EX-10.1



 





Exhibit 10.1




EXECUTION COPY




BLOCKED SPACE AGREEMENT




Between




Polar Air Cargo Worldwide, Inc.

and




DHL Network Operations (USA), Inc.




DATED JUNE 28, 2007



[*] = Portions of this exhibit have been omitted pursuant to a Confidential Treatment Request.
An unredacted version of this exhibit has been filed separately with the
Commission.


 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. Definitions and Rules of Construction
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Rules of Construction
	 	 	1	 
	2. Service Parameters and Blocked Space Commitments
	 	 	2	 
	2.1 Core Network
	 	 	2	 
	2.2 Schedule, Core Service
	 	 	2	 
	2.3 Blocked Space
	 	 	2	 
	2.4 Blocked Space Rates and Blocked Space Fee
	 	 	3	 
	2.5 Air Transportation Services and Alternative Air Transportation Services
	 	 	3	 
	2.6 Priority
	 	 	3	 
	2.7 Flexibility
	 	 	4	 
	2.8 Performance Standards
	 	 	5	 
	2.9 Operations
	 	 	9	 
	2.10 Compliance
	 	 	10	 
	2.11 Independent Services
	 	 	11	 
	2.12 Cooperation with other DHL Entities
	 	 	11	 
	2.13 Exercise of the Rights of Company
	 	 	11	 
	3. Remuneration
	 	 	12	 
	3.1 Blocked Space Fee
	 	 	12	 
	3.2 Variable Fee
	 	 	12	 
	3.3 The “Over Pivot” Charge
	 	 	12	 
	3.4 Additional DHL Material Charges
	 	 	12	 
	3.5 Other Fees, Charges and Offsets
	 	 	12	 






 









 






	 	 	 	 	 
	 	 	Page	 
	4. Payment
	 	 	12	 
	5. Term and Termination
	 	 	13	 
	5.1 Term
	 	 	13	 
	5.2 Termination for Event of Default, Liquidated Damages
	 	 	14	 
	5.3 Termination for the Occurrence of Change of Control
	 	 	17	 
	5.4 Remedies
	 	 	18	 
	6. Obligations of DHL
	 	 	21	 
	7. Management and Management Escalation Procedure
	 	 	23	 
	7.1 Responsible Managers
	 	 	23	 
	7.2 Operations Council
	 	 	23	 
	7.3 Senior Managers
	 	 	24	 
	7.4 Arbitration
	 	 	24	 
	8. General Indemnification
	 	 	25	 
	8.1 Indemnities by Company
	 	 	25	 
	8.2 Indemnities by DHL
	 	 	26	 
	8.3 Limitations on Indemnification
	 	 	26	 
	8.4 Survival of Indemnities
	 	 	26	 
	8.5 Notification of Claim
	 	 	26	 
	 
	 	 	 	 
	10. Representations and Warranties
	 	 	28	 
	11. Assignment
	 	 	30	 
	12. Notices
	 	 	30	 
	13. Force Majeure
	 	 	31	 
	14. Governing Law
	 	 	31	 
	15. Miscellaneous
	 	 	31	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	15.1 Relationship Between the Parties
	 	 	31	 
	15.2 Entire Agreement; Amendments; Waivers
	 	 	32	 
	15.3 Construction; Severability; Third Party Beneficiary
	 	 	32	 
	15.4 Execution in Counterparts
	 	 	33	 
	15.5 Expenses
	 	 	33	 
	15.6 Further Assurances
	 	 	33	 
	15.7 Taxes
	 	 	33	 
	15.8 Confidentiality and Publicity
	 	 	33	 
	15.9 Waiver; Drafting and Review; Headings; Authority
	 	 	34	 
	ATTACHMENTS
	 	 	 	 






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BLOCKED SPACE AGREEMENT




     This Blocked Space Agreement (the “Agreement”) dated as of June 28, 2007, is between Polar Air
Cargo Worldwide, Inc., a Delaware corporation (“Company”) and DHL Network Operations (USA), Inc.,
an Ohio corporation (“DHL”) (each a “Party” and together, the “Parties”).



     WHEREAS, Company is a U.S.-certificated airline operating scheduled air cargo transportation
services, including services between points of origin and points of destination of interest to DHL
in the U.S. and Asia; and



     WHEREAS, DHL is a licensed freight forwarder and express delivery services provider and
desires to obtain space for its shipments on services operated by Company, in particular on those
Company services between points of origin and points of destination of interest to DHL in the U.S.
and Asia;



     WHEREAS, Company is willing to supply air cargo space to DHL on Company’s U.S.-Asia and other
scheduled services in accordance with the terms and conditions set forth herein;



     NOW, THEREFORE, in consideration of the promises, mutual covenants and agreements set forth
herein, and other good and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:



1. Definitions and Rules of Construction




1.1 Definitions




     As used in this Agreement, the terms set forth in Attachment 1.1 shall have the meanings
ascribed to them therein. In addition to the terms defined in Attachment 1.1, certain other terms
are defined elsewhere in this Agreement and, whenever such terms are used in this Agreement, they
have their respective defined meanings.



     Technical and trade terms not otherwise defined herein shall have the meanings assigned to
them as generally accepted in the United States air cargo industry. All monetary amounts contained
in this Agreement refer to United States dollars.



1.2 Rules of Construction




     The following rules of construction apply to this Agreement:




	 	(a)	 	the singular includes the plural and the plural includes the singular;
	 
	 	(b)	 	“or” is not exclusive and “include” and “including” are not limiting;
	 
	 	(c)	 	“hereby”, “herein”, “hereof”, “hereunder”, “the Agreement”, “this Agreement”,
or any like words refer to this Agreement;




 









 






	 	(d)	 	a reference to Applicable Law includes any amendment or modification to such
Applicable Law after the date hereof, and any rules or regulations issued thereunder or
any Applicable Law enacted in substitution or replacement therefore;
	 
	 	(e)	 	a reference to a Person includes its permitted successors and assigns;
	 
	 	(f)	 	a reference to a Section, Exhibit, Attachment, Appendix or Schedule without
further reference is to the relevant Section, Exhibit, Attachment, Appendix or Schedule
of this Agreement;
	 
	 	(g)	 	any right may be exercised at any time and from time to time unless specified
otherwise herein;
	 
	 	(h)	 	all obligations are continuing obligations unless specified otherwise herein;
	 
	 	(i)	 	all Attachments to this Agreement shall have the same force and effect as if
set out in full herein;
	 
	 	(j)	 	the captions, headings, and arrangements of the Sections, and portions thereof
are for convenience only and shall not affect, limit or amplify the provisions of this
Agreement; and
	 
	 	(k)	 	unless the context dictates otherwise, throughout this Agreement references to
DHL Material shall include Additional DHL Material.





2. Service Parameters and Blocked Space Commitments





	2.1	 	Core Network





     As of the BSA Commencement Date, Company shall operate, or arrange to operate, a series of
scheduled air cargo flights between and among the points specified in
Attachment 2.1 (the “Core
Network”).




	2.2	 	Schedule, Core Service





     Company agrees to operate flights within the Core Network over routings on specified days of
the week (the “Flights”) in accordance with the timetable set forth in Attachment 2.1 (the
“Schedule”). The Schedule shall be adjusted periodically by mutual agreement in order to take into
account seasonal weather and wind variability. Each of the Schedule’s origin-destination services
on which capacity is to be blocked pursuant to Section 2.3 below shall be deemed a core service
(“Core Service”).



2.3 Blocked Space




     DHL shall reserve and Company shall allocate to DHL, air cargo capacity on each of the Core
Services comprising the Core Network by day of week, ULD type and ULD position in accordance with
Attachment 2.3 (the “DHL Blocked Space”).



2









 






	2.4	 	Blocked Space Rates and Blocked Space Fee





     The rates to be paid by DHL for the DHL Blocked Space (the “Blocked Space Rates”) shall be
agreed upon not less than thirty (30) days prior to the BSA Commencement Date and set forth in
Attachment 2.4(a). The Blocked Space Rates shall be adjusted periodically as agreed by the Parties
after taking into consideration inflation and other fees, charges or levies not in force or
anticipated by the Parties as of the date hereof; [*].



     The Blocked Space Fee, as provided for in Section 3.1, shall be calculated by utilizing the
applicable Blocked Space Rate in the formula set forth in Section 3 of this Agreement. The Blocked
Space Fee also shall include any surcharges (including security surcharges and fuel surcharges,
calculated as set forth in Attachment 2.4(b)) and other fees applicable at the time.




	2.5	 	Air Transportation Services and Alternative Air Transportation Services





     Subject to Applicable Law and the terms of this Agreement, until such time as DHL relinquishes
DHL Blocked Space pursuant to Section 2.7.1 of this Agreement, Company shall reserve the DHL
Blocked Space for DHL Material exclusively. So long as tendered DHL Material falls within the
capacity parameters of the DHL Blocked Space, Company shall transport all such DHL Material on the
intended Core Services of the Core Network (collectively, the “Air Transportation Services”).
Without limiting any of DHL’s rights herein, in the event that any DHL Material is tendered for
transportation and is not transported by Company on its originally intended Flight, Company shall
transport, or arrange for the transport of, such DHL Material to its original intended destination
within twenty-four (24) hours of the originally scheduled arrival time without additional charge to
DHL (the “Alternative Air Transportation Services”). It is understood by the Parties that, at its
sole discretion, DHL may recover any DHL Material (including Additional DHL Material) tendered for
transportation by the Company and arrange for the transport of such DHL Material. To the extent
that DHL recovers any such DHL Material (including Additional DHL Material) and the Flight on which
such material was intended to be transported nevertheless operates as scheduled, DHL shall pay any
Blocked Space Fees for such DHL Material as if it had in fact been transported.



     As
described more fully in Attachment 2.9.2 of this Agreement, Company shall have developed
and shall maintain a contingency plan (“Contingency Plan”), approved by DHL, for each point of
origin and point of destination comprising the Core Network, one purpose of which is to provide for
the availability of Alternative Air Transportation Services.




	2.6	 	Priority





     DHL Material tendered to Company for transportation on the Core Services comprising the Core
Network and within the limits of the DHL Blocked Space shall have the highest priority of all
material tendered to Company for transportation on such Core Services, and shall not be displaced
by any other material tendered for transportation by other Company customers under any
circumstances without the written consent of DHL.



     All DHL Material shall have the same level of priority as against other DHL Material unless
Company is otherwise instructed in writing by DHL.



3









 





2.7 Flexibility





	 	2.7.1	 	DHL shall have the right to adjust the DHL Blocked Space as provided
below and without financial charge or penalty, provided, however,
that the DHL Blocked Space shall not fall below the Annual Minimum Volume Guarantee
as set forth in Section 2.7.4 of this Agreement.






	 	2.7.1.1	 	Seasonal Adjustments. DHL shall have the right to adjust the DHL
Blocked Space on a seasonal basis, as defined by the International Air
Transport Association (“IATA”) summer and winter season periods, [*] before
the IATA seasonal schedule change, provided, however, that
such adjustment shall not exceed [*] of the then current DHL Blocked Space for
a particular Core Service.
	 
	 	2.7.1.2	 	Adjustments within an IATA Season. DHL shall have the right to
make the following adjustments to the DHL Blocked Space within an IATA season:






	 	(a)	 	Monthly Adjustments. DHL shall
have the right to adjust the DHL Blocked Space upwards or downwards
by up to [*] of the then current DHL Blocked Space for a particular
Core Service on or before the [*] day of the preceding month.
	 
	 	(b)	 	Daily Adjustments — Not Less Than [*]
Before the Scheduled Time of Departure. DHL shall have the
right to adjust upwards or downwards the DHL Blocked Space by [*] on
a daily basis not less than [*] before the intended departure.
	 
	 	(c)	 	Daily Adjustments — Between [*] and
[*] Before the Scheduled Time of Departure. DHL shall have the
right to adjust upwards or downwards the DHL Blocked Space by up to
[*] on a daily basis between [*] and [*] before the intended
departure.






	 	2.7.1.3	 	In the event of an adjustment to the DHL Blocked Space as described above,
Company shall confirm the adjustment of the DHL Blocked Space and shall take
reasonably necessary actions to ensure that, in the case of a DHL Blocked
Space increase, other Company customers are vacated from that space or
accommodated within other non-DHL Blocked Space, or in the case of a DHL
Blocked Space decrease, Company will use its commercially reasonable efforts
to attract customers to fill the vacated DHL Blocked Space.
	 
	 	2.7.1.4	 	Holiday Period Reduction. Twice per year, not less than [*]
preceding the IATA seasonal schedule change, DHL shall notify Company in
writing of all holiday-related reductions and cancellations for the upcoming
IATA season. DHL may request up to [*] of its then current DHL Blocked Space
for holiday-related




4









 






	 	 	 	reductions or cancellations per IATA season and per Core Service without
penalty.






	 	2.7.2	 	DHL shall have the right, subject to capacity availability, to tender
DHL Material for transportation on the Core Services in excess of the DHL Blocked
Space (“Additional DHL Material”). To the extent possible and at the discretion of
Company, Company shall provide Air Transportation Services, or Alternative
Transportation Services, for such Additional DHL Material. As set forth more fully
in Section 3 of this Agreement, DHL shall compensate Company for the transport of
Additional DHL Material at the Blocked Space Rates.
	 
	 	2.7.3	 	DHL may, from time to time, propose to Company additions,
modifications and subtractions of Core Services from the Core Network within the
full scope of the Company’s regulatory and operating capabilities. In such event,
the Parties shall negotiate such changes, including additions or changes to the
Blocked Space Rates in connection therewith, in good faith, to reach agreement. To
the extent that the Parties agree to modifications, additions or subtractions to
the Core Services, the Annual Minimum Volume Guarantee shall be adjusted
accordingly.
	 
	 	2.7.4	 	Annual Minimum Volume Guarantee. Notwithstanding any other
provision in this Agreement, the DHL Blocked Space shall not be reduced by more
than [*] of the DHL Blocked Space on a year-to-year basis on any Core Service (the
“Annual Minimum Volume Guarantee”).






If the DHL Blocked Space falls below the Annual Minimum Volume Guarantee for any
Core Service during any Annual Reconciliation period, DHL shall nevertheless pay
for the DHL Blocked Space up to the level of the Annual Minimum Volume Guarantee at
the Blocked Space Rates (including applicable surcharges and fees at the time) set
forth herein as if it had utilized such DHL Blocked Space. Any amounts owed by DHL
to Company pursuant to this Section 2.7.4 shall be calculated and reconciled as
part of the Annual Reconciliation set forth in Section 4.5 of this Agreement.



2.8 Performance Standards





	 	2.8.1	 	Company hereby acknowledges that the on-time performance of the Core
Services comprising the Core Network is critical to DHL’s business as a freight
forwarder and as an express delivery services provider. Accordingly, Company shall
use its commercial best efforts to operate the Core Services according to the
strict timetables established in the Schedule and the performance standards set
forth below.
	 
	 	2.8.2	 	The actual time of departure (“ATD”) versus the scheduled time of
departure (“STD”) of each Core Service shall be recorded and measured against the
departure criteria as set forth below in Sections 2.8.3 and 2.8.4. The actual




5









 






	 	 	 	time of arrival (“ATA”) versus the scheduled time of arrival (“STA”) of each
Core Service shall be recorded and measured against the arrival criteria as set
forth below in Section 2.8.5. The period of measurement shall be each
consecutive four (4) week period beginning as of the BSA Commencement Date
(each a “Measurement Period”). Company’s performance against the criteria set
forth in Sections 2.8.3, 2.8.4 and 2.8.5 shall be reported in a standard
reporting format the form of which will be agreed by the Parties and
similar to Attachment 2.8.2 (the “Performance Report”).
	 
	 	2.8.3	 	Departure Criteria for ACMI Services. The “Departure Criteria
for ACMI Services” are the following standards against which Flight delays within
the control of Company (or its subcontractor) are measured. For each Core Service,
the ATD shall be within [*] of the STD in order to be reported as “on-time.” The
Departure Criteria for ACMI Services shall require that: (1) as of the BSA
Commencement Date, [*] of all Core Services in each
Measurement Period be reported as “on-time”; (2) as of the date six months
following the BSA Commencement Date, [*] of all Core Services in each Measurement
Period be reported as “on-time”; and (3) as of the date one year following the BSA
Commencement Date, [*] of all Core Services in each Measurement Period be reported
as “on-time.”






All Flight delays within the control of Company (or its subcontractor) shall be
taken into account in measuring Company’s performance against the Departure
Criteria for ACMI Services. For purposes of this calculation, Flights that have
been delayed because of factors not within the Control of Company (or its
subcontractor) shall be considered to be “on-time.” Flight delays deemed to be
within the control of Company (or its subcontractor) are set forth in Attachment
2.8.3.




The above target percentages for Departure Criteria for ACMI Services are to be
confirmed by Company for the initial Schedule and each Schedule change thereafter.




	 	2.8.4	 	Departure Criteria for Network Services. The “Departure
Criteria for Network Services” are the following standards against which all Flight
delays within the Core Network are measured. For each Core Service, the ATD shall
be within [*] of the STD in order to be reported as “on-time.” The Departure
Criteria for Network Services shall require that, for each Measurement Period on
and after the BSA Commencement Date, [*] of all Core Services must be reported as
“on-time.”






All Flight delays, regardless of cause shall be taken into account in measuring
Company performance against the Departure Criteria for Network Services.




The above target percentage for Departure Criteria for Network Services is to be
confirmed by Company for the initial Schedule and each Schedule change thereafter.



6









 






	 	2.8.5	 	Arrival Criteria for Network Services. For each Core Service
and for each day of the week DHL shall specify the STA, a “Level 1 Arrival Time”
and a “Level 2 Arrival Time” to be set forth in a form to be agreed by the Parties
and similar to Attachment 2.8.5. Generally speaking and by way of explanation,
Flights that arrive prior to a Level 1 Arrival Time normally would allow the DHL
Material transported on such Flight to be processed and meet onward connection and
delivery commitments. Conversely, Flights that arrive after a Level 2 Arrival Time
normally would not allow the DHL Material transported on such Flight to be
processed and meet onward connection and delivery commitments.






Level 1 and Level 2 Arrival Times may vary by day of week even within the same Core
Service reflecting the fact that time-sensitive DHL Core Material is not
transported every day of the week.




The ATA of each Core Service shall be measured and reported according to the
following definitions:




• [*];




• [*];




• [*];




• [*]; and




• [*].




For each Measurement Period, [*] of all Core Services must be reported as achieving
“On-time Level 1 Arrival” or better, with said target percentage to be confirmed by
Company for the initial Schedule and each Schedule change thereafter.




For each Measurement Period, no more than [*] of all Core Services may be reported
as “Full Service Failure” and/or “Cancelled”, with said target percentage to be
confirmed by Company for the initial Schedule and each Schedule change thereafter.




All Flight delays, regardless of cause, shall be taken into account in measuring
Company performance against the Arrival Criteria for Network Services.




All of the above, collectively, are the “Arrival Criteria for Network Services”.




	 	2.8.6	 	Ground Handling Responsibilities.






Company shall be responsible for arranging for ground handling services at the
airports specified in the Schedule, including arranging for the following services:
(i) ramp positioning and repositioning of aircraft; (ii) aircraft pushback;



7









 






(iii) loading and unloading; (iv) ramp transport of staff and crew (v) presentation
of tendered DHL Material; (vi) fueling; (vii) cleaning; (viii) deicing; (ix)
aircraft weight and balance, and any other services that may be agreed between the
Company and DHL. Company may perform these services itself or procure the services
of a third party ground handler, including an Affiliate of DHL.




Ground handling performance criteria (the “Ground Handling Criteria”), including
performance windows for loading and unloading of aircraft but also including,
without limitation, positioning of aircraft, preparation of appropriate
documentation and handover to aircraft crew, etc., shall be as specified in each
MOP (as defined in Section 2.9.2), for each point of origin and point of
destination comprising the Core Network. Ground Handling delay codes are set forth
in Attachment 2.8.3. Company’s ground handling performance shall be measured for
each Measurement Period and reported in each Performance Report in the aggregate
and by location.




	 	2.8.7	 	Consequences of failure to meet Departure Criteria for ACMI
Services, Departure Criteria for Network Services or Arrival Criteria for Network
Services.






	 	2.8.7.1	 	If Company fails to meet either the Departure Criteria for ACMI Services,
Departure Criteria for Network Services, the Arrival Criteria for Network
Services or the Ground Handling Criteria for any single Measurement Period,
then such fact shall be reported to the Operations Council (as defined in
Section 7.2) for development of an Action Plan (as defined in Section 7.2),
and thereafter shall follow the management escalation procedure set forth in
Section 7 of this Agreement (the “Management Escalation Procedure”).
	 
	 	2.8.7.2	 	If Company fails to meet the Departure Criteria for ACMI Services for any
three (3) consecutive Measurement Periods, then such fact shall constitute an
Event of Default under this Agreement.
	 
	 	2.8.7.3	 	If Company fails to meet the Departure Criteria for ACMI Services, when
averaged over any thirteen (13) consecutive Measurement Periods, then such
fact shall constitute an Event of Default under this Agreement. This Section
2.8.7.3 shall not take effect until after the thirteenth (13th)
Measurement Period following the BSA Commencement Date.
	 
	 	2.8.7.4	 	Following an Event of Default by the Company pursuant to Section 2.8.7.2 or
Section 2.8.7.3 hereof, DHL shall have the right to terminate this Agreement
pursuant to Section 5.2 which right shall be effective for a period of one
hundred and eighty days (180) days following the end of the final Measurement
Period that led to such Event of Default. If no Event of Default is declared
by DHL during such period, then such Event of Default shall be deemed to be no




8









 






	 	 	 	longer in effect and continuing; provided, however, that such
right of termination shall not be exercisable if (i) a Section 2.8.7.2
Dispute or Section 2.8.7.3 Dispute, as applicable, has been referred to
the Management Escalation Procedure and the outcome of such procedure,
including the arbitration procedures set forth in Section 7.4, is still
pending, or (ii) the terms of an Action Plan or an alternative Action
Plan in effect have not come to a final conclusion; provided,
further, that in connection with clauses (i) and (ii) the
180-day period shall be suspended during such time, but such 180-day
period shall resume if the Management Escalation Procedure, including
arbitration thereunder, determines that an Event of Default did occur.
DHL shall have the right to terminate this Agreement until the later of
(a) the end of such resumed 180-day period and (b) the 90th
day following the final determination of such Management Escalation
Procedure, including arbitration thereunder (if no Event of Default is
declared by DHL during such period, then such Event of Default shall be
deemed to be no longer in effect and continuing). If DHL elects to
terminate this Agreement pursuant to Section 5.2, it shall provide sixty
(60) days notice or other notice period as may be mutually agreed by the
Parties in writing prior to such termination.





2.9 Operations





	 	2.9.1	 	Operational Standards and Procedures. DHL shall comply with
the Company’s operational manuals, processes and procedures. DHL shall ensure that
the DHL Material tendered to the Company complies with all Applicable Laws as noted
in Section 7 hereof. Company shall take all commercially reasonable steps
necessary to ensure that its operational standards align with those of DHL in
relation to DHL Material. This shall include DHL’s standards relating to the
matters specified in Sections 2.9.1.1 and 2.9.1.2. From and after the BSA
Commencement Date, Company will provide to DHL information reasonably satisfactory
to DHL with respect to the matters specified in Section 2.9.1.3:






	 	2.9.1.1	 	Ground Handling, i.e., conformity to the MOP, the tender of
material, dangerous goods handling, the handling of containers and other
equipment, and ramp personnel procedures and training.
	 
	 	2.9.1.2	 	Equipment, i.e., container type, use, design, procurement,
numbering, reporting and track-and-trace.
	 
	 	2.9.1.3	 	Data Capture and Reporting, i.e., aircraft and container movements,
loading, weight and balance, billing, airway bills, accounting, fuel burn,
messaging, coding, track-and-trace, performance and dangerous goods
documentation.




9









 












	 	2.9.2	 	Master Operating Plans. Following the date hereof, but prior
to the BSA Commencement Date, Company shall establish a Master Operating Plan
(“MOP”) satisfactory to DHL for each point of origin and point of destination in
the Core Network. MOPs shall specify the roles and responsibilities of the Parties
at each such point, including, at minimum (i) procedures and timing for the tender
of DHL Material to Company, and the loading and unloading of DHL Material from
aircraft; (ii) communications protocols between the Parties, as well as between the
Parties and third parties; (iii) security procedures; (iv) Contingency Plans; (v)
contact names and numbers; and (vi) any other processes, procedures, protocols or
circumstances that may be relevant to Company and DHL’s operations at a particular
point of origin or destination in the Core Network. An example form of MOP is
attached to this Agreement as Attachment 2.9.2.






MOPs shall be reviewed and updated from time to time as mutually agreed by the
Parties in writing and shall be attached to this Agreement.




	 	2.9.3	 	Use of Common Systems. In order to facilitate Company’s
performance of its obligations hereunder, DHL agrees to license to Company the
SABLE weight and balance software system of DHL at no charge pursuant to a separate
licensing agreement (the “SABLE Licensing Agreement”).






Company shall be entitled to license and employ any other DHL proprietary network
management application software system in order to align the operational standards
and procedures of Company with those of DHL at no charge and subject to a separate
licensing agreement.




	 	2.9.4	 	Additional Aircraft. The Company, upon notice from its
suppliers that such suppliers can provide to the Company additional aircraft, shall
inform DHL within sixty (60) days of the availability of such additional aircraft
and will keep DHL reasonably informed of any material changes thereto. The Company
shall make timely offers to DHL in response to DHL’s defined requirements for such
available aircraft and contract at the offering terms with DHL for such additional
aircraft, subject to the Company’s or its suppliers’ prior commitments.
	 
	 	2.9.5	 	Transmittal of Data. Company, where applicable, shall be
responsible for transmittal of all air automated manifest system data to U.S.
Customs and other similar requirements outside of the United States as required.





2.10 Compliance




     Each Party shall comply with all Applicable Laws, in all relevant jurisdictions, and shall
keep in current form and in good standing all regulatory authorities, licenses, permits,
exemptions, designations and other authorizations including, but not limited to: Company’s Air
Operator’s Certificate; Company’s Certificate of Public Convenience and Necessity; Company’s
licenses and designations to the route authorities necessary to operate the Core Services,



10









 




including with respect to each Party, necessary authorizations and permits granted by foreign
governments; entitlements to takeoff and landing slots and parking bays necessary to operate the
Core Services.




     Nothing contained in this Agreement shall be deemed to obligate Company to operate an Aircraft
in violation of the terms or conditions of any insurance policy relating to the Aircraft or its
operation in contravention of the time regulations applicable to the crew to be provided hereunder
or in violation of any other Applicable Law, rule or regulation controlling Company’s operations
under this Agreement. In the event that DHL makes a request that would require the Company to
violate Applicable Law or the terms of its obligations as stated in the immediately preceding
sentence, but the Company, through exercising commercially reasonable efforts, could provide DHL
with the requested service in a manner that comports with Applicable Law and the terms of its
obligations as stated in the immediately preceding sentence, the Company shall take such steps. To
the extent that any changes to the Company’s operations are required to provide for such request,
any associated costs shall be at the expense of DHL.



2.11 Independent Services




     Additional air transportation services undertaken by Company that are not specified in the
Core Services shall be independent services (“Independent Services”). Independent Services may
include additional transportation services undertaken with the Aircraft, or other aircraft operated
by Company or a third party with other aircraft. Nothing in this Agreement shall limit Company’s
ability to initiate and operate Independent Services, provided, however, that
Company shall use commercially reasonable efforts to ensure that such Independent Services do not
interfere with the timely performance of the Core Services comprising the Core Network. Company
acknowledges and agrees that Core Services shall take priority over Independent Services. All
revenues derived by and expenses incurred by Company from Independent Services shall be for
Company’s own account.



2.12 Cooperation with other DHL Entities




     To facilitate the transfer of DHL Materials to other carriers, Company shall cooperate with
other DHL entities, including DHL owned and DHL co-owned airlines as well as airlines with which
DHL has contractual relations, for the purpose of entering into interline, space sharing, code
sharing, capacity sharing or other similar agreements.



2.13 Exercise of the Rights of Company




     Company shall exercise all rights and take all actions required under the Ancillary Agreements
that are reasonably necessary to enable Company to meet its obligations under the terms of this
Agreement, and shall not waive any rights against Atlas Air under any of the Ancillary Agreements
or agree to any amendments to the Ancillary Agreements which waiver or amendment would materially
adversely affect the ability of Company to perform its obligations under this Agreement.


The Company shall exercise commercially reasonable efforts in order to perform its obligations
under this Agreement and to satisfy the current and reasonably anticipated requirements of DHL,
including, without limitation, the employment of a highly motivated and


11









 






incentivized management team and sales force and the maximization of capacity utilization and
economic return.




3. Remuneration




3.1 Blocked Space Fee




     DHL shall pay to Company a fee (the “Blocked Space Fee”) calculated on a monthly basis
according to the following formula:




	 	3.1.1	 	the DHL Blocked Space shall be multiplied by the Blocked Space Rates
(together with surcharges and fees applicable at the time) and by the number of
Core Services operated by Company during the relevant monthly billing period, and
added to,
	 
	 	3.1.2	 	the relevant monthly “Over Pivot” charge (together with surcharges and
fees applicable at the time), as defined in Section 3.3 below, and added to,
	 
	 	3.1.3	 	the relevant monthly Additional DHL Material Charge (together with
surcharges and fees applicable at the time), as defined in Section 3.4 below.






	3.2	 	[*] Fee
	 
	 	 	[*].
	 
	3.3	 	The “Over Pivot” Charge





     DHL
Material may be loaded to the maximum allowable weight of each ULD as
specified in Attachment 3.3. In the event that the load density of any particular ULD exceeds the agreed pivot
for that ULD type, the number of kilos above the agreed pivot weight for that particular ULD shall
be considered “over pivot”. The “Over Pivot” charge for each Core Service will be calculated by
deducting (a) the agreed pivot weights for all relevant ULDs contracted for or used on such Core
Service from (b) the total weight of the DHL Material loaded on that service, and will not be
calculated on an individual ULD basis.



3.4 Additional DHL Material Charges




     Any Additional DHL Material transported by Company shall be charged to DHL at the applicable
Blocked Space Rates.



3.5 Other Fees, Charges and Offsets




     In addition, DHL shall be responsible for any other accessorial charges, whether existing or
imposed in the future, by any Person.



4. Payment





	 	4.1	 	DHL shall pay to Company the agreed sum of the DHL Blocked Space multiplied by the Blocked
Space Rates in U.S. dollars, twice-monthly in advance, on the first (1st) day of




12









 






	 	 	 	each month of the term for the first half of such month and on the sixteenth
(16th) day of each month for the remainder of such month on standing order (the
“Twice-monthly Payment”).
	 
	 	4.2	 	The Blocked Space Fee, the Variable Fee and any other fees, charges or credits shall be
calculated on a monthly basis (the “Monthly Charges”).
	 
	 	4.3	 	The Monthly Charges shall be reconciled against the sum total of the Twice-monthly Payments
for the corresponding period or other amounts previously paid. In the event that such
reconciliation reflects an overpayment on the part of DHL, then DHL shall be entitled to
deduct such overpayment from the next Twice-monthly Payment or other future Payments. In the
event that such reconciliation reflects an underpayment on the part of DHL, then DHL shall pay
the amount of the underpayment to Company promptly.
	 
	 	4.4	 	In the event that for two (2) consecutive months the reconciliation of the Monthly Charges
and the sum total of the Twice-monthly Payments reflects either, overpayments or
underpayments, respectively, of more than U.S. one million dollars (US$1,000,000), in the
aggregate, then the amount of the Twice-monthly Payment shall be adjusted upwards or downwards
accordingly.
	 
	 	4.5	 	There shall be a final reconciliation of all amounts due and paid under the Agreement for the
preceding year on a yearly basis (the “Annual Reconciliation”).
	 
	 	4.6	 	All payments shall be made by DHL to Company by wire transfer of immediately available,
unconditional funds to the following account:
	 
	 	 	 	[*]
	 
	 	4.7	 	Payments made hereunder shall be made free of deductions or offsets. Notwithstanding the
foregoing, in the event of a bona fide Dispute hereunder, DHL may withhold payment for any net
amount in dispute; provided that, the Twice-monthly Payments, at a minimum, continue
to be made as and when due. Nothing herein shall be deemed to constitute a waiver of either
Party’s rights or obligations hereunder. If a Dispute over payment has not been resolved
within ten (10) business days, then either Party may initiate a procedure to resolve the
Dispute under the Management Escalation Procedure as set forth in Section 7 of this Agreement.





5. Term and Termination




5.1 Term




     This Agreement shall become effective on the date of its execution. Prior to July 31, 2007,
DHL shall provide notice to Company as to whether the BSA
Commencement Date shall be [*], or [*] provided, however, that DHL may provide reasonable advance notice
to Company that the BSA Commencement Date be on a date prior to October 31, 2008 other than [*].
The term of this Agreement shall be twenty (20) years following the BSA Commencement Date, unless
earlier terminated as provided herein (the “Term”); provided, however, that DHL
shall have the option to terminate this Agreement on the fifth-year, tenth-



13









 







year and fifteenth year anniversaries of the BSA Commencement Date by giving Company one
year’s advance written notice (“Termination for Convenience”) and, provided,
further, DHL’s right to a Termination for Convenience upon the fifth year anniversary of
the BSA Commencement Date shall be subject to DHL, in the event a COMPANY Call Right or an ATLAS
Put Right (as such terms are defined in that certain Put/Call Agreement dated as of the date hereof
(the “Put/Call Agreement”)) is exercised pursuant to the Put/Call Agreement, providing upon the
date of such Termination for Convenience a continuing guarantee, for the applicable head lease
terms and the indemnity agreement in favor of Atlas Air, from DP Guarantor, or another creditworthy
Affiliate of DHL reasonably acceptable to Atlas Air, as provided in Article 3 of the Put/Call
Agreement.



5.2 Termination for Event of Default, Liquidated Damages.





	 	5.2.1	 	The occurrence and continuance of any of the following events or
conditions shall constitute an event of default (“Event of Default”) by Company:






	 	5.2.1.1	 	Company’s failure to comply from and after the BSA Commencement Date with
the performance requirements to the extent set forth in Sections 2.8.7.2 and
2.8.7.3 of this Agreement;
	 
	 	5.2.1.2	 	the material breach of any representation or warranty of the Company
hereunder, where such breach is material to the Company’s Business and occurs
after the BSA Commencement Date (or after the date hereof and continuing after
the BSA Commencement Date), unless such breach is capable of cure and Company
is diligently taking steps to effect such cure;
	 
	 	5.2.1.3	 	the dissolution, liquidation, cessation of business or immediate
termination of existence of Company;
	 
	 	5.2.1.4	 	the bankruptcy of Company or the appointment of a trustee or receiver for
Company or for a substantial part of its business, or the admission in writing
of Company of its inability to pay its debts as they mature, or a judicial
adjudication that Company is insolvent;
	 
	 	5.2.1.5	 	the institution by or against Company of bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or any other proceedings
for relief under any bankruptcy or similar federal, state or local Applicable
Law for the relief of debtors, provided that, if such proceeding is
instituted against Company and is not consented to by Company, it is not
dismissed or stayed within sixty (60) days after such institution;
	 
	 	5.2.1.6	 	any other material breach or failure of Company to observe or perform after
the BSA Commencement Date (or after the date hereof and continuing after the
BSA Commencement Date) any term, condition, covenant or agreement required to
be observed or performed by it hereunder, where such breach is material to the




14









 






	 	 	 	Company’s Business, unless such breach is capable of cure and Company is
diligently taking steps to effect such cure, provided,
however, that DHL shall have no right to exercise a right of
termination contained herein in relation to any failure of Company to
perform its obligations contained in Section 2.14 until and unless DHL
shall have exercised all rights and remedies in respect of such breach,
including compliance with the Management Escalation Procedure, and
furthermore, in determining whether or not Company is breach of Section
2.14, it shall be a defense for the Company to demonstrate that it has
taken sufficient remedial action and other steps identified as part of
the Management Escalation Procedure or otherwise requested by DHL;
	 
	 	5.2.1.7	 	the material violation of any material Regulation after the BSA
Commencement Date (or after the date hereof and continuing after the BSA
Commencement Date) or the suspension or revocation of any license, certificate
or permit necessary to conduct all or any portion of Company’s obligations
hereunder with respect to the Core Services, which violation, suspension or
revocation prevents Company from performing in any material respects its
obligations hereunder with respect to the Core Services, unless such material
violation, suspension or revocation (i) is capable of cure and Company is
diligently taking steps to effect such cure or (ii) occurred as a result, in
whole or in part, of actions or omissions of DHL; and
	 
	 	5.2.1.8	 	any failure by Company to maintain at all times from and after the BSA
Commencement Date the insurances as required in Section 9.1 of this Agreement.






	 	5.2.2	 	The occurrence of any of the following events or conditions shall
constitute an Event of Default by DHL:






	 	5.2.2.1	 	DHL’s failure to pay within five (5) business days any amounts due
hereunder in accordance with the terms of this Agreement;
	 
	 	5.2.2.2	 	the material breach of any representation or warranty of DHL hereunder,
where such breach or failure prevents DHL from performing in any material
respects its obligations hereunder ;
	 
	 	5.2.2.3	 	the dissolution, liquidation, cessation of business or immediate
termination of the existence of DHL or DP Guarantor;
	 
	 	5.2.2.4	 	the bankruptcy of DHL or DP Guarantor or the appointment of a trustee or
receiver for DHL or DP Guarantor or for a substantial part of its business, or
the admission in writing of DHL or DP Guarantor of its inability to pay its
debts as they mature, or a judicial adjudication that DHL or DP Guarantor is
insolvent;




15









 






	 	5.2.2.5	 	the institution by or against DHL or DP Guarantor of bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or any
other proceedings for relief under any bankruptcy or similar federal, state or
local Applicable Law for the relief of debtors, provided that, if such
proceeding is instituted against DHL or DP Guarantor and is not consented to
by DHL or DP Guarantor, it is not dismissed or stayed within sixty (60) days
after such institution;
	 
	 	5.2.2.6	 	any other material breach or failure of DHL to observe or perform after the
BSA Commencement Date (or after the date hereof and continuing after the BSA
Commencement Date) any term, condition, covenant or agreement required to be
observed or performed by it hereunder, where such breach or failure prevents
DHL from performing in any material respect its obligations hereunder, unless
such breach is capable of cure and DHL is diligently taking steps to effect
such cure;
	 
	 	5.2.2.7	 	the violation of any Regulation after the BSA Commencement Date (or after
the date hereof and continuing after the BSA Commencement Date) or the
suspension or revocation of any license, certificate or permit necessary to
conduct all or any portion of DHL’s obligations hereunder that prevents DHL
from performing in any material respects its obligations hereunder, unless
such violation suspension or revocation (i) is capable of cure and DHL is
diligently taking steps to effect such cure or (ii) occurred as a result of
actions or omissions of Company;
	 
	 	5.2.2.8	 	any failure by DHL to maintain at all times after the BSA Commencement Date
the insurances as required in Section 9.2 of this Agreement; and
	 
	 	5.2.2.9	 	any failure by DP Guarantor to perform its obligations under the BSA
Guarantee for five (5) business days for amounts due thereunder and for thirty
(30) days after written notice of any other failure.






	 	5.2.3	 	Upon the occurrence and during the continuance of any Event of Default
as specified in paragraphs 5.2.1.3, .4, .5 or .8, or paragraphs 5.2.2.1, .3, .4, .5
or .8 above, the non-defaulting Party may terminate this Agreement immediately and
in its entirety by giving written notice to the defaulting Party.
	 
	 	5.2.4	 	Upon the occurrence and during the continuance of any Event of Default
as specified in paragraphs 5.2.1.2, 5.2.1.6 or 5.2.1.7 or paragraphs 5.2.2.2,
5.2.2.6 or 5.2.2.7 above, the non-defaulting Party may serve written notice of such
default, and the Party receiving such notice shall have thirty (30) days from the
date of receipt of such notice to cure such default. If the Event of Default has
not been cured by the close of business on the thirtieth (30th)




16









 






	 	 	 	day after receipt of such notice, then the non-defaulting Party may terminate
this Agreement immediately and in its entirety upon giving written notice to
the defaulting Party.
	 
	 	5.2.5	 	Subject to Section 2.8.7.4, upon the occurrence and during the
continuance of any Event of Default as specified in paragraph 5.2.1.1 above, DHL
may terminate this Agreement after giving notice of such Event of Default to
Company.
	 
	 	5.2.6	 	Except for a termination pursuant to Section 5.2.3, at any time during
which there is an issue or Dispute between the Parties about whether an Event of
Default has occurred (or is continuing) and such issue or Dispute has been referred
to the Management Escalation Procedure (including the arbitration provisions
thereof) by mutual agreement of the Parties, and the outcome of such proceeding is
still pending, neither Party shall have the right to terminate this Agreement on
account of such issue or Dispute.
	 
	 	5.2.7	 	A termination by DHL due to either an Event of Default under Section
5.2.1 or a Change of Control Event under Section 5.3 shall give rise to the rights
and obligations of the Parties under Sections 5.4.1.2, 5.4.1.3, 5.4.2, 5.4.3,
5.4.4, 5.4.5, 5.4.6, 5.4.7 and 5.4.8, which shall be valid and effective
notwithstanding such termination, and shall survive such termination, as rights and
obligations under this Agreement, without affecting the rights, remedies or
obligations of the Parties under Section 5.4.1.1, if any, by reason of the
Events(s) of Default under Section 5.2.1 pursuant to which DHL so terminated this
Agreement.





5.3 Termination for the Occurrence of Change of Control




     (a) In
the event that AAWW consummates a Change of Control with a
[*] or a [*], Company shall give
written notice of such event to DHL. Following receipt of such notice, DHL shall have the option
for thirty days (30) from the date thereof to terminate this Agreement upon written notice to the
Company (the “COC Termination Period”). This Agreement will then terminate thirty (30) days
following the Company’s receipt of such notice without further action by either Party.



     (b) For purposes of this Section 5.3, it is understood that the right of termination provided
for in Section 5.3(a) shall not apply to (x) any transactions contemplated by the Stock Purchase
Agreement, (y) any Change of Control that involves, or is solicited, initiated or encouraged, by
DHL, any of its Affiliates, or any licensed U.S. airline in which DHL, DP Guarantor or any of its
Controlled Affiliates has a significant ownership interest or (z) any Change of Control approved by
DHL in its capacity as a stockholder of the Company or through any Board of Directors
representative or voting rights DHL may have either directly or through any DP Guarantor or any of
its Controlled Affiliates.



17









 





5.4 Remedies





	 	5.4.1	 	In the event that this Agreement is properly terminated by DHL for an
Event of Default under Section 5.2.1 or a Change of Control event under Section
5.3, then DHL shall be entitled to the following:






	 	5.4.1.1	 	a payment of [*] in the nature of liquidated damages (“Liquidated Damages”)
to compensate it for the costs of obtaining replacement arrangements for the
services to be provided by Company hereunder and for any other costs
attributable to service interruptions and loss of business (the “Liquidated
Damages Payment”). At each yearly anniversary of the BSA Commencement Date,
the Liquidated Damages Payment shall be [*], to a minimum of [*] on the [*]
anniversary of the BSA Commencement Date, where it shall remain for the
duration of this Agreement. The Parties shall settle all accounts and amounts
due and payable for services previously provided under the Agreement up to the
date of such termination and prior to the application of the Liquidated
Damages Payment. It is understood by the Parties that a Termination for
Convenience shall in no case give rise to a right to Liquidated Damages
pursuant to this Section 5.4;
	 
	 	5.4.1.2	 	At any time on or after the date on which this Agreement is terminated by
DHL in accordance with this Agreement due to an Event of Default under Section
5.2.1 or a Change of Control event under Section 5.3 and ending on the date
six months after such termination becomes effective (such date, the
“Assumption Expiration Date”), PACW shall, upon DHL’s written request, cause
the applicable Aircraft Lessor under each Aircraft Lease to (a) terminate any
Aircraft Lease to which Company is a party (each, an “Existing Sublease”) and
(b) enter into a new sublease for the Aircraft subject to a terminated
Existing Lease (each, a “New Sublease”) with DP Guarantor or another
creditworthy DHL Affiliate acceptable to the Aircraft Lessor (such Person, the
“DHL Lessee”) on terms that are identical in all material respects to the
terms of the Existing Lease, except that the term of any New Sublease will be
the unexpired portion of the terminated Existing Lease and will contain an
indemnity in favor of the Aircraft Lessor with respect to any liabilty of the
Aircraft Lessor under the applicable Tax Indemnity Agreement which would not
have arisen but for DHL Lessee’s operation of the Aircraft pursuant to the New
Sublease in any manner different from the operation of the Aircraft pursuant
to the Existing Sublease. The parties acknowledge that any New Sublease shall
meet the requirements of the applicable head lease as in effect on the date
hereof or as otherwise amended with DHL’s approval to which the Aircraft
Lessor is a party At any time on or after the date on which the termination
of this Agreement becomes effective and prior to the




18









 






	 	 	 	Assumption Expiration Date, DHL shall provide notice to Company
specifying the Aircraft it wishes to sublease Each New Sublease shall
satisfy and discharge the Additional Obligations of DHL under Section
5.4.5 for and with respect to the terminated Existing Lease .
	 
	 	5.4.1.3	 	On or after the date on which this Agreement is terminated by DHL in
accordance with this Agreement due to an Event of Default under Section 5.2 or
a Change of Control event under Section 5.3. Company shall pay to DHL, an
amount equal to the Additional Obligations which DHL shall have paid pursuant
to Section 5.4.5 after giving effect to any DHL Assumption by DHL Lessee
pursuant to Section 5.4.1.2 or by Atlas Lessee (defined in Section 5.4.6)
pursuant to Section 5.4.6, and the release of Company with respect to its
obligations under any Existing Sublease, as provided for therein
(collectively, the “Gap Period Damages”); provided, however,
that the aggregate amount of Gap Period Damages shall not exceed (a) in the
aggregate, the lesser of either (i) [*] or (ii) [*] under the Aircraft Leases,
and (b) in respect of any one Aircraft Lease and the related Aircraft, [*].






	 	5.4.2	 	Termination by DHL and Company’s payment of the Liquidated Damages
Payment under Section 5.4.1 and the Gap Period Damages under Section 5.4.1.3 shall
be DHL’s exclusive remedies for an Event or Events of Default under Section 5.2.1
or a Change of Control event under Section 5.3 and shall be in lieu of any other
remedy DHL may have at Applicable Law or in equity.
	 
	 	5.4.3	 	Termination of this Agreement by Company in accordance with this
Agreement due to an Event or Events of Default under Section 5.2.2 shall be without
prejudice to Company’s rights and liabilities hereunder at Applicable Law and in
equity, and damages in respect of such Event or Events of Default shall be
calculated without regard to DHL’s right of Termination for Convenience under
Section 5.1; provided, however, that Company shall not be entitled
to claim or recover from DHL any consequential or special damages.
	 
	 	5.4.4	 	From and after the date DHL terminates this Agreement due to an Event
of Default under Section 5.2.1 or a Change of Control event under Section 5.3, each
of Company, Atlas Air and DHL will use its commercially reasonable good faith
efforts, in cooperation with one another, subject to Contractual Obligations
(including any applicable obligations under any applicable collective bargaining
agreement) or Applicable Law, to redeploy and place each Aircraft subject to an
Aircraft Lease that has not been subleased by the DHL Lessee pursuant to Section
5.4.1.2 or an Atlas Lessee pursuant to Section 5.4.6 for the remainder of the term
of such Aircraft Lease on a “first come-first served” basis (it being understood
that any sublease of an Aircraft subject to an Aircraft Lease shall be in
accordance with the terms of the




19









 






	 	 	 	applicable Aircraft Lease and any assignment of an Aircraft Lease shall be
subject to approval of the Aircraft Lessor).
	 
	 	5.4.5	 	Notwithstanding that either DHL or Company shall have terminated this
Agreement due to an Event of Default under Section 5.2 or a Change of Control event
under Section 5.3, but subject to the provisions of Section 5.4.1.2 and of Section
5.4.6, DHL shall, in accordance with the terms and conditions of the Aircraft
Leases, (a) make payments to Company from time to time after such termination in an
amount equal to the periodic rental payment obligations of the Company under each
Aircraft Lease when such payments are due under each such Aircraft Lease and (b)
guarantee the performance of the Company’s obligations under each such Aircraft
Lease, including aircraft maintenance, operation, insurance, casualty, and return
covenants, and its general tax and general indemnities, in the case of both clause
(a) and (b) arising after such termination and in respect of the unexpired portion
of the term of each Aircraft Lease up to the tenth anniversary of the BSA
Commencement Date at the time of such termination (collectively, the “Additional
Obligations”).
	 
	 	5.4.6	 	During the first 12 months after termination of this Agreement by DHL
or Company, nothing herein shall preclude Atlas Air from utilizing Aircraft subject
to an Aircraft Lease that has not been subleased by the DHL Lessee on commercial
terms and conditions which shall be subject to Company’s consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Atlas Air (the “Atlas
Lessee”) shall have the right, exercisable after the Assumption Expiration Date, to
sublease (an “Atlas Assumption”), with the approval of the relevant Aircraft
Lessor, any Aircraft Lease and its Related Lease Documents with respect to which
DHL shall not have delivered an Assumption Notice on or prior to the Assumption
Expiration Date for the remaining term of such Aircraft Lease, and to succeed to
all of the rights and obligations of the “Lessee” or “Sublessee” (as applicable)
thereunder (including tax indemnity and other obligations under any Aircraft Lease
and Related Lease Documents that may arise or become due as a result of such Atlas
Assumption), such that none of Company, DHL, nor any Affiliate of DHL shall have
any further obligations with respect to or under any Aircraft Lease and its Related
Lease Documents as a result of or with respect to the period from and after the
effective date of such Atlas Assumption. Upon the consummation of any such
assumption by the Atlas Lessee, DHL shall have no further Additional Obligations
under Section 5.4.5 with respect to the relevant Aircraft Lease for the period from
and after such assumption.
	 
	 	5.4.7	 	Company shall continue to have the ability to amend, waive and
exercise all rights under the Aircraft Leases without DHL’s consent,
provided, that DHL’s obligations under Section 5.4.1.2 and Section 5.4.5
shall only be governed by terms and conditions under the Aircraft Leases (and
related documents), copies of which have been provided by the Company to DHL,




20









 






	 	 	 	in effect on the date of this Agreement and amendments or modifications thereto
approved in accordance with the Stockholders Agreement.
	 
	 	5.4.8	 	The Parties agree that the Parties’ respective rights and obligations
with respect to the Aircraft Lease(s) set forth in Section 5.4.1.2 through Section
5.4.7 are subject to (A) the prior written consent of the Aircraft Lessor which
shall include a grant of quiet enjoyment rights to the Company so long as DHL is
performing its obligations under Section 5.4.5 and to DHL so long as DHL is
performing its obligations under 5.4.1.2, under documents reasonably satisfactory
to DHL. The parties hereby agree to use commercially reasonable efforts to
cooperate (and cause its Affiliates to cooperate) with one another and with the
Aircraft Lessor to facilitate the assumption of the Aircraft Leases by the DHL
Lessee or Atlas Air pursuant to Section 5.4.1.2 and 5.4.6.





     5.5 Expiration of the BSA Guarantee.



     If, by not later than the ninth (9th) anniversary of the BSA Commencement Date, DHL
has not notified the Company of its election to exercise a Termination for Convenience and DP
Guarantor has not extended or replaced the BSA Guarantee with a substantially similar guarantee by
DP Guarantor, or another creditworthy Affiliate of DHL or DP Guarantor reasonably acceptable to the
Company, within one hundred and eighty (180) days after such anniversary (a “Replacement
Guarantee”), the Company shall have the right to terminate this Agreement effective upon the tenth
(10th) anniversary of the BSA Commencement Date. Termination of this Agreement by Company under
this Section 5.5 shall be Company’s exclusive remedy if a Replacement Guarantee is not provided and
shall be in lieu of any other remedy Company may have at Applicable Law or in equity.



6. Obligations of DHL





	6.1	 	DHL shall, at its own cost and expense, make available and assume responsibility for suitable
ULDs, containers, pallets, nets, and tensioning equipment meeting relevant FAA and Joint
Aviation Authorities/European Agency for Safety of the Air regulations and standards at all
appropriate airports provided for under this Agreement.
	 
	6.2	 	DHL shall, in accordance with FAA, IATA and/or ICAO standards, properly prepare and pack the
cargo to be carried, together with all documentation applicable thereto.
	 
	6.3	 	DHL shall be responsible for the issuance, completion, and delivery of air waybills in
accordance with DHL standards, as well as any additional documentation necessary for the
carriage of DHL Material. In the event a special cargo shipment must be accompanied by an
attendant, the ticketing and any special documentation related thereto shall be issued by DHL
at DHL’s sole cost and expense.
	 
	6.4	 	DHL shall inform Company at least twenty-four (24) hours prior to the scheduled departure
time of a Flight of any special DHL Material expected for such Flight, such as livestock,
hazardous material, oversized pieces, and/or other special cargo and such




21









 






	 	 	notice shall be provided to Company to the departments indicated by the Company prior to any
such shipment as from time to time advised to DHL.
	 
	6.5	 	The carriage of cargo attendants on a Flight hereunder shall comply with the appropriate
provisions of the Federal Aviation Regulations (“FARs”).
	 
	6.6	 	Any and all claims that are filed by shippers and/or consignees using DHL airwaybill
documents shall be administered and adjudicated by DHL. All other issues of liability under
this Agreement shall be handled in accordance with the terms and conditions set forth herein
in Article 8.
	 
	6.7	 	(a) DHL shall be required at its expense to adhere to Company security procedures, including
but not limited to security procedures relating to the cargo. Company’s security procedures
shall be provided to DHL upon request. DHL also shall be responsible for compliance with all
Transportation Security Administration regulations and requirements, including but not limited
to, screening of cargo destined for or outbound from the United States, screening of service
personnel requiring access to the flight deck on Flights destined for or departing from the
United States, secure transportation for Company crews when required, and compliance with host
country security requirements. Company shall have the right to approve DHL’s security vendors
and contractors for the operations contemplated by this Agreement. Company shall have the
right to inspect and audit DHL’S security program (including services provided by any approved
vendor or contractor), and DHL agrees to cooperate in any such inspection or audit, provided
such inspection or audit shall be conducted at reasonable times and shall not cause a material
disruption to DHL’s operation.
	 
	 	 	(b) Company shall not be obligated to operate to any country or airport requested by DHL if
such operations would be contrary to Company security operating procedures or directives, or
to regulations or directives of any Governmental Entity, including but not limited to, the
U.S. Departments of State and Treasury, DOT and the FAA. Company will use commercially
reasonable efforts to keep DHL advised in advance of country-related and airport-related
operating restrictions of the above types. Subject to the other provisions of this
Agreement governing use, availability and assignment of Aircraft, Company will not
unreasonably withhold approval of DHL requests to operate to countries and airports not
covered by the above types of restrictions. Company will provide information with respect
to countries, cities and/or airports with restricted overflight, landing and other special
requirements on specific request by DHL.
	 
	 	 	(c) DHL acknowledges that U.S. government agencies, including the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’s Bureau of
Industry and Security, place limitations on certain types of exports to, and other
transactions with, named non-U.S. governments, entities and individuals. DHL warrants that
it will conduct its business pursuant to this Agreement in a manner that does not cause
Company to violate any such requirements. In particular, without limiting the applicability
of the above, DHL represents that it will not knowingly cause goods to be exported on
Company services to, cause goods to be imported on Company’s services from, or in using
Company’s services otherwise engage in financial




22









 






	 	 	transactions with, Persons whom OFAC has identified as specifically designated terrorists.
In any event, DHL agrees to indemnify and hold harmless from all costs, expenses (including
reasonable attorney’s fees), losses, liabilities, damages, fines, and judgments incurred by
Company as a result of any violation of the abovementioned requirements.





7. Management and Management Escalation Procedure





	7.1	 	Responsible Managers





     Each Party shall appoint one or more managers as responsible for the day-to-day implementation
of this Agreement (the “Responsible Managers”). The Responsible Managers shall consult and confer
with each other as often as they believe desirable. Responsible Managers may discuss any issue
arising under this Agreement, and shall use their best efforts to resolve any such issues or
Disputes that may arise under this Agreement from time to time.




	7.2	 	Operations Council





     Each Party shall appoint one or more managers to an operations council (the “Operations
Council”). The Operations Council shall meet or confer monthly in order to review the Performance
Report for the previous month and any failures to meet the Departure Criteria for ACMI Services,
Departure Criteria for Network Services, Arrival Criteria for Network Services and the Ground
Handling Criteria during that month. In the event of any such failure, the Operations Council
shall agree a detailed action plan (the “Action Plan”) the purpose of which is to identify and
remedy the underlying cause(s) of such failure. If within twenty-one (21) days (or such longer
period as may be agreed) the Operations Council fails to agree an Action Plan, or the Operations
Council agrees an Action Plan but such plan fails to improve the operating Criteria within two (2)
months of the date the Action Plan was developed, then the same shall be referred to the Senior
Managers.



     Notwithstanding the foregoing, if the Departure Criteria for Network Services or the Arrival
Criteria for Network Services for any Core Service is not met for a period of two (2) consecutive
Measurement Periods, DHL may, in its sole discretion (upon reasonable notice to the Company),
redirect the affected DHL Material to alternative transportation services, at its own expense, and
reduce the DHL Blocked Space and the Annual Minimum Volume Guarantee commitment (but not the
Variable Fee) accordingly. Such redirect may continue until such time as the Departure Criteria
for Network Services or Arrival Criteria for Network Services for the affected Core Service is once
again met, at which time DHL shall have the obligation to place DHL Material back into the Core
Network.



     Furthermore, in the event of a failure of the Company to meet the Departure Criteria for
Network Services or the Arrival Criteria for Network Services due to an issue with the performance
of the Ground Handling Criteria, then DHL may, at its sole discretion (upon reasonable notice to
the Company), undertake certain of such ground handling responsibilities at the point of service
giving rise to such issue. Upon the exercise of such right by DHL, the Blocked Space Rates shall
be adjusted accordingly, it being understood, however, that such



23









 







adjustment shall in no way affect DHL’s obligations to pay the Variable Fee under Section 3.2
of this Agreement.



     In addition to the above, the Operations Council shall review any Dispute that cannot be
resolved by the Responsible Managers and shall promptly meet (telephonically or in person) in order
to resolve such Dispute. If within ten (10) business days (or such longer period as may be agreed)
following initial consideration in such meeting by the Operations Council and the Operations
Council fails to resolve the Dispute, then the same shall be referred to the Senior Managers.



7.3 Senior Managers




     The Senior Managers shall comprise the CEO of Atlas Air Worldwide Holdings, Inc. and the DHL
Managing Director for Aviation, or such other designees as may be agreed by the Parties.



     In the event that an Action Plan fails to improve the Departure Criteria for ACMI Services,
the Departure Criteria for Network Services or the Arrival Criteria for Network Services and the
same is referred to the Senior Managers by the Operations Council, then the Senior Managers shall
develop an alternative Action Plan. If such alternative Action Plan does not improve the underlying
issue(s) within a further thirty (30) days, the Senior Managers shall meet to jointly determine the
next course of action.



     In addition to the above, in the event that a Dispute is referred to the Senior Managers by
the Operations Council, then the Senior Managers shall promptly meet (telephonically or in person)
in order to resolve such Dispute. If any such Dispute cannot be resolved within a period of fifteen
(15) business days, or as otherwise agreed by the parties, following initial consideration in such
meeting by the Senior Managers, then either Party may refer such Dispute to the arbitration
provisions in Section 7.4 of this Agreement.



7.4 Arbitration




     If the Parties cannot resolve a Dispute through the Management Escalation Procedures as set
forth above in this Section 7, then the Parties shall submit the Dispute to binding arbitration as
set forth in this Section 7.4.



     All Disputes referred to arbitration shall be finally settled under the Rules of Arbitration
of the International Chamber of Commerce (the “Rules”).



     The place of arbitration shall be New York, New York, and the governing Applicable Law shall
be the substantive Applicable Law of the State of New York.



     The language of the arbitral proceedings shall be English.



     There shall be three (3) arbitrators nominated in accordance with the Rules, all having
substantial commercial experience in the air transport or air express industry and in the English
language.



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     The Parties agree that within sixty (60) days after selection, the arbitrators shall submit a
written report of their determination of the Dispute, which report shall be binding on the Parties.
If such report is not unanimous, then the determination of two (2) of the arbitrators shall
nevertheless be binding upon the Parties.



     The losing Party shall pay all the costs of arbitration, provided that if neither Party is
clearly the losing Party (as determined by the arbitrators), then the arbitrators shall allocate
the costs between the Parties in an equitable manner as the arbitrators may determine in their sole
discretion.



8. General Indemnification





	8.1	 	Indemnities by Company





     Except as provided in Section 8.3, Company shall bear all liability for, and shall indemnify,
defend and hold harmless DHL, together with its directors, officers, employees, assignees, agents,
subcontractors, shareholders and Affiliates (collectively, the “DHL Indemnified Parties”) from and
against any Claims or Damages (including, without limitation, any Claim in tort, whether or not
arising from the negligence of the DHL Indemnified Parties and without regard to whether or not
such negligence is sole, joint, concurrent, comparative, active, passive or imputed) which may be
asserted against, incurred or suffered by, be charged to or recoverable from the DHL Indemnified
Parties in connection with:




	 	(a)	 	loss of or damage to aircraft utilized in the performance of this Agreement,
howsoever caused, during the term of this Agreement, except as expressly set forth in
Section 8.3, below;
	 
	 	(b)	 	death of or injury to the crew members provided by Company, any individual(s)
carried or employed on aircraft utilized in the performance of this Agreement, or other
personnel of Company or of any other Person (except DHL personnel in the performance of
duties under this Agreement) provided for or by Company while acting in connection with
the performance of this Agreement, and loss of or damage to their property except as
expressly set forth in Section 8.3, below; or
	 
	 	(c)	 	death of or injury to persons and loss of or damage to property caused by
aircraft utilized in the performance of this Agreement during the term of this
Agreement in connection with the management, possession, use, control, operation,
maintenance, service, repair, overhaul or testing thereof, or with the ground
inspection, operational ground check, ferry flights or flights related to the use or
operation of aircraft utilized in the performance of this Agreement, except as
expressly set forth in Section 8.3, below.





     The foregoing indemnity obligation shall apply whether or not such Claim is groundless, false
or fraudulent. Notwithstanding anything else in this Section 8.1, there shall be no obligation to
indemnify if the Claim or Damage is due to the willful misconduct or gross negligence of the DHL
Indemnified Parties. It is, however, the express intent of the Parties that the foregoing
indemnity obligation shall be without regard to the cause or causes thereof and whether or not such
cause or causes may be the result of the negligence of the DHL Indemnified



25









 







Parties, be it sole, joint, concurrent, comparative, active, passive or imputed. For the
avoidance of doubt, the foregoing indemnity obligation shall apply to aircraft of third parties
utilized in the performance of this Agreement.



8.2 Indemnities by DHL




     Except as provided in Section 8.3 and except cargo claims in the event of a total Aircraft
loss, DHL shall bear all liability for, and shall indemnify, defend and hold harmless Company,
together with its directors, officers, employees, assignees, agents, subcontractors, shareholders
and Affiliates (other than the Company) (collectively, the “Company Indemnified Parties”) from and
against any Claims or Damages (including, without limitation, any Claim in tort, whether or not
arising from the negligence of the Company Indemnified Parties and without regard to whether or not
such negligence is sole, joint, concurrent, comparative, active, passive or imputed) which may be
asserted against, incurred or suffered by, be charged to or recoverable from the Company
Indemnified Parties in connection with the loss, delay in delivery, damage to, or any other claim
relating to, DHL Material (except as set forth in Section 8.3, below), other than with respect to
Taxes, which shall be governed exclusively by Section 15.8, or with the death of or injury to
personnel of DHL, its agents and /or subcontractors while acting in connection with the performance
of this Agreement.



     The foregoing indemnity obligation shall apply whether or not such Claim be groundless, false
or fraudulent. Notwithstanding anything else in this Section 8.2, there shall be no obligation to
indemnify if the Claim or Damage is due to the willful misconduct or gross negligence of the
Company Indemnified Parties. It is, however, the express intent of the Parties that the foregoing
indemnity obligation shall be without regard to the cause or causes thereof and whether or not such
cause or causes may be the result of the negligence of the Company Indemnified Parties, be it sole,
joint, concurrent, comparative, active, passive or imputed.



8.3 Limitations on Indemnification




     In no event shall either Party be held liable to the other, and each Party hereby expressly
waives any claim it may have against the other, for incidental, consequential, special or punitive
damages of any kind, including loss of market or future profits.



8.4 Survival of Indemnities




     The indemnification obligations under this Section 8 shall survive the termination of this
Agreement and shall remain in effect for a period of one (1) year from the date of any such
termination.



8.5 Notification of Claim




     The Indemnified Party shall promptly notify the Indemnifying Party of the existence of any
Claim to which the Indemnifying Party’s indemnification obligations might apply; provided, however,
that the failure to give such notice (other than notice of the commencement of a legal proceeding)
shall not adversely affect any right of indemnification under the Agreement. The Indemnifying
Party shall be entitled to control the defense of any such legal proceedings, through legal counsel
reasonably satisfactory to the Indemnified Party, at the sole expense of the



26









 







Indemnifying Party, and the Indemnified Party shall cooperate and consult with the
Indemnifying Party in the defense of such Claim and shall have the right, but not the obligation,
to participate in the defense at its own expense. If the Indemnifying Party elects not to direct
such defense, the Indemnified Party will have the right, at its own discretion, to direct such
defense at the Indemnifying Party’s sole expense. The Indemnifying Party shall have the right to
compromise or settle, with the Indemnified Party’s prior written approval (such approval not to be
unreasonably withheld), any claim or litigation regarding which it is required to indemnify. If
the Indemnified Party refuses to approve any compromise or settlement recommended by the
Indemnifying Party which would have concluded such claim or litigation but for the Indemnified
Party’s failure to give approval, the Indemnifying Party’s liability to the Indemnified Party
hereunder with respect to any such claim or litigation shall not exceed the amount which the
Indemnifying Party would have paid pursuant to such proposed compromise or settlement.



     9. Insurance. Each Party expressly covenants and agrees to procure, carry and maintain insurance
as specified below. Within seven (7) days of the date first above written, and on each and every
renewal of the insurances, during the term of this Agreement each Party shall furnish the other
with a certificate of insurance pertaining to each such insurance policy. Each shall ensure that
its insurance policies name the other Party as an additional insured. Each Party shall further
ensure that its policies provide that its insurance coverage shall continue unaltered for the
benefit of the additional insured for at least thirty (30) days after written notice by registered
mail or facsimile of any cancellation, material adverse change, or event of non-payment of premium,
except in the case of war risks coverage for which seven (7) days prior written notice will be
given. During the term of this Agreement, each Party shall at its sole cost and expense maintain
in full force and effect the following insurance with insurers and through such insurance brokers
as it shall deem appropriate and which the other Party finds reasonably acceptable (the “Required
Insurance”):




	9.1	 	Company insurance shall include:






	 	9.1.1	 	Hull All Risks and Hull War and Allied Perils insurances covering
Company’s aircraft against all risks of loss or damage. Such insurances shall
provide a waiver of insurer’s rights of subrogation against DHL, its officers,
agents, subcontractors, servants, employees, successors and assigns; and
	 
	 	9.1.2	 	Aircraft Third Party, passenger, baggage, cargo, mail and Aviation
General Third Party Legal Liability and War Liability and Allied Perils for a
Combined Single Limit (Bodily Injury/Property Damage) [*]. Such insurance shall
include coverage of risk of loss of cargo and mail carried on the Aircraft, which
shall be in an amount of [*] for any one occurrence and may be satisfied either as
a separate policy or as an element of coverage in the policy described in the first
sentence of this Section 9.1.2.






	9.2	 	DHL insurance shall include:






	 	9.2.1	 	Cargo and mail insurance in sufficient amount to cover all risk of
loss of DHL Material tendered under this Agreement, [*]; and




27









 






	 	9.2.2	 	DHL shall be responsible for any additional war risks premium
surcharges or other additional charges applicable as a result of operations to,
through or over any geographical areas that are not covered under Company’s
standard policies.






	9.3	 	All insurance specified above shall:






	 	9.3.1	 	Include the other Party and its directors, officers, agents, servants,
employees and subcontractors as additional assured (the “Additional Assured”) for
their respective rights and interests;
	 
	 	9.3.2	 	Provide that all provisions, except the limits of liability, shall
operate in the same manner as if there were a separate policy issued to each
assured;
	 
	 	9.3.3	 	Be primary and without right of contribution from any other insurance
which may be available to or maintained by the Additional Assured;
	 
	 	9.3.4	 	Provide that the cover afforded to the Additional Assured by the
policy shall not be invalidated by any act or omission (including misrepresentation
or non-disclosure) of any other Person or party which results in a breach of any
term, condition or warranty of the policy provided that the Additional Assured so
protected has not caused, contributed to or knowingly condoned the said act or
omission; and
	 
	 	9.3.5	 	Provide not less than thirty (30) days prior written notice of
cancellation or material alteration of the Required Insurance except that in the
case of war and allied perils such period of notice shall be seven (7) days or such
lesser period as may be available in accordance with policy conditions. Notice will
not however be given at normal expiry date or in the event of non-renewal.






	9.4	 	Each Party shall bear primary responsibility for the handling and payment of claims with
respect to the matters covered by its Required Insurance.





10. Representations and Warranties





	10.1	 	Company hereby represents and warrants as follows:






	 	10.1.1	 	Status. Company has been properly formed as a company with limited
liability and has since been maintained in accordance with all Regulations
applicable to it and has the power to carry on its business as it is now being
conducted;
	 
	 	10.1.2	 	Non-conflict. In entering into this Agreement and carrying out its
obligations hereunder Company does not contravene or breach any constitutional
document, Regulation, obligation, covenant or warranty applicable to it;




28









 






	 	10.1.3	 	Power and authority. Company has the power and has obtained the
authorizations necessary to enter into this Agreement and to carry out its
obligations hereunder;
	 
	 	10.1.4	 	Legal validity. Company’s obligations under this Agreement are legal,
valid, binding and enforceable against it;
	 
	 	10.1.5	 	No Event of Default. No Event of Default has occurred and is continuing
or would occur as a result of Company’s execution of this Agreement or the
performance of any of its obligations hereunder;
	 
	 	10.1.6	 	Airworthiness. Each Aircraft shall at all times during the term of this
Agreement be covered by a currently valid Certificate of Airworthiness issued by
the FAA and Company shall operate, maintain, service and repair the Aircraft,
including spare engines and spare parts, in all material respects in accordance
with all Regulations, including the Maintenance Program, and the terms hereof. In
circumstances where aircraft or crews are provided by a third party (other than DHL
or an Affiliate of DHL) on behalf of Company, Company shall procure the equivalent
representations and warranties on the part of the third party to the extent
reasonably possible;
	 
	 	10.1.7	 	Operational Control. Company shall (i) be solely responsible for the
operational control of the Company aircraft; (ii) operate such aircraft in all
material respects in a safe, skilled and competent manner and in accordance with
all applicable Regulations, including noise, environmental and emissions standards
and requirements; and (iii) provide qualified flight crews for each Flight in
accordance with such Regulations. In circumstances where aircraft or crews are
provided by a third party (other than DHL or an Affiliate of DHL) on behalf of
Company, Company shall procure the equivalent representations and warranties on the
part of the third party to the extent reasonably possible.






	10.2	 	DHL hereby represents and warrants as follows:






	 	10.2.1	 	Status. DHL has been properly formed as a company with limited liability
and has since been maintained in accordance with all Regulations applicable to it
and has the power to carry on its business as it is now being conducted;
	 
	 	10.2.2	 	Non-conflict. In entering into this Agreement and carrying out its
obligations hereunder DHL does not contravene or breach any constitutional
document, Regulation, obligation, covenant or warranty applicable to it;
	 
	 	10.2.3	 	Power and authority. DHL has the power and has obtained the
authorizations necessary to enter into this Agreement and to carry out its
obligations hereunder;
	 
	 	10.2.4	 	Legal validity. DHL’s obligations under this Agreement are legal, valid,
binding and enforceable against it;




29









 






	 	10.2.5	 	No Event of Default. No Event of Default has occurred and is continuing
or would occur as a result of DHL’s execution of this Agreement or the performance
of any of its obligations hereunder.
	 
	 	10.2.6	 	Financial Condition, etc. DHL has, as of the date of this Agreement and
for the duration thereof, sufficient funds in an aggregate amount sufficient to
pay the amounts payable to the Company under this Agreement and all contemplated
fees and expenses related thereto when due.





11. Assignment




     Neither Party shall assign this Agreement, or any rights or obligations arising hereunder, to
any third party without the prior written consent of the other Party; except that DHL shall be
entitled to assign its rights and obligations hereunder to another entity (or entities) that is a
wholly owned subsidiary of Deutsche Post AG able to perform the terms and conditions of DHL
hereunder, provided that performance by such transferee continues to be guaranteed under
the BSA Guarantee (or a Replacement Guarantee).



12. Notices




     All notices, requests, demands and other communications hereunder shall be in writing,
transmitted by facsimile or DHL Express to the addresses set forth below or to such other addresses
or facsimile numbers as either Party may have advised to the other Party in writing pursuant to
this Section 12, and shall be deemed effective two (2) business days after dispatch by confirmed
fax or tracking confirmation of receipt via DHL Express overnight delivery. In any event, a Party
receiving notice hereunder shall acknowledge receipt thereof as soon as practicable by facsimile,
DHL Express overnight delivery or mail; however, failure to so acknowledge will not vitiate or
otherwise render ineffective any notice duly given hereunder.



     If to the Company, to:




	 	Polar Air Cargo Worldwide, LLC

c/o Atlas Air Worldwide Holdings, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

Facsimile number: 914-701-8333

Attention: Adam R. Kokas, Esq.

               Senior Vice President, General

               Counsel, and Secretary






     and with a copy to:




	 	Ropes & Gray LLP

One International Place

Boston, Massachusetts 02110

Facsimile number: (617) 951-7050

Attention: Hemmie Chang, Esq.





     If to DHL, to:




	 	DHL Aviation Legal Department

c/o EAT, Building 3

Brussels National Airport

B-1930 Zaventern, Belgium

Facsimile number: +32 2 718 1520




	 	DHL Express

Karl-Legien-Strasse 186

53117 Bonn, Germany

Facsimile number: +49 228 182 30405

Attention: Charles Graham




     Each Party may specify a different address or facsimile number by giving notice in accordance
with this Section 13.1 to the other Party hereto.



30









 





13. Force Majeure





	13.1	 	“Force Majeure Event” means acts or events not within the control of the Party bound
to perform and which, by exercise of due diligence, such Party is unable to overcome. A Force
Majeure Event includes acts of God, seizure, severe weather to the extent that it prevents
aircraft operations in the relevant region or airport, strikes, labor stoppage, lockouts, or
other industrial disturbances, acts of the public enemy, acts of terrorism, national
emergency, war (including a call up and required performance of any of the Aircraft by U.S.
authorities under the Civil Reserve Air Fleet (“CRAF”) or related government program, or for
Air Mobility Command or CRAF flights), shutdown of airspace, embargoes, blockades, riots,
epidemics, lightning, earthquakes, floods, tornadoes, explosions, failure of public utilities,
and any other causes not within the control of the Party claiming such event. For the
avoidance of doubt, a Force Majeure Event shall not include any mechanical breakdown of any
aircraft, unless such mechanical breakdown is caused by a Force Majeure.
	 
	13.2	 	Upon occurrence of a Force Majeure Event, the affected Party shall give prompt notice to the
other Party of such event. Upon giving such notice, and continuing during the period of a
Force Majeure Event, all obligations of the Parties hereunder affected by such Force Majeure
event shall be suspended until such event is no longer materially effecting the services to be
rendered hereunder. The payment for all services provided up to the occurrence of Force
Majeure Event shall not be effected by such event and shall be payable when due. If the
performance of this Agreement either as a whole or affecting one or more Aircraft shall be
materially prevented or delayed by reason of a Force Majeure Event for a period of more than
thirty (30) days, then either Party shall have the option to terminate this Agreement in its
entirety or with respect to the affected Aircraft, respectively, upon written notice to the
other Party; provided, however, that DHL and Company shall take all
commercially reasonable efforts to make alternative air transport capacity arrangements in
order to avoid terminating this Agreement both in its entirety and with respect to the
affected Aircraft, under this provision.





14. Governing Law




     This Agreement and the interpretation and performance hereof shall be governed by the
Applicable Laws of the State of New York, USA, and each Party consents to New York as the exclusive
jurisdiction and venue for any legal proceedings, and of the federal and state courts located in
the State of New York, USA for enforcement action.



15. Miscellaneous





	15.1	 	Relationship Between the Parties





     Each Party, in its performance under this Agreement, is and shall be engaged and acting as an
independent contractor in its own separate business. Each Party shall retain complete and
exclusive control over its personnel and operations and the conduct of its business. No Party, its
officers, employees or agents shall in any manner make any representation or take any actions which
may give rise to the existence of any employment, agency, partnership or other like



31









 




relationship between the Parties hereunder. The employees, agents and independent contractors
of each Party shall be and remain employees, agents and independent contractors of such Party for
all purposes, and shall not be deemed to be employees, agents or independent contractors of the
other Party. Neither Party shall have supervisory power or control over any employees, agents or
independent contractors employed or engaged by the other Party (except that Company shall have
supervisory control over all passengers or cargo attendants during any Company-operated flight,
including any employees, agents or contractors of the other Party who are on board any such
flight).





	15.2	 	Entire Agreement; Amendments; Waivers





     This Agreement sets forth the entire agreement and understanding between the Parties as to the
subject matter hereof, and as of the date of this Agreement merges and supersedes all prior
discussions, agreements and understandings concerning the subjects covered by this Agreement.
Unless expressly provided herein, this Agreement may not be changed or modified except by agreement
in writing signed by both Parties. The waiver by either Party of performance of any term,
covenant or condition of this Agreement in a particular instance shall not constitute a waiver of
any subsequent breach or preclude such Party from thereafter demanding performance thereof
according to the terms hereof.




	15.3	 	Construction; Severability; Third Party Beneficiary





     This Agreement shall not be construed against the Party preparing it, but shall be construed
as if both Parties jointly prepared it and any uncertainty or ambiguity shall not be interpreted
against either Party. In the event that any one or more of the provisions of this Agreement shall
be determined to be invalid, unenforceable, or illegal, such invalidity, unenforceability or
illegality shall not affect any other provision of this Agreement and the Agreement shall remain in
full force and effect and be construed as if such invalid, unenforceable or illegal provision had
never been contained herein. The Parties shall undertake good faith consultations in order to
replace any such invalid, unenforceable or illegal provision with a replacement provision intended
to accomplish, as near as possible, the purpose and intent of the original such provision.



     This Agreement is for the benefit of Company and its stockholders, and AAWW may, upon a
material default hereunder for which AAWW has given Company prior written notice of any action or
remedy it requests Company take in accordance with this Agreement, and Company has not done so
within sixty (60) days following receipt of such notices, enforce the rights of Company on behalf
of Company under this Agreement. Subject to such enforcement right, the Parties hereto shall
continue to have the ability to amend, waive and exercise all rights under this Agreement, and
nothing herein shall affect the governance of Company under the direction of Company’s Board of
Directors and management. Except as set forth in the prior sentence, (1) NO PERSON OR ENTITY,
OTHER THAN COMPANY OR DHL, SHALL HAVE ANY RIGHTS, CLAIMS, BENEFITS OR POWERS UNDER THIS AGREEMENT
AND THIS AGREEMENT SHALL NOT BE CONSTRUED OR INTERPRETED TO CONFER ANY RIGHTS, CLAIMS, BENEFITS OR
POWERS UPON ANY THIRD PARTY and (2) THERE ARE NO THIRD-PARTY BENEFICIARIES OF THIS AGREEMENT.



32









 






	15.4	 	Execution in Counterparts





     This Agreement may be executed in any number of counterparts (including by facsimile or
electronic transmission), each of which shall be deemed to be an original, but all of which
together shall constitute one binding agreement on the Parties, notwithstanding that not all
Parties are signatories on the same counterpart.




	15.5	 	Expenses





     Each of the Parties shall pay the fees and expenses of their own counsel, accountants or other
experts, and all expenses incurred by such Party incident to the negotiations, preparation and
execution of this Agreement.




	15.6	 	Further Assurances





     From time to time, as and when requested by any Party to this Agreement, each other Party
shall execute and deliver, or cause to be executed and delivered, all such documents and
instruments, and shall take, or cause to be taken, all such further or other actions, as such other
Party may reasonably deem necessary or desirable to carry out the intent of this Agreement.




	15.7	 	Taxes





     Any and all payments due to the Company hereunder shall be free from, and DHL shall pay and
hold the Company free and harmless from, any and all liability for any and all sales and/or use
taxes, excise taxes and property taxes (including property taxes assessed based on frequency of
operations, time in jurisdiction, time on ground, landings or otherwise), duties, fees,
withholdings, value added taxes, or other similar assessments or charges, including any and all
amount(s) of interest and penalties which may be or become due in connection therewith, imposed or
withheld by any Governmental Entity, or other entity which may be or become due arising out of or
resulting from the terms and conditions of this Agreement and payments hereunder, except for taxes
levied on the income of the Company.




	15.8	 	Confidentiality and Publicity






	 	15.8.1	 	Each of the Parties shall treat as strictly confidential and shall not reproduce
or use for its own purposes or divulge, or permit to be divulged, to others (i) all
information and data obtained by or from the other Party in connection with this
Agreement, or otherwise related to this Agreement, which is confidential or
proprietary to one of the Parties, including its customers, customer lists,
information and data relating to customers, operations, policies, procedures,
techniques, accounts, computer programs and networks, and personnel (“Confidential
Information”); and (ii) all information and data which are confidential or
proprietary to a third party and which are in the possession or control of one of
the Parties (“Third Party Confidential Information”). Each of the Parties shall
limit access to the Confidential Information and Third Party Confidential
Information to its employees having a need to know, and shall, upon reasonable
notice from the other Party or upon termination of this Agreement, return to the
other




33









 






	 	 	 	Party all Confidential Information and Third Party Confidential Information in
its possession in whatever form and on whatever medium embodied.
	 
	 	15.8.2	 	The Parties shall not knowingly, directly or indirectly, divulge, communicate or
use to the detriment of the other Party, or for the benefit of any other Person(s),
or misuse in any way, the Confidential Information or Third Party Confidential
Information.
	 
	 	15.8.3	 	The Parties may disclose Confidential Information or Third Party Confidential
Information:






	 	15.8.3.1	 	to professionals engaged by a Party who has a legitimate need to review
this Agreement, the Confidential Information or the Third Party Confidential
Information, and only after such party agrees to be bound by this Article 15;
	 
	 	15.8.3.2	 	as may be required pursuant to subpoena, court order, or request of a
Governmental Entity having jurisdiction over a Party;
	 
	 	15.8.3.3	 	with the consent of the other Party, which may be withheld in that Party’s
discretion;
	 
	 	15.8.3.4	 	in an action or other proceeding to enforce or which otherwise concerns
this Agreement; or
	 
	 	15.8.3.5	 	otherwise required by Applicable Law.






	 	15.8.4	 	If a Party receives a subpoena, court order or governmental request calling for
the disclosure of this Agreement, the Party shall notify the other Party to provide
that Party with an opportunity to object to the requested disclosure. However,
nothing herein shall require a Party to violate any subpoena, court order or
governmental request for disclosure.
	 
	 	15.8.5	 	All inquiries from the press concerning the activities of Company or DHL or any
of their Affiliate companies shall be referred to the Company’s or DHL’s
spokesperson, as appropriate.






	15.9	 	Waiver; Drafting and Review; Headings; Authority





     A waiver of any default (including an Event of Default) hereunder shall not be deemed a waiver
of any other or subsequent default hereunder.




Each Party has had an opportunity to review this Agreement, with benefit of legal counsel of
its own choosing if desired, and no adverse rule of construction or interpretation shall be
applied against DHL or Company as the drafting Party of this Agreement.



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Headings, as used herein, are added for the purpose of reference and convenience only, and
shall in no way be referred to in construing the provisions of this Agreement.




Each signatory to this Agreement warrants and represents that such signatory has full
authority and legal capacity to execute this Agreement on behalf of and intending to legally
bind the Parties hereto.



Signature page follows




35









 








     IN WITNESS WHEREOF, this Blocked Space Agreement has been executed and delivered by the
Parties hereto on the date first above written.



	 	 	 	 	 
	 	DHL NETWORK OPERATIONS (USA), INC.

 	 
	 	By:  	/s/ Jon E. Olin	 
	 	 	Name:  	Jon E. Olin	 
	 	 	Title:  	Executive Vice President, General Counsel and
Secretary	 
	 
	 	POLAR AIR CARGO WORLDWIDE, INC.

 	 
	 	By:  	/s/ William J. Flynn	 
	 	 	Name:  	William J. Flynn 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



[Signature Page to the Blocked Space Agreement]















 





Attachment 1.1




Definitions




     “AAP” and/or “AMF” means a non-containerized lower-deck ULD beginning with
stock numbers AAP or PLA.



     “AAWW” means Atlas Air Worldwide Holdings, Inc.



     “Action Plan” is defined in Section 7.2.



     “Additional Assured” is defined in Section 9.3.1.



     “Additional DHL Material” is defined in Section 2.7.2.



     “Additional Obligations” is defined in Section 5.4.5.



     “Affiliate” means, as to any specified Person, each Person directly or indirectly
controlling, controlled by or under common control with such specified Person. For purposes of
this definition, the term “control” (including the terms “controlling,” “controlled by” and “under
common control with”) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.



     “Agreement” is defined in the Recitals and is further defined to mean this Agreement,
as amended or supplemented by any amendments or supplements, and the Schedules, Exhibits and
Attachments attached or referred to herein.



     “Aircraft” means six (6) 747-400F aircraft listed on Company’s Air Operator’s
Certificate.



     “Aircraft Lease” means each of the following six aircraft leases:



     (1) DRY SUBLEASE AGREEMENT (MSN 30808) between Polar as sub-sublessor, and Company, as
sub-sublessee.



     (2) DRY SUBLEASE AGREEMENT (MSN 30809) between Polar as sub-sublessor, and Company, as
sub-sublessee.



     (3) DRY SUBLEASE AGREEMENT (MSN 30810) between Polar as sub-sublessor, and Company, as
sub-sublessee.



     (4) DRY SUBLEASE AGREEMENT (MSN 30811) between Polar as sub-sublessor, and Company, as
sub-sublessee.



     (5) DRY SUBLEASE AGREEMENT (MSN 30812) between Polar as sublessor, and Company, as sublessee.



 









 





     (6) DRY SUBLEASE AGREEMENT (MSN 32838) between Atlas Air, as sublessor, and Company, as
sublessee.


The six aircraft leases listed above shall each constitute an “Aircraft Lease” as that term is
defined in the Stock Purchase Agreement.




     “Aircraft Lessor” means either Atlas Air or Polar, as applicable.



     “Air Transportation Services” is defined in Section 2.5.



     “AKE” means a type of ULD that is a half width lower deck container with angle on one
end and a canvas or solid door.



     “ALF” means a containerized lower-deck ULD beginning with stock numbers AAR, P1P, PAG
or PAP.



     “Alternative Air Transportation Services” is defined in Section 2.5



     “AMA” means a 96 inch height containerized main-deck ULD beginning with stock numbers
AMA.



     “AMD” means a ULD that is a contoured main deck upper container and has a canvas door
and built-in net door straps.



     “AMJ” means a contoured and containerized main-deck ULD used to support MD11
operations.



     “Ancillary Agreements” means the following agreements:




     (a) the Flight Services Agreement among Atlas Air, Polar and Company;




     (b) the Aircraft sub-Dry Lease Agreements between Atlas Air and Company;




     (c) the Aircraft Wet Lease Agreements between Atlas Air and the Company;




     (d) the Shared Services Agreement between Atlas Air and Company; and




     (e) the General Sales & Services Agency Agreement between Atlas Air and Company.



     “Annual Minimum Volume Guarantee” is defined in Section 2.7.4.



     “Annual Reconciliation” is defined in Section 4.5.



     “Applicable Law” means, with respect to any Person, any U.S. federal, state or local
or foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation,
constitution, treaty, convention or any order issued by a Governmental Entity that is binding upon
or applicable to such Person.



2









 





     “Arrival Criteria for Network Services” is defined in Section 2.8.5.



     "“Assumption Expiration Date” is defined in Section 5.4.1.2.



     “ATA” is defined in Section 2.8.2.



     “ATD” is defined in Section 2.8.2.



     “Atlas Air” means Atlas Air, Inc.



     “Atlas Assumption” is defined in Section 5.4.6.



     “Atlas Lessee” is defined in Section 5.4.6.



     “BSA Commencement Date” means October 31, 2008 or such earlier date as DHL begins
placing the DHL Material on services operated by the Company pursuant to the terms of this
Agreement.



     “BSA Guarantee” the BSA Guarantee Agreement dated as of the date hereof by DP
Guarantor, in favor of the Company.



     “Blocked Space Fee” is defined in Section 3.1.



     “Blocked Space Rates” is defined in Section 2.4. 



     “Business” means the scheduled airport-to-airport air cargo transportation services
conducted by Company.



     “Cancelled” is defined in Section 2.8.5.



     [*].



     [*].



     “Change of Control” means




	 	(i)	 	any merger, consolidation or other business combination with or into
any other entity, or any other similar transaction, whether in a single transaction
or series of related transactions where: (a) following such transaction, the
stockholders of AAWW immediately prior to such transaction in the aggregate cease
to own less than [*] of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent thereof) (such
ownership being based solely on the voting securities of AAWW owned by stockholders
immediately prior to such event) or (b) any [*] or [*] becomes the beneficial owner of more than [*] of the voting
securities of the entity surviving or resulting from such transaction (or the
ultimate parent thereof);




3









 






	 	(ii)	 	any transaction or series of related transactions after which
in excess of [*] of AAWW’s voting power is held by a [*] or [*]
	 
	 	(iii)	 	any sale, transfer, lease, assignment, conveyance, exchange, mortgage
or other disposition, in one or a series of related transactions, of all or
substantially all of the assets, property or business of AAWW to any third party,
other than any transaction in the ordinary course of AAWW’s business involving
aircraft; or
	 
	 	(iv)	 	if, during any period of [*], individuals who at the beginning of such
period constituted the directors of AAWW (together with any new directors whose
election by such directors or whose nomination for election by the stockholders of
AAWW was approved by a vote of a majority of the directors of AAWW then still in
office who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved and together with any
directors who are Affiliates of DHL) cease for any reason to constitute a majority
of the directors of AAWW then in office and such directors are replaced by Persons
designated by a [*] or [*].





     “Claims” means any threatened, pending or completed third-party claim, demand, action,
suit or proceeding, whether civil, arbitral, criminal, administrative, or investigative, and
whether formal or informal.



     “COC Termination Period” is defined in Section 5.3(a).



     “Company” is defined in the Recitals.



     “Company Indemnified Parties” is defined in Section 8.2.



     “Confidential Information” means all information and data obtained by or from the
other Party in connection with this Agreement, or otherwise related to this Agreement, which is
confidential or proprietary to one of the Parties, including its customers, customer lists,
information and data relating to customers, operations, policies, procedures, techniques, accounts,
computer programs and networks, and personnel.



     “Contingency Plan” is defined in Section 2.5.



     “Contractual Obligation” means, with respect to any Person, any written contract,
agreement, deed, mortgage, lease, license, indenture, note, bond or other documents or instrument
to which or by which such Person is legally bound.



     “Control” or “Controlled” shall be construed as defined under the Securities
Act of 1933 or the Securities Exchange Act of 1934 as promulgated by the U.S. Securities Exchange
Commission and from time to time in effect.



     “Core Network” is defined in Section 2.1.



4









 





     “Core Service” is defined in Section 2.2



     “CRAF” is defined in Section 13.1.



     “Damage” means any loss, cost (including reasonable legal fees and expenses), damage,
expense, action, suit, proceeding, judgment, claim, fine, amount paid in settlement, obligation or
other liability of any nature whatsoever, whether joint or several (including, without limitation,
all fees and expenses incurred by an Indemnified Party in establishing the right to indemnification
hereunder).



     “Departure Criteria” means the Departure Criteria for ACMI Services and the Departure
Criteria for Network Services.



     “Departure Criteria for ACMI Services” is defined in Section 2.8.3.



     “Departure Criteria for Network Services” is defined in Section 2.8.4.



     “DHL” is defined in the Recitals.



     “DHL Assumption” is defined in Section 5.4.1.2.



     “DHL Assumption Notice” is defined in Section 5.4.1.2.



     “DHL Blocked Space” is defined in Section 2.3.



     “DHL Lessee” is defined in Section 5.4.1.2.



     “DHL Material” means any and all of the air cargo products of DHL and its subsidiary
or Affiliated companies, and makes no distinction between the products that DHL offers to its
customers in regard to: price, speed, size, commodity, service commitment, or traffic documentation
of those products whatsoever. For the avoidance of doubt “DHL Material” shall have the broadest
possible meaning with regard to any and all materials capable of air transport.



     “DHL Core Material” means air express materials that constitute DHL’s principal
express business and that are usually carried under a DHL house airway bill.



     “DHL Indemnified Parties” is defined in Section 8.1.



     “Dispute” means any genuine disagreement between the Parties arising out of a Party’s
performance under this Agreement.



     “DOT” means the United States Department of Transportation.



     “DP Guarantor” means Deutsche Post AG, a corporation organized under the laws of
Germany.



     “Event of Default” is defined in Section 5.2.



     “Existing Sublease” is defined in Section 5.4.1.2.



5









 





     “FAA” means the United States Federal Aviation Administration.



     “FARs” is defined in Section 6.5.



     “Flight” is defined in Section 2.2.



     “Force Majeure Event” Is defined in Section 13.1.



     “Full Service Failure” is defined in Section 2.8.5.



     “Gap Period” is defined in Section 5.4.1.3.



     “Gap Period Payment” is defined in Section 5.4.1.3.



     “Governmental Entity” means any U.S. or non-U.S. federal, state or local government,
court, board, commission, regulatory or administrative agency or any department, bureau, branch or
other subdivision of any of the foregoing.



     “Ground Handling Criteria” means those criteria set forth in Section 2.8.6.



     “Holiday” means a day fixed by Applicable Law or custom on which ordinary business is
suspended in commemoration of some event or in honor of some Person in a jurisdiction relevant to
the Core Network.



     “IATA” is defined in Section 2.7.1.1.



     “ICAO” means the International Civil Aviation Organization.



     “Independent Services” is defined in Section 2.11.



     “Leases” is defined in Section 5.4.1.2.



     “Level 1 Arrival Time” is defined in Section 2.8.5.



     “Level 2 Arrival Time” is defined in Section 2.8.5.



     “Liquidated Damages” is defined in Section 5.4.1.1.



     “Liquidated Damages Payment” is defined in Section 5.4.1.1.



     “Management Escalation Procedure” is as set forth in Section 7.



     “Maintenance Program” means a maintenance program approved by the relevant civil
aviation authority for the Aircraft in accordance with the manufacturer’s specifications, including
servicing, testing, preventative maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, service bulletins, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.



     “Measurement Period” is defined in Section 2.8.2.



6









 





     “Monthly Charges” is defined in Section 4.2.



     “MOP” is defined in Section 2.9.2.



     “Net Cost of the Core Network” is defined in Attachment 3.2.



     “New Subleases” is defined in Section 5.4.1.2.



     “OFAC” is defined in Section 6.7(c).



     “On-time” is defined in Section 2.8.4.



     “On-Time Level 1 Arrival” is defined in Section 2.8.5.



     “Operations Council” is defined in Section 7.2.



     “Over Pivot” is defined in Section 3.3.



     “Pallet” means any of the IATA defined ULDs including, but not limited to, PMC, PAG
and P1P.



     “Partial Service Failure” is defined in Section 2.8.5.



     “Party” and “Parties” are defined in the Recitals.



     “Performance Report” is defined in Section 2.8.2.



     “Person” means any individual or corporation, association, partnership, limited
liability company, joint venture, joint stock or other company, business trust, organization,
Government Entity or other entity of any kind.



     “Polar” means Polar Air Cargo LLC.



     “Put/Call Agreement” is defined in Section 5.1.



     “Regulations” means any Applicable Law or regulation (including any internal corporate
regulation), official directive, or recommendation, mandatory requirement that applies to a Party,
the Aircraft or the operation of the Core Network under this Agreement.



     “Related Lease Documents” is defined in Section 5.4.1.2.



     “Replacement Guarantee” is defined in Section 5.5.



     “Required Insurance” is defined in Section 9.



     “Responsible Managers” is defined in Section 7.1.



     “Rules” is defined in Section 7.4.



7









 





     “SABLE Licensing Agreement” is defined in Section 2.9.3.



     “Schedule” is defined in Section 2.2.



     “Scheduled On-Time” is defined in Section 2.8.5.



     “Section 2.8.7.2 Dispute” means any Dispute between the Parties about whether an Event
of Default has occurred pursuant to Section 2.8.7.2.



     “Section 2.8.7.3 Dispute” means any Dispute between the Parties about whether an Event
of Default has occurred pursuant to Section 2.8.7.3.



     “Sector” means an origin, destination pair regardless of intermediate points or stops.
A Sector may comprise more than one flight.



     “Service Failure” is defined in Section 2.8.4.



     “SLU” means a shipper loaded unit; i.e., a ULD containing cargo loaded by the shipper
and tendered to the operating carrier already packaged for air transportation.



     “STA” is defined in Section 2.8.2.



     “STD” is defined in Section 2.8.2.



     “Term” is defined in Section 5.1.



     “Termination for Convenience” is defined in Section 5.1.



     “Third Party Confidential Information” means all information and data which are
confidential or proprietary to a third party and which are in the possession or control of one of
the Parties.



     “Transportation Security Administration” means the United States Transportation and
Security Administration.



     “Twice-monthly Payment” is defined in Section 4.1.



     “ULD” means a unit load device; i.e., a unit in which cargo is bulk loaded and
subsequently loaded as a unit into an aircraft.



     “[*] Fee” is defined in Section 3.2.




8