AGREEMENT BY ERICKSON, KAWERAK, AND DOT FOR ATNEP

COMPENSATION FOR AIR TRANSPORATION AT DIOMEDE, ALASKA,

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I. BACKGROUND AND PURPOSE

This agreement is entered into by and among the U.S. Department of Transportation (DOT or

Department), Erickson Helicopters, Inc., a wholly-owned subsidiary of Erickson Air-Crane,

Incorporated (Erickson), and Kawerak, Inc. (Kawerak), and each is hereinafter referred to

individually as the "Party" and collectively as the "Parties" for the provision by Erickson of Air

Transportation to Noneligible Places (ATNEP) at Diomede, Alaska (Diomede), pursuant to 49

U.S.C. § 41736. This agreement also sets forth the terms and conditions of payment to Erickson

of not more than $377,520 to provide such ATNEP. Under 49 U.S.c. § 41736(a)(1)(8), one-h11lf

of the total subsidy 0[$377,520 Erickson will be eligible to receive must be paid by Kawerak

and the remaining one-half shall be paid by DOT.

II. PARTIES' ROLES AND RESPONSIBILITIES

A. ERICKSON: Erickson will provide ATNEP at Diomede from July 1,2014, through

June 30, 2015, based on the level of service described in this agreement, and will provide

monthly claims for payment to DOT after commencing ATNEP at Diomede.

8. DOT: On July 8,2014, DOT issued an Order selecting Erickson. DOT is entering into

this Agreement, consistent with the Order, to establish the terms and conditions of

payment to Erikson for the services described in the Order and this agreement. After

reviewing Erickson's monthly claim for accuracy and conformance with the payout

provisions entered into in pursuit this agreement, DOT will notify Kawerak of its

obligation to pay 50 percent of that ATNEP compensation to Erickson. The total amount

to be paid by DOT from July 1,2014, through June 30, 2015, shall not exceed $188,76d.

After Kawerak provides proof to DOT that it has paid the monthly compensation due tol

Erickson, DOT will pay its equal share.

C. KAWERAK: Kawerak will pay 50 percent of Erickson's monthly claim for providing

ATNEP at Diomede to Erickson after receiving notice from DOT that such service has

been provided. The total amount to be paid by Kawerak from July 1,2014, through

June 30,2015, shall not exceed $188,760.

III. LEGAL AUTHORITY

This agreement is entered into pursuant to 49 U.S.C. § 41736 (Air Transportation to Noneligiblb

l Places).

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A. Erickson shall provide ATNEP services in accordance with the terms and conditions set

forth in t~e Order and Append~x A of.this agreement.I.. .. ..

B. The Parties understand that Enckson Intends to stage aircraft at Nome for Its eligible

flights to Diomede.

c. Erickson shall request reimbursement for ATNEP services as specified by this

Agreement.

IV. FLIGHT RATES

A. Erickson shall provide ATNEP at Diomede from July 1,2014, through June 30,2015,

based on the level of service indicated in Appendix A of this Agreement in exchange for

total compensation of not more than $377,520.

B. Erickson understands and agrees that 50 percent of the total compensation it will receivf

for providing ATNEP at Diomede from July 1,2014, through June 30, 2015, will be paid

by Kawerak and the remaining 50 percent will be paid by DOT, pursuant to 49 U.S.C. §

41736(a)(1 )(B).

C. After commencing ATNEP at Diomede on July 1,2014, Erickson shall file a monthly I

claim with DOT indicating the level of service it had provided in the prior month.

D. Upon receipt of each monthly claim from Erickson, DOT shall review the claim to ensure

accuracy and conformity with this agreement. Approval of each monthly claim from

Erickson shall not be unreasonably withheld. DOT will promptly notify Erickson with I

any questions regarding Erickson's monthly claims, and Erickson shall have the option to

resubmit a monthly claim if DOT requests changes that require resubmission.

E. After reviewing Erickson's monthly claim, DOT shall notify Kawerak that it is obligated

to pay 50 percent of Erickson's monthly claim.

F. Upon receiving notice from DOT, Kawerak shall pay 50 percent of Erickson's monthly

claim.

G. Upon payment of 50 percent of Erickson's monthly claim, Kawerak shall provide proof

to DOT that Kawerak has paid Erickson its share of Erickson's monthly claim.

H. Once DOT receives proof of payment by Kawerak to Erickson of 50 percent of I

Erickson's monthly claim, DOT shall then pay the remaining 50 percent of the monthly

claim to Erickson within fifteen (15) calendar days.

I. DOT agrees to continue to pay its 50 percent share of Erickson's monthly claims as long

as Erickson maintains the established level of ATNEP and Kawerak continues to pay itk

50 percent share. The Secretary of Transportation may also make appropriate I

adjustments in the level of ATNEP provided at Diomede per 49 U.S.c. § 41736(e).

J. The Parties understand and agree that the compensation to be paid by DOT to Erickson

for ATNEP at Diomede is calculated and distributed on U.S. DOT's fiscal year basis,

subject to the availability of funds.

v. TERMS AND CONDITIONS

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K. The Parties understand and agree that DOT is not responsible for any loss of any fundinJ

obtained by Kawerak tor payment of Kawerak's 50 percent share of Erickson's monthlYI

claims. i

L. Erickson understands and agrees that, in providing ATNEP at Diomede, passenger

service shall be given first priority, but mail and freight may be transported on a space-i

available basis. Because Erickson also provides mail delivery to Diomede pursuant to an

agreement with the United States Postal Service (USPS), to ensure that Erickson's

service at Diomede is not double counted, Erickson shall submit with its monthly ATNBP

claim a listing of the entire service it provided at Diomede that month that distinguishes

between the service provided under this agreement and the service provided under its

USPS agreement.

VI. OTHER PROVISIONS

A. Primary Points of Contact:

a. DOT:

b. Erickson:

Kevin S. Schlemmer

Chief, Essential Air Service Program

1200 New Jersey Avenue, SE

Room W86-309

Washington, D.C. 20590

(202) 366-3176

Kevin.Schlemmer@dot.gov

For billing:

John DiLuccio

Director of Resource Directorate

1200 New Jersey Avenue, SE

Room W86-302

Washington, DC 20590

(202) 366-5631

John.DiLuccio@dot.1!.ov

For Contracting:

Edward T. Rizzuti, Vice President,

General Counsel & Corporate Secretary

Erickson Air-Crane Incorporated

5550 SW Macadam Avenue, Suite 200

Portland, OR 97239

Tel: (503) 505-5821

Fax: (503) 473-8540

erizzllli({1leri cksonai l'crane .com

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For Operations:

Andrew Young

Interim Base Manager Alaska

Erickson Helicopters Inc.

Anchorage, Alaska

1936 Merrill Field Drive

Anchorage, AK 99501

907-257-1500 Office

907-360-1310 Cell

AvouIlQ({l)eaccp.net

For Payment:

Accounts Payable

Erickson Helicopters, Inc.,

Attention: April Hla Khaing

Phone: 503-583-7874

c. Kawerak:

For Grant Management Issues:

Pearl Mikulski

Community Services Director

Kawerak, Inc.

P.O. Box 948

Nome, AK 99762

(907) 443-4245

pmikulskitZu.kawerak..org

For Accounting Issues:

Donna Ray

Chief Financial Officer

Kawerak, Inc.

P.O. Box 948

Nome, AK 99762

(907) 443-4266, cfo@kawl;!rak.ol'!!

B. Dispute Resolution: Where possible, disputes will be resolved by informal discussion

among the Parties. In the event the Parties are unable to resolve any disagreement

through good faith negotiations, the dispute will be resolved pursuant to applicable law.

C. Governing Law: This agreement shall be governed by Federal law.

D. Effective Date: This agreement takes effect upon the last signature date of the Parties.

E. No Third-Party Beneficiaries: This agreement does not create any right or benefit,

substantive or procedural, enforceable by law or equity, by persons who are not a party.lto

this agreement against the Parties, their officers or employees, or any other person.

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I I

F. Severability: Nothing in this agreement or any modification thereto shall be construed in

a fashion that conflicts with law, regulation, or DOT directive. Nothing in this contract is

intended to conflict with current law or regulation or the directives of DOT. If a term o~

this agreement is inconsistent with such authority, then that term shall be invalid, but the

remaining terms and conditions of this agreement shall remain in full force and effect.

G. Records Management: Erickson shall retain all books, records, and other source and

summary documentation to support claims tor payment, and preserve and maintain such

documentation in a manner that readily permits its audit and examination by

representatives of the Department. Such documentation shall be retained for seven years

from the service date of this agreement, or until the Department indicates that the records

may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or

disposed of must be retained. The carrier may forfeit its compensation for any claim that

is not supported under the terms of this agreement. In addition, Erickson agrees to retain

records of all of its air service at Diomede -as required by this agreement and to its USPS

agreement - as well as any charter or other service not so required.

H. Expiration: Upon issuance of DOT Order 2014-7-4, and signature of all three Parties om

this agreement, this agreement will be in effect from July 1,2014, to June 30, 2015.

1. Termination:

a. Erickson may end, suspend, or reduce ATNEP at Diomede provided that it gives

the DOT Secretary; the Alaska Department of Transportation and Public

Facilities; and Kawerak at least 30 days' notice before ending, suspending, or

reducing the transportation, pursuant to 49 U.S.C. § 4l736(g).

b. The DOT Secretary may withdraw designation of Diomede as eligible to receive

compensation for ATNEP pursuant to 49 U.S.c. § 4l736(t)ifDiomede has

received ATNEP for at least two years and the Secretary decides the withdrawal

would be in the public interest.

J. Anti-Deficiency: No provision of this agreement shall be interpreted to require

obligation or payment of funds in violation of the Anti-Deficiency Act, 31 U.S.c. § 1341,

as amended. This agreement is subj ect to the availability of funds.

K. Incorporation by Reference: This agreement expressly incorporates the DOT carrier selection

Order 2014-7-4 and made a part of this agreement.

L. Modification: This agreement may be moditied in writing (i) by mutual written consent

of all Parties, or(ii) by DOT if DOT determines that modification would be in the public

interest.

M. Entire Agreement: This agreement represents the entire agreement of the Parties and

replaces any previous oral or written agreement by and between the Parties. Other thad

set forth herein, no other promises or representations by any officer, representative, or

employee of any Party shall have any legal force or effect,

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N. Execution: The Parties agree that multiple originals of this agreement may be executed

and that copies of signatures shall be treated as an original.

Approvals:

For DOT:

Susan L. Kurland, 7 Date

Assistant Secretary r Aviation and International Affairs

Fur Erickson Helicopters, Inc.:

~-dT. Riz~~t+- £("IC,.., Sf1"l/iL

Vice. P&:esidtmt, General COttftsel Cpo

Date

For Kawerak:

Melanie Bahnke,

President, Kawerak, Inc.

Date

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APPENJIXA

Air Transportation to Noneligible Places to be Provided to Diomede. Alaska

Docket DOT -OST-2009-0260

Effective Period: July 1,2014, through June 30, 2015

Scheduled Service: Nome (OME) to Diomede (OlO) to Wales (W AA) to Diomede (010) to Nome

(OME)

One round trip per week to Nome (OME) and one to Wales (W AA).

BO-1 OS, -l-seat, twin-engine helicopter

Frequency:

Aircraft Type:

US-DOT Kawerak Total

Subsidy $188,760 $188,760 $377,520

Rate per Flight:

I

DIO-OME $1,609 $1,609 $3,218

DIO-WAA $536 $536 $1,072

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in

conformance with the terms and stipulations of the rate Order, including the service plans outlined in the Order and

any other significant elements of the required service, without prior approval. The carrier understands that an

aircraft take-off and landing at its scheduled destination constitutes a completed flight; absent an explanation

supporting subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only

completed flights are considered eligible for subsidy. In addition, if the carrier does not schedule or operate its

flights in full conformance with the Order for a significant period, it may jeopardize its entire subsidy claim for the

period in question. If the carrier contemplates any such changes beyond the scope of the Order during the

applicable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written

approval from the Department to be ensured of full compensation. Should circumstances warrant, the Department

may locate and select a replacement carrier to provide service on these routes. The carrier must complete all flights

that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In detehining

whether subsidy payment tor a deviating flight should be adjusted or disallowed, the Department will consider the

extent to which the goals of the program are met and the extent of access to the national air transportation system

provided to the community.

If the Department unilaterally, either partially or complete, terminates or reduces payments for service or changes

service requirements at a specific location provided for under this Order, then, at the end of the period for which the

Department does make payments in the stipulated amounts or at the stipulated service levels, the carrier may cease

to provide service to that specific location without regard to any requirement tor notice of such cessation. Those

adjustments in the levels of SUbsidy andlor service that are mutually agreed to in writing by the Department and

carrier do 110tconstitute a total or partial reduction or cessation of payment.

Funds may not be available tor performance under this order beyond September 30, 2014. The Government's

obligation for performance under this order beyond September 30, 2014, is subject to the availability of funds from

which payment for services can be made. No legal liability on the part of the Government for any payment may

arise for performance under this order beyond September 30, 2014, until funds are made available to the

Department tor performance, If funds are not made available for performance beyond September 30, 2@14, the

Department will provide notice in writing to the carrier. . I

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they

may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not

operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day of service provided under this Order.

I

1 $188,760 -t- 44 trips + 2 directions = $2,145. Allocated by time: 20 minutes DlO-WAA; 60 minutes DIO-OME. $2,145

+(60+20) = $26.8125 per minute. DlO-WAA: $26.8125 x 20 '"'$536; mO-OME, $26.8125 x 60 = $1,609.

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