Exhibit
10.14


 


NOTE:  The
information designated by a bracketed asterisk [*] has been omitted pursuant to
a request for confidential treatment and has been filed separately with the
Securities and Exchange Commission.


 


 


AIRLINE
SERVICES AGREEMENT


by
and between


SKYWEST
AIRLINES, INC.


and


MIDWEST
AIRLINES, INC.


Dated
December 20, 2006


Effective
as of January 1, 2007


 
















Table of Contents


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I
  DEFINITIONS

  	
   

  	
  1

  
	
  1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  PROVISION OF REGIONAL AIRLINE SERVICES

  	
   

  	
  7

  
	
  2.01

  	
   

  	
  Operation of
  Scheduled Flights

  	
   

  	
  7

  
	
  2.02

  	
   

  	
  Use of
  Designator, YX Identification and Related Matters

  	
   

  	
  7

  
	
  2.03

  	
   

  	
  Use of Other
  Designators

  	
   

  	
  8

  
	
  2.04

  	
   

  	
  Personnel and
  Dispatch Control

  	
   

  	
  8

  
	
  2.05

  	
   

  	
  Inventory
  Management

  	
   

  	
  8

  
	
  2.06

  	
   

  	
  Passenger Fares

  	
   

  	
  8

  
	
  2.07

  	
   

  	
  DOT
  Certification

  	
   

  	
  8

  
	
  2.08

  	
   

  	
  Compliance With
  Governmental Regulations

  	
   

  	
  9

  
	
  2.09

  	
   

  	
  Quality of
  Service

  	
   

  	
  9

  
	
  2.10

  	
   

  	
  Service
  Standards

  	
   

  	
  9

  
	
  2.11

  	
   

  	
  Service Recovery

  	
   

  	
  9

  
	
  2.12

  	
   

  	
  Inflight Food,
  Beverages and Supplies

  	
   

  	
  10

  
	
  2.13

  	
   

  	
  Exclusivity
  Arrangements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  AIRCRAFT

  	
   

  	
  11

  
	
  3.01

  	
   

  	
  Use of the
  Aircraft

  	
   

  	
  11

  
	
  3.02

  	
   

  	
  Fleet Size and
  Related Matters

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  ANCILLARY ARRANGEMENTS

  	
   

  	
  11

  
	
  4.01

  	
   

  	
  Coordination
  with SkyWest

  	
   

  	
  11

  
	
  4.02

  	
   

  	
  Ground Handling

  	
   

  	
  12

  
	
  4.03

  	
   

  	
  Facilities

  	
   

  	
  12

  
	
  4.04

  	
   

  	
  Data
  Communications

  	
   

  	
  13

  
	
  4.05

  	
   

  	
  Reservation
  Services

  	
   

  	
  14

  
	
  4.06

  	
   

  	
  Ticketing
  Services and Ticketing Procedures

  	
   

  	
  14

  
	
  4.07

  	
   

  	
  Baggage Handling
  Services

  	
   

  	
  15

  
	
  4.08

  	
   

  	
  Air Cargo
  Handling Services

  	
   

  	
  15

  
	
  4.09

  	
   

  	
  Use of COMAT

  	
   

  	
  16

  
	
  4.10

  	
   

  	
  Slots and Route
  Authorities

  	
   

  	
  16

  
	
  4.11

  	
   

  	
  Emergency
  Response and Family Assistance

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  REVENUES, PAYMENTS AND SETOFF

  	
   

  	
  17

  
	
  5.01

  	
   

  	
  Revenues

  	
   

  	
  17

  
	
  5.02

  	
   

  	
  Payments to
  SkyWest

  	
   

  	
  17

  
	
  5.03

  	
   

  	
  Block Hour and
  Cycle Rates; IOP Program Adjustment

  	
   

  	
  20

  
	
  5.04

  	
   

  	
  Fixed Costs

  	
   

  	
  20

  
	
  5.05

  	
   

  	
  Fuel

  	
   

  	
  20

  
	
  5.06

  	
   

  	
  Pass-Through
  Expenses

  	
   

  	
  21

  
	
  5.07

  	
   

  	
  Billing

  	
   

  	
  21

  



 













 


	
  5.08

  	
   

  	
  Performance
  Levels — Incentives and Penalties

  	
   

  	
  21

  
	
  5.09

  	
   

  	
  Credit Card
  Chargebacks

  	
   

  	
  23

  
	
  5.10

  	
   

  	
  Returned Checks

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  REPORTING OBLIGATIONS, AUDITING, INSPECTIONS AND CONFIDENTIALITY/PUBLICITY

  	
   

  	
  24

  
	
  6.01

  	
   

  	
  Reporting
  Obligations

  	
   

  	
  24

  
	
  6.02

  	
   

  	
  Audits

  	
   

  	
  24

  
	
  6.03

  	
   

  	
  Inspections

  	
   

  	
  25

  
	
  6.04

  	
   

  	
  Confidentiality/Publicity

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII
  MIDWEST IDENTIFICATION

  	
   

  	
  25

  
	
  7.01

  	
   

  	
  Identification
  License

  	
   

  	
  25

  
	
  7.02

  	
   

  	
  Designator
  License

  	
   

  	
  25

  
	
  7.03

  	
   

  	
  New
  Identifications

  	
   

  	
  25

  
	
  7.04

  	
   

  	
  Use of
  Identification

  	
   

  	
  26

  
	
  7.05

  	
   

  	
  Quality Control

  	
   

  	
  26

  
	
  7.06

  	
   

  	
  Reservation of
  Rights

  	
   

  	
  26

  
	
  7.07

  	
   

  	
  Ownership

  	
   

  	
  26

  
	
  7.08

  	
   

  	
  Termination

  	
   

  	
  26

  
	
  7.09

  	
   

  	
  Bankruptcy

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  TAXES AND FEES

  	
   

  	
  27

  
	
  8.01

  	
   

  	
  Taxes and Fees

  	
   

  	
  27

  
	
  8.02

  	
   

  	
  Ticket Taxes and
  Fees

  	
   

  	
  27

  
	
  8.03

  	
   

  	
  Property Tax,
  Fuel Tax, and Sales and Use Tax Compliance

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX
  LIABILITY, INDEMNIFICATION AND INSURANCE

  	
   

  	
  28

  
	
  9.01

  	
   

  	
  Independent
  Contractor

  	
   

  	
  28

  
	
  9.02

  	
   

  	
  Indemnification

  	
   

  	
  29

  
	
  9.03

  	
   

  	
  Insurance

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X TERM
  AND TERMINATION

  	
   

  	
  31

  
	
  10.01

  	
   

  	
  Term

  	
   

  	
  31

  
	
  10.02

  	
   

  	
  Termination Upon
  Certain Events

  	
   

  	
  32

  
	
  10.03

  	
   

  	
  Termination by
  Midwest

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI
  MISCELLANEOUS

  	
   

  	
  33

  
	
  11.01

  	
   

  	
  Limitation on
  Performance

  	
   

  	
  33

  
	
  11.02

  	
   

  	
  Mutual
  Cooperation

  	
   

  	
  34

  
	
  11.03

  	
   

  	
  Representations
  and Warranties

  	
   

  	
  34

  
	
  11.04

  	
   

  	
  Assignment

  	
   

  	
  34

  
	
  11.05

  	
   

  	
  Guaranties

  	
   

  	
  34

  
	
  11.06

  	
   

  	
  Equity
  Investment

  	
   

  	
  34

  
	
  11.07

  	
   

  	
  Governing Law
  and Venue

  	
   

  	
  34

  
	
  11.08

  	
   

  	
  Interline and
  Other Agreements

  	
   

  	
  34

  
	
  11.09

  	
   

  	
  Employee
  Nonsolicitation

  	
   

  	
  35

  



 



 ii
 









 


	
  11.10

  	
   

  	
  Notices

  	
   

  	
  35

  
	
  11.11

  	
   

  	
  Parties

  	
   

  	
  35

  
	
  11.12

  	
   

  	
  Counterparts

  	
   

  	
  36

  
	
  11.13

  	
   

  	
  Severability

  	
   

  	
  36

  
	
  11.14

  	
   

  	
  Captions,
  Section Headings and Table of Contents

  	
   

  	
  36

  
	
  11.15

  	
   

  	
  Availability of
  Equitable Remedies; Procedures

  	
   

  	
  36

  
	
  11.16

  	
   

  	
  Exhibits

  	
   

  	
  37

  
	
  11.17

  	
   

  	
  Integration and
  Entire Agreement

  	
   

  	
  37

  
	
  11.18

  	
   

  	
  Relationship of
  Parties

  	
   

  	
  37

  



 



 iii
 









 


EXHIBITS


	
  Number

  	
   

  	
  Title

  
	
  5.02(c)(i)

  	
   

  	
  Provisional Payments

  
	
  5.03(a)

  	
   

  	
  Block Hour Cost Elements

  
	
  5.03(b)

  	
   

  	
  Cycle Cost Elements

  
	
  5.04

  	
   

  	
  Fixed Cost Elements

  
	
  5.06

  	
   

  	
  Pass-Through Expenses

  
	
  11.09

  	
   

  	
  Key Employee Job Titles

  



 



 iv















 


AIRLINE
SERVICES AGREEMENT


THIS AIRLINE SERVICES AGREEMENT
(this “Agreement”) is dated the 20th day of December, 2006 and made effective as of
the 1st day of January 2007 (the “Effective Date”), by
and between SKYWEST AIRLINES, INC., a Utah
corporation (“SkyWest”), and MIDWEST AIRLINES, INC., a Wisconsin
corporation (“Midwest”).


WITNESSETH:


WHEREAS, SkyWest and Midwest
desire to make certain arrangements between them which will enable SkyWest to
provide Midwest with commercial regional air transportation services; and


WHEREAS, SkyWest and Midwest are
each willing to perform in the manner and upon the conditions and terms
hereinafter set forth.


NOW, THEREFORE,
in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Midwest and SkyWest
do hereby agree as follows:


ARTICLE I



DEFINITIONS


1.01        Definitions.  For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:


(1)           the terms as defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular;


(2)           all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles; and


(3)           the words “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, or other subdivision.


“A/C Months” means the number of
Aircraft in operation on the last day of a month, adjusted on a pro-rata
basis to account for any Aircraft deployed during such month.


“A/C Months Report” means the
report of A/C Months to be prepared by SkyWest pursuant to
Section 5.02(a)(ii).


“ACARS” means the Aircraft Communications
Addressing and Reporting System which provides communications between the
Aircraft and SkyWest with respect to operational matters.













 


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


“Aggregate Block Hour Rate”
means the sum of all of the Block Hour Rates for all of the Block Hour Cost
Elements.


“Agreement” shall have the
meaning ascribed to such term in the preamble to this Agreement.


“Air Cargo” means air freight,
United States mail and small package services appropriate for the Aircraft.


“Air Cargo Handling Services”
means the Air Cargo handling services to be performed pursuant to
Section 4.08.


“Aircraft” means the fifteen
(15) Bombardier CRJ-200 aircraft described in Section 3.02(a), plus
any additional aircraft added pursuant to Section 3.02(b).  “Aircraft” shall also be deemed to include
the neutrally-painted Bombardier CRJ-200 aircraft which may be used to provide
the Regional Airline Services pursuant to Section 3.01, below, but only with
respect to the calculation of Block Hours and Cycles and Midwest’s obligation
to pay for fuel pursuant to Section 5.05, below.


“Baggage Handling Services”
means the baggage handling services to be performed pursuant to
Section 4.07.


“Block Hour” means the period of
time (in minutes) beginning when an Aircraft first moves from the ramp blocks
in connection with a Scheduled Flight, a Non-Scheduled Flight or a
Charter Flight and ending when the Aircraft next comes to a stop at the ramp at
any station or other point of termination as recorded by ACARS or another mutually
agreed system, divided by sixty (60).


“Block Hour Cost Element” means
a cost element specified on Exhibit 5.03(a).


“Block Hour Rate” shall be
determined in accordance with Section 5.03(a) and Exhibit 5.03(a).


“Block Hour Report” means the
report with respect to Block Hours to be delivered by SkyWest pursuant to
Section 5.02(a)(i).


“Care Check” means the numerical
score obtained through Midwest’s existing 
Care Check survey, consistently applied for the Performance Period, or
any such successor program as mutually agreed to between Midwest and SkyWest.



 2
 









 


“Charter Flights” means uniquely
scheduled revenue passenger flights with a customized schedule between charter
client-requested airports using the Aircraft (other than Scheduled
Flights); provided, however, that the operational arrangements
and the compensation to be received by SkyWest in respect of such Charter
Flights are subject to the same procedures and remuneration as a Scheduled
Flight hereunder, unless otherwise mutually agreed by Midwest and SkyWest.  To the extent that inflight catering (food
and beverage) exceeds that normally provided for on a Scheduled Flight, the
incremental cost and coordination of the catering will be the sole
responsibility of Midwest and/or the charter client.


“COMAT” means company material,
including but not limited to priority aircraft maintenance parts.


“Contracted Service Cities”
means those Service Cities at which SkyWest contracts with a third party for
performance of substantially all Ground Handling Functions and for required
facilities, excluding Hub Cities.


“Customer Experience Pulse”
means the numerical score obtained through Midwest’s existing Customer
Experience Pulse survey, consistently applied for the Performance Period, or
any such successor system as mutually agreed to between Midwest and SkyWest.


“Cycle” means an actual takeoff
and landing of an Aircraft in connection with a Scheduled Flight, a Non-Scheduled
Flight or a Charter Flight.


“Cycle Cost Element” means a
cost element specified on Exhibit 5.03(b).


“Cycle Rate” shall be determined
in accordance with Section 5.03(b) and Exhibit 5.03(b).


“Cycle Report” means the report
with respect to Cycles to be delivered by SkyWest pursuant to
Section 5.02(a)(i).


“Data Communication Equipment”
shall have the meaning ascribed to such term in Section 4.04.


“Designator” means “YX” or such
other designator code selected by Midwest from time to time in its sole
discretion to identify Midwest’s own flights.


“Direct Cost” means Midwest’s or
SkyWest’s, as applicable, actual cost for goods and services without any
surcharge for administrative or general overhead expenses.


“DOT” means the United States
Department of Transportation or any successor to its functions with respect to
the regulation of air transportation.


“DOT Certification” means any
and all certifications and approvals by the DOT, the FAA and other regulatory
agencies required for SkyWest to operate the Aircraft and to perform pursuant
to the terms of this Agreement and all Governmental Regulations.


“Effective Date” means the date
specified in the preamble to this Agreement.



 3
 









 


“Excess Fuel Cost” shall be
determined in accordance with Section 5.05(c).


“FAA” means the Federal Aviation
Administration or any successor organization.


“Final Block Hour Payment” means
the payment for Block Hours calculated in accordance with
Section 5.02(c)(ii)(A).


“Final Cycle Payment” means the
payment for Cycles  calculated in
accordance with Section 5.02(c)(ii)(B).


“Final Fixed Cost Payment” means the
payment for fixed costs calculated in accordance with Section 5.02(c)(ii)(C).


“Final Monthly Margin Payment”
means the payment calculated in accordance with Section 5.02(c)(ii)(D).


“Fixed Cost Element” means a
cost element specified on Exhibit 5.04.


“Fixed Cost Rate” shall be
determined in accordance with Section 5.04 and Exhibit 5.04.


“Fuel Burn Rate” means the
quotient of (a) the total number of gallons of fuel burned by the Aircraft,
including auxiliary power units, for a month, divided by (b) the total number
of Block Hours for such month.


“GAAP” means generally accepted
accounting practice and principles at the time prevailing in the United States
for companies engaged in businesses similar to that of SkyWest, consistently
applied.


“Governmental Regulations” means
the rules and regulations prescribed by an airport authority at a Service City
or by any local, state or federal unit of government having authority and
jurisdiction to regulate the business and affairs of an air carrier having DOT
Certification, including without limitation, the DOT and the FAA.


“Ground Handling Functions”
shall have the meaning ascribed to such term in Section 4.02.


“Hub Cities” means Milwaukee,
Wisconsin (“MKE”), Kansas City, Missouri (“MCI”) and any other city in the
United States where Midwest, together with its subsidiaries and Midwest Connect
Carriers operating under Midwest’s Designator, operate an average of more than
twenty-five (25) departures per day during any Midwest Schedule Period.


“Identification” means a trade
name, trademark, service mark, graphic, logo, distinctive color scheme or other
trade dress, domain name and/or other identification or indication of source or
origin.


“Initial Term” shall have the
meaning ascribed to such in term in Section 10.01.



 4
 









 


“IOP Payment” means the payment
for IOP Program Incidents calculated in accordance with Section 5.03(c).


“IOP Program Incident” shall
mean Midwest’s request that SkyWest cancel one or more Scheduled Flights as a
result of Midwest’s initiation of its Irregular Operating Procedures Program.


[*]


“Maintenance Facilities” shall
mean the maintenance facilities described in Section 4.03(c).


“MASK” shall have the meaning
ascribed to such term in Section 2.11(a).


“Midwest” shall have the meaning
ascribed to such term in the preamble to this Agreement.


“Midwest Connect Carrier” means
an airline operating regional jet and/or turboprop air transportation services
as a Midwest Connect carrier pursuant to an airline services agreement between
such airline and Midwest.


“Midwest Group” shall have the
meaning ascribed to such term in Section 7.07.


“Midwest Guaranty” means that
certain Guaranty executed by Midwest Air Group, Inc. in favor of SkyWest dated
of even date herewith.


“Midwest Schedule Period” means
the planned duration of various time periods for which Midwest’s flight
schedule is for sale in computer reservation systems.


“Midwest Service Cities” means
those Service Cities at which Midwest employees perform substantially all
Ground Handling Functions and Midwest provides required facilities, or a city
at which Midwest has contracted directly with a third party other than SkyWest
to provide those services and facilities.


“Midwest Tickets” shall have the
meaning ascribed to such term in Section 4.06(a).


“Non-Scheduled Flights”
means all flights using the Aircraft which are not Scheduled Flights or Charter
Flights.


 “Pass-Through
Expenses” means the expenses described on Exhibit 5.06.


“Pass-Through Expense Payment”
means the payment for Pass-Through Expenses calculated in accordance with
Section 5.02(c)(iii)(A).


“Pass-Through Expense Report”
means the report of Pass-Through Expenses to be prepared by SkyWest
pursuant to Sections 5.02(a)(iii) and 5.06.


“Performance Criteria” shall
have the meaning ascribed to such term in Section 5.08(a).



 5
 









 


“Performance Period” means each
six (6) month period ending on a June 30 or December 31 occurring
during the term of this Agreement.


“Person” means an individual,
partnership, corporation, business trust, joint stock company, limited
liability company, unincorporated association, joint venture or other entity of
whatever nature.


“Planned Fuel Burn Rate” means [*] gallons per Block Hour.


“Prohibited Change of Control”
means the acquisition, directly or indirectly, by any Person or group of
Persons reasonably deemed by Midwest to be a major competitor of Midwest or any
of its Affiliates, in any one transaction or a series of related transactions,
of (a) the right to control the direction of the management and policies of
SkyWest, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, or (b) ownership of (i) fifty percent
(50%) or more of the outstanding equity securities of SkyWest, or (ii) all or
substantially all of the assets of SkyWest.


“Provisional Block Hour Payment”
means the amount set forth in Section 5.02(c)(i)(A).


“Provisional Cycle Payment”
means the amount set forth in Section 5.02(c)(i)(B).


“Provisional Fixed Cost Payment”
means the amount set forth in Section 5.02(c)(i)(C).


“Provisional Monthly Margin Payment”
means the amount set forth in Section 5.02(c)(i)(D)


“Regional Airline Services”
means the provisioning by SkyWest to Midwest of Scheduled Flights, Non-Scheduled
Flights and Charter Flights using the Aircraft in accordance with this
Agreement.


“Renewal Term” shall have the
meaning ascribed to such term in Section 10.01.


“Scheduled Flights” means
revenue passenger flights (other than Charter Flights) using the Aircraft
which, regardless of frequency, are held out to the public and published in the
customary and applicable schedule distribution systems, such as the Official
Airline Guide, or published by Midwest in its own system timetables.  In addition, Scheduled Flights shall include
all regularly scheduled flights which are not revenue passenger flights as
determined by Midwest in its sole discretion.


“Service Cities” means those
cities identified from time to time by Midwest to which SkyWest shall provide
Regional Airline Services.


“SkyWest” shall have the meaning
ascribed to such term in the preamble to this Agreement.


“SkyWest Guaranty” means that
certain Guaranty executed by SkyWest, Inc. in favor of Midwest dated of even
date herewith.



 6
 









 


“SkyWest Identification” means
any Identification selected by SkyWest from time to time for use in connection
with the business of SkyWest.


“SkyWest Service Cities” means
those Service Cities at which SkyWest employees perform substantially all
Ground Handling Functions and SkyWest provides required facilities.


“TAR” shall have the meaning
ascribed to such term in Section 2.11(a).


“Ticket Taxes and Fees” means
any taxes pursuant to Sections 4261 or 4271 of the U.S. Internal Revenue Code
of 1986, as amended or succeeded, on any amounts paid by customers for
transportation of persons or packages by air, and any passenger facility
charges, airport improvement fees, security fees or charges, stamp taxes,
excise taxes, value-added taxes (in the nature of a sales or use tax),
gross receipts taxes (in the nature of a sales or use tax), U.S. APHIS user
fees, U.S. Customs user fees, U.S. Immigration user fees, and any other taxes
and/or user fees imposed by any domestic or foreign governmental entity,
airport or taxing authority on a per-passenger basis on any amounts paid
by customers for transportation of persons or packages by air.


“Ticketing Services” means the
ticketing services to be performed pursuant to Section 4.06(a).


“YX Indemnitees” shall have the
meaning ascribed to such term in Section 8.02(b).


“YX Identification” means any
Identification specifically selected by Midwest from time to time in its sole
discretion for use by SkyWest in connection with the Regional Airline Services
(including without limitation “Midwest Connect” or any similar name).


ARTICLE II


PROVISION OF
REGIONAL AIRLINE SERVICES


2.01        Operation
of Scheduled Flights. 
Subject to the terms and conditions of this Agreement, SkyWest shall use
the Aircraft to operate Scheduled Flights and Charter Flights as shall be
designated by Midwest from time to time in Midwest’s sole discretion.  All schedules and aircraft routing for such
Scheduled Flights and all utilization of the Aircraft shall be determined by
Midwest from time to time, in its sole discretion, subject to the reasonable
operational constraints of SkyWest taking into consideration reasonable
maintenance, crew training and Aircraft rotation requirements.  Scheduled block times shall be set in
accordance with Midwest’s standards unless otherwise mutually agreed by Midwest
and SkyWest.  Minimum turn times shall be
mutually agreed to by SkyWest and Midwest and set in conformity with standard
industry practices and Aircraft type.


2.02        Use
of Designator, YX Identification and Related Matters.  Subject to the applicable provisions of
Article VII, below, SkyWest shall operate the Scheduled Flights and Charter
Flights provided under this Agreement using the Designator.  The Scheduled Flights and Charter Flights
shall be identified by SkyWest solely with flight numbers assigned by
Midwest.  Subject to the applicable
provisions of this Article II, SkyWest shall use only the YX Identification for
the Aircraft (except as otherwise required by Governmental Regulations), and 



 7
 









 


for all exclusive-use
facilities (including Maintenance Facilities), signage, equipment and
advertising, promotional and business materials in any form or media that are
used in connection with the Regional Airline Services, and shall conform to
Midwest standards for logo and brand as determined by Midwest.  SkyWest shall not use the SkyWest
Identification or the Identification of any other airline for the Aircraft
(except as required by Governmental Regulation), exclusive-use facilities
(including Maintenance Facilities), signage, equipment, uniforms or
advertising, promotional or business materials in any form or media that are
used in connection with the Regional Airline Services; provided, however,
nothing in the foregoing prohibition shall preclude SkyWest from using the
SkyWest Identification for general corporate purposes, investor relations, on
crew wings and employee service pins, and for purposes that are not covered by
the foregoing prohibition and do not involve interaction with Midwest customers
or passengers.  Midwest and SkyWest shall
agree on the color and design of all uniforms worn by SkyWest personnel involved
in the provision of the Regional Airline Services.  In the case of joint-use facilities,
such as airport facilities where SkyWest provides ground handling services for
Midwest and another carrier(s), Midwest and SkyWest shall agree on the
appropriate use of YX Identification along with that of the other carrier(s).


2.03        Use
of Other Designators. 
SkyWest shall not use on the Aircraft the airline designator,
Identification, or any other identifying feature of a foreign or United States
airline other than Midwest, without the express prior written consent of
Midwest, or unless Midwest directs SkyWest to use such other designator,
Identification, or identifying feature.


2.04        Personnel
and Dispatch Control. 
SkyWest shall be responsible for providing all crews (flight and cabin)
to operate the Scheduled Flights, Non-Scheduled Flights and any Charter
Flights and for all aspects (personnel and other) of dispatch control,
including but not limited to load control. 
SkyWest dispatch control shall maintain frequent communication with
Midwest dispatch control, and other Midwest entities as appropriate, to ensure
the safe and timely operation of flights and to adhere to Midwest customer
service standards.


2.05        Inventory
Management. 
Midwest shall have complete control over all inventory management
functions for all Scheduled Flights and Charter Flights operated pursuant to
this Agreement, including, without limitation, overbooking levels, discount
seat levels, itinerary controls and allocation of seats among the various fare
buckets.  In performing SkyWest’s
inventory management, Midwest shall conform in all material respects to its own
procedures and standards, taking into account the type of Aircraft operated by
SkyWest.


2.06        Passenger
Fares.  Midwest
shall be the sole authority for filing tariffs for Scheduled Flights operated
pursuant to this Agreement, and Midwest shall establish all passenger fares for
Scheduled Flights and rates for Charter Flights operated pursuant to this
Agreement.  All charges for filing of fares
or tariffs for Scheduled Flights operated pursuant to this Agreement shall be
paid by Midwest.


2.07        DOT
Certification. 
SkyWest has and shall maintain DOT Certification and all other permits,
licenses, certificates and insurance required by governmental authorities and
Article IX hereof to enable SkyWest to perform the services required by this
Agreement.



 8
 









 


2.08        Compliance
With Governmental Regulations.  All flight operations, dispatch operations
and flights and all other operations undertaken by SkyWest pursuant to this
Agreement shall be conducted and operated by SkyWest in strict compliance with
all Governmental Regulations, including, without limitation, those relating to
airport security, the use and transportation of hazardous materials, flight
crew and mechanic qualifications and licensing requirements, crew training and
hours.  All Aircraft shall be operated
and maintained by SkyWest in strict compliance with all Governmental
Regulations, SkyWest’s own operations manuals and maintenance manuals and
procedures, and all applicable equipment manufacturers’ instructions.  At all times, SkyWest shall operate with the
highest standards of care.


2.09        Quality
of Service. 
Midwest policies, procedures, performance standards and means of
measurement thereof concerning the provision of air passenger and air cargo
services shall be applicable to all services provided by SkyWest under this
Agreement.  SkyWest shall achieve at
least the same quality of airline service provided by Midwest, subject to
limitations imposed by the type of Aircraft used by SkyWest, its route network,
the availability of equipment and facilities at the Service Cities and the
performance by Midwest of its obligations under this Agreement.  SkyWest shall maintain adequate staffing
levels to ensure at least the same level of customer service and operational
efficiency that Midwest achieves; SkyWest shall cooperate with Midwest in any
way necessary or desirable to provide such comparable level of customer service
in connection with the operation of Regional Airline Services; and SkyWest
shall maintain new hire and recurrent training programs for all job
descriptions which are reasonably acceptable to Midwest.


2.10        Service
Standards.  [*]


(a)           Minimum Completion Factor.  [*]


(b)           Minimum On Time Reliability.  [*]


(c)           Mishandled Luggage Factor.  [*]


(d)           Customer Complaints Factor.  [*]


(e)           Care Check Score.  [*]


(f)            Customer Experience Pulse.  [*]


(g)           Calculations.         [*]


2.11        Service
Recovery.


(a)           Passenger
Amenities.  SkyWest agrees to provide
passenger amenities, including, without limitation, denied boarding
compensation, which Midwest provides under Rule 245 of the Domestic General
Rules No. 1 issued by Airline Tariff Publishing Co. and ATA Resolution
No. 120.20 or pursuant to any similar contractual arrangement now existing
or hereafter in effect or applicable to Midwest.  In any SkyWest Service City or Contracted
Service City, SkyWest agrees (i) to handle oversold Scheduled Flights and the
payment of denied boarding 



 9
 









 


compensation in
accordance with Midwest’s standard policies and procedures, (ii) to pay the
full cost of providing passenger amenities (either directly to the affected
passengers or to Midwest as reimbursement for the amounts paid by Midwest to
such passengers) with the exception of denied boarding compensation resulting
from inventory oversales or other actions of Midwest, and (iii) to report all
denied boarding data to Midwest via both the standard Midwest Ticket Agent
Report (“TAR”) and the standard Midwest Yield Management Flight Close-Out
Denied Boarding Mask (“MASK”).  In any
SkyWest Service City or Contracted Service City, for denied boarding
compensation resulting from inventory oversales or the actions of Midwest,
SkyWest will pay the appropriate amount of denied boarding compensation to the
affected passengers and will invoice Midwest for such amount pursuant to
Section 5.07, below.  Any such
invoice will include sufficient detail and supporting documentation to allow
Midwest to verify the invoiced amount. 
Notwithstanding the foregoing, SkyWest shall be responsible for any
discrepancy between the TAR and the MASK, and Midwest will invoice SkyWest for
any amounts due based on reconciliation of those two reports.  In Midwest Service Cities, Midwest will
provide all passenger amenities, including but not limited to baggage delivery,
at its sole cost.


(b)           Destination
by other Means.  If SkyWest
transports a revenue passenger to his or her destination by another means (bus,
train, taxi, etc.) due to a flight cancellation, Midwest shall reimburse
SkyWest for the actual transportation costs incurred to transport the passenger
by such other means.  SkyWest shall use
its best efforts to minimize the transportation of passengers by other means
and the costs associated therewith. 
SkyWest must confer with designated Midwest customer service staff prior
to making arrangements of this type.


2.12        Inflight
Food, Beverages and Supplies.  Unless otherwise mutually agreed, Midwest
will provide Aircraft catering services and food and beverages for passengers
on Scheduled Flights in accordance with Midwest’s specifications and directions
and at Midwest’s sole cost.  SkyWest
shall be solely responsible for maintaining all licenses necessary for the
serving of inflight food and beverages on Scheduled Flights and for the
provision of crew meals.  If so desired,
Midwest will supply crew meals as directed by SkyWest, and shall invoice to
SkyWest the actual cost of the crew meals so supplied.  Midwest shall furnish SkyWest, at Midwest’s
sole cost, adequate supplies of its customary inflight supplies including, but
not limited to, the Midwest inflight magazine, cups, napkins, pillows,
blankets, trash bags, sick sacks, lavatory supplies, creamers, swizzle sticks
and sugar in a form similar to or identical with that used by Midwest.  SkyWest may be asked to administer Midwest’s
buy-on-board meal program on designated flights.  In this case, SkyWest personnel shall be
trained in all Midwest catering and sales procedures by Midwest and shall
utilize all associated equipment and procedures designated by Midwest for the
buy-on-board meal program.


2.13        Exclusivity
Arrangements. 
Midwest and SkyWest agree that this Agreement shall not prevent either
party from engaging in other similar arrangements or agreements with other
carriers, except that the Aircraft are for the exclusive use of Midwest as
provided in Section 3.01.  Nothing
in this Agreement shall preclude Midwest from (i) entering into code share,
alliance or other commercial cooperation arrangements with any other airline,
or (ii) entering into similar or other arrangements with other carriers for the
provisioning of regional airline services using Canadair Regional Jets, other
regional jets, turboprop aircraft or any other aircraft to or from the Hub
Cities, the same Service Cities or elsewhere.


 



 10















 


ARTICLE III



AIRCRAFT


3.01        Use
of the Aircraft. 
Midwest and SkyWest agree that (a) the Aircraft shall be used only to
provide and/or support the Regional Airline Services contemplated by this
Agreement, (b) the Aircraft shall not be used by SkyWest for any other purpose
without the prior written consent of Midwest, and (c) the Regional Airline
Services shall be provided only using the Aircraft; provided, however,
that SkyWest may, from time to time as maintenance needs may require, use a
neutrally-painted Bombardier CRJ-200 aircraft (which is not an
Aircraft for purposes of this Agreement) to provide Regional Airlines Services
hereunder.


3.02        Fleet
Size and Related Matters.


(a)           Initial
Fleet Size.  The initial fleet shall
consist of fifteen (15) Aircraft, one of which shall constitute an operational
spare.  Midwest and SkyWest shall
mutually agree on the timing and rate of deployment of the initial fleet.


(b)           Fleet
Additions.  Midwest and SkyWest agree
that, subject to availability of aircraft on economic terms acceptable to
Midwest and SkyWest, SkyWest will, at the written request of Midwest, procure,
prepare, and put into service up to ten (10) additional Aircraft on the same
terms and conditions as apply to the initial fleet of fifteen (15) Aircraft.  This obligation shall be applicable only
until the second anniversary of the Effective Date of this Agreement.


(c)           Induction
and Termination Costs.  All one-time
expenses that are associated with inducting Aircraft and making them ready for
use pursuant to this Agreement shall be paid one hundred percent (100%) by
SkyWest.  [*]  In addition, Midwest shall reimburse SkyWest
for the cost of installing leather seat covers on the Aircraft.  All return costs and expenses associated with
the return of Aircraft shall be paid one hundred percent (100%) by SkyWest
without reimbursement by Midwest. 
Midwest’s obligation to reimburse SkyWest for certain expenses hereunder
is subject to the provisions of Section 5.02(e), below.


ARTICLE IV



ANCILLARY ARRANGEMENTS


4.01        Coordination
with SkyWest.


(a)           Schedules
and Timetables.  Midwest shall file
and maintain schedules with all applicable schedule distribution systems for
all Scheduled Flights, and such schedules shall be filed and maintained by
Midwest together with the schedules for its flights.  Midwest shall include and list all Scheduled
Flights providing Regional Airline Services in the schedule publication program
of Midwest.  SkyWest shall conform in all
respects to Midwest’s use of electronic schedules, timetables and contracts of
carriage.  Midwest shall include
Scheduled Flights operated by SkyWest in all appropriate flight information
systems on which Midwest flights are listed.



 11
 









 


(b)           Travel
Privileges.  Midwest and SkyWest
shall each be entitled to make available for their respective employees and
members of their respective Boards of Directors, those travel privileges as
mutually agreed to by the parties.


4.02        Ground
Handling.  Midwest
reserves the right to designate the ground handler at all locations served by
SkyWest pursuant to this Agreement.  At
cities designated by Midwest as Midwest Service Cities, Midwest or its
designated contractor shall provide the following functions:  (a) all gate and ticket counter check-in
activities, (b) all passenger enplaning/deplaning services, including but not
limited to sky cap and wheel chair services, (c) aircraft loading/unloading
services, including but not limited to airside busing, (d) passenger ticketing,
(e) aircraft cleaning, including but not limited to overnight cleaning, (f)
jetbridge maintenance (where applicable), (g) janitorial services, and (h)
deicing services (collectively, the “Ground Handling Functions”) at no charge
to SkyWest.  At cities jointly designated
by Midwest and SkyWest as SkyWest Service Cities, SkyWest shall provide the
Ground Handling Functions.  At mutually
agreeable Contracted Service Cities, SkyWest shall provide the Ground Handling
Functions utilizing a contract agent. 
Should a city be designated as a SkyWest Service City or a Contracted
Service City, Midwest and SkyWest shall mutually agree on the cost per turn
(cycle) and Pass-Through Expenses that Midwest will pay for the Ground
Handling Functions and Exhibits 5.03(b) and 5.06 shall be
amended to reflect the terms of such agreement. 
Midwest shall give as much notice as practicable of the designation of a
SkyWest Service City or a Contracted Service City, but in no event will such
notice be less than ninety (90) days unless mutually agreed.


4.03        Facilities.


(a)           Hub
Cities.  SkyWest will sublease from
Midwest airport facilities at the Hub Cities as set forth in mutually agreeable
sublease agreements, at no expense to SkyWest. 
In the event SkyWest requires additional facilities at any of the Hub
Cities caused by the expansion of Regional Airline Services, Midwest shall use
its reasonable efforts to obtain such facilities and provide them to SkyWest at
no charge to SkyWest.  Midwest and
SkyWest agree that Midwest may relocate SkyWest to comparable facilities at the
Hub Cities, provided that Midwest pays SkyWest’s reasonable relocation
expenses.


(b)           Service
Cities.  At Midwest Service Cities,
Midwest shall provide SkyWest with the Ground Handling Functions pursuant to
Section 4.02, above, utilizing Midwest’s owned and/or leased premises and
equipment (including jetbridges where applicable) located thereon.  Midwest shall cooperate with SkyWest’s
efforts to become a signatory carrier at such airports; provided, however,
that if SkyWest becomes a signatory carrier at any such airport, SkyWest shall
vote as directed by Midwest on any matters submitted to the signatory carriers
for a vote.  At SkyWest Service Cities,
SkyWest shall be solely responsible for all of its facilities and equipment
requirements; provided, however, if Midwest owns and/or leases facilities
at a SkyWest Service City and elects to provide Ground Handling Functions to
SkyWest pursuant to Section 4.02, Midwest shall provide such services
utilizing Midwest’s owned and/or leased premises and equipment (including
jetbridges where applicable) located thereon. At a Contracted Service City,
SkyWest shall be solely responsible for all of its facilities and equipment
requirements.  In the event Midwest
exercises its right, pursuant to Section 4.02, to have a Midwest-designated
contract agent perform the Ground Handling Functions in a Contracted 



 12
 









 


Service City, Midwest
shall be solely responsible for all facilities and equipment requirements.
Midwest will determine in its sole discretion whether a jetbridge will be used
at all Service Cities.


(c)           Maintenance
Facilities.  SkyWest shall provide
and be solely responsible for all maintenance facilities necessary to the
provision of Regional Airline Services; provided, however, that
Midwest shall provide a reasonable amount of its present Milwaukee hangar
facilities for use by SkyWest, at no charge to SkyWest.  Notwithstanding the foregoing, Midwest may,
upon one hundred twenty (120) days written notice to SkyWest, utilize any
hangar space provided to SkyWest for any other purpose, and SkyWest shall make
other arrangements as necessary.  To the
extent that SkyWest was utilizing Midwest’s hangar facility in Milwaukee and is
required to make other arrangements pursuant to this paragraph, Midwest and
SkyWest shall mutually agree on an adjustment to the fixed costs in
Section 5.04.


(d)           Landing
Fees.  SkyWest shall be responsible
for payment of landing fees at all airports to which it provides Regional
Airline Services pursuant to this Agreement and at all airports to which a
Scheduled Flight, Non-Scheduled Flight or Charter Flight is
diverted.  The actual amount of landing
fees paid by SkyWest shall constitute Pass-Through Expenses pursuant to Exhibit 5.06.


(e)           Signage.  Subject to Governmental Regulations, SkyWest
shall display at all ticketing and check-in locations such signage or
other forms of advertisement to identify and promote Midwest’s service as
Midwest may specify and as approved by the relevant airport authority.  All signage utilizing the YX Identification
shall be provided by Midwest at its sole cost, shall be the property of Midwest
and shall be subject to the applicable provisions of Article VII, below.  SkyWest shall not use the SkyWest
Identification on any signage or other forms of advertisement used to identify
or promote the Regional Airline Services (except as otherwise required by
Governmental Regulations).


(f)            Facilities
Lease Option.  Notwithstanding
anything to the contrary in this Agreement, Midwest may, at its option, elect
to hold the leasehold interest in any facilities to be used by SkyWest at any
new or existing Service City, and in the event Midwest exercises this option
(i) Midwest shall enter into a facilities lease with the lessor of such
facilities, (ii) SkyWest shall utilize such facilities pursuant to a sub-lease
or facilities use agreement with Midwest, (iii) the rent/facilities charges
payable by SkyWest in such sub-lease or facilities use agreement shall be
the same as Midwest’s Direct Cost under the Facilities Lease for the facilities
used by SkyWest, (iv) the sub-lease or facilities use agreement shall
terminate when SkyWest ceases to operate Regional Airline Services at the
airport, and (v) Midwest shall lease facilities which are reasonably suitable
for SkyWest’s operational needs and, with respect to new Service Cities,
Midwest shall complete the leasing arrangements in a manner that will allow
SkyWest adequate time to prepare to commence Regional Airline Services at the
Service City as scheduled by Midwest.


4.04        Data
Communications. 
Midwest shall provide to SkyWest at all Service Cities and Hub Cities,
at Midwest’s sole expense, data circuit lines, any required data networking
equipment, the use of computer reservation terminals, printers and modems,
including hardware, software and maintenance support for such equipment (the “Data
Communication Equipment”).  



 13
 









 


Such Data Communication
Equipment shall be of the same type and quality as that used by Midwest in its
airline operations.  In connection with
the commencement of Regional Airline Services at a new Service City, Midwest
will provide SkyWest with Midwest’s standard Data Communication Equipment at
Midwest’s sole expense.  In addition,
Midwest shall provide SkyWest with access to Midwest’s private SABRE partition
during the term of this Agreement. 
Midwest and SkyWest shall enter into a separate written agreement with
respect to the information technology services to be provided by Midwest to
SkyWest in connection with the Regional Airline Services operated under this
Agreement.


4.05        Reservation
Services.  During the
term of this Agreement, Midwest shall handle, at its sole expense, reservations
for all passenger air transportation on Scheduled Flights operated by SkyWest
pursuant to this Agreement.  Reservations
shall be handled in the same manner and subject to the same standards utilized
by Midwest for its own reservations.  All
reservations shall be made in the name of Midwest unless otherwise required by
Governmental Regulations.  Midwest shall
be sole owner of any customer or passenger data relating to the Scheduled
Flights and related reservation services.


4.06        Ticketing Services and Ticketing Procedures.


(a)           Ticketing
Services.  At all of its ticketing
locations, Midwest shall, at its sole expense, sell, issue and exchange tickets
for passenger air transportation on all Scheduled Flights to be operated
pursuant to this Agreement utilizing Midwest ticket stock and all related
accounting forms printed with the Midwest logo, name and format (“Midwest
Tickets”).  Midwest hereby appoints
SkyWest as its agent, and SkyWest hereby agrees to act as Midwest’s agent, at
all SkyWest ticketing locations in connection with the sale and issuance of all
passenger tickets by SkyWest and with the same duties owed to Midwest in that
capacity as is customary in the industry between airlines.  At all of its ticketing locations, SkyWest
shall sell, issue and exchange Midwest Tickets for passenger air transportation
on all Scheduled Flights to be operated pursuant to this Agreement and to be
provided by and over the routes of Midwest (collectively, “Ticketing Services”).  Nothing in this Section 4.06(a) shall be
deemed to alter or conflict with the provisions of Section 9.01
hereof.  Air carriers and other agencies
other than Midwest may also issue tickets for travel to be performed by SkyWest.


(b)           Booking
and Ticketing Procedures.  The
procedures followed and standards applied by SkyWest in booking flights and
performing the Ticketing Services shall conform in all material respects to
Midwest’s own tariffs, procedures and standards applicable to the booking of
Midwest flights and the issuance of Midwest Tickets and to the collection and
remittance of the proceeds of such sales. 
SkyWest employees booking flights and performing Ticketing Services shall
adhere to Midwest’s procedures and standards as shall be provided to SkyWest in
writing.  In accordance with
Section 8.02, below, SkyWest shall be responsible for collecting and shall
pay to Midwest any Ticket Taxes and Fees required to be collected under
applicable law on Tickets sold by SkyWest utilizing Midwest ticket stock.


(c)           Frequent
Flyer Program.  SkyWest agrees to
accept Midwest frequent flyer tickets and to provide transportation services
pursuant to such tickets at no charge to Midwest.  All travel under the frequent flyer program
solely on SkyWest shall entitle a passenger to such credit as shall be
equivalent to the credit offered on Midwest for comparable mileage
segments.  



 14
 









 


Midwest will provide such
credit to members of its frequent flyer program who travel on SkyWest at no charge
to SkyWest.


(d)           Supplies.  Midwest shall, at its sole expense, provide
an adequate supply of ticket office forms and specialized supplies (such as
baggage tags, but excluding normal office supplies such as paper, stationery,
envelopes, memo pads and the like) bearing the YX Identification for use by
SkyWest subject to the applicable provisions of Article VII, below.


(e)           Ticketing
Costs.  All travel agency commissions
attributable to Scheduled Flights shall be Midwest’s expense.  Midwest shall pay all computer reservation
system fees attributable to passengers on Scheduled Flights.  In the event Governmental Regulations
preclude the payment of these fees by Midwest and SkyWest then pays them,
Midwest shall immediately begin paying SkyWest a “traffic referral” commission
on a semi-monthly basis in an amount equal to such fees formerly paid by
Midwest for SkyWest.  Such commission
shall be retroactive to the date on which such fees were no longer lawfully
paid by Midwest and shall be included in the semi-monthly payments to be
made by Midwest pursuant to Section 5.02.


4.07        Baggage
Handling Services. 
“Baggage Handling Services” shall consist of the following:


(a)           At
all Midwest Service Cities and Hub Cities, SkyWest and Midwest shall exchange
and transfer baggage in accordance with procedures to be mutually agreed upon
and generally utilized by the parties.


(b)           The
procedures utilized in performing such Baggage Handling Services shall conform
in all respects to Midwest’s own standards and procedures as adapted to SkyWest’s
Aircraft and operations.


(c)           For
purposes of baggage claims, SkyWest will be treated as if it were a party to
standard industry ticketing and baggage agreements with Midwest and other air
carriers.  SkyWest will make available at
the request of any passenger excess valuation insurance, if any, offered by
Midwest to the extent such insurance covers SkyWest’s flights and Midwest’s
flights.


4.08        Air
Cargo Handling Services. 
“Air Cargo Handling Services” shall consist of the following:


(a)           At
each location at which Midwest operates Ticketing Services, Midwest shall at no
charge to SkyWest accept Air Cargo for shipment on flights to be operated by
and over the routes of SkyWest or Midwest. Midwest shall issue air waybills
covering Air Cargo and shall prepare a “transfer manifest” for each SkyWest
flight on which there shall be an Air Cargo shipment which transfer manifest
shall set forth all Air Cargo to be carried on the flight.


(b)           Midwest
hereby appoints SkyWest as its agent, and SkyWest hereby agrees to act as
Midwest’s agent, at all SkyWest ticketing locations in connection with the sale
and issuance of all air waybills by SkyWest and with the same duties owed to
Midwest in that capacity as is customary in the industry between airlines.  SkyWest agrees to observe all Midwest
procedures and standards applicable to the issuance of air waybills and to the
collection and remittance of the proceeds of such sales.  SkyWest employees performing such duties
shall adhere to 



 15
 









 


Midwest’s procedures and standards as shall be provided to SkyWest in
writing.  In accordance with
Section 8.02, below, SkyWest shall be responsible for collecting and shall
pay to Midwest any Ticket Taxes and Fees required to be collected under
applicable law on air waybills sold by SkyWest utilizing Midwest air
waybills.  Nothing in this
Section 4.08(b) shall be deemed to alter or conflict with the provisions
of Section 9.01 hereof.  Air carriers
other than Midwest may also issue air waybills for cargo transportation to be
performed by SkyWest.


(c)           SkyWest
shall provide Air Cargo Handling Services at SkyWest’s ticketing locations for
and on behalf of Midwest for Air Cargo carried solely on SkyWest or on both a
SkyWest flight and a Midwest flight. 
Such handling services shall be performed in accordance with Midwest’s
procedures and standards as provided to SkyWest in writing, including but not
limited to (i) accepting all Air Cargo that Midwest accepts, such as pets/AVI
(other live animals), human remains, Priority Service (SPC) freight and
perishables, and U.S. Mail, unless otherwise mutually agreed, and (ii) keeping
facilities open at least one and one-half (1.5) hours before and one (1)
hour after each Scheduled Flight for customers to deliver and pick up Air
Cargo.


(d)           For
Air Cargo carried solely on SkyWest or on both an SkyWest flight and a Midwest
flight, SkyWest and Midwest shall charge rates in accordance with Midwest’s
applicable rates and tariffs; such revenues shall be paid 100% to and retained
by Midwest.


(e)           For
purposes of Air Cargo claims, SkyWest will be treated as if it were a party to
standard industry ticketing and baggage agreements with Midwest and other air
carriers.


(f)            Midwest
shall, at its sole expense, supply SkyWest with all necessary Air Cargo forms
and supplies in an agreed upon form with the YX Identification, subject to the
applicable provisions of Article VII, below. 
Midwest and SkyWest shall utilize such forms and supplies when accepting
Air Cargo for transport on SkyWest’s flights.


4.09        Use
of COMAT.  Midwest
and SkyWest shall each provide to the other, at no cost to the other and on a
non-discriminatory basis, access to its respective COMAT system for the
movement and acquisition of priority aircraft maintenance parts and other
company material.  Midwest’s failure to
deliver timely a maintenance component via COMAT, whether timely or at all,
shall not cause an affected Scheduled Flight to be excluded in calculating
SkyWest’s on-time performance and completion factors.  All access shall be consistent with Midwest’s
and SkyWest’s respective published COMAT procedures and policies, as amended
from time to time.  Midwest shall provide
to SkyWest at no cost and on a non-discriminatory basis, access to
Midwest’s VIP express cargo service to the extent necessary for Aircraft out of
service recovery.


4.10        Slots
and Route Authorities. 
During the term of this Agreement (including any Renewal Terms) or upon
the expiration or termination of this Agreement, Midwest may, in its sole
discretion, require SkyWest to transfer to Midwest or its designee at no charge
any airport takeoff or landing slots, route authorities or other regulatory
authorities as Midwest shall designate which have been or are being used for
Regional Airlines Services under this Agreement.



 16
 









 


4.11        Emergency
Response and Family Assistance.  Midwest and SkyWest shall enter into a
separate written agreement with respect to emergency response and family
assistance services to be provided to SkyWest by Midwest at no charge in
connection with the Regional Airlines Services operated under this Agreement.


ARTICLE V


REVENUES, PAYMENTS
AND SETOFF


5.01        Revenues.  SkyWest acknowledges and agrees that all
revenues resulting from the sale and issuance of passenger tickets and cargo
air waybills associated with the operation of the Aircraft and all other
sources of revenue associated with the operation of the Aircraft are the sole
property of Midwest, including without limitation ticket change fees and other
fees or charges which are applicable pursuant to Midwest’s tariffs,
unaccompanied minor fees, beverage and buy-on-board food services,
excess baggage fees and nonrevenue pass travel charges.


5.02        Payments
to SkyWest.


(a)           Reports.


(i)            Block Hours; Cycles.  SkyWest shall provide to Midwest periodic
reports with respect to the number of actual, completed (A) Block Hours and (B)
Cycles, of regional jet service flown by SkyWest (each in respect of Scheduled
Flights, Charter Flights and Non-Scheduled Flights) in accordance with
the following schedule in each calendar month during the term of this
Agreement:




	
  Day of Month Report Due

  	
   

  	
  Period Covered
  by Report

  
	
  [*]

  	
   

  	
  [*]

  






 


(ii)           A/C Months.  SkyWest shall also provide Midwest periodic
reports with respect to its A/C Months in accordance with the following
schedule in each calendar month during the term of this Agreement:




	
  Day of Month Report Due

  	
   

  	
  Period Covered
  by Report

  
	
  [*]

  	
   

  	
  [*]

  






 


(iii)          Pass-Through Expenses.  SkyWest
shall also provide Midwest periodic reports with respect to its Pass-Through
Expenses in accordance with the following schedule in each calendar month
during the term of this Agreement:




	
  Day of Month Report Due

  	
   

  	
  Period Covered
  by Report

  
	
  [*]

  	
   

  	
  [*]

  






 



 17
 









 


(b)           Payment
Schedule.


(i)            Provisional Block Hour, Cycle,
Fixed Cost and Monthly Margin Payments. 
On Monday of each week during the term of this Agreement, Midwest shall
remit to SkyWest by wire transfer of immediately available funds, as
provisional payments in arrears for the prior week, (A) the Provisional Block
Hour Payment, (B) the Provisional Cycle Payment, (C) the Provisional Fixed Cost
Payment and (D) the Provisional Monthly Margin Payment.


(ii)           Final Block Hour, Cycle, Fixed
Cost and Monthly Margin Payments. 
Midwest shall remit to SkyWest by wire transfer of immediately available
funds by the close of business on the 15th day of each calendar month (or the
next banking day if the 15th is a bank holiday), as final payments, (A) the
Final Block Hour Payment, (B) the Final Cycle Payment, (C) the Final Fixed Cost
Payment, and (D) the Final Monthly Margin Payment, for the month covered by the
Block Hour Report, the Cycle Report and the A/C Months Report furnished by
SkyWest pursuant to Sections 5.02(a)(i) and (ii), above, less the aggregate amount
of the Provisional Block Hour Payments, Provisional Cycle Payments, Provisional
Fixed Cost Payments and Provisional Monthly Margin Payments made by Midwest
pursuant to Section 5.02(b)(i), above, which are attributable to the preceding
month, adjusted on a pro-rata basis to account for any provisional payments
which cover less than seven (7) days in such week.


(iii)          Final Pass-Through Expense
and IOP Payments.  Midwest shall
remit to SkyWest by wire transfer of immediately available funds by the close of
business on the 30th day of each
calendar month (or the next banking day if the 30th is
a bank holiday), as final payments, (A) the Pass-Through Expense Payment,
and (B) the IOP Payment, if any, for the month covered by the Pass-Through
Expense Report furnished by SkyWest pursuant to Section 5.02(a)(iii).


(c)           Payment
Calculations.


(i)            Provisional Payments.  The provisional payments to be made to
SkyWest pursuant to Section 5.02(b)(i), above, shall be calculated as
follows for the applicable period:


(A)          Each
Provisional Block Hour Payment will be equal to the amount set forth on Exhibit 5.02(c)(i),
as such amount may be changed from time to time during the term of this
Agreement by mutual agreement of Midwest and SkyWest.


(B)           Each
Provisional Cycle Payment will be equal to the amount set forth on Exhibit 5.02(c)(i),
as such amount may be changed from time to time during the term of this
Agreement by mutual agreement of Midwest and SkyWest.


(C)           Each
Provisional Fixed Cost Payment will be equal to the amount set forth on Exhibit 5.02(c)(i),
as such amount may be changed from time to time during the term of this
Agreement by mutual agreement of Midwest and SkyWest.


(D)          Each
Provisional Monthly Margin Payment will be equal to [*].



 18
 









 


(ii)           Final Block Hour, Cycle, Fixed
Cost and Monthly Margin Payments. 
The final payments to be made to SkyWest pursuant to
Section 5.02(b)(ii), above, shall be calculated as follows for the
applicable month:


(A)          The
Final Block Hour Payment will be equal to the sum of the results of the
following calculation for each Block Hour Cost Element:  the applicable Block Hour Rate for each Block
Hour Cost Element shall be multiplied by the number of actual, completed Block
Hours reported in the Block Hour Report for such month for Scheduled Flights,
Non-Scheduled Flights and Charter Flights.


(B)           The
Final Cycle Payment will be equal to the sum of the results of the following
calculation for each Cycle Cost Element: 
the applicable Cycle Rate for each Cycle Cost Element shall be
multiplied by the number of actual, completed Cycles reported in the Cycle
Report for such month for Scheduled Flights and Non-Scheduled Flights.


(C)           The
Final Fixed Cost Payment will be equal to the sum of the results of the
following calculation for each Fixed Cost Element:  the applicable Fixed Cost Rate for each Fixed
Cost Element shall be multiplied by the number of A/C Months in the A/C Months
Report for such month.


(D)          The
Final Monthly Margin Payment will be equal to [*].


(iii)          Final Pass-Through Expense
and IOP Payments.  The final payments
to be made to SkyWest pursuant to Section 5.02(b)(iii), above, shall be
calculated as follows for the applicable month:


(A)          The
Pass-Through Expense Payment will be equal to the aggregate amount of the
Pass-Through Expenses reported in the Pass-Through Expense Report
for such month.


(B)           The
IOP Payment, if any, will be determined in accordance with
Section 5.03(c), below.


(d)           Audit
Right.  All reports submitted by
SkyWest pursuant to Section 5.02(a), above, shall be subject to audit by
Midwest.  SkyWest agrees to provide
Midwest with any documentation reasonably requested by Midwest in connection
with any such audit.  Payment by Midwest
of any amount to SkyWest pursuant to Section 5.02(b), above, shall not
constitute acceptance by Midwest of SkyWest’s reports or affect Midwest’s audit
rights.  Any amount disputed by Midwest
may be offset against its next scheduled payment due to SkyWest.  Disputed amounts must be paid promptly
following the resolution of the dispute.


(e)           Payment
Schedule.  Notwithstanding anything
in this Agreement to the contrary, Midwest shall not be obligated to pay or
reimburse any amount to SkyWest, pursuant to this Article V, or any other
Section of this Agreement, including without limitation, Section 3.02(c),
until after deployment of the initial Aircraft pursuant to
Section 3.02(a).



 19
 









 


5.03        Block
Hour and Cycle Rates; IOP Program Adjustment.


(a)           Block
Hour Rates.  The Block Hour Rate for
2007 for each Block Hour Cost Element will be as set forth on Exhibit 5.03(a).  The 2007 Block Hour Rates will be increased
by [*] each calendar year during the term
of this Agreement.


(b)           Cycle
Rates.  The Cycle Rate for 2007 for
each Cycle Cost Element will be as set forth on Exhibit 5.03(b).  The 2007 Cycle Rates will be increased by [*] each calendar year during the term of this Agreement.


(c)           IOP
Program Incident Adjustment.  If
during any month during the term of this Agreement, SkyWest cancels one or more
Scheduled Flights in connection with one or more IOP Program Incidents, Midwest
shall pay to SkyWest an amount determined in accordance with the following
formula:


[*]


5.04        Fixed
Costs.  The Fixed
Cost Rate for 2007 for each Fixed Cost Element will be as set forth on Exhibit 5.04.  The 2007 Fixed Cost Rates will be increased
by [*] each calendar year during the term
of this Agreement, except for the Fixed Cost Rate for the Aircraft Ownership
Fixed Cost Element, which shall remain at the 2007 Fixed Cost Rate throughout
the term of this Agreement.


5.05        Fuel.


(a)           Fuel
Administration.  As soon as
practicable, Midwest will provide to SkyWest the following fuel-related
administrative services:  (i) negotiation
of fuel supply, fuel storage and into-plane service contracts for the
Aircraft, (ii) payment of all into-plane and fuel invoices in respect of
the Aircraft, (iii) monthly reconciliations (by the 22nd of the following month) with respect to fuel
boarded, inventory and purchases, and (iv) monthly reports with respect to fuel
boarded by station, flight number and Aircraft.


(b)           Outside
Fuel.  To the extent that fuel is
purchased by SkyWest outside of the contracts provided for in
Section 5.05(a) because of irregular operations or the unavailability of
contract fuel at a Service City, SkyWest will (i) include the actual fuel cost
paid by SkyWest on a Pass-Through Expense Report, and (ii) provide
Midwest with a report of fuel boarded by station, flight number and Aircraft,
along with fuel on board before fueling and at arrival for each affected
flight.


(c)           Fuel
Burn Limitation.  Midwest’s
obligation for payment for fuel, pursuant to Sections 5.05(a) and (b) is
limited to the Planned Fuel Burn Rate. 
Midwest will calculate the actual Fuel Burn Rate each month based on the
information from Sections 5.05(a) and (b), as well as the actual fuel
price paid, inclusive of all taxes and into-plane fees, and net of any
hedge benefit or detriment.  The fuel
burn guarantee assumes a stage length of [*].  To the extent that the actual Fuel Burn Rate
exceeds the Planned Fuel Burn Rate for any month, then Midwest will calculate
the Excess Fuel Cost as follows:


 



 20















 


[*]


Midwest will invoice SkyWest for the Excess Fuel Cost,
if any, on a monthly basis, and deduct any Excess Fuel Cost from the next
payment due to SkyWest pursuant to Section 5.02(b).


(d)           Audit
Rights.  SkyWest shall have the right
to audit on a semi-annual basis the determination of the number of
gallons of aircraft fuel boarded and shall report any disputes to Midwest.  Any dispute not reported to Midwest within[*] days of the conclusion of such audit shall be deemed
waived.  Midwest shall have the right to
audit on a monthly basis the determination of the number of gallons of aircraft
fuel boarded and fuel price paid and shall report any disputes to SkyWest.  Any dispute not reported to SkyWest within [*] days of the conclusion of such audit shall be deemed
waived.


(e)           SkyWest
Reporting Procedures.  To the extent
that SkyWest is operating any SkyWest Service Cities, or its designee is
operating any Contracted Service Cities, SkyWest or its contractor will comply
with Midwest’s fuel reporting procedures.


(f)            Fuel
Burn Review.  At any time when
Midwest publishes a schedule of Regional Airline Services that materially
changes the average stage length of the Regional Airline Services, Midwest and
SkyWest will agree on any required change to the Planned Fuel Burn Rate and the
revised Planned Fuel Rate will be used thereafter until changed pursuant to
this Section 5.05(f).


5.06        Pass-Through
Expenses.  Midwest
shall reimburse SkyWest, in accordance with Section 5.02(b)(iii), above,
for the actual amount of the Pass-Through Expenses specified on Exhibit 5.06
which are incurred by SkyWest in connection with its provision of the Regional
Airline Services.  Beginning with the
month in which the initial Aircraft is deployed pursuant to Section 3.02(a),
above, SkyWest shall prepare a monthly Pass-Through Expense Report
pursuant to Section 5.02(a)(iii), above, which such report shall include
appropriate documentation for each Pass-Through Expense included thereon.


5.07        Billing.  Midwest and SkyWest shall bill each other on
a monthly basis in respect of amounts owed to each other under this Agreement
not contemplated under Sections 5.02 and 5.08.  If such billed items are not paid by a party
within [*] days of the statement date, the
aggregate amount of undisputed items may be offset against or included in the
next scheduled wire transfer pursuant to Section 5.02(b).  Disputed amounts must be paid when the
dispute is resolved, provided that such amount may be set off against or included
in the next scheduled wire transfer pursuant to Section 5.02(b) if the
formerly disputed amount is not paid within seven (7) days of resolution.  Midwest may also offset against the next
scheduled wire transfer pursuant to Section 5.02(b) the amount of any
payment with respect to which SkyWest shall have defaulted and shall have
failed to cure before the expiration of any applicable grace period.


5.08        Performance
Levels — Incentives and Penalties.


(a)           SkyWest
shall be subject to certain target performance levels and incentives or
penalties as described in this Section 5.08(a) (“Performance Criteria”).  The performance of SkyWest during each
Performance Period will be measured against each of the Performance 



 21
 









 


Criteria. Any incentive
or penalty associated with achievement against the Performance Criteria shall
be made in the next scheduled wire transfer pursuant to
Section 5.02(b)(i), either as an increment to the amount otherwise due and
payable or as an offset thereto, as the case may be.  Achievement of each criterion is independent
of the others.  The applicable
Performance Criteria and associated targets, incentives and penalties shall be
based on [*] for each Performance Period and
calculated as follows:


(i)            Completion Factor (calculated in
accordance with Section 2.10(a)):


[*]


(ii)           On-Time Factor (calculated in
accordance with Section 2.10(b)):


[*]


(iii)          Mishandled Luggage Factor (calculated
in accordance with Section 2.10(c)):


[*]


(iv)          Customer Complaints Factor (calculated
in accordance with Section 2.10(d)):


[*]


(v)           Care Check Score (calculated in
accordance with Section 2.10(e)):


[*]


(vi)          Customer Experience Pulse (calculated
in accordance with Section 2.10(f)):


[*]


(b)           Calculations.  The parties agree that the Performance
Criteria targets described in Section 5.08(a), above, shall be calculated
for each Performance Period during the term of this Agreement and shall be
equal to [*] for each of the Performance
Criteria for such Performance Period (“[*]”).  After [*] for a
Performance Period has been calculated for each of the Performance Criteria,
Midwest shall calculate [*] for
purposes of this Section 5.08 and Section 2.10, below, based on [*].  Within two (2)
months after the end of each Performance Period, Midwest shall provide SkyWest
with its calculations of (i) [*] for each of
the Performance Criteria for such Performance Period, and (ii) the [*] required by this Section 5.08 and
Section 2.10, below.


(c)           Reconciliation
of Performance Standards.  Within
thirty (30) days after the end of each Performance Period, (i) SkyWest
shall determine the total number of actual flights operated by it during such
Performance Period, (ii) SkyWest shall calculate its Completion Factor and
On-Time Factor for such Performance Period, and (iii) Midwest shall
determine SkyWest’s 



 22
 









 


incidences of mishandled luggage,
its number of customer complaints, its Care Check score and its Customer
Experience Pulse score for such Performance Period.  Within thirty (30) days after Midwest
provides SkyWest with the calculations of [*] and related
[*] pursuant to Section 5.08(b),
above, for such Performance Period, Midwest shall prepare and deliver to
SkyWest (i) a reconciliation of SkyWest’s actual performance to the
targeted performance with respect to each of the Performance Criteria, and
(ii)  a written calculation of the resulting penalty and/or incentive
payments payable by or to SkyWest for such Performance Period.  Midwest and SkyWest will have the right to
audit the determinations and calculations prepared by the other pursuant to
this Section 5.08 and shall report any discrepancies to the other.  Any discrepancy not reported in writing
within [*] days of the end of any Performance
Period shall be deemed waived.  The
payment in respect of any discrepancy shall be handled as a disputed amount in
accordance with Section 5.07.


(d)           Additional
Performance Criteria.  During the
term of this Agreement, Midwest may propose other performance criteria for
SkyWest’s operations pursuant to this Agreement.  The parties agree that they will meet upon
the introduction of additional performance levels for Midwest’s operations to
develop similar performance targets for SkyWest, taking into account the
differences in operations between the two companies, and shall use their best
commercially reasonable efforts to develop a system of performance levels and
incentives/penalties for SkyWest’s performance with respect thereto in a manner
consistent with the performance standards agreed to herein.


5.09        Credit
Card Chargebacks.


(a)           SkyWest
shall be billed for credit card chargebacks resulting from SkyWest’s
noncompliance with Midwest’s credit card acceptance procedures at any stations
that are SkyWest Service Cities or Contracted Service Cities.  Midwest shall apply the same card acceptance
procedures and standards to SkyWest as applied to Midwest by Midwest’s credit
card contractors.  Midwest will inform
SkyWest in writing regarding any material changes in Midwest’s agreements with
its credit card contractors to the extent such changes will impact the
procedures and standards to be applied by SkyWest.


(b)           With
respect to all credit card charge forms returned to SkyWest by Midwest, Midwest
will furnish SkyWest with a complete written explanation of the reason
therefor, accompanied by relevant documentation received from the credit card
issuer or credit card holder.


(c)           Upon
receipt of a chargeback, SkyWest shall have a reasonable period of time, but
not to exceed thirty (30) days, to review the validity of the chargeback
notice.  If the chargeback is valid
(within the scope of the circumstances for the chargeback), SkyWest shall remit
to Midwest within thirty (30) days a gross amount equal to such credit card
charge form.  If, in SkyWest’s good faith
opinion, the chargeback is not valid, SkyWest will so notify Midwest and
provide Midwest with a complete written explanation of the transaction together
with any necessary supporting documentation within the thirty (30)-day
period.



 23
 









 


(d)           All
revisions to Midwest’s credit card acceptance procedures must be in writing and
must be submitted to SkyWest [*] days in advance of the effective date of such
procedures or such shorter notification period as Midwest may utilize in
notifying its own personnel.


5.10        Returned
Checks.


(a)           SkyWest
shall be billed pursuant to Section 5.07, above, for all returned checks resulting
from SkyWest’s non-compliance with Midwest’s check acceptance procedures.


(b)           With
respect to all returned checks, Midwest will furnish SkyWest with a complete
written explanation of the reason therefor, accompanied by relevant
documentation.


(c)           SkyWest
shall refund Midwest the full amount of the dishonored check within thirty (30)
days.  If, in SkyWest’s reasonable
opinion, the charge is not valid, SkyWest will so notify Midwest and provide
Midwest with a complete written explanation of the transaction together with
any necessary supporting documentation within the thirty (30)-day period.


(d)           All
revisions to Midwest’s check acceptance procedures will be in writing and will
be submitted to SkyWest [*] days in
advance of the effective date of such procedures or such shorter notification
period as Midwest may utilize in notifying its own personnel.


ARTICLE VI



REPORTING OBLIGATIONS,

AUDITING, INSPECTIONS AND CONFIDENTIALITY/PUBLICITY


6.01        Reporting
Obligations.


(a)           Certain
Notices to Midwest.  SkyWest shall
provide Midwest the reports specified in Sections 2.11(a), 5.02(a) and
5.05(b), above, and shall report to Midwest not later than the last day of each
month its Completion and On-Time Factors for the previous month related
to the Regional Airline Services provided hereunder.  Upon the reasonable prior written request by
Midwest, SkyWest shall make available its books and records related to its
completion and on-time factors in connection with the Regional Airline Services
provided hereunder.


(b)           Certain
Notices to SkyWest.  Midwest shall
report to SkyWest not later than the last day of each month the number of
incidences of mishandled luggage, the number of customer complaints, the Care
Check score and the Customer Experience Pulse score for the previous month
related to the Regional Airline Services provided hereunder.  Upon the reasonable prior written request by
SkyWest, Midwest shall make available its books and records related to
incidences of mishandled luggage and customer complaints, and the Care Check
and Customer Experience Pulse in connection with the Regional Airline Services
provided hereunder.


6.02        Audits.  SkyWest shall maintain complete and accurate
books and records to support and document all revenues, costs and expenses
related to the Aircraft and the Regional Airline Services provided hereunder in
accordance with GAAP.  Midwest and any
consultants engaged by Midwest shall be entitled, upon reasonable notice to
SkyWest, to audit and inspect (a) tickets, air waybills, exchange orders, refunds
and other records relating to sales and refund 



 24
 









 


activity pertaining to
the Regional Airline Services, and (b) all financial records related to the
Regional Airline Services pertaining to the calculation of the Pass-Through
Expenses.


6.03        Inspections.  Midwest shall be entitled to conduct on-site
observations of SkyWest’s in-flight service, flight, maintenance,
customer service (training) processes that apply to the Regional Airlines
Services, technical operations, gate check-in service, ground operations,
aircraft cleaning and any and all other services and operations performed under
this Agreement to monitor SkyWest’s operations in the same manner as similar
functions are evaluated at Midwest.  The
purpose of such inspections shall be to determine SkyWest’s compliance with
applicable Governmental Regulations, state and local laws, equipment
manufacturer’s instructions and the standards established by this
Agreement.  SkyWest’s operations will be
evaluated according to the same standard as Midwest taking into account the
differences in size and operational capabilities between the two airlines.  Such inspections may be announced or
unannounced, but under no circumstances shall they interfere with the operation
of SkyWest’s business.  Midwest shall report
the findings of any such inspection to SkyWest in writing.  SkyWest shall provide a timely written
response detailing a plan of corrective action to remedy any deficiencies noted
in an inspection.  If any deficiency
comes to the attention of SkyWest through audits or any other means, SkyWest
shall take immediate corrective action.


6.04        Confidentiality/Publicity.  Each of Midwest and SkyWest agrees that,
except as otherwise required by Governmental Regulations or any other
applicable law, it shall not disclose to others and shall keep confidential the
terms of this Agreement and any confidential, non-public information
concerning the other that it obtains as a result of or pursuant to this
Agreement.  SkyWest shall not issue any
press release or public announcement relating to new Scheduled Flights, the
cessation of Scheduled Flights in any Service City, schedule changes, customer
initiatives, pricing or yield management programs, or marketing programs or
promotions, without Midwest’s prior written approval of the press release or
public announcement.  In any such press
release or public announcement, SkyWest shall identify itself as a Midwest
Connect Carrier.


ARTICLE VII



MIDWEST IDENTIFICATION


7.01        Identification
License.  Midwest
hereby grants to SkyWest a non-exclusive, non-transferable, non-sublicensable
license to use the YX Identification in connection with its operation of the
Regional Airline Services as authorized hereunder.


7.02        Designator
License.  Midwest
hereby grants to SkyWest a non-exclusive, non-transferable, non-sublicensable
license to use the Designator in connection with its operation of the Scheduled
Flights, Non-Scheduled Flights and Charter Flights as authorized
hereunder.


7.03        New
Identifications. 
From time to time in its sole discretion, Midwest may change any YX
Identifications and/or Designators upon notice to SkyWest.  After receipt of such notice, SkyWest shall,
as soon as practicable, but no later than thirty (30) days thereafter, commence
use solely of the new YX Identifications and/or Designators and cease all use
of any 



 25
 









 


superseded ones.  Midwest shall reimburse SkyWest for the
reasonable out-of-pocket expenses incurred by SkyWest in making
such changes which are pre-approved in writing by Midwest.


7.04        Use
of Identification. 
The Midwest Group shall have exclusive control over the use and display
of all YX Identifications and Designators, and SkyWest shall comply with all
policies and guidelines of the Midwest Group in this regard.  SkyWest shall use the YX Identifications and
Designators in good faith, in a dignified manner and in compliance with good
trademark practice.  SkyWest shall use
the YX Identifications and Designators exactly as prescribed by the Midwest
Group, and shall not use (i) any stylization, abbreviation or variation thereof
or (ii) the YX Identifications and Designators in connection or combination
with any other Identification, in each case, without the Midwest Group’s prior
written consent, which may be withheld in its sole discretion.


7.05        Quality
Control.  SkyWest
shall use the YX Identifications and Designators only in connection with
products and services that comply with the high standards of quality associated
with Midwest.  At Midwest’s request,
SkyWest shall submit representative samples to the Midwest Group of all uses by
SkyWest of the YX Identifications and Designators pursuant to this Agreement,
including Sections 2.02, 4.03(e), 4.06(d) and 4.08(f).  SkyWest shall receive the prior written
approval of the Midwest Group for any new uses of the YX Identifications and
Designators, including on any advertising and promotional materials.  Once such approval is received, SkyWest need
not resubmit such materials for approval unless they contain non-trivial
modifications.


7.06        Reservation
of Rights.  All
rights not expressly granted to SkyWest hereunder are expressly reserved by the
Midwest Group, including without limitation the right to use or license others
to use any YX Identifications or Designators. 
SkyWest shall not use the YX Identification or Designator except as
expressly authorized herein, and has no right to use any other Identification
of the Midwest Group other than the specific YX Identification in the exact
form prescribed by the Midwest Group from time to time.


7.07        Ownership.  SkyWest hereby acknowledges that, as between
the parties, Midwest, or an Affiliate of Midwest, including but not limited to
YX Properties, LLC (hereinafter collectively, the “Midwest Group”) is the sole
owner of the names “Midwest,” “Midwest Airlines,” and “Midwest Connect,” the
initials “YX,” and any Designators or YX Identifications, and any and all
trademarks, service marks, trade names or logos related thereto or otherwise
licensed to SkyWest hereunder.  SkyWest
agrees not to directly or indirectly question attack, contest or impugn the
validity and/or the Midwest Group’s rights in the Designators and YX
Identifications, including without limitation by attempting to register title
to or any intellectual property rights in same or by participating in any
action or proceeding adverse to the Midwest Group in this regard.  SkyWest agrees to cooperate fully with the
Midwest Group in all actions to enforce, police and defend the Midwest Group’s
rights in the Designators and YX Identifications, subject to reimbursement for
its pre-approved out-of-pocket expenses.  SkyWest shall execute any documents the
Midwest Group considers necessary or appropriate to evidence or perfect the
Midwest Group’s entire and exclusive ownership of its intellectual property
rights.


7.08        Termination.  Should this Agreement expire or terminate for
any reason, the licenses in Sections 7.01 and 7.02 shall immediately terminate
(although Sections 7.07 and 7.08 



 26
 









 


shall survive), and
SkyWest shall promptly, but in any event within ninety (90) days (one hundred
twenty (120) days with respect to any distinctive color scheme), take all such
actions as may be necessary to change its facilities, equipment, uniforms,
supplies and other materials to cease all use of any Designators and YX
Identifications and to avoid any customer confusion or the suggestion or
appearance that SkyWest continues to have an operating relationship with
Midwest.


7.09        Bankruptcy.  The parties intend that the identity of
SkyWest as the licensee hereunder is a material condition to Midwest’s granting
of the licenses in Sections 7.01 and 7.02, above, and that this Agreement
should be construed overall as a contract for the personal services of
SkyWest.  Therefore, in the event SkyWest
becomes subject to a bankruptcy proceeding, the parties intend that this
Agreement shall not be assumed and/or assigned by SkyWest or its representative
without the Midwest Group’s consent.


ARTICLE VIII



TAXES AND FEES


8.01        Taxes
and Fees.


(a)           SkyWest
shall be liable for and pay the amount of any taxes (other than Ticket Taxes
and Fees which are addressed separately in Section 8.02, below), duties,
license fees, assessments, and other charges, together with any interest and
penalties thereon, levied, assessed, or imposed by any federal, foreign, state
or local taxing or airport authority related or attributable to (i) the
property owned or used by SkyWest, and (ii) the performance of Regional Airline
Services pursuant to this Agreement.


(b)           Excluded
from the coverage of Section 8.01(a) are any taxes based on the net income
of Midwest.


8.02        Ticket
Taxes and Fees.


(a)           For
all sales by SkyWest using Midwest ticket stock or air waybills, SkyWest shall
be responsible for (i) collecting all Ticket Taxes and Fees, and (ii) remitting
such Ticket Taxes and Fees to Midwest at the same time as the revenues to which
the Ticket Taxes and Fees relate are received by Midwest; provided, however,
that all Ticket Taxes and Fees shall be remitted to Midwest no less than three
(3) business days prior to the date such Ticket Taxes and Fees must be remitted
to the appropriate governmental entity. 
Midwest then shall be responsible for remitting to the appropriate
governmental entities and taxing authorities Ticket Taxes and Fees remitted by
SkyWest to Midwest.


(b)           SkyWest
shall indemnify, defend, and hold harmless Midwest and its current or former
officers, directors, employees, agents, and its affiliates (the “YX Indemnitees”)
from and against all assessments or payments for Ticket Taxes and Fees related
to all sales by SkyWest using Midwest ticket stock or air waybills, and any
interest and/or penalties related thereto. 
This indemnification specifically includes, but is not limited to,
assessments or payments under Sections 4261, 4263, 4271, 4291, 6662, 6672, 6861
or 7275 of the Internal Revenue Code of 1986, as amended, and any successor
provisions.  SkyWest further agrees as
part of this 



 27
 









 


indemnification to
reimburse the YX Indemnitees for any reasonable out-of-pocket
expenses, including attorneys’ fees and expenses, the YX Indemnitees have
incurred in connection with any such assessment or payment.  The obligations of SkyWest under this
Section 8.02(b) shall remain in effect and shall survive without
limitation the termination of this Agreement.


8.03        Property
Tax, Fuel Tax, and Sales and Use Tax Compliance.


(a)           With
respect to fuel taxes, Midwest and SkyWest shall cooperate to ensure that
SkyWest is filing appropriate fuel tax returns and refund claims to minimize
SkyWest’s taxes.  Midwest shall determine
which entity, Midwest or SkyWest, shall be responsible for preparing and filing
appropriate fuel tax returns and refund claims. 
Unless Midwest determines otherwise and notifies SkyWest in writing,
SkyWest shall be responsible for all SkyWest fuel tax filings and payments.
Upon the request of Midwest, Midwest shall be entitled to review any actual or
proposed SkyWest fuel tax filings. 
SkyWest shall notify Midwest of the commencement of any fuel tax
audit.  SkyWest shall receive approval
from Midwest prior to resolving any fuel tax audit.


(b)           With
respect to sales and use taxes, Midwest and SkyWest shall cooperate to ensure
that SkyWest is filing appropriate sales and use tax returns and refund claims
to minimize SkyWest’s taxes.  Midwest
shall determine which entity, Midwest or SkyWest, shall be responsible for
preparing and filing appropriate sales and use tax returns and refund
claims.  Unless Midwest determines
otherwise and notifies SkyWest in writing, SkyWest shall be responsible for all
SkyWest sales and use tax filings and payments. 
Upon the request of Midwest, Midwest shall be entitled to review any
actual or proposed SkyWest sales and use tax filings. SkyWest shall notify
Midwest of the commencement of any sales or use tax audit.  SkyWest shall receive approval from Midwest
prior to resolving any sales or use tax audit.


(c)           To
the extent requested by Midwest, SkyWest shall cooperate with Midwest to
minimize SkyWest’s property, fuel, excise, sales, use, value-added, or
similar transactional taxes.  SkyWest
shall in good faith and using reasonable best efforts supply Midwest with such
information and documents reasonably requested by Midwest to minimize SkyWest’s
property, fuel, excise, sales, use, value-added, or similar transactional
taxes.  Unless Midwest determines otherwise,
SkyWest shall use its reasonable best efforts to seek any and all applicable
refunds or credits of excise, sales, use, value-added, or similar
transactional taxes paid by SkyWest.


ARTICLE IX


LIABILITY,
INDEMNIFICATION AND INSURANCE


9.01        Independent Contractor.


(a)           Except
for the limited purposes described in Sections 4.06(a) and 4.08(b), above,
SkyWest is an independent contractor under this Agreement.  The employees, agents and/or independent
contractors of SkyWest engaged in performing any of the services SkyWest is
obligated to perform pursuant to this Agreement shall be employees, agents and
independent contractors of SkyWest for all purposes and under no circumstances
shall employees, agents or independent contractors of SkyWest be deemed to be employees,
agents or independent



 28
 









 


contractors of
Midwest.  Except for the limited purposes
described in Sections 4.06(a) and 4.08(b), above, in performing its
obligations under this Agreement, SkyWest shall act, for all purposes, as an
independent contractor and not as an agent for Midwest.  Midwest shall have no supervisory power or
control over any employees, agents or independent contractors engaged by
SkyWest in connection with SkyWest’s performance of its obligations hereunder,
and all complaints or requested changes in procedure shall, in all events, be
transmitted by Midwest to a designated representative of SkyWest.  Nothing contained in this Agreement is
intended to limit or condition SkyWest’s control over its operations or the
conduct of its business as an air carrier, and SkyWest assumes all risks of
financial losses which may result from the operation of the air services to be
provided by SkyWest hereunder.


(b)           Midwest
is an independent contractor under this Agreement.  The employees, agents and/or independent
contractors of Midwest engaged in performing any of the services Midwest is to
perform pursuant to this Agreement shall be employees, agents and independent
contractors of Midwest for all purposes and under no circumstances shall
employees, agents and independent contractors of Midwest be deemed to be
employees, agents or independent contractors of SkyWest.  In performing its obligations under this
Agreement, Midwest shall act, for all purposes, as an independent contractor
and not as an agent for SkyWest.  SkyWest
shall have no supervisory power or control over any employees, agents or
independent contractors engaged by Midwest in connection with Midwest’s
performance of its obligations hereunder, and all complaints or requested
changes in procedure shall, in all events, be transmitted by SkyWest to a
designated representative of Midwest. 
Nothing contained in this Agreement is intended to limit or condition
Midwest’s control over its operations or the conduct of its business as an air
carrier.


9.02        Indemnification.


(a)           Each
party assumes full responsibility for any and all liability to its own
officers, employees and agents on account of injury or death resulting from or
sustained in the performance of its respective services under this Agreement.  Each party shall indemnify, defend, protect,
save and hold harmless the other party, its officers, employees, and agents
from and against any and all liabilities, claims, demands, suits, judgments,
damages and losses (including the costs, fees and expenses in connection
therewith and incident thereto) brought against the other party, its officers,
employees or agents by or on behalf of any other person, by reason of damage to
or destruction of property of any such person, or injury to or death of such person,
caused by or arising out of any act or omission by the indemnifying party
occurring while this Agreement is in effect. 
Notwithstanding the foregoing, neither party shall be liable for
indemnifying the other for claims of third parties if caused by the negligence
or willful misconduct of the other.  Each
party shall give the other party prompt and timely notice if it has actual
knowledge of any claim made or suit instituted against the other party which in
any way results in indemnification hereunder, and the other party shall have
the right to compromise, or participate in the defense of, such claim or suit
to the extent of its own interest.


(b)           Midwest
shall indemnify SkyWest against any physical loss of or damage to the Aircraft
caused by Midwest’s negligent operation of ground support equipment or other
acts or omissions of Midwest in performing Ground Handling Functions pursuant
to Section 4.02 above.  For the
avoidance of doubt, Midwest shall not be liable to SkyWest for any
consequential loss or 



 29
 









 


damage arising from
physical loss of or damage to the Aircraft, and SkyWest shall not make any
claim against Midwest and shall indemnify it against any liability in respect
of any and all such consequential loss or damage howsoever arising.


(c)           SkyWest
shall hold Midwest harmless from and against any physical loss of or damage to
the Aircraft, except as otherwise set forth in Section 9.02(b), above.


(d)           The
obligations of SkyWest and Midwest under the indemnity and insurance provisions
contained herein shall remain in effect and shall survive without limitation
the termination of this Agreement with respect to any occurrence or claims
arising during the term of or in connection with this Agreement.


9.03        Insurance.


(a)           SkyWest
agrees, at its sole expense, to maintain in full force and effect during the
term of this Agreement the following insurance coverage with respect to
Regional Airline Services, subject to policy terms, conditions, limitations and
exclusions which are standard in airline industry insurance policies:


(i)            Workers’ compensation and
occupational disease insurance, subject to the laws of the states wherein this
Agreement is being performed.  Such
coverage shall include employers liability insurance with a minimum limit of $[*] per incident.


(ii)           Comprehensive aviation bodily injury
and property damage liability insurance, with limits of not less than $[*] combined single limit per occurrence,
including, but not limited to, aircraft liability, passenger legal liability,
thirty party liability, liquor liability, premises, products (excluding
manufacturer’s products liability) and completed operations liabilities,
premises and property damage liability, hangar keepers liability and baggage,
mail and cargo liability.  Such insurance
shall include personal injury and contractual liability, and shall also include
war risk and allied perils, hijack and confiscation coverage with a limit of
not less than $[*] per
incident.  Upon written request from
Midwest, SkyWest agrees to consider in good faith a request from Midwest to
increase the insurance limits provided for in this clause (ii).


(iii)          All risk hull insurance on the
Aircraft, including hull war risk and allied perils coverage, subject to
SkyWest’s participation in a government-sponsored war risk program, or, if such
a government-sponsored program no longer exists, a comparable commercial
program.


(b)           Prior
to the commencement of Regional Airline Services under this Agreement and at
least annually thereafter, certificates of insurance in a form satisfactory to
Midwest shall be delivered to Midwest evidencing compliance with the insurance
terms of this Agreement.  The
certificates of insurance shall be of a type that unconditionally obligates the
insurer to notify Midwest in writing [*] days (or
such lesser period as may be available for war peril coverage) in advance of
the effective date in the event of any adverse material change in or
cancellation of such insurance.  The
policies of insurance required by paragraphs (ii) and (iii) of Section 9.03(a)
shall provide coverage for events which occur during the policy period, are
continuing in nature and not on a claims made basis, and shall include special
provisions that provide:


 



 30















 


(i)            that with respect to the interest of
Midwest, the insurance shall not be invalidated by any breach of warranty by
any other party;


(ii)           that a waiver of subrogation is
provided in favor of Midwest to the same extent SkyWest has waived its right of
recovery under the terms of the agreement; and


(iii)          that any waiver of rights of
subrogation against other parties by SkyWest will not affect the coverage
provided with respect to Midwest.


The policies of insurance required by paragraph (ii)
of Section 9.03(a) shall include special provisions that provide:


(i)            that the insurers acknowledge that
the indemnification and hold harmless provisions of this Agreement are insured
under SkyWest’s blanket contractual liability coverage;


(ii)           that Midwest, its officers, agents,
employees, affiliates and assigns are named as additional insureds thereunder
under the liability coverages, but only as respects the operations of SkyWest,
as their interests may appear;


(iii)          that the insurance is primary
irrespective of any insurance carried by Midwest; and


(iv)          except for the limit of liability, the
insurance shall operate in the same manner as if there were a separate policy
covering each additional insured, but nothing herein shall operate to increase
the insurer’s liability as set forth elsewhere in the policy beyond the amount
or amounts for which the insurer would have been liable if only one person of
interest had been named as insured.  The
inclusion of more than one corporation, person, organization, firm or entity as
insured under the policies shall not in any way affect the rights of any such
corporation, person, organization, firm or entity either as respects any claim,
demand, suit or judgment made, brought or recovered by or in favor of any other
insured, or by or in favor of any employee of such other insured.


ARTICLE X



TERM AND TERMINATION


10.01      Term.  This Agreement shall be effective as of the
Effective Date and, unless earlier terminated as provided herein, shall
continue in effect until June 30, 2012 (the “Initial Term”) and shall
thereafter automatically be extended for successive two (2) year renewal
periods (each a “Renewal Term”) upon the same terms and conditions unless  either party gives written notice to the
other party at least one (1) year prior to the expiration of the Initial Term
or any Renewal Term that such party intends not to renew this Agreement, in
which case the Agreement will terminate on the last day of the Initial Term or
then applicable Renewal Term, as the case may be.



 31
 









 


10.02      Termination
Upon Certain Events.


(a)           In
the event that SkyWest or Midwest (i) makes a general assignment for the
benefit of creditors or becomes insolvent, (ii) files a voluntary petition in
bankruptcy, (iii) petitions for or acquiesces in the appointment of any receiver,
trustee or similar officer to liquidate or conserve its business or any
substantial part of its assets, (iv) commences under the laws of any competent
jurisdiction any proceeding involving its insolvency, bankruptcy,
reorganization, readjustment of debt, dissolution, liquidation or any other
similar proceeding for the relief of financially distressed debtors, (v)
becomes the object of any proceeding or action of the type described in clause
(iii) or (iv), above, and such proceeding or action remains undismissed or
unstayed for a period of [*] days, or
(vi) is divested of a substantial part of its assets for a period of [*] days, then SkyWest (in the event the foregoing occurs
with respect to Midwest) or Midwest (in the event the foregoing occurs with respect
to SkyWest) may by written notice terminate this Agreement immediately.


(b)           Except
as otherwise provided in this Article X, in the event of a breach of a non-monetary
provision of this Agreement by either party which remains uncured for [*] days after receipt of written notification of such
breach by the non-defaulting party, or in the case of a breach requiring [*] days to cure, the defaulting party does not begin and
pursue with due diligence a method of cure within [*] days
after receipt of written notification specifying in reasonable detail the
nature of such breach from the non-defaulting party, then the non-defaulting
party may terminate this Agreement at its sole option.


(c)           In
the event of a breach of a monetary provision of this Agreement by either party
which remains uncured for [*] days after
receipt of written notification specifying in reasonable detail the nature of
such breach from the non-defaulting party, then the non-defaulting
party may terminate this Agreement at its sole option.


(d)           In
the event of a breach by SkyWest of any of the Customer Complaints Factor, the
Care Check Factor or the Customer Experience Pulse Factor performance standards
pursuant to Section 2.10, above, for a Performance Period, SkyWest shall
immediately take all necessary action to modify its operating procedures in an
effort to correct the deficiencies which caused such breach.  If, despite such corrective actions, SkyWest
breaches the same performance standard for the next succeeding Performance
Period, Midwest may terminate this Agreement at its sole option upon written
notice to SkyWest.


(e)           In
the event the Midwest Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Midwest Guaranty, or Midwest Air Group, Inc. shall fail
to comply with any of the terms or provisions of the Midwest Guaranty, or
Midwest Air Group, Inc. denies that it has any further liability under the
Midwest Guaranty, or give notice to such effect, SkyWest may terminate this
Agreement immediately upon written notice to Midwest.


10.03      Termination
by Midwest. 
Notwithstanding the provisions of Section 10.02, Midwest shall have
the right to terminate this Agreement immediately and at its sole option if:



 32
 









 


(a)           SkyWest
shall fail to comply with the provisions of Section 9.03 and, as a result
thereof, the insurance required thereunder is not in effect.


(b)           SkyWest
shall fail to comply with the provisions of Section 6.03.


 


(c)           More
than [*] of the Aircraft do not operate any
Scheduled Flights for more than seven (7) consecutive days or [*] of the Aircraft do not operate any Scheduled Flights for
more than twenty-one (21) consecutive days, other than as a result of (i)
an FAA order which grounds all commercial flights of all air carriers or
grounds a specific Aircraft type of all air carriers, (ii) scheduling action by
Midwest, or (iii) Midwest’s inability to perform its obligations under this
Agreement as a result of a strike by Midwest employees.


(d)           SkyWest’s
FAA or DOT Certification is for any reason suspended or revoked or otherwise
not in full force and effect so as to permit SkyWest to perform the Regional
Airline Services required under this Agreement.


(e)           A
Prohibited Change in Control shall occur.


(f)            SkyWest
or any SkyWest Affiliate shall default with respect to the material terms of
any other agreement between SkyWest or any SkyWest Affiliate and Midwest or any
Midwest Affiliate, and such default shall continue for more than the period of
grace, if any, specified therein and shall not have been waived.


(g)           The
SkyWest Guaranty shall fail to remain in full force or effect or any action
shall be taken to discontinue or to assert the invalidity or unenforceability
of the SkyWest Guaranty, or SkyWest, Inc. shall fail to comply with any of the
terms or provisions of the SkyWest Guaranty, or SkyWest, Inc. denies that it
has any further liability under the SkyWest Guaranty, or gives notice to such
effect.


ARTICLE XI


MISCELLANEOUS


11.01      Limitation
on Performance. 
The obligation of either Midwest or SkyWest to perform under the terms
of this Agreement shall be limited or modified by, and neither party shall be
deemed to be in default hereunder as a result of any of the following causes:


(a)           Acts
of God or the public enemy, civil war, insurrections or riots; fires, floods,
explosions, embargoes, earthquakes or serious accidents, epidemics, or
quarantine restrictions; any act of government, governmental priorities,
allocations, orders or Governmental Regulations affecting materials or
facilities, inability after due and timely diligence to procure materials,
accessories, equipment or parts; or due to any other cause to the extent it is
beyond that party’s practical control or not occasioned by that party’s fault
or negligence.


(b)           Cessation,
slow-down or interruption of work, or any other labor disturbance
involving Midwest.



 33
 









 


11.02      Mutual
Cooperation. 
Midwest and SkyWest shall use their reasonable best efforts to cooperate
with each other in performing their respective obligations under this
Agreement.


11.03      Representations
and Warranties. 
Except as expressly set forth herein, neither Midwest nor SkyWest shall
make any representations or warranties, expressed or implied, under or in
connection with this Agreement.


11.04      Assignment.  This Agreement may not be assigned by any
party without the prior written consent of the other party.


11.05      Guaranties.  Midwest’s obligations under this Agreement
are expressly subject to the condition precedent that SkyWest, Inc. execute and
deliver to Midwest the SkyWest Guaranty in form and substance satisfactory to
Midwest.  SkyWest’s obligations under
this Agreement are expressly subject to the condition precedent that Midwest
Air Group, Inc. execute and deliver the Midwest Guaranty in form and substance
satisfactory to SkyWest.


11.06      Equity
Investment. 
Midwest and SkyWest acknowledge that, in conjunction with the
negotiation of this Agreement, they and their respective Affiliates have been
engaged in discussions regarding a potential investment by SkyWest or one of
its Affiliates in certain equity securities of Midwest Air Group, Inc., the
parent company of Midwest (the “Equity Investment”).  As of the date of execution of this
Agreement, the final terms of the Equity Investment have not been
finalized.  SkyWest covenants and agrees
that, if so requested by Midwest, it, or one of its Affiliates acceptable to
Midwest, shall make the Equity Investment [*].


11.07      Governing
Law and Venue. 
This Agreement shall be governed in accordance with the laws of the
State of Wisconsin, notwithstanding the choice of law provisions thereof.  The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of courts of competent
jurisdiction located in Milwaukee County, Wisconsin for any actions, suits, or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby (and agree not to commence any action, suit, or proceeding
relating thereto except in such courts). 
The parties hereby irrevocably and unconditionally waive any objection
to the laying of venue on any action, suit, or proceeding arising out of this
Agreement or, the transactions contemplated hereby, in courts of competent
jurisdiction located in Milwaukee County, Wisconsin, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit, or proceeding brought in any such court
has been brought in an inconvenient forum.


11.08      Interline
and Other Agreements. 
Midwest agrees, to the extent it has the right to do so, to permit
SkyWest to avail itself of all its rights, privileges and amenities pursuant to
its interline agreements and all industry trade or other agreements between
Midwest and any other air carriers. Midwest shall take all action and execute
such documents as may be necessary to enable SkyWest to avail itself of the
maximum benefits afforded by such agreements. 
Subject to Midwest’s prior written approval, SkyWest may enter into
interline agreements with air carriers other than those air carriers covered by
the two preceding sentences.



 34
 









 


11.09      Employee
Nonsolicitation. 
Midwest and SkyWest agree that, during the term of this Agreement,
neither party will directly encourage any key administrative employee of the
other party who is actively involved in the administration of this Agreement to
terminate his/her employment with the other party or solicit such an individual
for employment.  This provision shall not
restrict either party from any form of general employee solicitations that are
not specifically directed at individual employees.  For purposes of this Agreement “key employee”
shall include the job titles for each of Midwest and SkyWest set forth on Exhibit 11.09.


11.10      Notices.  All notices given hereunder shall be given in
writing and shall be delivered in person or deposited in the United States
mail, certified or registered mail, return receipt requested, with adequate
postage prepaid, or given by courier, telex, facsimile, or other expedient
written means, addressed as follows:


If to Midwest:                                             Midwest
Airlines, Inc.

Best Care Campus — West Wing

6744 South Howell Avenue

Oak Creek, Wisconsin  53154-1402

Attn:  Director — Airline Partner
Services

Facsimile No:  (414) 570-9606


With
copies to:                                      Midwest
Airlines, Inc.

Best Care Campus — West Wing

6744 South Howell Avenue

Oak Creek, Wisconsin  53154-1402

Attn:  General Counsel

Facsimile No:  (414) 570-0080


If to SkyWest:                                           SkyWest
Airlines, Inc.

444 River Road

St. George, UT  84790

Attn:  Bradford R. Rich, Chief Financial
Officer

Facsimile No:  (435) 634-3305


With copies to:                                      SkyWest, Inc.

444 River Road

St. George, UT  84790

Attn:  Bradford R. Rich, Chief Executive
Officer

Facsimile No:  (435) 634-3305


or to such other address as the respective parties
hereto shall designate by notice in writing to the other party.  Notices shall be deemed received and given on
the date of delivery or the date of refusal of delivery as shown by the return
receipt.


11.11      Parties.  Except as provided to the contrary herein,
this Agreement, and the rights and obligations created hereunder, shall be
binding upon and inure to the benefit of the respective parties hereto and
their respective successors and permitted assigns.



 35
 









 


11.12      Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement.


11.13      Severability.  If any term of this Agreement shall be
judicially determined to be illegal, invalid or unenforceable at law or in
equity, it shall be deemed to be void and of no force and effect to the extent
necessary to bring such term within the provisions of any such applicable law
or laws, and such terms as so modified and the balance of the terms of this
Agreement shall remain enforceable.


11.14      Captions,
Section Headings and Table of Contents.  Captions, Section headings and the Table of
Contents used herein are for convenience only and are not a part of this
Agreement and shall not be used in construing it.


11.15      Availability
of Equitable Remedies; Procedures.


(a)           In
the event of a breach by either party of any provision of this Agreement, the
non-breaching party may give notice thereof to the breaching party, which
notice shall specify in reasonable detail the nature of the breach and shall
demand that the breaching party either cure the breach or refrain from conduct
constituting the breach (herein the “conduct”), as may be applicable.  If (i) the breaching party has not cured the
breach or refrained from the conduct, as may be applicable, within ten (10)
days following receipt of the notice from the non-breaching party, or
(ii) the breaching party does not begin within ten (10) days following receipt
of the notice to pursue with reasonable diligence a method of cure or begin to
take steps toward ceasing the conduct where the breach or conduct is such that
it requires more than ten (10) days to cure or to cease, as may be applicable,
then the non-breaching party may seek to compel performance by the
breaching party in accordance with the provisions of paragraph (b), below.  If, upon receiving a notice contemplated by
this paragraph (a), a breaching party believes that a breach has not occurred
or that the conduct specified in the notice does not constitute a breach of the
provisions of this Agreement, but the breaching party nonetheless cures the
alleged breach or refrains from the conduct within ten (10) days following
receipt of such notice, such party may thereafter proceed in accordance with
the provisions of paragraph (b), below, to seek a determination of whether a
breach occurred or whether the specified conduct constituted a breach of the
provisions of this Agreement.


(b)           Because
a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled, following
notification in accordance with the provisions of paragraph (a), above, to an
injunction restraining such breach or threatened breach and to specific
performance of any provision of this Agreement and, in either case, no bond or
other security shall be required in connection therewith, and the parties
hereby consent to the issuance of such injunction and to the ordering of
specific performance.  Further, in the
event any party refrains from the conduct of any activity alleged in a notice
received pursuant to paragraph (a), above, to constitute a breach of the
provisions of this Agreement, such party may thereafter proceed promptly to
bring an action in a court of competent jurisdiction located in Milwaukee County,
Wisconsin, for an expedited judicial determination as to whether the conduct
specified constitutes a breach of the provisions of this Agreement and, upon a
determination that the conduct does not constitute a breach, such party may
promptly thereafter recommence such conduct.



 36
 









 


11.16      Exhibits.  The Exhibits attached hereto are intended to
be an integral part of this Agreement and are incorporated into the Agreement
by reference for all purposes.


11.17      Integration
and Entire Agreement. 
This Agreement (including the Exhibits) and the ancillary documents
entered into in connection herewith are intended by the parties as a complete
statement of the entire agreement and understanding of the parties with respect
to the subject matter hereof and all matters between the parties related to the
subject matter herein and therein set forth. 
This Agreement may only be amended or modified by a written agreement
between SkyWest, on the one hand, and Midwest, on the other, which specifically
references this Agreement and expressly provides for such amendment.


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



 37
 









 


IN WITNESS WHEREOF, Midwest and
SkyWest have executed this Agreement on the day, month and year set forth
above.


	
  SKYWEST AIRLINES, INC.

  	
   

  	
  MIDWEST
  AIRLINES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Bradford R. Rich

  	
   

  	
  By:

  	
  /s/ Curtis E. Sawyer

  
	
   

  	
  Bradford R. Rich, Executive Vice President, Chief
  Financial Officer and Treasurer 

  	
   

  	
   

  	
  Curtis E.
  Sawyer, Senior Vice President and Chief Financial Officer 

  



 



 38














 


EXHIBIT
5.02(c)(i)


Provisional
Payments


	
   

  	
   

  	
  April

  2007

  	
   

  	
  May

  2007

  	
   

  	
  June

  2007

  	
   

  	
  July

  2007

  	
   

  	
  August

  2007

  	
   

  	
  September

  2007

  	
   

  	
  October 2007

  and each

  month

  thereafter

  	
   

  
	
  Provisional Block Hour
  Payment

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  Provisional Cycle
  Payment

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  Provisional Fixed Cost Payment

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  



 











 


EXHIBIT
5.03(a)


Block
Hour Cost Elements




	
  Block Hour Cost Element

  	
   

  	
  2007 Block Hour Rate

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  






 











 


EXHIBIT
5.03(b)


Cycle
Cost Elements




	
  Cycle Cost Element

  	
   

  	
  2007 Cycle Rate

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  






 











 


EXHIBIT
5.04


Fixed
Cost Elements




	
  Fixed Cost Element

  	
   

  	
  2007 Fixed Cost Rate

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  






 











 


EXHIBIT
5.06


Pass-Through
Expenses


[*]











 


EXHIBIT
11.09


Key
Employee Job Titles




	
  Midwest

  	
   

  	
  Sky West

  	
   

  
	
  [*]

  	
   

  	
  [*]