right to terminate
this Agreement based upon such event; provided, that such waiver shall not apply
to any subsequent or continuing event that constitutes Cause.

 

(b)                                 By Continental for Breach.  Continental may
terminate this Agreement, by providing written notice to Contractor (with or
without any prior notice), upon the occurrence of a material breach of this
Agreement by Contractor as described in clause (ii) below.  Continental may
terminate this Agreement, by providing written notice to Contractor, upon the
occurrence of any other material breach of this Agreement by Contractor, which
breach shall not have been cured within 60 days (or 15 days in the case of
clause (x) below) after written notice of such breach is delivered by
Continental to Contractor (which notice period may run concurrently with the
15-day notice period, if any, provided pursuant to Section 4.03 for
non-safety-related breaches).  Any such written notice delivered pursuant to the
foregoing sentences shall specify the Termination Date (subject to the
provisions of this Article VIII).  The parties hereto agree that, without
limiting the circumstances or events that may constitute a material breach, each
of the following shall constitute a material breach of this Agreement by
Contractor: (i) the occurrence of a System Flight Disruption, (ii) a reasonable
and good faith determination by Continental, using recognized standards of
safety, that there is a material safety concern with the operation of any
Scheduled Flights, (iii) the grounding of any Contractor Fleet by regulatory or
court order or other governmental action, other than a non-carrier specific
grounding, (iv) a Controllable Cancellation Factor for any two consecutive
calendar months of ***% or below, (v) a Controllable On-Time Departure Rate for
any two consecutive calendar months of ***% or below, (vi) concurrent material
defaults by Contractor under ten or more Covered Aircraft Subleases or a
material default under any other Ancillary Agreement that, in either case,
materially adversely affects Contractor’s performance of its obligations under
this Agreement or any Ancillary Agreement and is not cured during any applicable
cure period, (vii) a material default by Contractor under any Flight Hour
Agreement that adversely affects the maintenance

 

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of any Covered Aircraft, Charter Aircraft or United Aircraft, any material
maintenance reserve provided for under such agreement, or the maintenance costs
under such agreement, which default is not cured during any applicable cure
period, (viii) a Change of Control shall occur to which Continental shall not
have consented in writing in advance, (ix) a Prohibited Transfer shall occur or
(x) the non-carrier specific grounding of any Contractor Fleet by regulatory or
court order or other governmental action.  In the event that Continental shall
not have delivered written notice of termination pursuant to this
Section 8.02(b) within four months after the later of (A) the date upon which
Continental receives written notice from Contractor of any material breach of
this Agreement by Contractor and (B) such event is no longer continuing, then
Continental shall be conclusively deemed to have waived any right to terminate
this Agreement based upon such breach; provided that such waiver shall not apply
to any subsequent or continuing breach.  Notwithstanding the foregoing, the
termination right attributable to an event described in clause (x) above shall
be limited to the termination of this Agreement as it relates solely to the
particular Contractor Fleet subject to such grounding.

 

(c)                                  By Contractor for Breach.  Contractor may
terminate this Agreement, by providing written notice to Continental, upon
(i) Continental’s failure to make any payment of $500,000 or more due to
Contractor under Article III or Section 10.01 of this Agreement, including
without limitation, payments which become due during any Wind-Down Period, which
payment is not subject to any ongoing good faith dispute and which failure shall
not have been cured within five Business Days after receipt of written notice
from Contractor of such failure, or (ii) upon the occurrence of any other
material breach of this Agreement by Continental, which breach shall not have
been cured within 60 days after written notice of such material breach is
delivered by Contractor to Continental.  Such written notice of termination
shall specify the Termination Date (subject to the provisions of this
Article VIII). In the event that Contractor shall not have delivered written
notice of termination pursuant to this Section 8.02(c) within four months after
the later of (x) the date upon which Contractor receives written notice from
Continental of any material breach under this Agreement by Continental and
(y) such material breach is no longer continuing, then Contractor shall be
conclusively deemed to have waived any right to terminate this Agreement based
upon such breach; provided, that such waiver shall not apply to any subsequent
or continuing breach.

 

(d)                                 By Continental for Breach of Affiliate CPA. 
Continental may terminate this Agreement, by providing written notice to
Contractor (with or without prior notice) upon the early termination by
Continental of any Affiliate CPA or other Capacity Purchase Arrangement between
Continental and Contractor; provided, that the foregoing termination right in
this Section 8.02(d) shall not apply in the event the Affiliate CPA or Capacity
Purchase Arrangement is terminated solely as a result of events or actions
similar to those described in clauses (i), (ii) or (iii) of the definition of
Cause herein.  Such written notice of termination shall specify the Termination
Date (subject to the provisions of this Article VIII).

 

(e)                                  By Contractor for Breach by Continental of
Affiliate CPA.  Contractor may terminate this Agreement by providing written
notice to Continental (with or without prior notice) upon the early termination
by Contractor of any Affiliate CPA or other Capacity Purchase Arrangement
between Continental and Contractor as a result of any uncured default by
Continental thereunder.  Such written notice of termination shall specify the
Termination Date (subject to the provisions of this Article VIII).

 

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(f)                                    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, if any, 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 each Covered Aircraft until it is withdrawn from this Agreement and
otherwise until the later of the Termination Date and the end of the Wind-Down
Period, if any.

 

Section 8.03                                Disposition of Aircraft during
Wind-Down Period.

 

(a)                                  Termination by Continental for Cause.  If
this Agreement is terminated pursuant to Section 8.02(a), then the Covered
Aircraft shall be withdrawn from the capacity purchase provisions of this
Agreement in accordance with the following terms and conditions.  Within 90 days
of delivery of any notice of termination, Continental shall deliver to
Contractor a revocable written Wind-Down Schedule, providing for the withdrawal
of such Covered Aircraft from the capacity purchase provisions of this
Agreement, delineating the number of each aircraft type to be withdrawn by
month.  Continental may amend or modify such Wind-Down Schedule in its sole
discretion by providing two weeks written notice to Contractor of such amendment
or modification.  The Wind-Down Schedule may begin immediately upon its
delivery, and may not provide for the withdrawal of any Covered Aircraft beyond
the earlier of (i) the date 60 months after the date of delivery of the
Wind-Down Schedule, and (ii) the date on which the head lease applicable to the
Covered Aircraft terminates.  The provisions of this Section 8.03(a) shall
supersede any Wind Down Schedule delivered pursuant to any other provision of
this Agreement in accordance with a Wind-Down Schedule to be delivered by
Continental to Contractor on the Termination Date.

 

(b)                                 Termination by Continental for Breach,
Change of Control or Transfer of Interest.  If this Agreement is terminated by
Continental under Section 8.02(b) or 8.02(d), then the Covered Aircraft (or in
the event of a termination under Section 8.02(b)(x), only the Covered Aircraft
that are included within the grounded Contractor Fleets) shall be withdrawn from
the capacity purchase provisions of this Agreement in accordance with the
following terms and conditions.  The notice of termination delivered by
Continental to Contractor pursuant to Section 8.02(b) or 8.02(d) shall contain a
Termination Date that is determined in the discretion of Continental provided
that it does not conflict with the provisions of this Section 8.03(b) governing
the Wind-Down Schedule.  Within 90 days of delivery of any notice of
termination, Continental shall deliver to Contractor an irrevocable written
Wind-Down Schedule, providing for the withdrawal of such Covered Aircraft from
the capacity purchase provisions of this Agreement, and delineating the number
of each aircraft type to be withdrawn by month.  The Wind-Down Schedule may not
commence until the Termination Date and may not provide for the withdrawal of
any Covered Aircraft beyond the earlier of (i) the date 60 months after the date
of delivery of the Wind-Down Schedule, and (ii) the date on which the head lease
applicable to the Covered Aircraft terminates.

 

(c)                                  Termination by Contractor for Breach.  If
this Agreement is terminated by Contractor under Section 8.02(c) or 8.02(e),
then the Covered Aircraft shall be withdrawn from the capacity purchase
provisions of this Agreement in accordance with the following terms and
conditions:

 

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(i)                                     The notice of termination delivered by
Contractor to Continental pursuant to Section 8.02(c)(i) shall be irrevocable by
Contractor and shall contain a Termination Date that is not more than 60 days
after the date of such notice; provided, that such termination notice shall be
void and of no further effect automatically upon the payment by Continental
prior to the Termination Date of all unpaid amounts giving rise to the default
under Section 8.02(c)(i).  As of the Termination Date set forth in a notice of
termination delivered pursuant to Section 8.02(c)(i), all of the Covered
Aircraft shall automatically be withdrawn from the capacity purchase provisions
of this Agreement and shall cease to be Covered Aircraft as of such date and
this Agreement shall terminate.

 

(ii)                                  The notice of termination delivered by
Contractor to Continental pursuant to Section 8.02(c)(ii) or Section 8.02(e)
shall be irrevocable by Contractor and shall contain a Termination Date that is
at least 180 days after the date of such notice.  Prior to the 90th day after
receipt of such termination notice, Continental shall deliver to Contractor a
Wind-Down Schedule beginning on such Termination Date.  The Wind-Down Schedule
may not provide for the withdrawal of more than 15 Covered Aircraft per month
(excluding the withdrawal of any Covered Aircraft upon the termination of the
head lease related to such Covered Aircraft), and may not provide for the
withdrawal of any Covered Aircraft on any date more than 60 months after the
Termination Date.

 

(d)                                 Termination at End of Term.  If the
Agreement is terminated at the end of the Term (other than pursuant to
Section 8.02), then each Covered Aircraft shall be withdrawn from the capacity
purchase provisions of this Agreement in accordance with a Wind-Down Schedule to
be delivered by Continental to Contractor no later than six months prior to the
end of the Term.  The Wind-Down Schedule shall not commence prior to the end of
the Term and may not provide for the withdrawal of more than 15 Covered Aircraft
per month (excluding the withdrawal of any Covered Aircraft upon the termination
of the head lease related to such Covered Aircraft), and may not provide for the
withdrawal of any Covered Aircraft on any date more than 36 months after the end
of the Term.

 

(e)                                  Return Conditions.  Upon the date for
withdrawal from the capacity purchase provisions of this Agreement of a Covered
Aircraft as provided in Sections 8.03(a), 8.03(b), 8.03(c) or 8.03(d), the
provisions of Section 2.09 shall apply.

 

(f)                                    Fleet Hour Program Balances.  In
connection with the return of any aircraft by Contractor to Continental,
Contractor shall use its commercially reasonable efforts to facilitate the
participation by Continental or its designee in any Flight Hour Agreement or any
other similar program for components relating to Covered Aircraft.  Any reserve
balances held by a flight hour contractor in respect of any such Engines or
components of Covered Aircraft shall be deemed to be held for Continental’s
account, and Contractor shall execute an assignment, if any, required by
Continental or such flight hour contractor in connection therewith.

 

(g)                                 Other Remedies for Labor Strike and Other
Circumstances.  In the event of (i) the occurrence of a Labor Strike or (ii) the
mandatory grounding of any of the Contractor Fleets by the FAA due to any action
or inaction of Contractor, then for so long as such Labor Strike or grounding
shall continue and thereafter until the number of Scheduled Flights that are

 

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Controllable On-Time Departures (including giving effect to any delays resulting
from a Labor Strike or grounding) on any day of the week equals or exceeds the
number of Scheduled Flights that were Controllable On-Time Departures on the
same day of the week prior to such Labor Strike or grounding, Continental shall
not be required to pay any of the amounts set forth on Appendix 1 to Schedule 3
as being required “for each Covered Aircraft for each month in the Term.”  The
rights set forth in this Section 8.03(g) are in addition to, and not in
limitation of, any other right of Continental arising hereunder.

 

(h)                                 Material Breach by Continental.  Upon a
payment breach of this Agreement described in Section 8.02(c)(i) by Continental,
which breach shall not have been cured within 30 days after written notice
delivered by Contractor to Continental, then for the period from such 30th day
until such breach is cured or the Agreement is otherwise terminated, 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.

 

(i)                                     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 claims for incidental, indirect, consequential,
punitive, special or exemplary damages, including lost revenues, lost profits or
lost prospective economic advantage, 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; provided, that nothing in this Section 8.03(i) shall restrict the right
of any party to exercise any right to terminate this Agreement pursuant to the
terms hereof.

 

(j)                                     Automatic Withdrawal Schedule.  If, at
anytime upon or following the termination of this Agreement by Continental under
Section 8.02(a), 8.02(b) or 8.02(d), or any termination of this Agreement at the
end of the Term, and prior to the delivery of a notice or Wind-Down Schedule to
be delivered pursuant to Section 8.03(a), (b) or (d), Continental is enjoined or
stayed from delivering any such notice or Wind-Down Schedule, then, without any
further action required by any party hereto, the Wind-Down Schedule in effect in
connection with such termination shall be deemed to be as follows: five Covered
Aircraft shall be withdrawn from the capacity purchase provisions of this
Agreement at 12:01 a.m., central time, on each Monday, beginning on the first
Monday following the Termination Date or the end of the Term, as the case may
be, and continuing until all such aircraft are withdrawn, and the Covered
Aircraft shall be withdrawn in order of Covered Aircraft Sublease termination
dates, with the Covered Aircraft with the latest scheduled termination date
withdrawn first, and the Covered Aircraft with the soonest scheduled termination
date withdrawn last; provided that each Covered Aircraft whose head lease
termination date occurs prior to the date on which such aircraft would otherwise
be withdrawn pursuant to the foregoing shall instead be withdrawn on such head
lease termination date.

 

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ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 9.01                                Representations and Warranties of
Contractor.  Contractor represents, warrants and covenants to Continental as of
the Effective Date as follows:

 

(a)                                  Organization and Qualification.  Contractor
is a duly organized and validly existing corporation in good standing under the
laws of its state of incorporation and has the corporate power and authority to
own, operate and use its assets and to provide the Regional Airline Services. 
Contractor is duly qualified to do business as a foreign corporation under the
laws of each jurisdiction that requires such qualification except where failure
to be so qualified would not have a material adverse effect on the business or
assets of Contractor.

 

(b)                                 Authority Relative to this Agreement. 
Contractor 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 Contractor.  This Agreement has
been duly and validly executed and delivered by Contractor 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
Contractor, enforceable against Contractor 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)                                  Broker.  Except for the fees and expenses
payable to Raymond James Financial Inc. (which amounts shall be paid by
Contractor), no broker, investment banker, or other person is entitled to any
broker’s, finder’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Contractor.

 

(d)                                 Permits.  Contractor possesses all material
certificates, authorizations and permits issued by FAA and other applicable
federal, state or foreign regulatory authorities necessary to conduct its
business, to provide Regional Airlines Services and otherwise to perform its
obligations hereunder, and Contractor has not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a material
adverse effect on Contractor or on its ability to conduct its business, to
provide Regional Airlines Services and otherwise to perform its obligations
hereunder.

 

Section 9.02                                Representations and Warranties of
Continental.  Continental represents and warrants to Contractor as of the
Effective Date 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.

 

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(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 validly executed and delivered by Continental and is, assuming
due execution and delivery thereof by Contractor and that Contractor 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 or by which it or its properties or assets may be
bound, (ii) result in the creation or imposition of any lien, charge or
encumbrance in favor of any third person or entity, (iii) violate any law,
statute, judgment, decree, order, rule or regulation of any governmental
authority or body, 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, charges or encumbrances.

 

(d)                                 Broker.  No broker, investment banker, or
other person is entitled to any broker’s, finder’s or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Continental.

 

(e)                                  No Proceedings.  There are no legal or
governmental proceedings pending, or investigations commenced of which
Continental has received notice, in each case to which Continental is a party or
of which any property or assets of Continental is the subject which, if
determined adversely to Continental, would individually or in the aggregate have
a material adverse effect on Continental or on its ability to perform its
obligations hereunder; and to the best knowledge of Continental, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.

 

(f)                                    No Default Under this Agreement.  To the
knowledge of Continental, there is not occurring any continuing event that would
constitute a default by Contractor under this Agreement following the Effective
Date.

 

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ARTICLE X
MISCELLANEOUS

 

Section 10.01                          Transition Arrangements.

 

(a)                                  Conversion of Covered Aircraft Livery.  For
each aircraft currently subject to a sublease or lease between Continental and
Contractor, at such time (if ever) as such aircraft enters service as a Covered
Aircraft, if such aircraft is not already prepared in the livery required by
Paragraph 8 of Exhibit G and otherwise appropriately configured, then
Continental shall be responsible for Contractor’s reasonable out-of-pocket costs
of preparing each Covered Aircraft in such livery and appropriate configuration
prior to its being placed into service hereunder, up to $*** for each such
Covered Aircraft.

 

(b)                                 Contractor’s Other Airline Passenger
Services.  The parties agree and acknowledge that (x) Contractor intends to
wind-up Contractor’s airline passenger services operated by ExpressJet as of the
Effective Date, including, without limitation, any charter services (other than
Regional Airlines Services and any services pursuant to any United Agreement)
(“Contractor’s Charter Service”), (y) in consideration of Contractor’s entering
into this Agreement, Continental is willing to be responsible for all costs of
the wind-up of Contractor’s Charter Service, (z) in order to permit Continental
to maximize the efficiency and minimize the cost of such wind-up, Contractor is
willing to permit Continental to direct and manage the wind-up of Contractor’s
Charter Service, including any limited continuation of such service that may
occur in the process of such wind-up.  In that regard, from and after the
Effective Date:

 

(i)                                     Contractor shall continue to provide
Contractor’s Charter Service during such wind up period as is determined by
Continental, at a level of performance and safety equivalent to Contractor’s
provision of Regional Airlines Services hereunder;

 

(ii)                                  Continental shall complete the final
wind-up of Contractor’s Charter Service within a time frame reasonably
determined by Continental following consultation with Contractor;

 

(iii)                               all revenues attributable to such
Contractor’s Charter Service shall be for Continental’s account;

 

(iv)                              Contactor shall enter into such amendments to
and/or terminations of existing agreements relating to Contractor’s Charter
Service as shall be requested by Continental, including without limitation
amendments to and/or terminations of airport and office leases, maintenance
agreements, aircraft leases or subleases, reservation service agreements and
service contracts;

 

(v)                                 all costs of Contractor’s Charter Service
and the wind-up of such service (under the direction and management of
Continental), shall be for Continental’s account, including specifically the
following:

 

(A)                              the cost of termination of contracts relating
solely to Contractor’s Charter Service, including without limitation airport and
office

 

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leases, maintenance agreements, aircraft leases or subleases, reservation
service agreements and service contracts;

 

(B)                                any necessary employee termination and
severance costs;

 

(C)                                costs of removal, if any, of satellite-based
passenger entertainment systems not used for Regional Airline Services; and

 

(D)                               all costs and expenses directly associated
with the operation and management of Contractor’s Charter Service incurred by
Contractor from and after the Effective Date for which Contractor is not
otherwise compensated in block hour rates under this Agreement (but not
including non-cash expenses such as write-offs or write-downs);

 

(vi)                              the indemnification provisions of Article VII
shall apply to both Continental and Contractor with respect to such parties’
obligations in respect of the continuation and wind-up of Contractor’s Charter
Service; and

 

(vii)                           within 60 days following the Effective Date,
Continental shall amend the subleases of each aircraft constituting part of
Contractor’s Charter Service (x) so that the amended sublease is in the form
attached as Exhibit B and (y) to provide that such sublease shall terminate upon
termination of this Agreement.

 

Contractor shall cooperate with Continental and use its reasonable best efforts
to mitigate the costs of Contractor’s Charter Service and the winding-up of such
service in a manner as is reasonably requested by Continental.  Upon the wind-up
of Contractor’s Charter Service with respect to any aircraft, at Continental’s
direction and management, such aircraft shall either become a Covered Aircraft
or be returned to Continental, in each case pursuant to Section 2.06 and, if
applicable, Section 2.09.  In connection with the wind-up of Contractor’s
Charter Services, Continental have the opportunity to review a current summary
and forecast of the maintenance and repair status of and condition of each
Charter Aircraft (including the United Short-Term Aircraft), and select in its
sole discretion the particular Charter Aircraft (including any United Short-Term
Aircraft) for the purposes of the immediately preceding sentence.  Upon delivery
of possession of any aircraft returned pursuant to the immediately preceding
sentence, if all conditions set forth in the applicable Return Aircraft
Sublease, including any return conditions, have been satisfied in accordance
with its terms, then such Return Aircraft Sublease shall terminate, in each case
pursuant to Section 2.06 and, if applicable, Section 2.09.  Contractor shall
provide Continental monthly with a written statement of the costs for which
Continental is obligated to reimburse Contractor pursuant to this
Section 10.01(b), signed by the chief financial officer of Contractor.  Within
five Business Days after receipt by Continental of such written statement,
Continental shall pay Contractor the full sum of such costs for the period at
issue.  Notwithstanding anything in this Agreement to the contrary, in the event
this Agreement is terminated by Continental and such termination is not
attributable to a breach by Contractor of its obligations under this Agreement
with respect to the Charter Aircraft or the Contractor’s Charter Service, the
obligations of the parties under this Agreement as to the Charter Aircraft,
Contractor’s Charter Service or as otherwise described in this Section 10.01(b),
shall continue until such time as the wind-up of Contractor’s Charter Service is
completed.

 

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Section 10.02                          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.
77 West Wacker Drive
Chicago, IL 60601
Attention:  Alexandria P. Marren
Facsimile No.: (847) 700-9545

 

with a copy to:

 

Continental Airlines, Inc.
77 West Wacker Drive
Chicago, IL 60601
Attention:  General Counsel
Facsimile No.: (312) 997-8110

 

if to Contractor:

 

ExpressJet Airlines, Inc.
700 North Sam Houston Parkway West, Suite 200
Houston, Texas 77067
Attn: President
Facsimile No.: (832) 353-1008

 

with a copy to:

 

SkyWest, Inc.
444 River Road
St. George, UT 84790
Attn:  Bradford R. Rich, Chief Financial Officer
Facsimile No:  (435) 634 3305
Telephone No: (435) 634-3200

 

if to Parent or any other Guarantor:

 

SkyWest, Inc.
444 River Road
St. George, UT 84790
Attn:  Bradford R. Rich, Chief Financial Officer
Facsimile No:  (435) 634 3305
Telephone No:  (435) (634-3200)

 

45

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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 10.02.

 

Section 10.03                          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 or other
consolidation of either party with another Person or the transfer of all or
substantially all of the assets of either party to another Person (in which
event the surviving Person or the Person acquiring the assets shall be deemed a
successor and permitted assign) (and without limiting Continental’s rights
pursuant to Section 5.02 or 5.03 hereof), 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.  In connection with any
assignment of this Agreement by Contractor or merger, consolidation or other
similar transaction that results in a successor to Contractor, Contractor shall
bear the cost of any payments or fees associated with such assignment, merger,
consolidation or other similar transaction, including without limitation, any
fees paid to secure route authorities, operating certificates, permits and any
similar costs for Contractor’s assignee, but excluding any costs incurred by
Continental in connection with providing notice to head lessors of such
assignment, merger, consolidation or other similar transaction.

 

Section 10.04                          Amendment and Modification.  This
Agreement may not be amended or modified in any respect except by a written
agreement signed by the parties hereto that specifically states that it is
intended to amend or modify this Agreement.

 

Section 10.05                          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 that specifically states that
it is intended to waive such term.  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 10.06                          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 (but not Business 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

 

46

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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.”  All references in this Agreement to the past
practices of “Contractor,” including the practices of “Contractor” during any
historical period (whether under this Agreement or the Existing CPA), shall be
deemed to refer to the performance or practices of the entity that operated
substantially all of the Covered Aircraft during such historical period.  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 10.07                          Confidentiality.  Except as required by
law or stock exchange or other regulation or in any proceeding to enforce the
provisions of this Agreement, or as otherwise provided below, each party to this
Agreement hereby agrees 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, or any CPA Records, without the
prior written consent of the other parties thereto (except that a party may
disclose such information to its third-party consultants, advisors and
representatives, in each case who are themselves bound to keep such information
confidential).  Except as required by law or stock exchange or other regulation
or in any proceeding to enforce the provisions of this Agreement or any of the
Ancillary Agreements, or as otherwise provided below, each party hereby agrees
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, without the prior
written consent of the party providing such confidential information or data
(except that a party may disclose such information to its third-party
consultants, advisors and representatives, in each case who are themselves bound
to keep such information confidential).  Each party hereby agrees 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 permitted or contemplated by this Agreement or any of the
Ancillary Agreements.  If either 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 hereto of the 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 which is still in the
recipient’s possession or control.  Without limiting the foregoing, no party
shall be prevented from disclosing the following terms of this Agreement: the
number of aircraft subject hereto, the periods for which such aircraft are
subject hereto, and any termination provisions contained herein.  The provisions
of this Section 10.07 shall survive the termination of this Agreement for a
period of ten years.

 

Section 10.08                          Survival.  The obligations of the parties
under Section 2.02, Section 2.04, Section 2.08, Section 2.09, Article III,
Article IV, Article VII, Section 8.03(f), Section 8.03(i), Section 10.01(b),
Section 10.02, Section 10.07, Section 10.08, Section 10.11, Section 10.12,
Section 10.13, Section 10.14, Section 10.15, Section 10.16, Exhibit G, Exhibit H
and Exhibit M

 

47

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(to the extent of any surviving obligations of Contractor) shall survive the
expiration or termination of this Agreement.

 

Section 10.09                          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 10.10                          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 10.11                          Equitable Remedies; Limitation on
Damages.

 

(a)                                  Equitable Remedies.  Each party
acknowledges and agrees that, under certain circumstances, the breach by a party
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.

 

(b)                                 Other Limitations on Seeking Damages. 
Neither the right of any party to terminate this Agreement, nor the exercise of
such right, shall constitute a limitation on such party’s right to seek damages
or such other legal redress to which to which such party may otherwise be
entitled; provided, that absent the occurrence of another breach of this
Agreement by Contractor and without limiting the effect of the provisions of
Sections 2.07 and 4.18, Continental shall not be entitled to seek damages solely
for the occurrence of (i) an event of Cause of the type described in
clause (iii) of the definition thereof, (ii) a material breach of the type
described in clauses (viii) or (x) of Section 8.02(b), or (iii) any other breach
of this Agreement directly attributable to the matters described in
clauses (i) or (ii) above.

 

Section 10.12                          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 10.13                          Entire Agreement; No Third-Party
Beneficiaries.  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.  Specifically, this Agreement and each
Ancillary Agreement shall constitute a single, integrated agreement.  This
Agreement is made among, and for the benefit of, the parties hereto, and the
parties do not intend to create any third-party beneficiaries hereby, and no
other Person shall have any rights arising under, or interests in or to, this
Agreement.

 

48

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Section 10.14                          Governing Law.  This Agreement is subject
to, and will be governed by and interpreted in accordance with, the laws of the
State of New York, excluding conflicts of laws principles, and of the United
States of America.  Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement may only be brought in
the United States District Court for the Southern District of New York (or, if
such court does not accept jurisdiction, such action or proceeding may only be
brought in any New York state court sitting in the County of New York, New York)
and each of the parties hereto irrevocably consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives, to the fullest extent permitted by law,
any objection to venue laid therein.  Notwithstanding the preceding sentence,
process in any action or proceeding referred to therein may be served by
appropriate means on the other party outside of the Southern District of New
York (or the County of New York, New York, as applicable).  Each party further
agrees to waive any right to a trial by jury.  Because a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled to an injunction restraining such breach or
threatened breach and to specific performance of any provision of this Agreement
and, in either case, no bond or other security shall be required in connection
therewith, and the parties hereby consent to the issuance of such injunction and
to the ordering of specific performance.

 

Section 10.15                          Guarantee.  Contemporaneous with the
execution and delivery of this Agreement, Guarantor shall execute a guarantee in
favor of Continental in the form of Exhibit M.

 

Section 10.16                          Right of Set-Off.  Subject to
Section 3.06(c), if any party hereto shall be in default hereunder or under any
Ancillary Agreement to any other party hereto, 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 due and owing by
the defaulting party to the non defaulting party thereunder and not subject to
dispute in good faith; provided, that contemporaneously with any such set off,
the non-defaulting party shall, unless legally enjoined or otherwise stayed from
doing so, 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 between Continental
and Contractor; (ii) reciprocity between Continental and Contractor 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), including without limitation pursuant to
Section 3.06(b)(ii) hereof.

 

Section 10.17                          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

 

49

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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.

 

Section 10.18                          Amendment of Certain Contracts.  Without
Continental’s express prior written consent, (and such consent shall not be
unreasonably withheld) Contractor shall not amend, supplement, grant a waiver or
extension under, or otherwise modify or enter into a replacement contract for,
the Embraer Contract or any Flight Hour Agreement.  In addition, Contractor
shall use its reasonable commercial efforts to assist Continental in the
negotiation of any Flight Hour Agreement or any amendment thereto.

 

50

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IN WITNESS WHEREOF, the parties hereto have caused this Second 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:

President & Chief Executive Officer

 

 

 

 

 

 

 

EXPRESSJET AIRLINES, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO CAPACITY PURCHASE AGREEMENT

 

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

 

SCHEDULE 1
Covered Aircraft

 

As last adjusted as of: November 12, 2010

 

***

 

 

SCHEDULE 1 -1

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

 

SCHEDULE 2
Transition Aircraft and Spare Engines

 

***

 

SCHEDULE 2 -1

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

 

SCHEDULE 3
Compensation for Capacity Purchase

 

A.                                   Base and Incentive Compensation.

 

1.                                       Base Compensation.  Continental will
pay to Contractor, in respect of block hours and each month of the Term for each
Covered Aircraft, an amount calculated for each of the foregoing measurements
and aggregated, as follows for each calendar month:

 

a.                                       98% of the number of block hours set
forth on the Final Monthly Schedule for such month, multiplied by the “for each
block hour” rate as set forth in Appendix 1 hereto; plus

 

b.                                      the weighted average number of Covered
Aircraft during such month, multiplied by the rate “for each Covered Aircraft
for each month in the Term” as set forth in Appendix 1 hereto.

 

For purposes of this Paragraph 1, the weighted average number of Covered
Aircraft during any month shall be calculated by determining, for each Covered
Aircraft, the number of days during such month during which such aircraft was a
Covered Aircraft, and then aggregating such number of days for all Covered
Aircraft, and then dividing such aggregate number of days by the number of days
in such month. In addition, Continental will pay Contractor an allocation for
Reconciled Expenses set forth in Appendix 3, and as reconciled and further
described in Paragraph B(5)(a) below:

 

c.                                       for Reconciled Expenses constituting
payments described in clauses (i), (ii), (v), (viii), (ix), (xi) and (xii) of
Paragraph B(5)(a) of this Schedule 3, Base Compensation shall include the amount
set forth for such Reconciled Expenses on Appendix 3; and

 

d.                                      for Reconciled Expenses described in
clauses (iii), (iv), (vi), (vii), (x) and (xiii) of Paragraph B(5)(a) of this
Schedule 3, Base Compensation shall include an allocation based on the
statistical drivers set forth for such Reconciled Expenses on Appendix 3 and
calculated in accordance with Paragraph B(5)(b).

 

The aggregate Base Compensation shall be invoiced as provided in
Section 3.06(a).

 

2.                                       Incentive Compensation.  With respect
to each calendar month, incentive compensation shall be calculated as follows:

 

a.                                       On-Time Bonus/Rebate.  The
reconciliation for any calendar month shall include, as applicable, a bonus
(represented by a payment by Continental to Contractor) or a rebate (represented
by a payment by Contractor to

 

SCHEDULE 3 - 1

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

 

Continental), in each case in respect of on-time performance, as determined
pursuant to paragraph 1 of Appendix 4 to this Schedule 3.

 

 

b.                                      Fuel Efficiency Bonus.  The
reconciliation shall include, when and as applicable, a bonus (represented by a
payment by Continental to Contractor) as determined pursuant to paragraph 2 of
Appendix 4 to this Schedule 3.

 

The aggregate Incentive Compensation shall be invoiced as provided in
Section 3.06(b).

 

B.                                     Expenses and Reconciliation.

 

1.                                       With respect to Scheduled Flights, in
consideration of the provision by Contractor of Regional Airline Services and
its compliance with the other terms and conditions of this Agreement, the
following expenses listed within Paragraph (B)(1) of this Schedule 3 shall be
incurred directly by Continental:

 

a.                                       passenger and cargo revenue-related
expenses, including but not limited to commissions, ticket and airway bill taxes
and fees related to the transportation of passengers or cargo, food, beverage
costs and catering, charges for fare or tariff filings, sales and advertising
costs, computer reservation system fees, credit card fees, interline fees,
revenue taxes, GDS fees, airport collateral materials, reservation costs,
revenue accounting costs, including costs associated with ticket sales reporting
and unreported sales, usage, maintenance and replacement costs related to
equipment relevant to onboard sales and payment transaction processes as
outlined in Continental’s policies and procedures in quantities consistent with
standards used by Continental, OnePass participation costs and Continental
Currencies;

 

b.                                      glycol, de-icing and snow removal costs
at Continental Airports;

 

c.                                       denied boarding amenities and related
travel certificates in respect of delayed or cancelled flights distributed in a
manner consistent with Continental’s policies and procedures (regardless of
whether attributable to Contractor’s operations in the normal course of
business);

 

d.                                      passenger-related interrupted trip costs
(including hotel, meal and calling cards vouchers) and baggage handling claims,
baggage repairs, baggage delivery costs and oversales distributed or made in a
manner consistent with Continental’s policies and procedures (regardless of
whether attributable to Contractor’s operations in the normal course of
business);

 

e.                                       as provided by and in consideration of
Contractor’s compliance with its obligations under the Fuel Purchasing
Agreement, Fuel, Fuel taxes and Fuel into plane charges, including
administration fees, if any;

 

SCHEDULE 3 - 2

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

 

f.                                         rent for Terminal Facilities at
Continental Airports;

 

g.                                      ground handling costs at Continental
Airports, for which costs Continental is responsible pursuant to the Continental
Ground Handling Agreement;

 

h.                                      technology services related to all
passenger services processes; and

 

i.                                          TSA fees or charges and any other
passenger security fees or charges for security at all Continental Airports, but
without limiting the parties respective obligations relating to regulatory and
other fines pursuant to Article VII.

 

2.                                       Flight Reconciliation.

 

a.                                       With respect to Scheduled Flights, for
any calendar month in which Contractor’s actual block hours flown exceeds the
block hours invoiced pursuant to Paragraph A(1)(a) for such calendar month, then
the reconciliation for such period shall include a payment by Continental to
Contractor in an amount equal to the product of (i) the difference between the
actual block hours flown for Scheduled Flights and such invoiced block hours,
multiplied by (ii) the “for each block hour” rate as set forth in Appendix 1
hereto.

 

b.                                      With respect to Scheduled Flights, for
any calendar month for which the block hours invoiced pursuant to Paragraph
A(1)(a) exceeds Contractor’s actual block hours flown in such calendar month,
then the reconciliation for such period shall include a payment by Contractor to
Continental in an amount equal to the product of (i) the difference between such
invoiced block hours and the actual block hours flown for Scheduled Flights,
multiplied by (ii) the “for each block hour” rate as set forth in Appendix 1
hereto.

 

c.                                       To the extent consistent with past
practice under the capacity purchase agreement between Contractor and
Continental in place immediately prior to the date of this Agreement,
Contractor’s “actual block hours flown” shall include block hours operated for
all completed Scheduled Flights, including those resulting from any unscheduled
stop required prior to the completion of a Scheduled Flight, however, “actual
block hours flown” shall not include any block hours resulting from or
attributable to ground returns or air returns.

 

3.                                       Flight Cancellation Reconciliation.

 

a.                                       With respect to Scheduled Flights, for
any calendar month in which (x) the actual number of Controllable Cancellations
exceeds (y) the product of the FCR Factor multiplied by the total number of
actual Scheduled Flight departures (calculated in accordance with past
practices) in such calendar month (the “Benchmark Controllable Cancellation
Number” for such

 

SCHEDULE 3 - 3

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

 

calendar month), then the reconciliation for such period shall include a payment
by Contractor to Continental in an amount equal to the product of (i) the
Controllable Completion Factor Incentive Rate set forth on Appendix 2 multiplied
by (ii) the number of such excess actual Controllable Cancellations over the
Benchmark Controllable Cancellation Number.  The “FCR Factor” shall be an amount
equal to (i) for any calendar month beginning prior to December 31, 2011,
(A) for the purposes of any calculation pursuant to Paragraph B(3)(a) of this
Schedule 3, *** until the completion of three full calendar months following the
Effective Date and *** thereafter, and (B) for the for the purposes of any
calculation pursuant to Paragraph B(3)(b) of this Schedule 3, ***; and (ii) for
any calendar month beginning on or after January 1, 2012, *** minus ***
expressed as a decimal rounded to the nearest 1/10,000th.

 

b.                                      With respect to Scheduled Flights, for
any calendar month in which (x) the Benchmark Controllable Cancellation Number
for such calendar month exceeds (y) the actual number of Controllable
Cancellations in such calendar month, then the reconciliation for such period
shall include a payment by Continental to Contractor in an amount equal to the
product of (i) the Controllable Completion Factor Incentive Rate as set forth in
Appendix 2 multiplied by (ii) the excess of such Benchmark Controllable
Cancellation Number over the number of actual Controllable Cancellations.

 

c.                                       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 (whether through a schedule modification or
other communication) 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,

 

SCHEDULE 3 - 4

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

 

then such cancellation shall constitute an Uncontrollable Cancellation; it being
understood that any airport to which Contractor flies on the Effective Date or
has previously flown pursuant to this Agreement shall not constitute a “new
airport.”

 

d.                                      For purposes of this Schedule 3, in the
event of a Labor Strike, all calculations of the actual number of Controllable
Cancellations and the Benchmark Controllable Cancellation Number shall not
include any Scheduled Flight cancelled as a result of such Labor Strike.

 

e.                                       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
Continental’s historical experience and practice with operators of its regional
jets.

 

4.                                       Compensation for Lower Block Hours
Scheduled per Covered Aircraft.  If, for any calendar quarter, (A) the product
of (x) the number of days in such calendar quarter, multiplied by (y) *** per
day, multiplied by (z) the weighted average number of Covered Aircraft,
available each day for such calendar quarter (determined as provided below)
exceeds (B) the number of scheduled block hours for all Scheduled Flights during
such calendar quarter, then within 60 days after the end of such calendar
quarter Continental shall pay to Contractor an amount equal to the product of
such excess number of hours multiplied by the appropriate rate, determined as
set forth in the immediately succeeding sentence; provided, that no payment
shall be made for any calendar quarter in which (x) a Labor Strike shall have
occurred or (y) Continental reduced the number of scheduled block hours in
connection with or in response to Contractor’s failure to remain in material
compliance with its obligations arising under this Agreement or any Ancillary
Agreement, or otherwise as a result of a material event outside of Continental’s
reasonable control (including without limitation grounding of Covered Aircraft,
the imposition of flight caps or other material regulatory action involving
Covered Aircraft and/or airports serviced or to be serviced by Covered
Aircraft).  The appropriate rate to be used for purposes of payment calculation
as set forth above shall be determined by using the rate set forth on Appendix 6
to Schedule 3 for the applicable quarter (I) under the column corresponding to
the number of consecutive quarters in which the amount described in clause
(A) above exceeds the amount described in clause (B) above, and (II) in the row
corresponding to the “Scheduled Utilization”, which shall be calculated by
taking the block hours referenced in clause (B) above divided by the product of
(x) the weighted average number of Covered Aircraft available each day for such
calendar quarter (determined as provided below) multiplied by (y) the number of
days during such quarter.  For example, if the amount described in clause
(A) above exceeds the amount described in clause (B) above for three consecutive
quarters and the Scheduled Utilization was *** for the third such quarter, then
the rate for such third quarter pursuant to this Paragraph B(4) would be $***
for each block hour that the amount described in clause (A) above exceeds the
amount described in clause (B) above.  The weighted average number of Covered
Aircraft

 

SCHEDULE 3 - 5

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

 

available each day for such calendar quarter shall be calculated by determining,
for each Covered Aircraft other than Spare Aircraft, the number of days during
such calendar quarter during which such aircraft was a Covered Aircraft and
available for scheduling, and then aggregating such number of days for all
Covered Aircraft other than Spare Aircraft, and then dividing such aggregate
number of days by the number of days in such calendar quarter.

 

5.                                       Reconciled Expenses.

 

a.                                       The following expenses incurred in
connection with Scheduled Flights shall be reconciled monthly (except as
specifically set forth below) to actual costs (“Reconciled Expenses”):

 

(i) rent paid by Contractor for Terminal Facilities at Contractor Airports (it
being understood, for the avoidance of doubt, that the term “rent” as used
herein shall not be deemed to include indemnity or similar payments,
irrespective of its definition under any applicable lease, except to the extent
such indemnity or similar payment is attributable to the fault or neglect of
Continental);

 

(ii) property taxes (but excluding all other taxes including without limitation
income, profits, withholding, employment, social security, disability,
occupation, severance, excise ad valorem, sales, use and franchise taxes);

 

(iii) Aviation Insurance premiums, and deductibles payable by Continental
pursuant to Paragraph B(6)(f) below or otherwise payable under Aviation
Insurance not part of a combined placement pursuant to Section 6.04; provided,
that if Continental and Contractor are not participating in a combined placement
pursuant to Section 6.04, then Continental shall not pay to Contractor (A) in
respect of premiums payable pursuant to this clause (iii), any amount that is in
excess of the amount payable pursuant to Paragraph B(6)(a) or
Paragraph B(6)(b) below, as applicable or (B) in respect of deductibles payable
pursuant to this clause (iii), any amount that is in excess of maximum amount
reimbursable by Continental pursuant to Paragraph B(6)(f) below immediately
prior to Contractor ceasing to participate in such combined placement;

 

(iv) landing fees other than deposits or similar payments (irrespective of the
definition of “landing fees” in any applicable airport agreement);

 

(v) glycol and de-icing costs at Contractor Airports;

 

(vi) air navigation fees paid to NavCanada (or any Canadian successor thereto)
and Servicios a la Navegacion en el Espacio Aereo Mexicano (SENEAM) (or any
Mexican successor thereto), in each case in

 

SCHEDULE 3 - 6

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

 

respect of Scheduled Flights, it being understood that any fees paid to secure
route authorities (other than in connection with the initiation of routes not
previously flown by Contractor), operating certificates, permits and any related
costs will not be considered air navigation fees;

 

(vii) the amount of TSA fees or charges and any other passenger security fees or
charges for security at all Contractor Airports, other than such fees and
charges for which Continental is or would be entitled to indemnification under
Article VII;

 

(viii) Incentive Program Costs;

 

(ix) costs of operating ARINC aircraft communications addressing and reporting
systems;

 

(x) landing gear overhaul and Landing Gear LLP costs;

 

(xi) replacement costs for Engine LLPs that reach their life limit;

 

(xii) replacement costs for Spare Engine LLPs that reach their life limit,
subject to the limitations set forth in Paragraph B(7); and

 

(xiii) payments made by Contractor for “power-by-the-hour” services under the
Engine Maintenance Agreement, or alternate arrangement agreed to by Contractor
and Continental, such agreement not to be unreasonably withheld, conditioned or
delayed.

 

The Base Compensation includes allocations of the Reconciled Expenses as set
forth in Appendix 3 and with respect to certain Reconciled Expenses, as further
provided in Paragraph B(5)(b) below.  If in any month the Contractor’s actual
Reconciled Expenses exceed the amount of Reconciled Expenses included in the
Base Compensation in accordance with Appendix 3 and with respect to certain
Reconciled Expenses as further provided in Paragraph B(5)(b) below for such
month, Continental shall pay to Contractor an amount equal to such difference. 
If in any month the amount of Reconciled Expenses included in the Base
Compensation in accordance with Appendix 3 and with respect to certain
Reconciled Expenses as further provided in Paragraph B(5)(b) below for such
month exceeds the Contractor’s actual Reconciled Expenses, Contractor shall pay
to Continental an amount equal to such difference.

 

b.                                      The allocations included in Base
Compensation for Reconciled Expenses of the type set forth in
Paragraph A(1)(d) for any particular month shall be calculated as provided
below:

 

I.                                         The amount of Aviation Insurance
costs referred to in clause (iii) of Paragraph B(5)(a) and the amount of TSA
fees or charges and any other passenger security fees or charges at all
Contractor

 

SCHEDULE 3 - 7

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

 

Airports for security referred to in clause (vii) of Paragraph B(5)(a) included
in the Base Compensation for any particular month will be equal to the product
of (1) the insurance rate and TSA rates set forth on Appendix 3 multiplied by
(2) the Forecasted Passengers for such month.

 

II.                                     The amount of landing fees referred to
in clause (iv) of Paragraph B(5)(a) and the amount of Canada and Mexico air
navigation fees referred to in clause (vi) of Paragraph B(5)(a) included in the
Base Compensation for any particular month will be equal to the aggregate sum of
the following products: (1) the landing fee rate and the Canadian and Mexican
air navigation rates set forth in Appendix 3, multiplied by (2) the number of
scheduled departures set forth in the Final Monthly Schedule, multiplied by
(3) 98%.

 

III.                                 The amount of landing gear overhaul and
Landing Gear LLP costs referred to in clause (x) of Paragraph B(5)(a) included
in the Base Compensation for any particular month will be equal to the aggregate
sum of the following products: (1) the landing gear overhaul and Landing Gear
LLP cost rate set forth in Appendix 3, multiplied by (2) the weighted average
number of Covered Aircraft during such month.

 

IV.                                 The amount of Engine power-by-the-hour costs
referred to in clause (xiii) of Paragraph B(5)(a) included in the Base
Compensation for any particular month will be equal to the aggregate sum of the
following products: (1) the Engine power-by-the-hour costs rate set forth in
Appendix 3, multiplied by (2) the number of scheduled block hours set forth in
the Final Monthly Schedule, multiplied by (3) 98%.

 

6.                                       Insurance Costs

 

a.                                       If Contractor elects not to participate
in a combined placement for a particular Aviation Insurance policy, Contractor
shall not be reimbursed or otherwise compensated (through adjustments to block
hour rates, reconciliation amounts or otherwise) for any Excess Insurance Costs
with respect to such policy or for any costs of such policy that are in excess
of the Average Peer Group Rate.

 

b.                                      If Contractor does not participate in a
combined placement for a particular Aviation Insurance policy for any reason
other than its election not to participate, Continental shall pay to Contractor
an amount equal to the Excess Insurance Costs with respect to such policy, but
only up to an aggregate policy cost equal to the Average Peer Group Rates. 
Contractor shall not be reimbursed or otherwise compensated (through adjustments
to

 

SCHEDULE 3 - 8

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

 

block hour rates or otherwise) to the extent that its insurance costs exceed the
Average Peer Group Rates.

 

c.                                       Subject to Paragraph B(6)(d) and
Paragraph B(6)(e) below, Contractor will pay to Continental its proportionate
share of all combined-placement Aviation 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 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.                                 War Risk Rate. To be determined each year;
an amount equal to the combined placement program’s composite liability war risk
rate as set forth in the current group policy, multiplied by revenue passenger
miles and onboard passengers, as determined by recognized standard industry
methods consistent with prior practice and an amount equal to the combined
placement program’s composite hull war risk 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.

 

d.                                      In the fiscal quarter subsequent to the
next combined policy Aviation 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 Aviation Insurance renewal premium amount, then in the fiscal quarter
subsequent to the renewal in which the effects are first included), Continental
and Contractor agree to determine and allocate the amount of increase in the
combined policy Aviation 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.

 

SCHEDULE 3 - 9

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

 

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 portion of the Continental Premium
Surcharge Amount payable by Continental shall be 100% of the Continental Premium
Surcharge Amount for the first year following the beginning of such fiscal
quarter, 50% of the Continental Premium Surcharge Amount for the second year
following the beginning of such fiscal quarter, 25% of the Continental Premium
Surcharge Amount for the third year following the beginning of such fiscal
quarter, and $0 thereafter.

 

V.                                     The portion of the Continental Premium
Surcharge Amount payable pursuant to clause (IV) above 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 fiscal quarter subsequent to the
next combined policy Aviation 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 Aviation Insurance renewal premium amount, then in the fiscal quarter
subsequent to the renewal in which the effects are first included), Continental
and Contractor agree to determine and allocate the amount of increase in the
combined policy Aviation 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 those of 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 regional airlines shall be calculated by (i) subtracting the
expiring rates of each such regional airline 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.

 

SCHEDULE 3 - 10

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

 

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 (the “Contractor Premium
Surcharge Amount”).

 

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 (the
“Contractor Premium Surcharge Overflow Amount”).

 

VI.                                 The portion of the Contractor Premium
Surcharge Amount payable by Contractor shall be 100% of the Contractor Premium
Surcharge Amount for the first year following the beginning of such fiscal
quarter, 50% of the Contractor Premium Surcharge Amount for the second year
following the beginning of such fiscal quarter, 25% of the Contractor Premium
Surcharge Amount for the third year following the beginning of such fiscal
quarter, and $0 thereafter.

 

VII.                             The portion of the Contractor Premium Surcharge
Overflow Amount payable by Contractor shall be 100% of the Contractor Premium
Surcharge Overflow Amount for the first year following the beginning of such
fiscal quarter, 50% of the Contractor Premium Surcharge Overflow Amount for the
second year following the beginning of such fiscal quarter, 25% of the
Contractor Premium Surcharge Overflow Amount for the third year following the
beginning of such fiscal quarter, and $0 thereafter.

 

VIII.                         The portion of the Contractor Premium Surcharge
Amount payable pursuant to clause (VI) above 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 portion of the Contractor Premium
Surcharge Overflow Amount payable pursuant to clause (VII) 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 dollar amount of all Aviation Insurance deductibles paid
with respect to Regional Airline Services

 

SCHEDULE 3 - 11

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

 

in any calendar year in respect of Aviation Insurance policies placed pursuant
to Section 6.04, up to, for any Aviation Insurance policy, the historical annual
average of the aggregate dollar amount of such deductibles paid by Contractor
for claims made under such policy during the last five full calendar years for
which such calculations are available as of such date of determination.

 

7.                                       Spare Engine LLPs

 

a.                                       Subject to Paragraph 7(b), Continental
shall not be liable for replacement costs attributable to Spare Engine LLPs in
an amount in excess of the product of (i) the amount set forth in the applicable
invoice for the replacement of such Spare Engine LLP and (ii) a fraction, the
numerator of which shall be the product of (x) the number of Covered Aircraft at
such time and (y) ***, and the denominator of which shall be the number of Spare
Engines at such time.

 

b.                                      At Continental’s request, Contractor
shall cooperate with Continental to allow the replacement costs attributable to
Spare Engine LLPs associated with a portion of the Spare Engines to be included
in a power-by-the-hour arrangement; provided, that such power-by-the-hour
arrangement include Spare Engine LLPs installed on a number of Spare Engines
equal to or greater than the product of (x) the number of Covered Aircraft at
such time and (y) *** (a “Spare Engine Power-by-the-Hour Arrangement”).  During
the effectiveness of any Spare Engine Power-by-the-Hour Arrangement, Continental
shall not be liable for any replacement costs attributable to Spare Engine LLPs
other than pursuant to such Spare Engine Power-by-the-Hour Arrangement.  The
Spare Engines to be included in any Spare Engine Power-by-the-Hour Arrangement
shall consist of equal portions of the Spare Engines with the highest Average
Remaining Cycle Life and lowest Average Remaining Cycle Life (or, in the event
of an odd number of Spare Engines, as equal as possible with one more Spare
Engine with the lowest Average Remaining Cycle Life).  The “Average Remaining
Cycle Life” for a Spare Engine shall be the sum of the remaining cycle life for
each Spare Engine LLP installed on such Spare Engine divided by the total number
of Spare Engine LLPs installed on such Spare Engine.

 

c.                                       Promptly following the effectiveness of
any Spare Engine Power-by-the Hour Arrangement, Contractor shall pay to
Continental in respect of each Spare Engine that is not included in such
arrangement an amount equal to the product of (i) the aggregate amount of
Reconciliation Expenses described in clause (xii) of Paragraph B(5)(a) incurred
prior to the Spare Engine LLP Reconciliation Date attributable to such Spare
Engine LLP and (ii), a fraction, the numerator of which is difference, as of the
Reconciliation Date, between the cycle limit on such Spare Engine LLP and the
actual number of cycles incurred on such Spare Engine LLP since such part was
last replaced, and the denominator of which is the cycle limit on such Spare
Engine LLP.

 

d.                                      With respect to each Spare Engine (other
than any Spare Engine for which Contractor has made a payment in accordance with
clause (c) above), on the date

 

SCHEDULE 3 - 12

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

 

such Spare Engine ceases to be a Spare Engine, Contractor shall pay to
Continental in respect of such Spare Engine an amount equal to the product of
(i) the aggregate amount of Reconciliation Expenses described in clause (xii) of
Paragraph B(5)(a) attributable to such Spare Engine LLP (other than any
Reconciliation Expenses paid pursuant to a Spare Engine Power-by-the-Hour
Arrangement) incurred prior to such date attributable to such Spare Engine LLP
and (ii), a fraction, the numerator of which is difference, as of such date,
between the cycle limit on such Spare Engine LLP and the actual number of cycles
incurred on such Spare Engine LLP since such part was last replaced, and the
denominator of which is the cycle limit on such Spare Engine LLP.

 

 

8.                                       No Reconciliation for Fines, Etc. 
Notwithstanding anything to the contrary contained in this Paragraph B,
Continental shall not be required to incur any cost or make any reconciliation
payment pursuant to this Paragraph B to the extent that such cost or
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.  Continental shall be
liable for 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 Continental or its agents
of any law, statute, judgment, decree, order, rule or regulation of any
governmental or airport authority.

 

SCHEDULE 3 - 13

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

 

Schedule 3 Appendices

 

Appendix 1

 

Base Compensation Rates

Appendix 2

 

Controllable Completion Factor Incentives and Rebates

Appendix 3

 

Reconciliation of Expenses

Appendix 4

 

Incentive Bonuses/Rebates

Appendix 5

 

Insurance Rates

Appendix 6

 

Low Block Hour Utilization Rates

 

SCHEDULE 3 - 14

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

 

Appendix 1 to Schedule 3

 

Base Compensation Rates

 

$***

For each block hour

$***

For each Covered Aircraft for each month in the Term

 

These Base Compensation Rates shall be adjusted to the extent provided pursuant
to the terms of Section 3.02 of this Agreement.

 

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

 

Appendix 2 to Schedule 3

 

Controllable Completion Factor Incentives and Rebates

 

“Controllable Completion Factor Incentive Rate” shall be $***, as adjusted
pursuant to Section 3.02 of this Agreement.

 

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

 

Appendix 3 to Schedule 3

 

Reconciled

 

Schedule 3

 

Statistical

 

 

Expense

 

Reference

 

Driver

 

Rate

 

 

 

 

 

 

 

Terminal Facility Rent at Contractor Airports

 

Sched3.B.5(a)(i)

 

***

 

$

 ***

Property Taxes

 

Sched3.B.5(a)(ii)

 

***

 

$

 ***

Aviation Insurance

 

Sched3.B.5(a)(iii)

 

***

 

$

 ***

Landing Fees

 

Sched3.B.5(a)(iv)

 

***

 

$

 ***

Glycol and De-icing at Contractor Airports

 

Sched3.B.5(a)(v)

 

***

 

$

 ***

Canadian and Mexican Air Navigation

 

Sched3.B.5(a)(vi)

 

***

 

$

 ***

TSA Fees or Charges and any Other Passenger Security Fees or Charges for
Security at all Contractor Airports

 

Sched 3.B.5(a)(vii)

 

***

 

$

 ***

Incentive Programs

 

Sched 3.B.5(a)(viii)

 

***

 

$

 ***

ARINC System Costs

 

Sched 3.B.5(a)(ix)

 

***

 

$

 ***

Landing Gear Overhaul and Landing Gear LLP Costs

 

Sched 3.B.5(a)(x)

 

***

 

$

 ***

Engine LLP Costs

 

Sched 3.B.5(a)(xi)

 

***

 

$

 ***

Spare Engine LLP Costs

 

Sched. 3.B.5(a)(xii)

 

***

 

$

 ***

Engine Power-by-the-Hour Costs

 

Sched 3.B.5(a)(xiii)

 

***

 

$

 ***

 

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

*

To be based upon the terms of any Incentive Program entered into pursuant to
Section 4.16 of this Agreement.

The rates in this Appendix 3 shall be adjusted from time to time with the mutual
agreement of the parties to reflect the actual rates charged to Contractor.

 

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

 

Appendix 4 to Schedule 3

 

Incentive Bonuses/Rebates

 

1.             On Time Bonus/Rebate:  For purposes of Paragraph A(2), the bonus
or rebate, as the case may be, for on-time performance shall be determined as
follows:

 

a.                                      Contractor’s on-time Scheduled Flight
departures to or from each of EWR, CLE and IAH shall be measured monthly. For
the purposes of this Appendix 4, a Scheduled Flight departure is an “on time”
departure only if such Scheduled Flight actually departed the gate not later
than the scheduled departure time. “Excused Departures” are cancelled flights
and those Scheduled Flight departures that were prevented from departing on time
solely because of weather, ATC, late arriving equipment delays, or departures
delayed upon Continental’s request or any combination thereof as determined by
Continental in accordance with its systems operations control center delay
coding protocol.  As of January 2010, numerical delay codes for weather, ATC,
late arriving equipment or Continental’s request are 82, 86, 80, 10, 11, and 13,
respectively.

 

b.                                      If Contractor’s actual percentage of
Scheduled Flight on-time departures for any such calendar month to or from any
of EWR, CLE or IAH (expressed as a percentage of all of Contractor’s Scheduled
Flight departures for any such calendar month to or from such airport, that are
not Excused Departures) is above the Monthly Historical Percentage set forth
below for such airport, then the reconciliation payment for such month shall
include a payment by Continental to Contractor equal to $*** multiplied by the
number of Contractor’s actual Scheduled Flight departures (excluding Excused
Departures) for such month at such airport, multiplied by the excess of
Contractor’s actual percentage of Scheduled Flight on-time departures above such
Monthly Historical Percentage. If Contractor’s actual percentage of Scheduled
Flight on-time departures for any such calendar month to or from any of EWR, CLE
or IAH (expressed as a percentage of all of Contractor’s Scheduled Flight
departures for any such calendar month to or from any of EWR, CLE or IAH,
respectively, that are not Excused Departures) is below the Monthly Historical
Percentage set forth below for such airport, then the reconciliation payment for
such month shall include a payment by Contractor to Continental equal to $***
multiplied by the number of Contractor’s actual Scheduled Flight departures
(excluding Excused Departures) for such month at such airport, multiplied by the
excess of such Monthly Historical Percentage above Contractor’s actual
percentage of Scheduled Flight on-time departures.

 

For purposes of this Appendix 4, the “Monthly Historical Percentage” for any of
EWR, CLE or IAH for any month shall equal the average of the actual number of
Scheduled Flight on-time departures during the respective calendar month during
each of the last five full calendar years prior to the month in question
(expressed as percentages of Contractor’s Scheduled Flight departures for any
such calendar month to or from any of EWR, CLE or IAH, respectively, that are
not Excused Departures); provided, that for the purposes of calculating the
Monthly Historical Percentage, for any month of any prior year during which
Contractor did not have operations hereunder at such airport, the performance
data for such month shall include data for all regional aircraft flights that

 

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

 

month that were operated to or from such airport as Continental Connection or
Continental Express, to the extent that such historical performance data is
available and that Continental in good faith deems reliable and accurate is
available (it being acknowledged, for the avoidance of doubt, that if Contractor
had operations hereunder to or from such airport during any month, then only
Contractor’s performance data to or from such airport that month shall be taken
into account for purposes of calculating the Monthly Historical Percentage).
Should the processes currently utilized by the air traffic control system in the
United States to manage commercial aircraft change in any material way,
Contractor and Continental agree, if requested in writing by either party, to
meet and confer within the next thirty (30) days, in good faith to adjust the
targets.  Additionally, should Continental’s hub flight schedule or ground
handling performance materially change from historical performance levels, if
requested in writing by either party, Contractor and Continental agree to meet
and confer in good faith to adjust the targets.  In either case, should the
parties be unable, despite their good faith efforts, to reach an agreement on
adjustments to the prospective targets to take into account the effect of such
material change, all the on-time incentive provisions (both bonus and rebate)
set forth in this Appendix 4 will cease to be of any force or effect from and
after the end of such thirty (30) day-period.  Notwithstanding the foregoing
definition of Monthly Historical Percentages, the Monthly Historical Percentages
for EWR, CLE or IAH for each of the months during the calendar year 2010 is
hereby stipulated by the parties as being as follows (it being acknowledged that
the Monthly Historical Percentages for months during subsequent calendar years
shall be determined as above provided):

 

 

 

CLE

 

EWR

 

IAH

January

 

***

 

***

 

***

February

 

***

 

***

 

***

March

 

***

 

***

 

***

April

 

***

 

***

 

***

May

 

***

 

***

 

***

June

 

***

 

***

 

***

July

 

***

 

***

 

***

August

 

***

 

***

 

***

September

 

***

 

***

 

***

October

 

***

 

***

 

***

November

 

***

 

***

 

***

December

 

***

 

***

 

***

 

References to “Scheduled Flights” in this Appendix 4 shall not include
Maintenance Flights, ferry flights or other non-revenue flights.

 

2.             Fuel Efficiency Bonus:  At Continental’s expense, Contractor
agrees to implement a Fuel efficiency program modeled on Continental’s Fuel
program as set forth in Exhibit L following the mutual agreement of Contractor
and Continental with respect to the matters set forth in the last sentence of
this paragraph.  Contractor acknowledges that such program is the property of

 

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

 

Continental, shall be deemed confidential by Contractor and, for Contractor but
not for Continental, shall be subject to the provisions of Section 10.07 of the
Agreement. If Contractor achieves the applicable target Fuel efficiency under
such program, then Continental shall pay Contractor a Fuel efficiency bonus
equal to (a) 10% of the annual Fuel savings attributable to the Fuel efficiency
program, less (b) any expenses incurred or reimbursable by Continental under the
terms of the program for its development, implementation or management by
Contractor.  The program shall specify a measurement period and a Fuel savings
measurement mechanism, including target adjustments for stage length, load
factor and flight hour to block hour ratio.

 

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

 

Appendix 5 to Schedule 3

 

Insurance Rates

 

Insurance Type

 

Rate

 

Driver Units

 

 

 

 

 

Hull Insurance

 

$

***

 

per $100 value

 

 

 

 

 

Liability Insurance

 

$

***

 

per 1000 RPMs

 

 

 

 

 

War Risk Insurance

 

$

***

 

per 1000 RPMs and

 

 

$

***

 

per Passenger

 

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

 

Appendix 6 to Schedule 3

 

***

 

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

 

SCHEDULE 4

Return Aircraft Sublease — Supplemental Terms

 

Terms Relating to United 8 Aircraft

 

The terms of the applicable Return Aircraft Sublease for the United Aircraft
listed in Section A.1 of Schedule 2, identified as “United 8 Aircraft,” are
modified and supplemented as follows:

 

Basic Rent

 

The basic rent payable under each Return Aircraft Sublease for United 8 Aircraft
will be the following. The Basic Rent will be $*** per United 8 Aircraft per
month, through the period ending at the end of the month in which the total
number of aircraft months for the Return Aircraft Subleases for the United 8
Aircraft (measured in the aggregate for all United 8 Aircraft) equals two
hundred forty (240) (the “Baseline Date”).  (For purposes of calculating the
Baseline Date, if any partial month in which the applicable Return Aircraft
Sublease commences on or before the 15th of the month, then such month shall
count as a full aircraft month, and, if any partial month in which the
applicable Return Aircraft Sublease commences after the 15th of the month, then
such month shall not count as any portion of an aircraft month.)  During the
month in which the Baseline Date is reached, the basic rent will be $*** per
United 8 Aircraft per month for each aircraft month in excess of two hundred
forty (240) accrued during such month.  For eighteen months after the Baseline
Date, the basic rent will be $*** per United 8 Aircraft per month.  For the
nineteenth month after the Baseline Date and for so long thereafter as such
Return Aircraft Sublease is in effect, the basic rent will be $*** per United 8
Aircraft per month.  Contractor shall provide reasonable documentation and
access to Contractor’s maintenance records so that Continental may substantiate
all charges, maintenance events, operational statistics and expenses
reimbursable hereunder.  The basic rent for partial months will be pro-rated
based on the number of calendar days in such month.  Notwithstanding the payment
terms for basic rent set forth in the applicable aircraft sublease, payment of
basic rent for the United 8 Aircraft for each month will be made on the first
Business Day of such month, or the first Business Day of the term of each
applicable Return Aircraft Sublease, if such Return Aircraft Sublease term
commences after the first Business Day of any month.

 

Landing Gear Charge

 

In addition to the basic rent and engine LLP charges set forth below, Contractor
shall also pay to Continental a charge of $*** for every aircraft cycle flown
after the sublease term commencement by the United 8 Aircraft for so long as
each United 8 Aircraft remains a United 8 Aircraft as compensation for the
consumption of landing gear useful life between overhauls, including the
consumption of the useful life of landing gear LLP. These charges are
non-refundable and are not in any way predicated or contingent upon the
performance of any landing gear maintenance, overhaul or parts replacement. 
Such payment shall be made on the 15th day of the month following the month of
operation (or if such day is not a Business Day, the next Business Day).  If
Contractor incurs out-of-pocket expenses for the scheduled overhaul of landing
gear, including landing gear LLP replacement expenses (excluding removal and
installation

 

SCHEDULE 4 - 1

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

 

expenses and otherwise consistent with Paragraph B(5)(a)(x) of Schedule 3) for
landing gear removed from such United 8 Aircraft, then Continental shall
reimburse Contractor for such expenses, within 30 days of Contractor’s
presentation to Continental of an invoice along with evidence that Contractor
has paid all applicable third parties for such material and services. 
Contractor shall, in a manner consistent with industry best practices, prolong
the life of landing gear assemblies as long as possible before removing for
scheduled maintenance.

 

Engine LLP Charge

 

In addition to the basic rent and landing gear charges set forth above,
Contractor shall also pay to Continental a charge of $*** for every aircraft
cycle flown after the Return Aircraft Sublease term commencement by the United 8
Aircraft for so long as each United 8 Aircraft remains a United 8 Aircraft as
compensation for the consumption of the useful life of engine LLP.  It being
acknowledged that, as of December 22, 2009, Contractor provided the Spare
Engines and Contractor and Continental agreed to reduce the above rate of $***
to $*** for the term and any extension thereof of the Return Aircraft Subleases
for so long as Contractor continues to provide at least 42 Spare Engines.  To
the extent that the number of Spare Engines becomes less than 42 (whether or not
periodically unserviceable in the ordinary course of business), the rate of $***
will be increased by $*** for each such Spare Engine up to a maximum rate of
$***. These charges are non-refundable and are not in any way predicated or
contingent upon the replacement of any engine LLP.  Such payment shall be made
on the 15th day of the month following the month of operation (or if such day is
not a Business Day, the next Business Day).

 

Engine LLP Program

 

If the Engine Maintenance Agreement is amended to provide coverage for
life-limited parts for engines (as defined in Contractor’s maintenance program)
replacement in exchange for a charge per cycle (or a similar arrangement) (an
“LLP Program”) and the engines associated with the United 8 Aircraft pursuant to
the applicable Return Aircraft Sublease are included within the scope of such
LLP Program, then, upon the commencement of such LLP Program and thereafter, for
so long as such engines remain within the scope of an LLP Program, Contractor
shall be relieved of its obligation to pay the engine LLP charge described
above, conditioned upon Contractor making payment to the maintenance provider of
the LLP Program services, for all charges payable under such LLP Program
relating to the cycles (or other operable parameter that may be the basis for
payment under such LLP Program).  Without limiting Contractor’s right to decide
whether or not the engines associated with the United 8 Aircraft are included
within the scope of an LLP Program, Contractor shall keep the engines associated
with the United Aircraft within the scope of the Engine Maintenance Agreement
(excluding any provisions related to such LLP Program), unless otherwise agreed
by Continental, and, if so directed by Continental, Contractor shall include the
engines associated with the United 8 Aircraft within the scope of the LLP
Program, provided, that if the charges to include such engines in the LLP
Program exceeds the per cycle fee set forth in the preceding paragraph, then
Continental will reimburse Contractor for such excess costs.

 

SCHEDULE 4 - 2

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

 

Engine LLP Replacement Expenses

 

If Contractor incurs out-of-pocket expenses for replacement of life-limited
parts for engines (as defined in Contractor’s maintenance program) for the cycle
limit driven replacement of such parts for engines associated under the
applicable Return Aircraft Sublease with the United 8 Aircraft (consistent with
Paragraph B(5)(a)(xi) of Schedule 3), then Continental shall reimburse
Contractor for such expenses, within 30 days of Contractor’s presentation to
Continental of an invoice along with evidence that Contractor has paid all
applicable third parties for such material and services.  Contractor shall, in a
manner consistent with industry best practices, prolong the life of such engine
life-limited parts as long as possible before replacement.

 

Return Aircraft Sublease Term Commencement

 

The term of each Return Aircraft Sublease for the United 8 Aircraft will
commence on the later of the (i) date that such aircraft is released from its
status as a Covered Aircraft and no longer providing Regional Airline Services,
or (ii) date set forth in the following schedule:  (a) December 29, 2009 for the
first two United 8 Aircraft, (b) January 5, 2010 for the third, fourth, fifth
and sixth United 8 Aircraft and (c) April 6, 2010 for the seventh and eighth
United 8 Aircraft.  Upon transition of such aircraft from Covered Aircraft to
United 8 Aircraft, such aircraft shall be fully fueled at Continental’s expense
and Contractor shall deliver to Continental a delivery receipt, including a
description of operational and maintenance history, in a form reasonably
acceptable to Continental.

 

Return Sublease Term Duration

 

The average term of all of the Return Aircraft Subleases for the United 8
Aircraft will be thirty (30) months from May 1, 2010; provided, that the minimum
term for any such Return Aircraft Sublease is twenty-four (24) months from May
1, 2010; and provided further, that if the thirty (30) month average term
described above for such Return Aircraft Subleases is less than the average term
of all the United Other Aircraft operated by Contractor pursuant to the United
Agreement, then, upon Continental’s election, the term of one or more of such
Return Aircraft Subleases for the United 8 Aircraft will be extended such that
the average term (measured from May 1, 2010) of all the Return Aircraft
Subleases for United 8 Aircraft equals the average term for all of the United
Other Aircraft operated by Contractor pursuant to the United Agreement.  If
United elects to extend the term of the United Agreement, then Contractor shall
immediately notify Continental of such election in writing.

 

Each time that United extends the term of the United Agreement Continental may
extend the term of one or more of the Return Aircraft Subleases for United 8 
Aircraft for the term of such extension (but not beyond April 30, 2015), but not
more than the number of Return Aircraft Subleases for United 8 Aircraft that
would cause the total number of Return Aircraft Sublease for United 8 Aircraft
terms extended (including any extension options exercised by Contractor as
provided below) to exceed one Return Aircraft Sublease for United 8 Aircraft for
every two United Other Aircraft covered by such extension of the United
Agreement.  Within twenty (20) days of notice by Contractor to Continental that
United has elected to extend the United Agreement, Continental shall

 

SCHEDULE 4 - 3

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

 

provide notice to Contractor identifying the particular Return Aircraft
Subleases for United 8 Aircraft that Continental elects to extend, if any, as
described above.

 

Each time that United extends the term of the United Agreement; provided, that
Continental is given notice of such election no less than six (6) months prior
to the effective date of such extension, Contractor may extend the term of one
or more of the Return Aircraft Subleases for United 8 Aircraft for the term of
such extension (but not beyond April 30, 2015), but not more than the number of
Return Aircraft Subleases for United 8 Aircraft that would cause the total
number of Return Aircraft Sublease for United 8 Aircraft terms extended
(including any extension options exercised by Continental as provided above) to
exceed one Return Aircraft Sublease for United 8 Aircraft for every two United
Other Aircraft covered by such extension of the United Agreement.  Within twenty
(20) days of notice by Contractor to Continental that United has elected to
extend the United Agreement, Contractor shall provide notice to Continental of
the number of Return Aircraft Subleases of United 8 Aircraft that Contractor
wishes to extend.  Continental shall select the particular United 8 Aircraft for
which the Return Aircraft Sublease(s) will be extended.

 

For the avoidance of doubt, in all events, at such time as the United Agreement
terminates as to a United Aircraft, the term of the Return Aircraft Sublease for
such aircraft shall terminate and the aircraft shall be returned to Continental
in accordance with Section 2.06.

 

Contractor Representations Regarding the United Agreement

 

Contractor warrants and represents that (a) of the thirty-two (32) aircraft to
be operated by Contractor pursuant to the United Agreement (i) the term for
which the United Agreement is applicable to eleven (11) of such aircraft is not
less than twenty-four (24) months, (ii) the term for which the United Agreement
is applicable to the other eleven (11) aircraft is not less than thirty-six (36)
months, and (iii) the term for which the United Agreement is applicable for ten
(10) of such aircraft expires no sooner than December 15, 2010, (b) Contractor
will immediately notify Continental of any notice provided by United related to
any extension of the term of the United Agreement, (c) Contractor will promptly
provide notice of any change to the notice provisions of the United Agreement
relating to the term thereof, and (d) Contractor will provide a true and correct
representation with respect to the term of the United Agreement and any
extension options.

 

Terms Relating to United Other Aircraft and the United Short-Term Aircraft

 

The terms of the applicable Return Aircraft Sublease for the United Aircraft
listed in Section A.2 of Schedule 2, identified as “United Other Aircraft,” and
10 of the aircraft identified in Section B of Schedule 2 as being operated for
United (“United Short-Term Aircraft”) are modified and supplemented as follows:

 

SCHEDULE 4 - 4

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

 

Basic Rent

 

The basic rent payable under each Return Aircraft Sublease for the United Other
Aircraft and the United Short-Term Aircraft is set forth in the following table:

 

***

 

SCHEDULE 4 - 5

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

 

EXHIBIT A
Definitions

 

13D Person — is defined in clause (iii) of “Change of Control” in this
Exhibit A.

 

Additional Aircraft — is defined in Section 2.04.

 

Adjustment Date — is defined in Section 3.02.

 

Administrative Support and Information Services Provisioning Agreement — means
that certain Amended and Restated Administrative Support and Information
Services Provisioning Agreement, dated as of the Effective Date, among
Continental and Contractor and certain of its Affiliates, in the form attached
hereto as Exhibit N (or as otherwise agreed or amended).

 

Affiliate — means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.  With respect to any natural person, the
term “Affiliate” shall additionally mean (1) the spouse or children (including
those by adoption) and siblings of such Person; and any trust whose primary
beneficiary is such Person, such Person’s spouse, such Person’s siblings and/or
one or more of such Person’s lineal descendants, (2) the legal representative or
guardian of such Person or of any such immediate family member in the event such
Person or any such immediate family member becomes mentally incompetent and
(3) any Person controlled by or under the common control with any one or more of
such Person and the Persons described in clauses (1) or (2) preceding.

 

Affiliate CPA — means a capacity purchase agreement and accompanying ancillary
agreements entered into pursuant to Section 2.07, in each case between
Continental and an Affiliate of Contractor that is in the business of providing
passenger air service, with terms and conditions identical to the terms of this
Agreement and the Ancillary Agreements; provided, that the identity of the
parties, the aircraft and the engines shall be revised appropriately; provided
further, that the Capacity Purchase Arrangement shall contain
(i) representations and warranties by such Affiliate regarding conflicts and
defaults coextensive with the representations in Sections 4(g) and 4(h) of the
Guarantee, but without any qualification as to knowledge, (ii) provisions in the
Guarantee reflecting the then-existing partial ownership (if applicable) of such
Affiliate by Guarantor (but otherwise containing the restrictive provisions set
forth in Section 5 of the Guarantee as to Guarantor’s then-existing partial
ownership) and (iii) cross default provisions similar to Sections 8.02(d) and
8.02(e) but relating to this Agreement, and, unless otherwise agreed by the
parties, shall exclude provisions similar to Sections 2.04, 2.06, 2.11, 6.04,
6.05 and 10.01 of this Agreement and, in any provision substantially similar to
Section 6.01(a), all references to $*** million shall be $*** million with
respect to any aircraft with more than 50  passenger seats.

 

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

 

Affiliate Marks — is defined in Section 4.12.

 

Agreement — means this Second Amended and Restated Capacity Purchase Agreement,
dated as of the Effective Date, among Continental and Contractor, as amended
from time to time pursuant to Section 10.04 hereof.

 

Ancillary Agreements — means each of the agreements entered into by Continental
and Contractor substantially in the form of Exhibits B, C, E, F, M, N and P
hereto, together with all amendments, exhibits, schedules and annexes thereto
(including any ground handling agreements entered into pursuant to Exhibit C),
and any other aircraft lease between Continental and Contractor.

 

Annual Commodity CPI Change — means, for any Adjustment Date, the fraction
(expressed as a number rounded to four decimal places) as determined on the 15th
day of the immediately preceding month (or the first Business Day thereafter on
which relevant Commodity CPI figures are publicly available) equal to the
quotient obtained by dividing the simple average of the sum of the Commodity CPI
for each of the last twelve months ending with the penultimate month preceding
such Adjustment Date by the simple average of the sum of the Commodity CPI for
each of the last twelve months ending with such penultimate month of the
preceding year.  (As an example, and for illustrative purposes only, the Annual
Commodity CPI Change for April 1, 2007 would be equal to 206.827 (the simple
average of the sum of the Commodity CPI for the last twelve months ending
February 2007) divided by 201.583 (the simple average of the sum of the
Commodity CPI for the last twelve months ending February 2006), or 1.0260.)

 

Annual CPI Change — means, for any Adjustment Date, the fraction (expressed as a
number rounded to four decimal places) as determined on the 15th day of the
immediately preceding month (or the first Business Day thereafter on which
relevant CPI figures are publicly available) equal to the quotient obtained by
dividing the simple average of the sum of the CPI for each of the last twelve
months ending with the penultimate month preceding such Adjustment Date by the
simple average of the sum of the CPI for each of the last twelve months ending
with such penultimate month of the preceding year.  (As an example, and for
illustrative purposes only, the Annual CPI Change for April 1, 2007 would be
equal to 202.335 (the simple average of the sum of the CPI for the last twelve
months ending February 2007) divided by 196.500 (the simple average of the sum
of the CPI for the last twelve months ending February 2006), or 1.0297.)

 

Audit Period — is defined in Section 3.05.

 

Available Labor Strike Withdrawn Aircraft — is defined in Section 2.07(e)

 

Average Peer Group Rates — means, with respect to any insurance coverage and as
of any date of determination, (x) the insurance rates set forth on Appendix 5 to
Schedule 3, multiplied by (y) the average percentage increase or decrease, as
appropriate, from January 1, 2010 to such date of determination, in the cost of
such insurance coverage for the five regional airlines with annual revenue
passenger miles closest to those of

 

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

 

Contractor, as determined by available information obtained from public sources
or reputable insurance brokers, excluding (i) any such regional airline that
experienced a major loss within the previous three years, and (ii) any regional
airline whose insurance rates are included with its major airline partner(s).

 

Average Remaining Cycle Life — is defined in Paragraph B(7)(b) of Schedule 3.

 

Aviation Insurance — means any airline hull, war risk, or passenger liability
insurance.

 

Base Compensation — is defined in Paragraph A(1) of Schedule 3.

 

Baseline Date — is defined in Schedule 4.

 

Basic Rent — is defined, with respect to any Covered Aircraft, in the Covered
Aircraft Sublease for such Covered Aircraft.

 

Benchmark Controllable Cancellation Number — is defined in Paragraph B(3)(a) of
Schedule 3.

 

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.

 

Capacity Purchase Arrangement — means any capacity purchase agreement or other
arrangement whereby one party operates aircraft on behalf of a second party that
(i) exercises control over the scheduling of flights for such aircraft and
(ii) bears a majority of the financial risk with respect to passenger load on
flights for such aircraft.  For the avoidance of doubt, a pro-rate arrangement
shall not constitute a “Capacity Purchase Arrangement” for the purposes of this
Agreement.

 

Category 2 Conditions — has the meaning contained in Contractor’s flight
operations manual as of the Effective Date.

 

Cause — means the following, each of which shall constitute a breach of this
Agreement: (i) the suspension or revocation of Contractor’s authority to operate
as a scheduled airline, (ii) the ceasing of Contractor’s operations as a
scheduled airline, other than (A) as a result of a Labor Strike or a non-carrier
specific grounding of any of the Contractor Fleets by regulatory or court order
or other governmental action or (B) any other temporary cessation for not more
than 14 consecutive days, (iii) the occurrence of a Labor Strike that shall have
continued for 15 days or (iv) a willful or intentional material breach of this
Agreement by Contractor or any Guarantor that substantially deprives Continental
of the benefits of this Agreement, which breach shall have continued for 45 days
after written notice thereof is delivered by Continental to Contractor.

 

Change of Control — means:

 

(i)                                     Parent consolidates with, or merges with
or into, a Prohibited Person or conveys, transfers, leases or otherwise disposes
of all or substantially all of its assets to a

 

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

 

Prohibited Person, or a Prohibited Person consolidates with, or merges with or
into, Parent in any such event pursuant to a transaction in which the voting
securities of Parent are converted into or exchanged for cash or securities of a
Prohibited Person, except where the holders of voting securities of Parent
immediately prior to such transaction own not less than a majority of the voting
securities of the surviving or transferee corporation immediately after such
transaction, in each case other than any such transaction between Parent on the
one hand, and Continental and/or any of its Subsidiaries on the other;

 

(ii)                                  the direct or indirect acquisition by a
Prohibited Person or any Person directly or indirectly controlling a Prohibited
Person of beneficial ownership of 15% or more of the capital stock or voting
power of Parent;

 

(iii)                               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 (ii) above, of beneficial
ownership of more than 25% of the capital stock or voting power of Parent, other
than (A) Continental or its Subsidiaries or (B) any “person” or “group” that is
a Person who has a Schedule 13D 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
Parent’s voting securities (a “13D Person”), so long as (1) such 13D Person is
principally engaged in the business of managing investment funds for
unaffiliated securities investors and, as part of such 13D Person’s duties as
agent for fully managed accounts, holds or exercises voting or dispositive power
over Parent’s voting securities, (2) such 13D Person was a Person who had a
Schedule 13G on file with the Securities and Exchange Commission pursuant to the
requirements of Rule 13d-1 under the Exchange Act with respect to its holdings
of Parent’s voting securities, and became a 13D Person pursuant to
Rule 13d-1(f)(1), and (3) such 13D Person acquires and continues to have
beneficial ownership of Parent’s voting securities pursuant to trading
activities undertaken in the ordinary course of such 13D Person’s business and
not with the purpose nor the effect, either alone or in concert with any 13D
Person, of exercising the power to direct or cause the direction of the
management and policies of Parent or of otherwise changing or influencing the
control of Parent, 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; provided, that a “Change of Control” shall
not occur pursuant to this clause (iii) if such “person” or “group” reduces its
ownership of the capital stock or voting power of Parent, 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;

 

(iv)                              the liquidation or dissolution of Parent in
connection with which Contractor ceases operations as an air carrier;

 

(v)                                 the sale, transfer or other disposition of
all or substantially all of the airline assets of Parent or Contractor on a
consolidated basis directly or indirectly to a

 

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

 

Prohibited Person or its Affiliate, whether in a single transaction or a series
of related transactions; or

 

(vi)                              the execution by Parent or Contractor of bona
fide definitive agreements, the consummation of the transactions contemplated by
which would result in a transaction described in the immediately preceding
clauses.

 

Charter Aircraft — is defined in Section 2.06(a).

 

Commodity Aircraft Deficit — is defined in Section 2.08(h).

 

Commodity CPI — means (i) the Consumer Price Index for All Urban Consumers —
U.S. City Average, All Items less food and energy, Not Seasonally Adjusted Base
Period: 1982-84 = 100, as published by the Bureau of Labor Statistics, United
States Department of Labor, or (at any time when the Bureau of Labor Statistics
is no longer publishing such Index) as published by any other agency or
instrumentality of the United States of America, or (ii) at any time after the
index described in clause (i) shall have been discontinued, any reasonably
comparable replacement index or other computation published by the Bureau of
Labor Statistics or any other agency or instrumentality of the United States of
America.  If any such index shall be revised in any material respect (such as to
change the base year used for computation purposes), then all relevant
determinations under this Agreement shall be made in accordance with the
relevant conversion factor or other formula published by the Bureau of Labor
Statistics or any other agency or instrumentality of the United States of
America, or (if no such conversion factor or other formula shall have been so
published) in accordance with the relevant conversion factor or other formula
published for that purpose by any nationally recognized publisher of such
statistical information.

 

Commodity Price — means, for any Business Day, the spot price per barrel of West
Texas Intermediate light sweet crude oil for delivery in Cushing, Oklahoma,
stated in U.S. Dollars, as published under the heading “Spot Crude Price
Assessments: U.S.:WTI” in the issue of Platt’s Oilgram that reports prices
effective on such date; provided that if no such price is published on a
particular Business Day, then the price for such date shall be the price most
recently published prior to such date, and if the above publication ceases to be
published during the term hereof, its successor publication shall be used or, if
there is no successor, then a comparable published index shall be substituted in
replacement thereof.

 

Commodity Replacement Event — means a First Commodity Replacement Event or a
Second Commodity Replacement Event.

 

Commodity Replacement Period — is defined in Section 2.08(f).

 

Commodity Withdrawal Event — means a First Commodity Withdrawal Event or a
Second Commodity Withdrawal Event.

 

Commodity Withdrawal Period — is defined in Section 2.08(a).

 

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

 

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 Currencies — means inflight currency coupons issued by Continental
that may only be purchased at any Continental eService Center and may only be
redeemed for alcoholic beverages or headsets on any Continental or Contractor
flight.

 

Continental Expenses — is defined in Section 3.04(a).

 

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 behalf of Continental to Contractor of ground handling
services at the airports specified therein.

 

Continental Hub Airport — means (i) George Bush Intercontinental Airport in
Houston, Texas (IAH), Hopkins International Airport in Cleveland, Ohio (CLE) and
Liberty International Airport in Newark, New Jersey (EWR), and (ii) as of any
date of determination, any other airport at which Contractor operates an average
of more than 50 Scheduled Flights per day during the 90 days prior to such date
of determination.

 

Continental Marks — is defined in Exhibit G.

 

Continental Premium Surcharge Amount — is defined in Paragraph B(6)(d)(III) of
Schedule 3.

 

Contractor — means ExpressJet and its successors and permitted assigns.

 

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’s Charter Service — is defined in Section 10.01(b).

 

Contractor Fleet — means all or any of the following fleets of Covered Aircraft:
(i) ERJ Aircraft if such aircraft constitutes one or more Covered Aircraft,
(ii) any other type of regional jet aircraft (whether manufactured by Embraer or
another manufacturer) if such aircraft constitutes one or more Covered Aircraft,
and (iii) any portion of such group of aircraft consisting of one or more models
(for example, ERJ-135s and ERJ-145s, or ERJ-145LRs and ERJ-145XRs), or any
subgroup of such aircraft as determined from time to time by regulatory or court
order or other governmental action (for example, all

 

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such aircraft manufactured within specific time frames), in each case, if such
aircraft constitutes one or more Covered Aircraft.

 

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 Contractor to Continental 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(6)(e)(IV) of
Schedule 3.

 

Contractor Premium Surcharge Limit — is defined in Paragraph B(6)(e)(III) of
Schedule 3.

 

Contractor Premium Surcharge Overflow Amount — is defined in
Paragraph B(6)(e)(V) of Schedule 3.

 

Contractor Services — is defined in the Master Facility and Ground Handling
Agreement.

 

Controllable Completion Factor Incentive Rate — is defined in Appendix 2 to
Schedule 3.

 

Controllable Cancellation — means a cancellation of a Scheduled Flight that is
not an Uncontrollable Cancellation.

 

Controllable Cancellation Factor — means, for any period of determination, the
percentage of Scheduled Flights completed during such period, excluding
Uncontrollable Cancellations.

 

Controllable On-Time Departure — means a flight departing within 15 minutes of
scheduled departure time, as determined solely by ACARS, excluding (i) cancelled
flights, (ii) flights impacted by ATC or weather-related delays, (iii) flights
impacted by Labor Strike, (iv) unscheduled, extra section or diversion
departures, or (v) departures delayed upon Continental’s request and not
otherwise impacted by weather or ATC.

 

Controllable On-Time Departure Rate — means, for any period of determination,
the percentage of Scheduled Flights that are Controllable On-Time Departures.

 

Covered Aircraft — means all of the aircraft listed on Schedule 1 (as amended
from time to time pursuant to the provisions of this Agreement) and presented
for service by Contractor, as adjusted from time to time for additions and
withdrawals pursuant to Article II, Section 4.18, Article VIII and
Section 10.01(b) (it being understood by the parties hereto that Schedule 1
shall be revised from time to time to reflect any such additions and
withdrawals).

 

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Covered Aircraft Sublease — means the Amended and Restated Covered Aircraft
Sublease (or a lease) substantially in the form of the Exhibit B (or as
otherwise agreed or amended) between Continental and Contractor, pursuant to
which Contractor subleases (or leases) a Covered Aircraft from Continental.

 

CPA Aircraft — means any regional aircraft operated by (i) Contractor under a
Capacity Purchase Arrangement (including this Agreement) with Continental and
(ii) an Affiliate of Contractor under a Capacity Purchase Arrangement or
Affiliate CPA entered into as a result of Contractor’s election pursuant to
Section 2.04, 2.05, 2.07 or 2.08; but excluding (x) Make-Whole Aircraft and
(y) following the United Merger, any aircraft subject to a Capacity Purchase
Arrangement between either Contractor or, in the event of a merger of Contractor
and Atlantic Southeast Airlines, Inc. (“ASA”), ASA and United, which Capacity
Purchase Arrangement was in effect as of the earlier of (a) the Effective Date
or (b) the effective time of the United Merger.  For the avoidance of doubt,
regional aircraft operated by SkyWest Airlines, Inc. (“SA”) for United shall not
be CPA Aircraft except to the extent such aircraft are operated by SA as a
result of the provisions of Section 2.04, 2.05, 2.07 or 2.08 hereof.

 

CPA Records — is defined in Section 3.05.

 

CPA Target Income — is defined in Section 3.07.

 

CPI — means (i) the Consumer Price Index for All Urban Consumers — U.S. City
Average, All Items, Not Seasonally Adjusted Base Period: 1982-84 = 100, as
published by the Bureau of Labor Statistics, United States Department of Labor,
or (at any time when the Bureau of Labor Statistics is no longer publishing such
Index) as published by any other agency or instrumentality of the United States
of America, or (ii) at any time after the index described in clause (i) shall
have been discontinued, any reasonably comparable replacement index or other
computation published by the Bureau of Labor Statistics or any other agency or
instrumentality of the United States of America.  If any such index shall be
revised in any material respect (such as to change the base year used for
computation purposes), then all relevant determinations under this Agreement
shall be made in accordance with the relevant conversion factor or other formula
published by the Bureau of Labor Statistics or any other agency or
instrumentality of the United States of America, or (if no such conversion
factor or other formula shall have been so published) in accordance with the
relevant conversion factor or other formula published for that purpose by any
nationally recognized publisher of such statistical information.

 

Disposed Aircraft — means any aircraft withdrawn from the capacity purchase
provisions of this Agreement pursuant to Section 2.08 which, subsequent to such
withdrawal, either (a) has been returned (or is subject to a binding commitment
to be returned in connection with such withdrawal) to the head lessor, security
trustee or any financing party under an applicable head lease, mortgage or
security agreement, whether in connection with the end of the term of such
lease, or otherwise, (b) has been sold, assigned, leased or otherwise
transferred (or is subject to a binding commitment for sale, assignment, lease
or transfer in connection with such withdrawal) by Continental to a third party,
or (c) is the subject of an impairment or restructuring charge by Continental.

 

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DOT — means the United States Department of Transportation.

 

Effective Date — means November 12, 2010.

 

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 Holdings, Inc., dated August 5, 1996, Letter of
Agreement No. GPJ-004/96 between Embraer and XJT Holdings, Inc., dated August 5,
1996, Letter of Agreement No. PCJ-004A/96 among Embraer, Continental and XJT
Holdings, Inc., dated August 31, 1996, Purchase Agreement No. DCT-054/98,
between Embraer and XJT Holdings, Inc., dated December 23, 1998, Letter of
Agreement No. DCT-059/2000 between Embraer and XJT Holdings, Inc., dated
October 27, 2000, Letter of Agreement No. DCT-055/98 between Embraer and XJT
Holdings, Inc., dated December 23, 1998, Letter of Agreement No. DCT-058/2000
between Embraer and XJT Holdings, Inc., dated October 27, 2000, and EMB-135
Financing Letter of Agreement among Continental, Embraer and XJT Holdings, Inc.,
dated March 23, 2000, in each case including such amendments and supplements as
were incorporated by reference in XJT Holding Inc.’s registration statement on
Form S-1 (Registration No. 333-64808) as Exhibits 10.12 — 10.19 thereto.

 

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.

 

Engine LLP — means Engine life-limited parts as defined in the Engine
Maintenance Agreement, excluding any Spare Engine LLP.

 

Engine Maintenance Agreement — means the contract entered into between
Contractor and Rolls Royce Corporation, dated as of September 28, 2004 for the
maintenance of the Engines, as amended and supplemented or replaced from time to
time.

 

ERJ Aircraft — means any Embraer ERJ-135 or ERJ-145 aircraft.

 

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 6.04.

 

Exchange Act — is defined in clause (iii) of “Change of Control” in this
Exhibit A.

 

Excused Departure — is defined in Appendix 4 to Schedule 3.

 

Existing CPA — is defined in the first whereas clause to this Agreement.

 

Expiration Aircraft — is defined in Section 2.04.

 

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ExpressJet — means ExpressJet Airlines, Inc., a Delaware corporation.

 

FAA — means the United States Federal Aviation Administration.

 

FCR Factor — is defined in Paragraph B(3)(a) 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).

 

First Commodity Replacement Event — means any date, from time to time, after
Continental shall have exercised its right under Section 2.08(a) and on which,
for the 90 days immediately preceding such date, the average Commodity Price
shall have been $*** per barrel or lower; provided, that the measurement period
for any First Commodity Replacement Event may not overlap with the measurement
period for any Commodity Withdrawal Event for which a notice is delivered by
Continental pursuant to Section 2.08(b) (and thus may not begin until the day
after the date of any Commodity Withdrawal Event, if any, that may otherwise
have occurred during such 90-day period).

 

First Commodity Withdrawal Event — means any date, from time to time, on which,
for the 90 days immediately preceding such date, the average Commodity Price
shall have been $*** per barrel or higher; provided, that the measurement period
for any First Commodity Withdrawal Event may not overlap with the measurement
period for any Commodity Replacement Event for which a notice is delivered
pursuant by Contractor to Section 2.08(g) (and thus may not begin until the day
after the date of any Commodity Replacement Event, if any, that may otherwise
have occurred during such 90-day period).

 

Flight Cancellation Reconciliation — is defined in Paragraph B(3) of Schedule 3.

 

Flight Hour Agreements — means, collectively, (i) the Engine Maintenance
Agreement, (ii) that certain agreement relating to Avionics between Contractor
and Honeywell, (iii) that certain agreement relating to Starter Control System
between Contractor and Honeywell, (iv) that certain agreement relating to
Lighting between Contractor and Honeywell, (v) that certain agreement relating
to PRSOV between Contractor and Honeywell, (vi) that certain agreement relating
to AHRS between Contractor and Honeywell, (vii) that certain agreement relating
to Sensors between Contractor and Goodrich, (viii) that certain agreement
relating to Access between Contractor and Goodrich, (ix) that certain agreement
relating to ECS between Contractor and Hamilton Sundstrand, (x) that certain
agreement relating to Wheels and Brakes between Contractor and Goodrich,
(xi) that certain agreement relating to Tires between Contractor and Goodyear,
(xii) that certain agreement relating to APU between Contractor and Hamilton
Sundstrand, in each case in effect as of the Effective Date, and (xiii) any
replacement of any of the foregoing which has been approved by Continental
pursuant to Section 10.18.

 

Flight Related Revenue — is defined in Section 2.02.

 

Forecasted Passengers — means, for any month, the forecasted Revenue Onboards
derived from the Final Monthly Schedule for the previous month.

 

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Fuel — means any fuel customarily used as aviation fuel.

 

Fuel Purchasing Agreement — means that certain Fuel Purchasing Agreement, dated
as of the Effective Date, between Continental and Contractor, in the form
attached hereto as Exhibit F (or as otherwise agreed or amended).

 

Growth Aircraft — is defined in Section 2.04(a).

 

Guarantor — means each of (i) Parent, (ii) ExpressJet Holdings, Inc., a Delaware
corporation, (iii) XJT Holdings, Inc., a Delaware corporation, and (iv) Atlantic
Southeast Airlines, Inc., a Georgia corporation.

 

Guaranty — means that certain Guaranty Agreement, dated as of the Effective
Date, between Guarantor and Continental.

 

Identification — means the Continental Marks, the aircraft livery set forth on
Exhibit G, 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.

 

Incentive Program Costs — means the out-of-pocket costs or expenses arising
directly from the implementation of any incentive program implemented pursuant
to Section 4.16, excluding overhead and general operating expenses, including,
without limitation, salaries.

 

Indemnified Party — is defined in Section 7.03.

 

Indemnifying Party — is defined in Section 7.03.

 

Indemnity Notice — is defined in Section 7.03.

 

Invoiced Amount — is defined in Section 3.06(a).

 

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 resulting in a work stoppage.

 

Landing Gear LLP — means life-limited parts for landing gear as defined in
Contractor’s maintenance program.

 

LLP Program — is defined in Schedule 4.

 

Maintenance Flight — is defined in Section 2.01(c).

 

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

 

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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.

 

Make-Whole Aircraft — is defined in Section 2.04(d).

 

Master Facility and Ground Handling Agreement — means that certain Master
Facility and Ground Handling Agreement, dated as of the Effective Date, between
Continental and Contractor, in the form attached hereto as Exhibit C (or as
otherwise agreed or amended).

 

Minimum Percentage — is defined in Section 2.04(c).

 

Monthly Historical Percentage — is defined in Appendix 4 to Schedule 3.

 

Non-Revenue Pass Travel Privileges — means (i) business-related positive space
travel privileges and (ii) standby business and personal use travel privileges.

 

Other Subleased Aircraft — means all aircraft (i) identified in Section D of
Schedule 2 or (ii) listed on Schedule 1 or Schedule 2 (other than Covered
Aircraft) that are subleased by Continental from time to time.

 

Parent — means SkyWest, Inc., a Utah corporation, and its successors and
permitted assigns.

 

Parked Aircraft — means all aircraft identified in Section C of Schedule 2, as
adjusted from time to time if and when any such aircraft become Covered Aircraft
or Other Subleased Aircraft.

 

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.

 

Prohibited Person — means (i) an air carrier (other than Continental and its
successors and any Subsidiary thereof or Parent or any Guarantor), 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), and (ii) any executive officer, as of the Effective Date or any date
of determination, 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 the Revenue Threshold as of the date of determination
and any entity in which such current executive officer is an officer or 10%
shareholder.

 

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Prohibited Transfer — is defined in Section 5.03.

 

Proposed Schedule — is defined in Section 2.01(b).

 

Rate Reset Aircraft — is defined in Section 2.11(b).

 

Reasonable Operating Constraints and Conditions — means the operating
constraints and conditions for Scheduled Flights set forth on Exhibit J.

 

Reconciled Expenses — is defined in Paragraph B(5)(a) of Schedule 3.

 

Regional Airline Services — means the provisioning by Contractor to Continental
of Scheduled Flights and related ferrying using the Covered Aircraft in
accordance with this Agreement.

 

Replacement Aircraft — is defined in Section 2.05(a).

 

Replacement Date — is defined in Section 2.05(b).

 

Reset Rate — is defined in Section 2.11(b).

 

Return Aircraft Sublease — means the sublease (or lease) in effect immediately
prior to the Effective Date between Continental and Contractor, pursuant to
which Contractor subleases (or leases) a United Aircraft or a Charter Aircraft
from Continental.

 

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 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 twelve months ending on
December 31, 2000.

 

Savings — is defined in Section 3.07.

 

Scheduled ASMs — means, for any period of calculation, the available seat miles
for all Scheduled Flights during such period of calculation.

 

Scheduled Flight — is defined in Section 2.01(b).

 

Second Commodity Replacement Event — means any date, from time to time, after
Continental shall have exercised its right under Section 2.08(a) and on which,
for the 90 days immediately preceding such date, the average Commodity Price
shall have been $*** per barrel or lower; provided, that the measurement period
for any Second Commodity Replacement Event may not overlap with the measurement
period for any Commodity Withdrawal Event for which a notice is delivered by
Continental pursuant to

 

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Section 2.08(b) (and thus may not begin until the day after the date of any
Commodity Withdrawal Event, if any, that may otherwise have occurred during such
90-day period).

 

Second Commodity Withdrawal Event — means any date, from time to time, on which,
for the 90 days immediately preceding such date, the average Commodity Price
shall have been $*** per barrel or higher; provided, that the measurement period
for any Second Commodity Withdrawal Event may not overlap with the measurement
period for any Commodity Replacement Event for which a notice is delivered by
Contractor pursuant to Section 2.08(g) (and thus may not begin until the day
after the date of any Commodity Replacement Event, if any, that may otherwise
have occurred during such 90-day period).

 

Similar Economic Term Transaction — is defined in Section 2.05(a).

 

SkyWest Merger — means the legal merger contemplated by the Agreement and Plan
of Merger, dated as of August 3, 2010, by and among Parent, Express Delaware
Merger Co., an indirect, wholly-owned subsidiary of Parent, and ExpressJet
Holdings, Inc., the parent of Contractor.

 

Spare Aircraft — means any Covered Aircraft that is designated by Contractor as
spare aircraft pursuant to Section 2.01(d), which may be used by Contractor to
replace another aircraft in the operation of a Scheduled Flight that otherwise
would be cancelled or as otherwise provided in Section 2.01(d).

 

Spare Engine — means all of the engines listed on Section E of Schedule 2;
provided, that any engine that (i) ceases to be used from time to time in
support of Covered Aircraft or (ii) becomes subject to an arrangement pursuant
to which it is expected to be used in support of aircraft other than Covered
Aircraft, Charter Aircraft or United Aircraft shall cease to be a Spare Engine
(it being understood by the parties hereto that Section E of Schedule 2 shall be
revised from time to time to remove engines that are no longer Spare Engines and
to include engines that are in replacement as agreed by Continental and
Contractor).

 

Spare Engine LLP — means engine life-limited parts as defined in the Engine
Maintenance Agreement and installed on Spare Engines.

 

Spare Engine LLP Reconciliation Date — is defined in Paragraph B(7)(d) of
Schedule 3.

 

Spare Engine Power-by-the-Hour Arrangement — is defined in Paragraph B(7)(b) of
Schedule 3.

 

Storage Sublease — means the Storage Sublease (or a lease) substantially in the
form of the Exhibit P(1) (or as otherwise agreed or amended) between Continental
and Contractor, pursuant to which Contractor subleases (or leases) a Parked
Aircraft, Other Subleased Aircraft or other aircraft from Continental pursuant
to the terms of this Agreement. 

 

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(1)  Form of Storage Sublease to be agreed upon by Contractor and Continental
prior to the Effective Date with both parties acting reasonably and in good
faith

 

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Storage Sublease shall also include any deemed Storage Sublease as provided in
Section 2.09(c).

 

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 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
***% of the aggregate Scheduled ASMs in any three consecutive calendar months,
or at least ***% of the aggregate Scheduled ASMs in any consecutive 45-day
period, in each case excluding the effect of Uncontrollable Cancellations;
provided, that if the average number of block hours flown per Covered Aircraft
during such period is more than the average number of block hours flown per
Covered Aircraft during the three consecutive calendar months (or 45 days, as
applicable) immediately preceding the period first measured, 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 the average number
of block hours flown per Covered Aircraft during prior three consecutive
calendar month period (or 45 days, as applicable); 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 ***% 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.

 

Target Savings — is defined in Section 3.07.

 

Term — has the meaning set forth in Section 8.01, as earlier terminated pursuant
to Section 8.02, if applicable, and any Wind-Down Period.

 

Terminal Facilities — means “Terminal Facilities” as such term is defined in the
Master Facility and Ground Handling Agreement.

 

Termination Date — means the date of early termination of this Agreement, as
provided in a notice delivered from one party to the other pursuant to
Section 8.02, or, if no such early termination shall have occurred, the date of
the end of the Term.

 

TSA — means the United States Transportation Security Administration.

 

Uncontrollable Cancellation — means a cancellation of a Scheduled Flight that is
(A) solely weather-related, air traffic control-related or an event described in
Paragraph B(3)(c) of Schedule 3, in each case as coded on Contractor’s
operations reports

 

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in accordance with Continental’s standard coding policies and pursuant to
Paragraph B(3)(e) of Schedule 3, it being understood and agreed that if
Continental’s operations are subject to the same circumstance giving rise to the
cancellation and Continental does not cancel flights as a result (except where
such circumstances apply differently to Contractor’s aircraft type and
Continental’s aircraft type), such cancellation shall be a Controllable
Cancellation, (B) flights cancelled due to aircraft damage caused by Continental
or its agents, (C) the result of a non-carrier specific grounding of any
Contractor Fleet by regulatory or court order or other governmental action,
(D) cancellations on any day during which a Labor Strike is continuing or
(E) cancellations due to extraordinary events beyond Contractor’s reasonable
control, it being understood and agreed that if Continental’s operations are
subject to the same circumstance giving rise to the cancellation and Continental
does not cancel flights as a result, such cancellation shall be a Controllable
Cancellation.

 

United — means United Airlines, Inc., a Delaware corporation, and its successors
and assigns.

 

United 8 Aircraft — is defined in Section 2.06(a).

 

United Agreement — means that certain United Express Agreement, as amended,
dated December 1, 2009, by and among Contractor and United.

 

United Aircraft — is defined in Section 2.06(a).

 

United Merger — means the legal merger contemplated by the Agreement and Plan of
Merger, dated as of May 2, 2010, by and among UAL Corporation, Continental and
JT Merger Sub Inc.

 

United Other Aircraft — is defined in Section 2.06(a).

 

United Short-Term Aircraft — is defined in Section 2.06(a).

 

Wind-Down Period — means the period after the Termination Date and until the
time when the last Covered Aircraft has been withdrawn from the capacity
purchase provisions of this Agreement.

 

Wind-Down Schedule — means the schedule, determined as provided in Article VIII
of this Agreement, for Covered Aircraft to be withdrawn from the capacity
purchase provisions of this Agreement.

 

Withdrawal/Rate Reset Notice — is defined in Section 2.11(b).

 

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