exhibit10-76.htm


    Exhibit
10.76

     

     

    CERTAIN
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE SYMBOL “[***]” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO
OMITTED.

     

    


    


    


    United
Contract:  178101

    


    November
1, 2008

    


    


    


    


    


    


    


    


    


    


    


    United
Express® Agreement

    


    between

    


    United
Air Lines, Inc.

    


    and

    


    Colgan
Air, Inc.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    UNITED EXPRESS®
AGREEMENT

    


    This
Agreement is between UNITED AIR
LINES, INC., a Delaware corporation, with its worldwide headquarters
located at 77 W. Wacker Drive Chicago, IL 60601 (“United”), and COLGAN AIR, INC., a Virginia
corporation, having its principal mailing address at 10677 Aviation Lane,
Manassas, VA 20110 (“Contractor”).

    


    WITNESSETH:

    


    WHEREAS,
United holds a certificate of public convenience and necessity issued pursuant
to the Federal Aviation Act of 1958 authorizing United to engage in air
transportation of persons, property and mail, and is a major airline providing
scheduled air service in both national and international markets;

    


    WHEREAS,
Contractor holds a certificate of public convenience and necessity issued
pursuant to the Federal Aviation Act of 1958 authorizing Contractor to engage in
air transportation of persons, property and mail, and provides high frequency,
short-haul scheduled service in particular regions;

    


    WHEREAS,
United owns various trademarks, service marks, trade names, logos, emblems,
uniform designs and distinctive exterior and interior color decor and patterns
for its aircraft, including, but not limited to, the service mark United Express
(hereinafter referred to individually and collectively as “United Marks” or “Marks”);

    


    WHEREAS,
United has entered into agreements with several regional carriers to provide air
transportation services under the United Express mark for city pairs where it is
generally uneconomic for United to operate such services;

    


    WHEREAS,
United will provide Contractor, pursuant to the terms of this Agreement, a
non-exclusive license to use one or more of the United Marks in connection with
Contractor’s United Express Services.

    


    NOW,
THEREFORE, in consideration of the foregoing premises, mutual covenants and
obligations hereinafter contained, the parties agree as follows:

    


    I. DEFINITIONS

     

    A. “Apollo Services” means the
computerized Apollo Reservations and Ticketing Service (or any similar or
substitute service offered by or on behalf of United), which performs flight,
hotel, rental car and other travel related services, reservations and ticket
issuance functions.

     

    B.  “Contractor’s United Express
Services” means the services or operations provided and maintained by
Contractor or its affiliates in connection with providing scheduled air
transportation service as a United Express Carrier.

     

    C. “Customer Service Policies and
Procedures” means the procedures prescribed by United from time to time
(including, but not limited to, United’s “Series 65” regulations and customer
service resources contained in the Apollo Services system) that describe
United’s approved procedures for various activities relating to the provision of
air transportation services.

     

    D. “Default” means, individually
or collectively, a Section A Default, a Section B Default, a Section C Default,
a Section D Default, or a Section E Default, each as defined in Article XVII.

     

    E. “Designated Personnel” means
all of Contractor’s employees who provide Contractor’s United Express Services
in job classifications requiring direct public contact.

     

    F. “Effective Date” is defined as
November 1, 2008.

     

    G. “Environmental Laws” means all
federal, state, local and foreign laws and regulations, and airport rules,
regulations and policies relating to pollution or the environment, including,
without limitation, laws and regulations relating to emissions to the air,
discharges to surface and subsurface waters, safe drinking water, the storage,
release, disposal, transport or handling of chemicals, pollutants, contaminants,
wastes, hazardous substances, petroleum and petroleum products, and aircraft
noise, vibration, exhaust and overflight.

     

    H. “Ground Handling Agreement”
means any agreement between United and a Ground Handling Provider covering the
provision of Ground Handling Services to Contractor.

     

    I. “Ground Handling Provider”
means, for each city in which Contractor operates flights in Contractor’s United
Express Services, either United or another entity selected by United (which, in
some cities, will be Contractor) to provide Ground Handling Services to
Contractor in that city.

     

    J. “Revenue Passenger” means each
passenger traveling on Contractor in connection with Contractor’s United Express
Services who holds a ticket (electronic or otherwise), flight coupon, voucher or
other form of document that (i) entitles that passenger to board an aircraft and
(ii) is issued pursuant to or in connection with a published or unpublished
fare.  Passengers traveling on a purchased ticket (including ID50
airline industry reduced rate tickets), wholesaler voucher, or voucher issued as
denied boarding compensation, shall be considered to be Revenue
Passengers.  A passenger traveling on a single itinerary from an
origin city to a destination city shall count as one Revenue Passenger
regardless of the number of segments that are included in such
itinerary.  In addition, passengers traveling on a free ticket as (or
as part of) a Mileage PlusÒ award or a free ticket
issued in conjunction with a two-for-one fare or other similar fare established
by United, shall be considered to be Revenue Passengers.  A passenger
traveling on any other type of free or service charge-based ticket, including,
but not limited to, a site inspection ticket, or wholesaler compensation ticket,
any travel agent or wholesaler traveling on a positive space or space available
ticket, and any employee of United, Contractor or any other carrier traveling on
either a positive space or space available ticket, shall not be considered a
Revenue Passenger.

     

    K. “Support Services” means those
activities set forth in Article III which are related to the operation of
airline services except during flight.

     

    L. “United Express Carrier” means
an air carrier which has been contractually given a non-exclusive license to use
the mark United Express and one or more other United Marks in connection with
providing air transportation service to United pursuant to an agreement between
United and such air carrier.

     

    M. “United Express Service
Standards” means the procedures prescribed by United that describe
United’s approved standards, policies, requirements and procedures for various
activities relating to the provision of air transportation services by all
United Express carriers, and as modified from time to time in accordance with
this Agreement; provided, however, that “United Express Service Standards” shall
not include any standards, policies, requirements or procedures, whether or not
specified on the attached appendices, that conflict with or are otherwise
inconsistent with the terms of this Agreement.

     

    II. SCOPE,
TERM, AND CONDITIONS

     

    A. SCOPE

     

    The scope
of this Agreement pertains to the type and number of Contractor’s aircraft set
forth in Appendix B.  The covenants and other agreements contained
herein shall only pertain to Contractor’s use of the aircraft set forth in
Appendix B and Contractor’s provision of United Express Services (other than the
provisions of Article VI which shall apply to all of Contractor’s
operations).

    


    B. TERM

     

    This
Agreement will become effective at 12:01 a.m., Chicago, Illinois time, the
Effective Date and shall terminate on December 31, 2011,
unless it is terminated at an earlier date pursuant to one or more of the
provisions of this Agreement.

    


    III. SUPPORT
SERVICES

     

    A. GENERAL

     

    1. Support
Services.  United and Contractor will provide Support Services and
facilities to the extent and in the manner set forth in the subsequent
provisions of this Article III.  All such Support Services set forth
in this Article III will be furnished only with respect to Contractor’s United
Express Services.  United, at its expense, will retain a Ground
Handling Provider in the cities specified on Appendix B.  United will
cause the Ground Handling Provider to provide Ground Handling Services to
Contractor in that city to the extent and in the manner set forth in the
subsequent provisions of this Article III.  Appendix C identifies the
certain minimum Ground Handling Services to be provided by each Ground Handling
Provider.

     

    


    B. SPECIAL
SUPPORT SERVICES

     

    In
addition to other services to be made available to or provided to Contractor
pursuant to this Agreement and the applicable Ground Handling Agreement for each
city, United agrees that it or its designees will provide and Contractor agrees
to use the following services and facilities for Contractor’s United Express
Services, be they provided by United or its designee:

    


    1. Use of the United Designator
Code.  All scheduled air transportation provided by Contractor
as a part of Contractor’s United Express Services will be displayed in Apollo
Services, the Official Airline Guide (“OAG”) and all other computerized
reservations systems, using the appropriate United designator code, “UA” or
“UA*,” and a flight number within a range of flight numbers assigned by
United.

     

    2. Use of Apollo
Services.  In selling and providing Contractor’s United Express
Services, Contractor and the Ground Handling Provider will only use Apollo
Services, including United’s automated check-in, United’s ticketing (including
United’s electronic ticketing service, E-TicketSM) and boarding passes, advance
seat reservation system and United’s automated baggage tag printing and baggage
tracing systems.

     

    3. Participating in United’s Mileage
PlusÒ Program.  At
United’s discretion, all passengers traveling on a flight segment included in
Contractor’s United Express Services, whether or not in conjunction with a
United flight segment, will be awarded mileage credits for United’s Mileage Plus
Program.  Contractor shall not participate in the frequent traveler
program of any other carrier in connection with Contractor’s United Express
Services, unless otherwise mutually agreed between United and Contractor in any
Mileage Plus Participation Agreement or under another writing between the
parties.

     

    4. Denied
Boarding.  Contractor will provide United, upon specific
written request by United, station information regarding any weight restrictions
and aircraft limitations that could result in denied boardings.  Such
requests will be made by United’s Revenue Management Department (WHQIM) and
written responses from Contractor shall be provided within two (2) weeks of such
request.  If Contractor fails to provide the information within two
weeks of a request by United, Contractor will absorb all denied boarding
expenses incurred as a result of Contractor’s failure timely to provide weight
restrictions and aircraft limitations.

     

    5. Revenues and Passenger
Data.  United will provide Contractor on an as-needed basis
passenger and flight related data as is necessary for Contractor to perform its
obligations hereunder, including revenue accounting and other financial and
operational obligations.

     

    C. COMMUNICATIONS

     

    1. Telephone and Data
Lines.  United, at its expense, will provide and maintain or
arrange for the provision of reservations telephone lines connecting
Contractor’s headquarters with United’s Reservations Centers.  United,
at its expense, will establish, operate and maintain, or arrange for the
provision of, the data circuits linking the United-approved data processing
equipment at the airport facilities of Contractor and the Ground Handling
Provider and other selected locations with Apollo Services. United will
determine, at its sole discretion, the necessity and feasibility of installing
all such communications equipment and backup lines (including ticket printers,
CRTs, other monitors, and computers, as applicable), so long as the quantity and
quality of such equipment is determined under the same policies, adjusted by
passenger volumes or facility requirements, that are applied by United in
determining the quantity and quality of communications equipment at United’s
airport facilities.

     

    2. Protection of
Circuits.  Contractor will take all necessary precautions to
protect the data circuits provided for Contractor’s use pursuant to this
Agreement by United or its designee.

     

    D. RESERVATIONS

     

    1. Reservations
Functions.  United agrees to provide, at its expense, the
following reservations functions for Contractor’s United Express
Services:

     

    a. Answering
reservations telephones, providing information regarding schedules and fares,
making bookings and providing other services normally associated with airline
reservations services in accordance with United’s established
procedures.

     

    b. Providing
personnel so that telephone calls are answered at a service level determined by
United.

     

    c. Answering
all calls terminating on specified telephone lines as United or United Express,
at United’s option.

     

    d. To the
extent practicable, re-accommodating and notifying passengers of confirmation on
United, Contractor and other airlines and clearance from wait-list.

     

    e. Reviewing
and processing inbound prepaid ticket advices.

     

    f. Providing
reservations services to the hearing impaired via a special telephone number
during normal business hours.

     

    2. Apollo Services
Activities.  Contractor agrees to use, and United will cause
the Ground Handling Provider to use, Apollo Services for the following
activities for Contractor’s United Express Services, which are to be provided at
no charge to Contractor and the Ground Handling Provider by United:

     

    a. Establishment,
maintenance, display and change of passenger name records (PNRs).

     

    b. Confirmation
of passengers against seat inventory on Contractor’s United Express Services and
United’s scheduled flights and on other airlines where flight availability is
maintained in Apollo Services.

     

    c. Maintenance
of seat availability for Contractor’s United Express Services scheduled
flights.

     

    d. Transmission
of availability status messages (AVS) for Contractor’s United Express Services
scheduled flights to other airlines with which United has an agreement in
accordance with Standard Industry Passenger Procedures (SIPP).

     

    e. Process
inbound reservations messages received from ARINC addressed to
Contractor.

     

    f. Routing
of all inbound messages received from ARINC, other than as stated in
Article III.D.2.e above, to a computer message
queue.

     

    3. CRS Fees.  United
shall be directly liable to pay, and shall pay, all Computer Reservations System
fees (“CRS Fees”) as a result of passengers booked on flights in Contractor’s
United Express Services.

     

    4. Travel Agent
Commissions.  United will be responsible for all travel agent
commissions charged in connection with the sale of tickets or other services on
Contractor’s United Express Services.

     

    E. OPERATIONS

     

    1. No Flight Dispatch
Duty.  Contractor will be solely responsible for, and United
will have no obligations or duties with respect to, the dispatch of Contractor’s
flights.  For the purposes of this Article III.E.1, the term “dispatch” will include, but will
not be limited to, all planning of aircraft itineraries and routings, fueling
and flight release.

     

    2. Compliance with
Statutes.  Contractor agrees that all air transportation
services performed by it pursuant to this Agreement or otherwise will be
conducted in full compliance with all applicable statutes, order, rules and
regulations, whether now in effect or hereafter promulgated, of all governmental
agencies having jurisdiction over Contractor’s operations, including, but not
limited to, the Federal Aviation Administration (“FAA”) and the Department of
Transportation (“DOT”).  Contractor’s compliance with such
governmental statues, orders, rules and regulations will be the sole and
exclusive obligation of Contractor and United will have no obligation,
responsibility or liability, whether direct or indirect, with respect to such
matters except as otherwise expressly provided herein.  Additionally,
Contractor will comply during the term of the Agreement with the United/United
Express Safety Standards, as described on Appendix E.

     

    3. Weather Information
Service.  From time to time and upon the request of Contractor
or its flight crews, United may furnish Contractor’s flight crews with such U.S.
Weather Bureau information or data as may be available to United; provided that
(i) in furnishing any such weather information or data to Contractor, neither
United nor its employees or agents will be responsible or liable for the
accuracy thereof and, (ii) any and all costs or expenses associated with such
weather information or data will be paid by Contractor.

     

    4. Diversions.  The
following rules shall apply when any scheduled flight operated by Contractor in
Contractor’s United Express Services is diverted to a city other than the
scheduled destination city.

     

    a. Generally.  All
operating statistics (departures, passengers, etc.) will be counted to determine
fees payable by Contractor to United.

     

    b. Busing.  The costs
of busing passengers to the original destination city will be borne by
Contractor.

     

    c. Repositioning
Costs.  United will not pay any costs associated with any
re-positioning flight required as a result of the diversion of any flight to a
city.

     

    5. Ground Delay
Program.  Contractor will participate in United’s ground delay
program, which stipulates that United may request Contractor to cancel flights
to free ATC slots at a hub when the FAA or United’s Station Control Center has
initiated a Ground Delay Program (“GDP”).   For the purposes of
Contractor’s On Time Performance grade, if for any month, Contractor’s ratio of
GDP-caused delays versus scheduled departures is greater than the average United
Express ratio of GDP-caused delays versus scheduled departures, then
Contractor’s On Time Performance grade will be set equal to goal.

     

    F. TARIFFS
AND SCHEDULE PUBLICATION

     

    1. General.  Contractor
will be responsible for local pricing for the markets defined in Appendix
B.  United will be responsible for pricing for all connecting origins
and destinations on flights operated by Contractor..  United shall
comply with applicable governmental regulations pertaining to public disclosure
of fares, rates and rules tariffs.

     

    2. Passenger
Fare Tariffs.

     

    a. United
shall comply with applicable governmental regulations pertaining to public
disclosure of fares, rates and rules tariffs and shall pay for any fines or
civil penalties incurred by Contractor as a result of violations by United
thereof, and for the cost of defense of such claims of violations including the
cost of defending or negotiating the terms of a consent order or
decree.  All passenger fare tariffs published for Contractor’s United
Express Services shall be included as part of United’s tariffs.

     

    b. Contractor
shall notify the Airline Tariff Publishing Company or any successor company
performing the same or equivalent services (“ATPCO”) that United is authorized
to supply, modify or withdraw such rates with ATPCO.  United may file
changes to such fares from time to time with ATPCO as UA fares.

     

    3. Timetables.  United
will reflect Contractor’s United Express Services in computerized reservations
systems and United’s internal reservations system as UA flights, and
Contractor’s United Express Services flight connections to United will be listed
as UA connections.  United will provide information such that
references in computerized reservations systems and United’s internal
reservations system to Contractor’s United Express Services will also contain
notations indicating that such services are performed by Contractor as an
independent contractor under the appropriate United Marks.  A similar
notation will be made in the OAG or any successor publication commonly used by
the airline industry for the dissemination of schedule
information.  Such notations shall comply with all applicable
regulations of DOT.

     

    G. ADVERTISING
AND PROMOTIONS

     

    1. Travel Certificate
Program.  United will allow Contractor to accept, and
Contractor agrees to accept, United/United Express Amenities, Promotional
Discount(s) and/or Free Travel Certificates on Contractor’s flight segments,
whether or not in conjunction with a United flight segment.

     

    2. Right to Advertise Using
Marks.  To the extent Contractor is licensed to use the Marks,
Contractor may in its capacity as a United Express Carrier and at its sole
expense use the marks to advertise Contractor’s United Express
Services.  However, any and all such advertisements using one or more
of the United Marks will identify United as the owner of those United Marks
(including in any state company name registrations required of Contractor), and
to the extent that any Mark is registered, will so
specify.  Notwithstanding the above, no advertisement, solicitation,
document or other material using any United Mark will be published or otherwise
promulgated without United’s prior inspection and written
approval.  No advertising that relates in any way to United, United
Express or Contractor’s United Express Services will be placed by Contractor
with an outside advertising agency unless United has given its prior consent
regarding copy, layout and the specific media plan.  In addition,
where United has agreed to share the costs of any such advertising, Contractor
will obtain the prior written consent of United regarding the funds to be
expended for such advertising.

     

    3. Prior Approval of
United.  Contractor agrees that it will not use (or attempt to
register) any United trade name or service mark, including, but not limited to,
the names “UNITED AIR LINES, INC.,” “UNITED AIRLINES,” or “UNITED,” or United’s
logo in any advertising, or other document or material without first obtaining
United’s prior written approval of each such use.

     

    H. AUTOMATION

     

    1. Generally.  Contractor
and United shall determine information technology resources necessary to perform
functions required by this agreement, and the parties agree to maintain
appropriate levels of confidentiality and care as detailed in this article of
all related technology and information.

     

    2. Use and
Protection.  Contractor agrees to comply with and abide by all
terms and restrictions imposed by United on the use of Apollo Services and
associated Automation Equipment.  Automation equipment includes the
technology and information used to process reservations, tickets, and revenue.
Contractor agrees that all instructions, procedures and manuals provided by
United in connection with Contractor’s use of Apollo Services and Automation
Equipment (“Automation Information”) are and will remain the property of
United.  Contractor acknowledges that Apollo Services contains
software which is confidential and proprietary information of United or its
affiliates (such as Galileo International) or any successor
thereto.  Contractor further agrees that it will not (or cause any
third party to) duplicate, copy or otherwise reproduce any such software or
Automation Information or furnish or disclose any such software or Automation
Information to any other party or to Contractor’s employees other than such
employees who have a need to know and who are aware of and understand the
confidential and proprietary nature of the software and Automation
Information.

     

    3. Standards
of Use.

     

    a. In the
event that Contractor uses Apollo Services, Contractor agrees to maintain an
effective interconnection between Apollo Services and the Automation Equipment
and to prevent misuse thereof, and that it will use and operate Apollo Services
and the Automation Equipment (a) in strict accordance with operating
instructions provided by United or its affiliates in the Customer Services
Policies and Procedures, United’s Computer Security Regulations (Series 5-18),
and any other related United or affiliate guidelines, and (b) solely for the
performance of the specific business functions designated by
United.  Any undesignated business use and all non-business uses are
strictly prohibited.  Prohibited uses include, but are not limited to,
personal messages, servicing subscribers, travel agencies, or any other third
party, training any other party or any other use designated as prohibited in the
Apollo Services Manual.  Contractor will maintain a list of all
employees and agents who have access to Apollo Services and their assigned file
numbers and passwords.  United may at any time deny access to Apollo
Services to any employee of Contractor if such employee is found by United to
have abused Apollo Services or the Automation Equipment.  Contractor
will take all precautions necessary to prevent unauthorized operation or use of
Apollo Services and the Automation Equipment.

     

    b. Contractor
will not alter or change the Apollo Services display as provided by United or
its affiliate without the written consent of United. Contractor may not provide
Apollo Services or its database to any other person or entity without the
written consent of United.

     

    c. Except as
expressly permitted in this Agreement or other written agreement with United,
Contractor will not cause any Apollo Services (including, but not limited to,
its software, data bases, intellectual property, and customer information) to be
used (as a basis for any software development or otherwise), commercially
exploited, copied, redistributed, retransmitted, published, sold, rented,
leased, marketed, sublicensed, pledged, assigned, disposed of, encumbered,
transferred, or otherwise altered, modified or enhanced, without the express
written permission of United.

     

    d. Contractor
will not engage in any speculative booking or reservation of space for any
airline, hotel, rental car company, or any other vendor’s service or product
available through Apollo Services.

     

    4. Maintenance,
Repair and Modification.

     

    a. United
will provide or cause to be provided to Contractor repair and maintenance
services required for the Automation Equipment at United’s
expense.  To maintain an effective interconnection between the
Automation Equipment (including ticket printers, CRTs, other monitors, computers
and other passenger related automation equipment) and Apollo Services and to
preserve the functional integrity of the Automation Equipment, neither
Contractor nor any third party, other than a third party designated by United,
will perform or attempt to perform maintenance, repair work, alterations or
modifications, of any nature whatsoever, to the Automation
Equipment.  Contractor will provide free positive space travel on
Contractor’s flights for United’s Computer Terminal Technicians or replacements
when such travel is for the purpose of repairing Apollo Services or any
Automation Equipment.

     

    b. Contractor
will reimburse United for the costs of any such repairs or maintenance
attributable to Contractor’s gross negligence.

     

    c. United or
its designee will have the right to enter upon any airport terminal facility
where Contractor provides Contractor’s United Express Services pursuant to this
Agreement during Contractor’s business hours for the purpose of monitoring
Contractor’s operation of the Automation Equipment and Apollo Services,
inspecting the Automation Equipment, performing such repairs or maintenance as
may be necessary or removing the Automation Equipment; provided, however, that
United will not during the course of such monitoring, inspection, repair, or
removal unreasonably interfere with Contractor’s business.

     

    5. Downtime.  United
will notify Contractor of any scheduled or pre-announced downtimes of Apollo
Services.

     

    6. No
Warranty; Release.

     

    a. UNITED
MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO
THE AUTOMATION EQUIPMENT OR APOLLO SERVICES.

     

    b. CONTRACTOR
HEREBY WAIVES AND RELEASES UNITED AND ITS AFFILIATES, AND THEIR SUCCESSORS FROM
ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES AND ALL RIGHTS, CLAIMS AND
REMEDIES OF CONTRACTOR AGAINST UNITED OR ITS AFFILIATES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, DUE TO ANY DEFECTS, ERRORS (INCLUDING, WITHOUT
LIMITATION, ANY ERRORS IN RESERVATIONS AVAILABILITY RECORDS), MALFUNCTIONS OR
INTERRUPTIONS OF SERVICE TO APOLLO SERVICES OR THE AUTOMATION EQUIPMENT,
INCLUDING ANY LIABILITY, OBLIGATION, RIGHT, CLAIM OR REMEDY IN TORT, AND
INCLUDING ANY LIABILITY, OBLIGATION, RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE
OR PROFIT OR ANY OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES.

     

    7. Ownership and
Liens.  It is understood and agreed that: (i) all Automation
Equipment will remain the sole property of United; (ii) Contractor will not
remove any identifying marks from any Automation Equipment; (iii) Contractor
will not subject the Automation Equipment to any lien or encumbrance; and (iv)
Contractor will return the Automation Equipment to United immediately upon the
termination of this Agreement.

     

    I. CONTRACTOR
ASSISTANCE

     

    Contractor
will furnish United with all information in Contractor’s possession or that can
be reasonably produced by Contractor that United may require to carry out the
services and functions contemplated by this Article III.

    


    J. AIRCRAFT
GROUND HANDLING PROCEDURES

     

    Contractor
will establish and prescribe Aircraft Ground Handling Procedures, which will
include procedures for (a) deicing, (b) aircraft handling and (c) other aircraft
servicing measures.  Contractor may modify its Aircraft Ground
Handling Procedures from time to time.  Contractor agrees that all
Aircraft Ground Handling Procedures prescribed by it will comply with all
applicable federal, state, local and industry regulations as well as with the
United Express Service Standards. Including the Regional Ground Operations
Manual (RGOM) and United series 45 for procedures and
regulations.  Contractor will obtain all necessary federal, state and
local regulatory approvals of its Aircraft Ground Handling
Procedures.  Contractor will provide a copy of its Aircraft Ground
Handling Procedures to United and applicable Ground Handling
Providers.  As necessary, Contractor will train employees of the
Ground Handling Provider in the requirements of Contractor’s Aircraft Ground
Handling Procedures.

    


    IV. AIR
SERVICES TO BE PROVIDED BY CONTRACTOR

     

    A. AIRCRAFT
TO BE USED

     

    1. Aircraft
Types.  Unless otherwise agreed by United, Contractor will
provide Contractor’s United Express Services described in this Article IV with
Saab 340B turboprop aircraft.  In accordance with the terms and
conditions of this Agreement, for each period during the term of this Agreement,
Contractor is authorized to operate the number of aircraft of each such type set
forth on Appendix B with respect to such period.

     

    2. Technical
Specifications.

     

    a. The
aircraft utilized by Contractor pursuant to this Article IV.A will bear those United Marks which are expressly
designated by United, whether included on Appendix A or otherwise established by
United.  Technical specifications covering aircraft colors, schemes,
United Marks and other elements of exterior and interior aircraft decor will be
provided to Contractor by United.  Contractor will have all aircraft
used to provide Contractor’s United Express Services, other than those aircraft
designated as spare aircraft, painted and decorated with the exterior and
interior color decors and patterns specified by United.  In accordance
with the technical specifications referenced in this Article IV.A.2 Contractor will be responsible for maintaining
all of its aircraft.

     

    b. In
addition to the use of the United Marks on its aircraft, Contractor will use and
display a suitable sign or insignia on the exterior of its aircraft that
identifies Contractor as the operator of the services being provided pursuant to
this Agreement. The use and display of such sign or insignia will be subject to
the prior written approval of United as to its nature, size and location on
Contractor’s aircraft.

     

    3. Spare
Aircraft.  Contractor will arrange for and make available for
its use the number of spare Saab 340B aircraft as are specified on Appendix B
with respect to such period.  Spare aircraft will be maintained in
neutral livery, and may include marks identifying the aircraft as that of Colgan
Air.

     

    4. Substitute
Aircraft.  In addition to the aircraft authorized in Article
IV.A.1 above, if requested by United, Contractor will use reasonable efforts to
arrange for and make available for its use such substitute aircraft as are
required to effectively maintain Contractor’s United Express
Services.  If Contractor is unable to operate any flights in its
schedule for Contractor’s United Express Services with aircraft bearing United
Marks, Contractor will notify United of such event and the circumstances of
Contractor’s inability to so operate and Contractor will be permitted to operate
an aircraft bearing different elements of aircraft decor than those specified
above.  If such operations extend beyond a continuous forty-eight (48)
hour period, Contractor must seek and obtain United’s written approval for such
aircraft substitutions; provided that if Contractor purchases or leases a used
aircraft that does not contain appropriate United Marks, Contractor will notify
United and Contractor may, without the approval of United described in this
sentence, operate such aircraft without United Marks for up to 60 days after the
date of purchase or lease of such aircraft by Contractor, so long as such
aircraft does not display the brand name or trademark of any other air carrier
(other than Contractor).

     

    B. SCHEDULES
AND CHARTERS TO BE OPERATED BY CONTRACTOR

     

    1. United Express Schedule.
Contractor, with input from United, will establish schedules for all aircraft
available to be operated by Contractor pursuant to this
Agreement.  Available aircraft shall exclude any aircraft dedicated
for maintenance or spares.

     

    2. United Schedule Consent
Required.  Contractor may operate its scheduled air service as
a United Express Carrier only with the schedules established in accordance with
Article IV.B.1, so long as each such schedule
remains in effect.

     

    3. Charter.  Contractor
will not operate charter flights in United Express branded aircraft without the
prior written approval of United.  United will respond to such
requests in a timely manner.

     

    4. Changes Input to Reservations
Systems.  Changes to Contractor’s schedules as set forth in
this Article IV.B and which otherwise are in
accordance with the terms and conditions of this Agreement will be submitted by
Contractor for input into United’s internal reservations system and computerized
reservations systems.  At no time may Contractor make any changes to
flights operated by United or any other carrier.

     

    5. Operating
Commitment.  Contractor agrees to operate Contractor’s United
Express Services in order to provide air transportation services scheduled
pursuant to this Article IV.B (as modified from time
to time) throughout the term of this Agreement.

     

    C. INVENTORY

     

    United
and Contractor will control availability, levels and use of all seat inventory
for the aircraft used by Contractor in Contractor’s United Express
Services.  Contractor will take all revenue and inventory risk and
will maintain inventory and pricing responsibility.  Contractor is
prohibited from providing positive space leisure travel, or any other confirmed
leisure travel that requires removal of a seat from inventory, to any person
other than the people outlined in Appendix M, on Contractor’s
United Express flights without the prior written consent of
United.  Contractor also agrees to comply with all rules and
regulations for travel as outlined in the Related Agreements.

     

    D. FLIGHT
CREWS TO BE USED

     

    1. Flight Crew.  All of
Contractor’s United Express Services will be operated with crews consisting of a
captain or pilot, and a first officer or co-pilot.  All such crew
members will at all times meet all currently applicable governmental
requirements, as such requirements may be amended from time to time during the
life of this Agreement, and will be fully licensed and qualified for the
services to be performed hereunder.  In addition, each of Contractor’s
captains will hold a current Airline Transport Pilot
Certificate.  Crewmembers will also meet all requirements imposed by
the insurance policies that are to be maintained pursuant to Article
XII.

     

    2. Flight
Attendants.  Contractor’s flight attendants will at all times
possess all necessary training and meet all currently applicable governmental
requirements, as such requirements may be amended from time to time during the
life of this Agreement.

     

    E. INFLIGHT
SALES

     

    Contractor
may, with United’s approval, offer to sell beer, liquor and other goods or
services on flights included in Contractor’s United Express
Services.  Contractor agrees that such in-flight sales shall be
conducted in a manner consistent with in-flight sales provided on United’s
flights, so long as the price for all such in-flight sales provides adequate
compensation to Contractor to cover all incremental costs and a reasonable
profit.  Contractor will be solely responsible for the direct costs
associated with such in-flight sales and shall be entitled to all revenues
generated from such in-flight sales from beer, liquor and other
goods.  United will be entitled to retain any commissions payable as a
result of any SkyMall sales to passengers on flights included in Contractor’s
United Express Services.

    


    V. OPERATING
RESTRICTIONS

     

    A. NO
CODE SHARE LIMITATIONS

     

    Except as
expressly provided in Article V.B, nothing in this Agreement shall restrict the
ability of Contractor or any of its subsidiaries or affiliates, directly or
indirectly, from engaging in any other business, including the business of
providing air transportation on behalf of one or more other
carriers.

    


    B. NO
OPERATION OUTSIDE AGREEMENT

     

    1.
Without the prior written consent of United, Contractor will not use any of the
services or facilities afforded to Contractor by United or its affiliates under
this agreement for any air transportation or related services provided by
Contractor or its affiliates other than Contractor’s United Express Services and
charters permitted by this Agreement.

    


    2. Under
no circumstances will Contractor or its affiliates be permitted to operate
aircraft bearing the United Marks in city pairs other than those specified by
United pursuant to Article IV, without the prior written consent of United.
Contractor will not, without United’s prior written consent, permit any third
party, whether under a lease arrangement or otherwise, to operate any aircraft
bearing the United Marks.

    


    C. SEVERABILITY
AND REMEDY

     

    1. If the
restrictions set forth in Article V.B or any part thereof should, for any reason
whatsoever, be declared invalid by a court of competent jurisdiction, the
validity or enforceability of the remainder of such restrictions shall not
thereby be adversely affected.  In the event that any time, scope or
territorial limitation is deemed to be unreasonable by a court of competent
jurisdiction, then Contractor agrees and submits to the reduction of either said
time, scope or territorial limitation to such a time period, scope or area as
said court shall deem reasonable.  In the event the Contractor shall
be in violation of the aforementioned restrictive covenants, then the time
limitation thereof shall be extended for a period of time equal to the period of
time during which such breach or breaches should occur.

     

    2. Contractor
acknowledges that United has no adequate remedy at law and would be irreparably
harmed were Contractor to breach or threaten to breach the provisions of Article
V.B hereof and, therefore, agrees that United shall be entitled to injunctive
relief to prevent any breach or threatened breach of Article V.B hereof, and to
specific performance of the terms of Article V.B, in addition to any other legal
or equitable remedy it may have.  Contractor also agrees that it shall
not raise the defense that United has an adequate remedy at law in any equity
proceeding involving it relating to Article V.B hereof.  Nothing in
this Agreement shall be construed as prohibiting United from pursuing any other
remedies at law or in equity that it may have or any other rights that it may
have under any other agreement.

     

    VI. LICENSE

     

    A. GRANT
OF LICENSE

     

    Contractor
will conduct all operations described in Article IV.B above and any additional operations undertaken by
subsequent amendment hereto or thereto, under the Marks set forth in Appendix A
or other marks designated by United pursuant to this Article VI.A.  In consideration for the services to
be provided by Contractor under this Agreement, United hereby grants to
Contractor, upon the terms and conditions herein contained, a nonexclusive,
royalty free, nontransferable right and license to use the United Marks, and
Contractor hereby undertakes the obligation to use the licensed United Marks in
connection with the services to be rendered by Contractor under this Agreement;
provided, however, that at any time during the term of this Agreement United may
alter, amend or revoke the license hereby granted and require Contractor’s use
of any new or different Marks in conjunction with the air transportation
services provided hereunder.  In the event that the United Marks are
changed or United requires the use of different Marks or no marks, Contractor
agrees to update the marks in accordance with its normal paint
schedule.  If United requests modification of marks to be completed
prior to the normal paint schedule, United shall bear the cost of complying with
this covenant.

    


    B. TERMS
AND CONDITIONS GOVERNING LICENSE

     

    1. United
Marks.  Contractor hereby acknowledges United’s ownership of
the United Marks, further acknowledges the validity of the United Marks and
agrees that it will not do anything in any way to infringe or abridge United’s
rights in its marks or directly or indirectly to challenge the validity of the
United Marks.

     

    2. Standards of
Service.  Contractor agrees that, in providing services under
this Agreement in conjunction with one or more of the United Marks, it will
comply with the United Express Service Standards.  The United Express
Service Standards include, but are not limited to, United standards for (a)
aircraft types, as set forth in Article IV, (b) customer service, as set forth
in United’s Customer Service Policies and Procedures, (c) minimum customer
service training requirements consistent with United’s customer service
practices and procedures, (d) in-flight amenities and service, (e) aircraft
appearance, (g) United/United Express safety programs (and Contractor will enter
into any agreements relating to such programs that are similar to those offered
to other United Express Carriers), and (h) any other quality control measures
designated by United, as such standards may be prescribed by United from time to
time.  As necessary, United will provide training to Contractor’s
designated instructors in the requirements of United’s Customer Service Policies
and Procedures; provided that United will at its expense provide a trainer and
materials, and United agrees that the United Express Service Standards
prescribed by it will not be unreasonable in light of the facilities and type of
aircraft available to Contractor.  United will have the right, from
time to time, to inspect Contractor’s United Express Services to determine if
they conform to the United Express Service Standards.  In the event
United determines that Contractor is not in compliance with the United Express
Service Standards, United will notify Contractor and Contractor will promptly
rectify any such noncompliance.  Failure on the part of United to
conduct such inspections will not relieve Contractor of its obligations to
conform to the United Express Service Standards.  If Contractor fails
to comply with any part of the United Express Service Standards and such failure
is not corrected as soon as practicable (and, in any event, within 30 days)
after Contractor’s receipt of written notice of such failure from United, then
United may, at its discretion, restrict or eliminate Contractor’s pleasure
travel privileges, or suspend Contractor’s authority to serve city pair markets
as a United Express Carrier, or impose any other nonexclusive remedy or remedies
available to United.

     

    3. Liability for
Operations.  Nothing in this Article VI.B is intended to nor
will be construed so as to relieve Contractor of any liability or to impose any
liability on United for Contractor’s United Express Services by virtue of any of
United’s rights under Article VI.B.2, whether
exercised or not.

     

    4. Non-Exclusivity.  Nothing
in this Agreement is intended nor will be construed to give Contractor the
exclusive right to use the United Marks, or to abridge United’s right to use or
to license the Marks, and United hereby reserves the right to continue use of
the United Marks and to license such other uses of such Marks as United may
desire.

     

    5. Reversion of
Marks.  Upon termination of this Agreement for any reason, the
right to use herein granted for the United Marks for the purpose of providing
air transportation services for United will immediately revert back to United,
and Contractor will have no right to use such Marks for that
purpose.  Further, upon termination of this Agreement, Contractor
will, at its sole cost and expense, remove all United Marks from its aircraft
and any related items used specifically for providing air transportation for
United and from any and all other places or things controlled or formerly
controlled by Contractor as soon as commercially reasonable, but in any event
within 10 days after such termination.

     

    C. INFRINGEMENT

     

    United
will, at its expense, defend, indemnify, release, protect, save and hold
Contractor, its officers, directors, agents and employees harmless from and
against any and all liabilities, damages, expenses, losses, claims, demands,
suits, fines or judgments, including, but not limited to, attorneys’ and
witnesses’ fees, costs and expenses incident thereto, which may be suffered by,
accrue against, be charged to or be recovered from Contractor as a result of any
claim that the use by Contractor of any United Mark in accordance with the terms
of this Agreement or Contractor’s Ground Handling Agreement infringes a
registered trademark or service mark of any third party in the United States,
and will pay all costs, damages and attorneys’ fees that a court finally awards
as a result of such claim.  To qualify for such defense and payment,
Contractor must (i) give United prompt written notice of any such claim and (ii)
allow United to control the defense of the claim and all related settlement
negotiations and fully cooperate with United in its defense of the claim and the
conduct of any settlement negotiations.  United’s obligation hereunder
is conditioned on Contractor’s agreement that if any Mark becomes, or in
United’s opinion is likely to become, the subject of such a claim, Contractor
will not dispute that United, at its option, may either procure the right for
Contractor to continue using such Mark or to replace or modify such Mark so that
it becomes non-infringing.  This Article VI.C states United’s entire obligation to Contractor
regarding infringement or the like.

    


    VII. ADDITIONAL
UNDERTAKINGS

     

    A. BULK
PURCHASES

     

    Each
party may assist the other in obtaining goods and services useful to the other
party, including, without limitation, fuel, uniforms, supplies and ground
equipment, in a more economical manner.  Contractor agrees to
participate in any bulk purchasing arrangement identified by United for any
goods and services required by Contractor in connection with Contractor’s United
Express Services (including fuel) or with Contractor’s provision of services
under Contractor’s Ground Handling Agreement, so long as the arrangement is on
terms that are not disadvantageous to Contractor (taking into account price,
volume commitments, term, and other relevant factors).  The terms of
any such bulk purchase arrangement will be as set forth in a separate agreement
between the parties.

    


    B. UNIFORMS

     

    Contractor
shall pay for, or require all of its employees, to pay for, uniforms for all of
its employees working for United Express, with the exceptions of Supervisors,
Managers and administrative employees.   All such employees of
Contractor who are visible to the public, are required to wear either i) the
United Express Uniform, or ii)a uniform that has been approved by United in
writing, such approval not to be unreasonably withheld.  This uniform is to
be worn at all times while on duty.  Employees in United Express uniform,
on or off duty, shall not drink intoxicating beverages, give the appearance of
being intoxicated or visit any establishment whose primary purpose is to
dispense liquor (e.g., bars, saloons, cocktail lounges, liquor stores).
 The “United Express uniform” refers to any uniform apparel bearing the
United brand or insignia, or which can be in any way identified with United
Airlines or United Express.  Because the actions and appearance of
employees influence, to a considerable extent, the public’s opinion of the
United brand, Contractor’s employees wearing a United Express uniform must be
mindful of these requirements and conduct themselves accordingly.  Complete
information on United Express uniform and accessory items are contained in the
Customer Service Uniform Appearance Guidelines.

    


    C. PASSES
AND REDUCED RATE TRAVEL

     

    Each
party will comply with the terms of a separate agreement between them under
which are granted to the employees of the other party certain passes and reduced
rate pleasure travel privileges.  United has the right to retain all
revenue generated from reduced rate travel by Contractor’s employees, on both
United flights and flights in Contractor’s United Express Services.

    


    D. SIGNAGE

     

    Contractor
is required to display signage, advertising its operations as United Express at
the stations ground handled by Contractor and set forth in APPENDIX B.  All
signage must be approved by United prior to its use by Contractor, and
Contractor shall be responsible for all acquisition, installation and
maintenance of all such signage.  Contractor shall also be responsible
for all costs associated with such signage.

    


    E. TRAINING

     

    1. Contractor
shall assure that its employees successfully complete all United and Carrier
required training specified for the performance of Services assigned under this
Agreement.  Contractor further agrees to designate at least one
individual who will be responsible for training the Contractor’s employees at
each airport station awarded.  Contractor’s trainer(s) will receive initial
training from United, in a “Train-the-Trainer” type format.  Contractor’s
trainer is responsible for serving as the central point of contact between
United and Contractor for all training related issues.  United shall
provide all applicable training materials related to United policies and
procedures, in order for the Contractor to accomplish initial training of its
employees who will perform Services under this Agreement.

     

    2. United
will provide training for Contractor’s instructors that United deems sufficient
to permit Contractor’s instructors to be able to train Contractor’s employees as
required by this Agreement.  Contractor will bear all costs related to
the United trainer(s), including all travel, hotel, and per diem expenses
incurred during initial training.

     

    3. Unless
otherwise mutually agreed in writing, Contractor agrees to bear all training
costs, including but not limited to employee labor costs, transportation costs,
hotel, and associated per diem charges required to accomplish initial and
recurrent training of their employees.  Contractor agrees to schedule
and provide subsequent training, as required, resulting from changes in
personnel in order to meet performance expectations of the
Agreement.  United is not responsible for any training costs resulting
from employee turnover at the Contractor’s locations.  Any “House
Calls” provided by United for training related issues will be charged to the
Contractor.

     

    4. Contractor’s
employees shall periodically review, as necessary, materials supplied by United
in order to maintain competency in United’s policies, procedures, and
standards.  Contractor agrees to provide recurrent training, as
necessary, and train their employees on any new products, processes, procedures,
or initiatives as directed by United.  United may, at is discretion,
monitor or test the proficiency level of Contractor’s employees.  If
United determines that their proficiency levels are insufficient, Contractor
must arrange, at Contractor’s sole expense, for such employees to undertake any
further training which United determines necessary to bring Contractor’s
employees to the required proficiency level.

     

    5. Training
must be specific to the employee’s job function and task
assignment.  An employee may not work in an area in which he or she
has not been properly trained.

     

    VIII. AMOUNTS
PAYABLE TO CONTRACTOR

     

    A. Non-EAS (Essential Air Service)
Markets.  For the cities listed in Appendix B without the EAS
designation, Contractor shall retain [***].

     

    For
purposes of calculating the value of local revenue, the value of mileage plus
award travel will be set to equal the program fee specified in Article
IX.A.

    


    [***]

    


    [***]

    


    [***]

    


    B. EAS (Essential Air
Service)  Markets.  For the cities listed in Appendix
B with the EAS designation, Contractor shall receive [***] for the prorate
market flights as well as [***] of the standard straight rate pro-rate for
connecting revenue passengers on flights operated by Contractor as defined
within the standard United prorate agreement.  Local revenue
passengers are defined as any revenue passenger originating and terminating in a
single flight segment, traveling in the city pairs defined in Appendix
B.

     

    C. Performance
Incentives.  Goals for monthly On Time Performance and
Controllable Completion Factors shall be as set forth in Appendix
M.  The Controllable Completion Factor and the On Time Performance
measures shall be weighted [***]. The respective letter grades obtained from the
above mentioned goals will result in the following multiplier to the Program
Fees, Ground Handling Fees, and Monthly Fixed Fee:

     

    A=
[***]

    B=
[***]

    C=
[***]

    D=
[***]

    


    D. Reconciliation and Payment of
Fees.  No later than 60 days after the close of any month,
United shall invoice contractor via the Airline Clearing House, the full dollar
amount of the Program Fees, Fixed Fees and Ground Handling Fees for the
month.  United and Contractor agree that United’s actual data will be
used for calculating Program Fees, Fixed Fees and Ground Handling
Fees.

     

    E. Weekly Revenue
Advance.  United will make weekly wire transfer payments to
Contractor in an amount equal to the number of passengers boarded for the period
as provided by Contractor, multiplied by an average coupon revenue rate as
adjusted from time to time by mutual agreement.

     

    F. Other
Costs.  Contractor is responsible for any and all other costs
necessary to operate Turbo Prop Aircraft in accordance with “United Express
Service Standards.” United will not be responsible for any costs not
specifically covered in this agreement.

     

    G. Collection
of Data and Audit Rights.

     

    1. United
shall be responsible for collecting all data from the United Express Carriers
that is necessary to enable United to calculate Contractor’s Goals under this
Article. United shall retain all such data, and all data regarding United’s
operating performance that is necessary to normalize such data, during the term
of this Agreement and for a period of two years thereafter.  United
shall use commercially reasonable efforts to ensure that all data furnished by
United Express Carriers (including Contractor) that is used to determine
Contractor’s Goals under this Article is accurate and complete, and United shall
take appropriate steps to verify the accuracy and completeness of all data
furnished to it by other United Express Carriers.

     

    2. Within
thirty days after the end of each calendar month, United will calculate
Contractor’s Goals for the month and send Contractor written notice of United’s
calculation, accompanied by a statement of all operating statistics underlying
United’s calculation and a certificate to the effect that, to the best of
United’s knowledge, the data used by United to calculate the Goals was accurate
and complete and that United has taken appropriate steps to verify the accuracy
and completeness of such data.

     

    [***]

     

    [***]

     

    5. Any
dispute between United and Contractor concerning the accuracy and completeness
of any data or whether United has taken appropriate steps to verify the accuracy
and completeness of any data shall, at the election of either United or
Contractor, be resolved by arbitration in Chicago, Illinois by a single
arbitrator in accordance with the rules of the American Arbitration
Association.  The costs of any such arbitration shall be borne
one-half by each party.

     

    H. SET
OFF AMOUNTS

     

    Subject
to the terms of Article XIII, the payment for transportation furnished by
Contractor may be reduced in order to set off any of the following amounts owed
by Contractor to United and arising after the Effective Date:

    


    1. amounts
owed by Contractor to United for:

     

    a. fraudulent,
grossly negligent or erroneous acts of employees of Contractor which cause
United to suffer a loss; and

     

    b. unreported
sales on United tickets assigned to Contractor;

     

    2. such
other adjustments as may be mutually agreed to by the parties from time to
time;

     

    3. any other
amounts owed by Contractor to United under this Agreement; and

     

    4.         at
United’s discretion, any ITE vouchers issued outside of the guidelines
established in Series 65.

     

    United
will notify Contractor of any such adjustment that it intends to make at least
fourteen days prior to the date of the payment to which the adjustment
relates.  United will provide Contractor with supporting documentation
for such intended adjustments.  Contractor shall have the right to
object to any such adjustment by providing United with written notice of its
objection, together with supporting documentation, within 30 days after its
receipt of the notice provided by United describing such
adjustments.  United agrees to negotiate in good faith with Contractor
in order to resolve all such disputes within 30 days after its receipt of
Contractor’s notice to United.  If Contractor objects to any
adjustment, the amounts payable to Contractor may be reduced by any part of the
adjustment not in dispute and no more than [***] of any portion of the
adjustment that is in dispute until the dispute between Contractor and United is
resolved.

    


    If United
sets off amounts owed to any affiliate of United against any payment due to
Contractor from United, United shall cause its affiliate to release Contractor
with respect to the amounts set off by United as if Contractor paid such amounts
to the affiliate directly.

    


    IX. FEES
PAYABLE TO UNITED

     

    A. Program
Fee.  Contractor shall pay United [***] for each segment
Revenue Passenger carried on contractors flights (the “Program Fee”) for
services rendered as outlined in Appendix B.

     

    B. Ground Handling
Fee.  Contractor shall pay United [***] per departure at any
United or United designated ground handled station (the “Ground Handling Fee”)
for Ground Handling services provided, [***].

     

    C. Fixed
Fee.  Contractor shall pay United a monthly fixed amount of
[***] for Revenue Management and Revenue Accounting services provided (the
“Fixed Fee”).

     

    D. Annual
Escalations

     

    1. Program
Fees, Fixed Fees, and Ground Handling Fees are subject to annual rate
escalations.  Annual rate escalations will be effective on the
anniversary of the date of the ratified agreement.  Escalations will
be applied using the preceding 12-month year-over-year change in average CPI and
will be capped at no more than a [***] increase per year.

     

    2. “CPI”
shall mean the Consumer Price Index, U.S. City Average, Urban Wage Earners and
Clerical Workers, All Items (base index year 1982-1984=100) as published by the
United States Department of Labor, Bureau of Labor Statistics.  If the
manner in which the Consumer Price Index as determined by the Bureau of Labor
Statistics shall be substantially revised, including, without limitation, a
change in the base index year, an adjustment shall be made by the parties in
such revised index which would produce results equivalent, as nearly as
possible, to those which would have been obtained if such Consumer Price Index
had not been so revised.  If the Consumer Price Index shall become
unavailable to the public because publication is not readily available to enable
the parties to make the adjustment referred to in this Section, then the parties
shall mutually agree to substitute therefore a comparable index based upon
changes in the cost of living or purchasing power of the consumer dollar
published by any other governmental agency or, if no such index shall be
available, then a comparable index published by a major bank or other financial
institution or by a university or a recognized financial
publication.

     

    E. Sales
Settlements.  Contractor will cause Total Net Sales Receipts to
be deposited in a bank account specified by United.  “Total Net Sales
Receipts” equals total gross sales receipts collected by Contractor for all
passenger tickets, airway bills, cargo bills, mail fees and other tickets issued
for Carriers’ flights (less refunds thereon paid out by
Contractor).  The frequency of the deposit will be once a week, on
Wednesdays, for all Total Net Sales Receipts collected during the preceding
week.  Contractor’s deposit will be made to the following bank
account:

     

    Bank of
America

    Account:  [***]

    


    Contractor
will also require its employees and agents to forward to United, on a daily
basis, all auditors ticket coupons, airway bills, cargo bills, lift
documentation, reports, exchange orders and refund detail issued by Contractor
in connection with Carriers’ flights during the previous day in accordance with
the sales and reporting procedures specified by United.

    


    
      	
              1.  

            	
              Modified
      Procedures.  United and Contractor by mutual written agreement
      may establish alternative or modified passenger sales procedures in order
      to accommodate tickets and exchange orders issued by air carriers which
      are not participants in the Airline Clearing House,
  Inc.

            


    

    


    
      	
              2.  

            	
              Audits.  United,
      or United’s representative, may conduct on-site audits, from time to time,
      of tickets, air way bills, cargo bills, exchange orders, refunds and other
      records relating to sales and refund activity pertaining to Contractor’s
      provision of the services; provided that such audits do not unreasonably
      interfere with Contractor’s
business.

            


    

    


    X. MAINTENANCE
AND FUELING

     

    United
will have no responsibility under this Agreement for maintenance or fueling of
Contractor’s aircraft.  Contractor and United agree that Contractor
may participate in United’s fuel purchase program at IAD, subject to United’s
purchase terms.  Contractor shall use its commercially reasonable
effort to participate in United’s fuel and resource conservation programs for
which adequate information is provided to Contractor.

    


    XI. U.S.
MAIL

     

    United
and Contractor agree to cooperate in making bids for mail carriage.

    


    XII. INSURANCE

     

    A. INSURANCE
TYPES

     

    1. During
the term of this Agreement, Contractor agrees to procure and maintain in full
force and effect, at its own expense, with insurers of recognized reputation and
responsibility,

     

    a. Comprehensive
Airline Liability Insurance, including, but not limited to, Aircraft Liability,
Passenger Liability, Comprehensive General Liability Insurance, War Risk and
Allied Perils, including both passengers and other third parties, Cargo
Liability and Baggage Liability Insurance, with combined single limits for each
and every loss and each aircraft of not less than [***].

     

    b. Aircraft
Hull All Risks Insurance, including ground and flight coverage on Contractor’s
aircraft, including its engines and all its parts when installed or temporarily
detached from Contractor’s aircraft on a repair-or-replace basis, as required by
the applicable aircraft lease.

     

    c. Workers’
compensation insurance in statutory amounts required by each state in which any
work is performed by Contractor.

     

    Any
policies of insurance carried in accordance with this Article XII.A.1 will also contain or be endorsed to contain
those provisions set forth in the attached Appendix D.

    


    2. Contractor
will be responsible for the first [***] of loss or damage to all automation
equipment provided by United to Contractor.

     

    B. 30-DAY
NOTICE

     

    Not less
than thirty (30) days (or with respect to war risk insurance, seven days) before
the expiration of any insurance required to be maintained by Contractor under
Article XII.A above, Contractor will furnish United
with certificates of insurance, substantially in the form of the attached
Appendix D, evidencing compliance with the foregoing requirements, unless
otherwise provided in writing between the parties.

    


    C. ALTERATIONS

     

    United
and Contractor agree to discuss, reasonable alterations in the requirements set
forth in this Article XIII above, in respect of the types and scope of coverage
and amounts of insurance.  Any such alteration will be deemed
reasonable if the insurance is readily available and has become the custom in
the industry.

    


    D. FAILURE
TO MAINTAIN INSURANCE

     

    In the
event that Contractor fails to acquire or maintain insurance as herein provided,
United may at its option secure such insurance on Contractor’s behalf at
Contractor’s expense.

    


    XIII. LIABILITY
AND INDEMNIFICATION

     

    A. EMPLOYER’S
LIABILITY AND WORKERS’ COMPENSATION

     

    Each
party hereto assumes full responsibility for its employer’s liability and
workers’ compensation liability to its own officers, directors, employees or
agents on account of injury or death resulting from or sustained in the
performance of their respective service under this Agreement.  Each
party, with respect to its own employees, accepts full and exclusive liability
for the payment of workers’ compensation and employer’s liability insurance
premiums with respect to such employees, and for the payment of all taxes,
contributions or other payments for unemployment compensation or old age
benefits, pensions or annuities now or hereafter imposed upon employers by the
government of the United States or by any state or local governmental body with
respect to such employees measured by the wages, salaries, compensation or other
remuneration paid to such employees, or otherwise, and each party further agrees
to make such payments and to make and file all reports and returns, and to do
everything to comply with the laws imposing such taxes, contributions or other
payments.

    


    B. INDEMNIFICATION
BY CONTRACTOR

     

    Contractor
hereby assumes liability for and agrees to indemnify, release, defend, protect,
save and hold United and its officers, directors, agents and employees harmless
from and against any and all liabilities, damages, expenses, losses, claims,
demands, suits, fines or judgments, including, but not limited to, attorneys’
and witnesses’ fees, costs and expenses incident thereto, which may be suffered
by, accrue against, be charged to or be recovered from United or its officers,
directors, employees or agents, by reason of any injuries to or deaths of
persons, except for injury or death of United employees, or the loss of, damage
to or destruction of property, including the loss of use thereof, arising out
of, in connection with or in any way related to any act, error, omission,
operation, performance or failure of performance of Contractor or its officers,
directors, employees and agents, or of any Ground Handling Provider, regardless
of any contributory negligence either active, passive or otherwise, on the part
of United or its officers, directors, employees or agents (but excluding the
reckless and willful misconduct or gross negligence of United or its officers,
directors, employees or agents), which is in any way related to the services of
Contractor contemplated by or provided pursuant to this
Agreement.  United will give Contractor prompt and timely notice of
any claim made or suit instituted against United which in any way results in
indemnification hereunder, and Contractor will have the right to compromise or
participate in the defense of same to the extent of its own
interest.

    


    C. INDEMNIFICATION
BY UNITED

     

    United
hereby assumes liability for and agrees to indemnify, release, defend, protect,
save and hold Contractor and its officers, directors, agents and employees
harmless from and against any and all liabilities, damages, expenses, losses,
claims, demands, suits, fines or judgments, including, but not limited to,
attorneys’ and witnesses’ fees, costs and expenses incident thereto, which may
be suffered by, accrue against, be charged to or be recovered from Contractor or
its officers, directors, employees or agents, by reason of any injuries to or
deaths of persons, except for injury or death of Contractor’s employees, or the
loss of, damage to or destruction of property, including the loss of use
thereof, arising out of, in connection with or in any way related to any act,
error, omission, operation, performance or failure of performance of United or
its officers, directors, employees or agents, regardless of any contributory
negligence either active, passive or otherwise on the part of Contractor or its
officers, directors, employees, or agents (but excluding the reckless and
willful misconduct or gross negligence of Contractor or its officers, directors,
employees or agents), which is in any way related to the services of United
contemplated by or provided pursuant to this Agreement.  Contractor
will give United prompt and timely notice of any claim made or suit instituted
against Contractor which in any way results in indemnification hereunder, and
United will have the right to compromise or participate in the defense of same
to the extent of its own interest.

    


    D. INDEMNIFICATION
RELATED TO GROUND HANDLING SERVICES

     

    Contractor
hereby assumes liability for and agrees to indemnify, release, defend, protect,
save and hold each Ground Handling Provider, and its officers, directors, agents
and employees, harmless from and against any and all liabilities, damages,
expenses, losses, claims, demands, suits, fines or judgments, including but not
limited to, attorneys’ and witnesses’ fees, costs and expenses incident thereto,
which may be suffered by, accrue against, be charged to or be recovered from
such Ground Handling Provider, or its officers, directors, employees or agents,
by reason of any injuries to or deaths of persons, or the loss of, damage to or
destruction of property, including the loss of use thereof, arising out of, in
connection with or in any way related to any act, error, omission, operation,
performance or failure of performance of Contractor or its officers, directors,
employees and agents, regardless of any negligence either active, passive or
otherwise on the part of such Ground Handling Provider, or its officers,
directors, employees or agents (but excluding the reckless and willful
misconduct or gross negligence of such Ground Handling Provider or its officers,
directors, employees or agents and excluding such Ground Handling Provider’s
negligent operation of ground support equipment to the extent solely of such
Ground Handling Provider’s indemnification obligation therefor under the
following paragraph), which is in any way related to the Ground Handling
Services.  To be eligible for this indemnity, each Ground Handling
Provider will give Contractor prompt and timely notice of any claim made or suit
instituted against it which in any way results in indemnification hereunder, and
Contractor will have the right to compromise or participate in the defense of
same to the extent of its own interest.  Contractor acknowledges and
agrees that the Ground Handling Providers are third party beneficiaries of the
indemnities provided herein by Contractor, and may bring legal actions and
proceedings (whether administrative, judicial, or otherwise) in their own names
directly against Contractor.

    


    United
will cause each Ground Handling Provider to agree to indemnify Contractor
against any physical loss of or damage to any of Contractor’s aircraft caused by
such Ground Handling Provider’s negligent operation of ground support equipment;
provided that such Ground Handling Provider’s liability under this sentence
shall be limited to any loss or damage not exceeding [***] in respect of any
incident and shall not extend to any loss or damage below [***] in respect of
any incident.

    


    E. CONTRACTOR’S
SUPPLIES LIABILITY

     

    Contractor
hereby assumes liability for and agrees to indemnify, release, defend, protect,
save and hold United and its officers, directors, agents and employees from and
against any and all liabilities, damages, losses, claims, demands, suits, fines
or judgments, including, but not limited to, attorneys’ and witnesses’ fees,
costs and expenses incident thereto, which may be suffered by, accrue against,
be charged to or be recovered from United or its officers, directors, employees,
or agents by reason of any losses or damages incurred on account of the loss,
misapplication, theft or forgery of passenger tickets, exchange orders or other
supplies furnished by or on behalf of United to Contractor, or the proceeds
thereof, whether or not such proceeds have been deposited in a bank and whether
or not such loss is occasioned by the insolvency or bankruptcy of a bank in
which Contractor may have deposited such proceeds, other than a loss caused by a
bank to which funds have been transmitted at the express direction of United,
unless such liabilities, damages, losses, claims, demands, suits, fines or
judgments, including, but not limited to, attorneys' and witnesses' fees, costs
and expenses incident thereto, which may be suffered by, accrue against, be
charged to or be recovered from United or its officers, directors, employees, or
agents by reason of any losses or damages incurred on account of the loss,
misapplication, theft or forgery of passenger tickets, exchange orders or other
supplies furnished by or on behalf of United is caused by the negligence of
United or its officers, directors, employees, or agents including, but not
limited to, attorneys' and witnesses' fees, costs and expenses incident thereto,
which may be suffered by, accrue against, be charged to or be recovered from
United or its officers, directors, employees, or agents by reason of any losses
or damages incurred on account of the loss, misapplication, theft or forgery of
passenger tickets, exchange orders or other supplies furnished by or on behalf
of United.  Contractor’s responsibility hereunder for passenger
tickets, exchange orders and other supplies will commence immediately upon the
delivery of said passenger tickets, exchange orders, and other supplies into the
possession of Contractor or any duly authorized officer, agent or employee of
Contractor.  United will furnish Contractor prompt and timely notice
of any claims made or suits instituted against United which in any way may
result in the indemnification hereunder, and Contractor will have the right to
compromise or participate in the defense of same to the extent of its own
interest.

    


    F. INDEMNITY
FOR INFORMATION

     

    Each
party hereby assumes liability for and agrees to release, defend, protect, save,
indemnify and hold the other party, its officers, directors, employees and
agents harmless from all liabilities, damages, losses, claims, demands, suits,
fines or judgments including, but not limited to, attorneys’ and witness’ fees,
costs and expenses incident thereto, of such party and any third person, express
or implied, arising by law or otherwise, as a result of, or related to, any
errors in information provided by the other party under this Agreement,
regardless of any contributory negligence of the other party either active,
passive or otherwise (but excluding the willful misconduct of the other
party).  Each party’s waiver and release to the other party in this
Article XII.F applies to any liability, obligation, right, claim, or remedy in
tort and including any liability, obligation, right, claim, or remedy for loss
of revenue or profit or any other direct, indirect, incidental, special, or
consequential damages.

    


    G. UNITED
DEFINITIONS

     

    As used
in this Article XIII for purposes of identifying an indemnified party, all
references to United include United’s parent company, and any subsidiary or
affiliate of United or its parent company, and their respective employees,
officers, directors and agents.  For purposes of this Article XIII any
passenger who connects in any city from a flight on United or Contractor (the
“Carrying Party”) within four (4) hours after the end of such flight to a flight
of the other party (the “Connecting Party”) become passengers of the Connecting
Party when such passenger enters the hold room or waiting area to which they
were deplaned in such city from the Carrying Party’s flight to such on-line
city.  A passenger of the Carrying Party who does not have a
connecting flight with the other party hereto and prior to entering the hold
room or waiting area after deplaning from the Carrying Party’s flight in the
Connection City is a passenger of the Carrying Party.  For purposes of
this Article XIII, neither loading bridges, hallways, stairways, nor ramp areas
will be considered part of the hold room or waiting area.

    


    XIV. ENVIRONMENTAL
MATTERS

     

    
      	
              A.  

            	
              Definitions.

            


    

    


    
      	
              1.  

            	
              The
      term “Environmental Laws” means all applicable federal, state, local and
      foreign laws and regulations, including airport or United rules,
      regulations, policies, or lease requirements relating to the prevention of
      pollution, protection of the environment or occupational health and
      safety, or remediation of environmental contamination, including, without
      limitation, laws, regulations and rules relating to emissions to the air,
      discharges to surface and subsurface waters, regulation of potable or
      drinking water, the use, storage, release, disposal, transport or handling
      of Hazardous Materials, and aircraft noise, vibration, exhaust and
      overflight.

            


    

    


    
      	
              2.  

            	
              The
      term “Hazardous Materials” means any substances, whether solid, liquid or
      gaseous, which are listed and/or or regulated as hazardous, toxic, or
      similar terminology under any Environmental Laws or which otherwise cause
      or pose threat or hazard to human health, safety or the
      environment.

            


    

    


    
      	
              B.  

            	
              Contractor
      Obligations.

            


    

    


    
      	
              1.  

            	
              Contractor
      shall conduct its operations in a prudent manner, taking reasonable
      preventative measures to avoid liabilities under any Environmental Laws or
      harm to human health or the environment, including, without limitation,
      measures to prevent unpermitted releases of Hazardous Materials to the
      environment, adverse environmental impacts to on-site or off-site
      properties and the creation of any public nuisance.  If in the
      course of conducting services under this Agreement Contractor encounters
      adverse environmental conditions that could reasonably be expected to give
      rise to liability for United or Contractor under any Environmental Laws or
      which otherwise could reasonably be expected to result in harm human
      health or the environment, Contractor shall promptly notify United of such
      conditions.

            


    

    


     

    
      	
              2.  

            	
              Contractor
      shall, at its own expense, conduct its operations in compliance with
      applicable Environmental Laws.  If United provides any
      information, instruction, or materials to Contractor relating to its
      obligations under any Environmental Laws, Contractor agrees that this
      shall not in any way relieve Contractor of its obligation to comply with
      Environmental Laws.  Contractor further agrees that it shall
      otherwise preserve the proprietary nature of any such information that is
      identified by United as proprietary and confidential and shall use
      commercially reasonable efforts to ensure that the information is not
      disclosed to any third parties without first obtaining the written consent
      of United.

            


    

    


    
      	
              3.  

            	
              Contractor
      shall use its reasonable commercial efforts to perform its services under
      this Agreement so as to minimize the unnecessary generation of waste
      materials, including consideration of source reduction and re-use or
      recycling options.  If requested by United, Contractor shall
      replace specific products used in its operations with less toxic products,
      as long as there is a reasonable replacement available at a similar cost,
      or if the product is not at a similar cost, provide United the option to
      agree to pay the difference.  Contractor shall ensure that any
      waste materials generated in connection with the services performed by
      Contractor under this Agreement are managed in accordance with all
      applicable Environmental Laws, with Contractor assuming responsibility as
      the legal generator of such wastes; however, this provision does not apply
      should United or another vendor of United be the entity who has in fact
      generated the wastes.

            


    

    


    
      	
              4.  

            	
              For
      any leased areas or other equipment that are jointly used or operated by
      both Contractor and United (and/or other United Contractors), Contractor
      shall use its reasonable commercial efforts to coordinate its activities
      with United and/or United Contractors and otherwise perform such
      activities to ensure compliance with applicable Environmental
      Laws.

            


    

    


    
      	
              5.  

            	
              Except
      for de minimis amounts of Hazardous Materials which are immediately and
      fully remediated to pre-existing conditions, Contractor shall promptly
      notify United of any spills or leaks of Hazardous Materials arising out of
      Contractor’s provision of services under this Agreement, and shall provide
      copies to United of any written reports provided to any governmental
      agencies and airport authorities under any Environmental Laws regarding
      same.  Contractor shall promptly undertake all reasonable
      commercial actions to remediate any such spills or leaks to the extent
      Contractor is required to do so by applicable Environmental Laws, by the
      relevant airport authority, or in order to comply with a lease
      obligation.  In the event that Contractor fails to fulfill its
      remediation obligations under this Paragraph and United may otherwise be
      prejudiced or adversely affected, United may undertake such actions as are
      reasonable at the cost and expense of
  Contractor.

            


    

    


    
      	
              6.  

            	
              Contractor
      shall promptly provide United written copies of any notices of violation
      issued or other claims from a third party asserted pursuant to
      Environmental Laws or associated with a potential release of Hazardous
      Mubstances and related to or associated with the provision of services by
      Contractor under this Agreement.  Contractor shall promptly
      undertake all actions necessary to resolve such matters, including,
      without limitation, the payment of fines and penalties, and promptly
      addressing any non-compliance identified; provided, however, that
      Contractor may contest any notice of violation or other alleged violation
      and defend any claim that it believes is untrue, improper or
      invalid.   In the event that Contractor fails to fulfill
      its obligations under this Paragraph and United may otherwise be
      prejudiced or adversely affected, United may undertake such actions as are
      reasonable at the cost and expense of
  Contractor.

            


    

    


    
      	
              7.  

            	
              If
      requested by United, Contractor shall conduct a review and provide
      information to United regarding Contractor’s compliance with the
      requirements of this Article.  This review may include the
      completion of an environmental compliance audit of Contractor’s activities
      pursuant to a work plan approved by United.  Contractor shall
      provide United with a summary of the results of this audit, provide United
      an opportunity to review any report generated in connection with such an
      audit, and will promptly use its reasonable commercial efforts to address
      any non-compliance identified.

            


    

    


    
      	
              8.  

            	
              In
      the event that Contractor’s Services include (a) providing bulk
      (non-bottled) potable water for crew or passenger consumption; (b) the
      handling or loading of bulk (non-bottled) potable water onto aircraft; or
      (c) the maintenance of any potable water equipment (such as water
      servicing trucks, carts, cabinets or portable tanks), Contractor shall
      comply with all applicable Environmental Laws governing the provision of
      such Services (“Drinking Water Requirements”) and shall use its reasonable
      commercial efforts to ensure all water handling equipment is properly and
      regularly disinfected and kept in sanitary condition.  If
      Contractor relies upon a Contractor to load water onto its aircraft or to
      maintain water handling equipment, it shall inquire with such contractors
      to ensure they meet these standards as well. Contractor shall notify
      United if it becomes aware of practices or conditions that may negatively
      impact potable water quality.

            


    

    


    
      	
              9.  

            	
              Contractor
      shall maintain records relating to its compliance with Environmental Laws
      under this Agreement for at least five (5) years or such longer period of
      time if required by Environmental Laws.  Contractor shall, at
      the request of United and with reasonable advance notice, provide United
      with reasonable access to Contractor’s operations, documents, and
      employees for the sole purpose of allowing United to assess Contractor’s
      compliance with its obligations with this Article, including responding to
      reasonable information requests.

            


    

    


    
      	
              10.  

            	
              Upon
      the termination of operations at a space used to support operations under
      this agreement, Contractor shall use its reasonable commercial efforts to
      ensure the removal and proper management of any and all Hazardous
      Materials for which Contractor is responsible associated with its
      operations (including its subcontractors) and will comply with any other
      applicable Environmental Laws applicable to Contractor’s United Express
      Services.

            


    

    


    
      	
              11.  

            	
              Contractor
      has reviewed United’s Environmental Commitment Statement (found at http://www.united.com/page/article/0,6722,52532,00.html)
      and agrees to cooperate with United in meeting these commitments and in
      responding to reasonable information
requests.

            


    

    


    
      	
              12.  

            	
              Contractor
      shall be responsible for and will indemnify, defend, and hold harmless
      United, including its officers, agents, servants and employees, from and
      against any and all claims, liabilities, damages, costs, losses,
      penalties, and judgments, including costs and expenses incident thereto
      under Environmental Laws or due to the release of a Hazardous Material,
      which may be suffered or incurred by, accrue against, be charged to, or
      recoverable from United or its officers, agents, servants and employees
      arising out of an act or omission of Contractor (or its subcontractor)
      related to Contractor’s provision of services under this Agreement, except
      to the extent caused by the negligent or willful acts or omissions of
      United or a third party contracted by
United.

            


    

    


    
      
        	
                13.  
      

              	
                All
      notices to be provided by Contractor to United under this Article shall be
      provided as indicated in Article XXII of this Agreement, with a copy to
      Director of Environmental Safety, United Air Lines, Inc., 1200 East
      Algonquin Road – OPCSY, Elk Grove Township, Illinois
  60007.

              


      

    

     

    XV. REPORTS

     

    A. OPERATING
PERFORMANCE

     

    Contractor
will furnish to United within ten (10) days after the end of each month a
detailed report of its operating performance, which report will include
information on Contractor’s performance during the preceding month for each of
the items designated by United, including, but not limited to, operating
performance standards and aircraft appearance.

    


    B. GOVERNMENT
FILINGS

     

    Contractor
will be responsible for filing all reports relating to its United Express
operations with the DOT, FAA or any state or airport authority (other than any
such reports for which United has assumed the responsibility to file them on
Contractor’s behalf), and Contractor will promptly furnish United with copies of
all such reports and such other available traffic and operating reports, in each
case relating to Contractors United Express service, as United may reasonably
require from time to time during the life of this Agreement.  To the
extent only United is in possession of relevant statistics used in such reports,
United will provide such available statistics to Contractor as necessary for
Contractor to complete these filings.  If United fails to provide such
statistics to Contractor sufficiently in advance of the applicable deadline for
such filings, and Contractor is unable to submit such filings by the deadline
because of such delay, United will reimburse Contractor for any fines or
penalties incurred by Contractor as a result of its failure to submit such
filings by the deadline.

    


    C. COPY
OF GOVERNMENT REPORTS

     

    Contractor
will promptly furnish United with a copy of every report that Contractor
prepares, whether or not such report is filed with the FAA, NTSB or any other
governmental agency, relating to any accident or incident involving an aircraft
used by Contractor in performing services under this Agreement, whether or not
such aircraft bears any of the United Marks, when such accident or incident is
claimed to have resulted in the death or injury to any person or the loss of,
damage to or destruction of any property.

    


    D. SCHEDULED
SERVICE UPDATE

     

    Contractor
will provide accurate updates of its flights’ planned and actual departure and
arrival times (including updates of irregularities) in Apollo Services as soon
as the planned flight schedule is changed and the flight departs and arrives or
experiences an irregularity.  Specifically, this includes updating the
out, off, on and in times for the aircraft within fifteen (15) minutes of the
occurrence of each event.  In the event of flight delays,
cancellations or other schedule irregularities affecting Contractor’s United
Express Service flights, and as soon as information concerning such
irregularities is available, Contractor shall update Apollo Services or other
approved United systems to reflect such information and, when requested by
United, notify the designated United organization.  For delayed
flights, Contractor shall provide updates to Customers and Apollo in no less
than fifteen (15)-minute intervals. For purposes of this Agreement, such
scheduled and actual departure and arrival and irregularity information shall be
known as “FLIFO.”  United will notify Contractor in writing as soon as
practicable after United determines that Contractor has failed to update FLIFO
in a timely and accurate manner.  If Contractor fails ten (10) times
in any consecutive thirty (30) day period (the “FLIFO Threshold”) to update
FLIFO in a timely and accurate manner as soon as it becomes evident to
Contractor that a schedule deviation shall take place, then upon notification by
United to Contractor, Contractor shall pay United damages of [***] for each
occurrence over and above the first ten (10) occurrences during such thirty (30)
day period regardless of who ground handles Contractor’s United
Express.  United agrees to bill Contractor any amount owed under this
Section within ninety  (90) days after the end of each calendar ninety
(90) day period during which Contractor has exceeded the FLIFO
Threshold.  Such damages shall be United’s exclusive remedy for
Contractor’s non-compliance with this paragraph and may be collected by setoffs
against other amounts owed by United to Contractor hereunder.

    


    E. CLOSE
OUT ENTRIES

     

    For the
cities specified in APPENDIX
B where the Contractor is performing its own Ground Handling, upon
departure of each United Express flight, Contractor will make close-out entries
in Apollo Services as required by United and as specified in the United Express
Service Standards.  United will make available to Contractor the same
monitoring systems currently available (i.e. day after departure prompts) or
those that are being developed and implemented for United.  If
Contractor fails to perform flight close-out entries in Apollo Services as
required in more than ten (10) occurrences within any consecutive thirty (30)
day period as outlined above, where such occurrence is caused by or arises out
of an act or omission of Contractor, then upon notification by United to
Contractor, Contractor shall pay United damages of [***] for each occurrence
over and above the first ten (10) occurrences within such thirty (30) day
period.  Such damages shall be United’s exclusive remedy for
Contractor’s non-compliance with this paragraph and may be collected by setoffs
against other amounts owed by United to Contractor hereunder.

    


    XVI. INDEPENDENT
CONTRACTORS AND WAIVER OF CONTROL

     

        A. INDEPENDENT
CONTRACTORS

     

    1. The
employees, agents and independent contractors of each party hereto (the
“Employer”) engaged in performing any of the services the Employer is to perform
pursuant to this Agreement are employees, agents, and independent contractors of
the Employer for all purposes and under no circumstances will be deemed to be
employees or agents or independent contractors of the other party (the
“Non-Employer”).   The Non-Employer will have no supervision or
control over any of the Employer’s employees, agents and independent contractors
and any complaint or requested change in procedure made by the Non-Employer will
be transmitted by it to the Employer’s designated representatives.  In
its performance under this Agreement, each party will act for all purposes, as
an independent contractor and not as an agent for the other party.

     

    2. Notwithstanding
the fact that Contractor has agreed to follow certain procedures, instructions
and United Express Service Standards pursuant to this Agreement, United will
have no supervisory power or control over any employees, agents or independent
contractors engaged by Contractor in connection with its performance hereunder,
and all complaints or requested changes in procedures made by United will, in
all events, be transmitted by United to Contractor’s designated
representatives.  Nothing contained in this Agreement is intended to
limit or condition Contractor’s control over its operations or the conduct of
its business as an air carrier, and Contractor and its principals assume all
risks of financial losses which may result from the operation of the air
services to be provided by Contractor hereunder.

     

    B. UNAUTHORIZED
OBLIGATIONS

     

    1. Nothing
in this Agreement authorizes United to make any contract, agreement, warranty or
representation on Contractor’s behalf, or to incur any debt or obligation in
Contractor’s name (“Contractor Unauthorized Obligation”); and United hereby
agrees to defend, indemnify, save, release and hold Contractor and its officers,
directors, employees and agents harmless from any and all liabilities, claims,
judgments and obligations which arise as a result of or in connection with or by
reason of any such Contractor Unauthorized Obligation made by United or its
officers, directors, employees, agents or independent contractors (other than
Contractor) in the conduct of United’s operations.

     

    2. Nothing
in this Agreement authorizes Contractor to make any contract, agreement,
warranty or representation on United’s behalf, or to incur any debt or
obligation in United’s name (“United Unauthorized Obligation”); and Contractor
hereby agrees to defend, indemnify, save, release and hold United and its
officers, directors, employees and agents harmless from any and all liabilities,
claims, judgments and obligations which arises as a result of or in connection
with or by reason of any such United Unauthorized Obligation made by Contractor
or its officers, directors, employees, agents or independent contractors (other
than United) in the conduct of Contractor’s operations.

     

    C. CONTRACTOR
OPERATED FLIGHTS

     

    The fact
that Contractor’s operations are conducted under the United Marks and listed
under the UA designator code will not affect their status as flights operated by
Contractor, and Contractor and United agree to advise all third parties,
including passengers, of this fact.

    


    XVII. DEFAULT,
TERMINATION AND OTHER REMEDIES

     

    A. BANKRUPTCY

     

    If either
party becomes insolvent; if the other party has evidence that either party is
not paying its bills when due without just cause; if either party takes any step
leading to its cessation as a going concern; makes an assignment for the benefit
of creditors or a similar disposition of the assets of the business; or if
either party either ceases or suspends operations for reasons other than an
Article XXV force majeure condition (a “Section A Default”), then the
other party (the “Insecure
Party”) may immediately terminate this Agreement on notice to such party
(the “Section A Defaulting
Party”) unless the Section A Defaulting Party immediately gives adequate
assurance of the future performance of this Agreement by establishing an
irrevocable letter of credit—issued by a U.S. bank acceptable to the Insecure
Party, on terms and conditions acceptable to the Insecure Party, and in an
amount sufficient to cover all amounts potentially due from the Section A
Defaulting Party under this Agreement—that may be drawn upon by the Insecure
Party if the Section A Defaulting Party does not fulfill its obligations under
this Agreement in a timely manner.  If bankruptcy proceedings are
commenced with respect to the Section A Defaulting Party and if this Agreement
has not otherwise terminated, then the Insecure Party may suspend all further
performance of this Agreement until the Section A Defaulting Party assumes or
rejects this Agreement pursuant to Section 365 of the Bankruptcy Code or any
similar or successor provision.  Any such suspension of further
performance by the Insecure Party pending the Section A Defaulting Party’s
assumption or rejection will not be a breach of this Agreement and will not
affect the Insecure Party’s right to pursue or enforce any of its rights under
this Agreement or otherwise.  If a bankruptcy proceeding is commenced
with respect to Contractor, Contractor and United hereby agree that Contractor’s
obligations under this Agreement, 

    


    B. COVENANT
DEFAULT

     

    If either
party (the “Section B
Defaulting Party”) shall refuse, neglect or fail to perform, observe, or
keep any material covenants, agreements, terms or conditions contained herein on
its part to be performed, observed, and kept (other than any such covenant or
agreement for which this Agreement provides an exclusive remedy and other than
the covenants described in Article XVI.D), and such refusal, neglect or failure
(individually and collectively, a “Breach”) shall continue for a
period of thirty (30) days after written notice to cure such Breach to the
Section B Defaulting Party thereof (a “Section B Default”), then the
other party may upon thirty (30) days’ notice to the Section B Defaulting Party
terminate this Agreement.  If a notice of Breach is delivered and a
notice of termination is not delivered within forty-five (45) days thereafter
the other party shall be deemed to have waived its right hereunder to terminate
for the particular occurrence of Breach for which the Section B Defaulting Party
received notice.

    


     

    C. DEFAULT
BY CONTRACTOR

     

    If
Contractor shall refuse, neglect or fail to cure or perform any one of the
following conditions, United may give Contractor written notice to correct such
condition or cure such breach, and if any such condition or breach shall
continue for thirty (30) days, or, in the case of Article XVII.C.1 below, ninety (90) days after notice to
Contractor thereof (a “Section C Default”), then United may terminate this
Agreement upon fifteen (15) days’ written notice to Contractor if:

     

    1. Contractor’s
operations fall below each of the following three levels for three (3)
consecutive months (in other words, Contractor will not have failed to comply
with the condition in this paragraph if it does not fall below any one or more
of the following three levels at any time during a period of three (3)
consecutive months):

     

    a. less than
[***] completion factor (excluding cancellations resulting from weather, Air
Traffic Control, labor actions, or from causes solely attributable to United or
its subcontractors);

     

    b. greater
than [***] mishandled bags per 1,000 passengers; and

     

    c. less than
[***] of flight departures are on-time within zero minutes; or

     

    2. Contractor
knowingly maintains falsified books or records or submits false reports of a
material nature.

     

    3. Contractor
is in breach under the terms of any of the Related Agreements and the other
party thereto has the right to terminate such Related Agreement in its entirety,
Contractor’s breach of such Related Agreement is material to the obligations of
Contractor under this Agreement and the Related Agreements, taken as a whole,
and such breach has continued for the longer of thirty days after notice to
Contractor thereof or the cure period specified in such Related
Agreement.

     

    D. SIMILAR
AGREEMENTS

     

    United
may immediately terminate this Agreement if Contractor or any of its affiliates
is in breach of the terms of Article V.B (No Operation Outside Agreement) (a
“Section D Default”).

    


    E. NON-COMPLIANCE
WITH STANDARDS

     

    If
Contractor shall refuse, neglect, or fail to perform or observe the provisions
of the United Express Service Standards to be performed, observed, and kept with
regard to one or more city pairs under this Agreement, and such refusal, neglect
or failure shall continue for a period of sixty (60) days after United delivers
written notice to cure such default to Contractor thereof (a “Section E
Default”), then United may upon thirty (30) days’ notice to Contractor terminate
this Agreement with regard to the city pairs involved or as to the entire
Agreement at United’s discretion.  If a notice of a Section E Default
is delivered and a notice of termination is not delivered within seventy-five
(75) days thereafter, United shall be deemed to have waived its right hereunder
to terminate for the particular occurrence of breach for which Contractor
received notice.

    


    F. CONSEQUENCES
OF TERMINATION; OTHER REMEDIES

     

    Any
termination pursuant to one or more of the provisions of this Agreement will be
without additional liability to the party initiating such termination and will
not be construed so as to relieve either party hereto of any debts or
obligations, monetary or otherwise, to the other party that accrued hereunder
prior to the effective date of such termination.  Each party will be
entitled to any and all damages recoverable and remedies under law or in equity
against the other for any breach by the other party of this Agreement,
regardless of whether the non-breaching party elects to terminate this
Agreement; provided that the liquidated damages provided for in Article XVI,G
shall constitute full payment and the exclusive remedy for any damages suffered
by United by reason of any breach by Contractor to which Article XVI,G
applies.

    


    G. UNITED’S
LIQUIDATED DAMAGES

     

    1. If United
terminates this Agreement pursuant to the terms of this Article XVII, including for Contractor’s breach, then
Contractor will pay to United as liquidated damages, and not as a penalty, the
Daily United Damages, for each day remaining during the period commencing with
the date of termination through the end of the term of this Agreement; provided,
however, that if United secures another carrier to replace Contractor in the
city pairs served by Contractor under this Agreement as a United Express Carrier
at any of the affected stations, or if United determines that United could
replace Contractor without increasing its damages in these city pairs, then the
liquidated damages will be adjusted as follows:

     

    a. At such
time as the average daily Total Net Sales Receipts received by United from the
replacement carrier or its own operations with respect to the city pairs
previously included in Contractor’s United Express Services for thirty (30)
consecutive days (the “Replacement Carrier’s Average Daily Receipts”) are at
least [***] of Contractor’s Average Daily Receipts, then from that day and
thereafter, the Daily United Lost Receipts will be reduced by
[***];

     

    b. At such
time as the Replacement Carrier’s Average Daily Receipts are at least [***] of
Contractor’s Average Daily Receipts, then from that day and thereafter the Daily
United Lost Receipts will be reduced to equal [***] of the original Daily United
Lost Receipts; and

     

    c. At such
time as the Replacement Carrier’s Average Daily Receipts are at least [***] of
Contractor’s Average Daily Receipts, then from that day and thereafter the Daily
United Lost Receipts will be reduced to [***].

     

    2. For
purposes of this be Article XVI,G,

     

    a. “Contractor’s Average Daily
Receipts” means the average amount of the daily Total Net Sales
Receipts

     

    b. “Daily United Lost Receipts”
shall equal Contractor’s Average Daily Receipts, subject to adjustment as
provided in paragraphs (a), (b) and (c) of Article XVI.

     

    c. The
amount of the “Daily United
Damages” shall equal the sum of (1) the Daily United Lost Receipts (as so
adjusted), plus (2) the amount (which may be a negative number) by which the
Replacement Carrier’s Average Daily Fees exceed the Contractor’s Average Daily
Fees; provided that, if the sum of the amount in clause (1) above plus the
amount in clause (2) above is less than zero, then the Daily United Damages
shall be zero.

     

    d. “Contractor’s Average Daily
Fees” means the average amounts paid by United to Contractor pursuant to
Article XVI G under this Agreement per day over the twelve (12) month period
immediately preceding the date of termination or Contractor’s breach, whichever
occurs earlier.

     

    e. “Replacement Carrier’s Average Daily
Fees” means the total of the average amounts paid to other carriers, if
any, per day and expenses incurred by United to replace Contractor’s United
Express Services for the cities served by Contractor.

     

    3. If this
Agreement is terminated in a manner such that United shall have the right to
damages under this Article XVI, United shall, in good faith and in a
commercially reasonable manner, secure another carrier to replace Contractor and
take such other reasonable actions so as to mitigate the damages owed to United
hereunder.

     

    4. The
inclusion of this Article XVI is not intended to modify, waive or restrict
Contractor’s rights to exercise any and all remedies available at law or in
equity for United’s breach of this Agreement.

     

    5. The
provisions of this Article XVI.G shall not be applicable to a termination of
this Agreement by United pursuant to Article XVI.C as a result of Contractor’s
failure to meet the conditions referenced in Article XVI.C; provided, that the
exclusion of the applicability of Article XVI.G to Article XVI.C shall not be
deemed to be a waiver of any right which United may have for remedies at law or
in equity.

     

    6. Not
withstanding the above, total liquidated damages shall in no case exceed [***]
in aggregate.  Liquidated damages shall not apply to EAS
markets.

     

    H. RESTRICTED
ACTIONS

     

    Neither
party shall not take, nor agree to take, any of the following actions without
the other party’s prior written consent: (a) dispose of any of the other party’s
assets, or (b) enter into any agreements with third parties which create liens,
claims or encumbrances on any of the other party’s assets.  To the
extent that Contractor engages in, invests in or otherwise is responsible
(financially or otherwise) for any business, activity or operation other than
Contractor’s United Express Services, and unless otherwise expressly agreed in
writing with United, Contractor will ensure that the costs and expenses
associated with or allocable to such other businesses, activities or operations
are not charged to or recovered from United in any way.

    


    XVIII. ASSIGNMENT

     

    Assignment.  This
Agreement may be terminated by either United or Contractor (the “first party”) if the other
party assigns this Agreement or any of its rights, duties or obligations under
this Agreement (except an assignment of the right to money to be received
hereunder) without the prior written consent of the first party.  In
the event that this Agreement is assigned in violation of this Article XVII,
without such consent having been given in writing, the first party will have the
right to terminate this Agreement immediately by telegraphic or written notice
to the other party; provided, however, that a corporate reorganization that does
not result in a material change in the ultimate ownership of Contractor from the
ownership that existed prior to such transaction will not be considered an
assignment as long as all of the entities succeeding to any of the assets or
liabilities of Contractor prior to such corporate reorganization agree to be
bound by this Agreement.

    


    XIX. TAXES,
PERMITS AND LICENSES

     

    A. PAYROLL
TAXES

     

    Contractor
acknowledges that it is responsible for and will pay to the appropriate
authority, and will indemnify and hold harmless United from, any and all federal
or state payroll taxes, FICA, unemployment tax, state unemployment compensation
contribution, disability benefit payments, insurance costs and any other
assessments or charges which relate directly or indirectly to the employment by
Contractor of Contractor’s employees.  United acknowledges that it is
responsible for and will pay to the appropriate authority, and will indemnify
and hold harmless Contractor from, any and all federal or state payroll taxes,
FICA, unemployment tax, state unemployment compensation contribution, disability
benefit payments, insurance costs and any other assessments or charges which
relate directly or indirectly to the employment by United of United’s
employees.

    


    B. PERMITS
AND LICENSES

     

    Contractor
will comply with all federal, state and local laws, rules and regulations, will
timely obtain and maintain any and all permits, certificates or licenses
necessary for the full and proper conduct of its operations, and will pay all
fees assessed for airport use including, but not limited to, landing fees, user
airport fees and prorated airport facility fees.  Contractor further
agrees to comply with all mandatory resolutions issued by the Air Transport
Association of America (“ATA”) and all non-binding recommended resolutions of
the ATA which are adopted by United.

    


    XX. REVIEW

     

    During
the term of this Agreement United may, at any time at its discretion, require a
joint review of Contractor’s aircraft and facilities to determine whether
Contractor’s United Express Services are meeting the requirements of this
Agreement. This review is not intended nor shall it be construed to relieve
Contractor of its responsibility to provide a quality and airworthy aircraft
that satisfies all FAA regulations.  In addition, within thirty (30)
days after each calendar quarter United and Contractor will meet to review
Contractor’s United Express Services during the preceding calendar
quarter.

    


    XXI. JURISDICTION

     

    With
respect to any lawsuit, action, proceeding or claim relating to this Agreement
or any other agreement between United and Contractor (hereinafter, any such
lawsuit, action, proceeding or claim is referred to as a “Lawsuit”), each of the
parties hereto irrevocably (i) submits to the jurisdiction of the courts of the
State of Illinois and the United States District Court located in the City of
Chicago, Illinois, and (ii) waives any objection which it may have at any time
to the laying of venue of any Lawsuit brought in any court, waives any claim
that any Lawsuit has been brought in any inconvenient forum, and further waives
the right to object, with respect to any Lawsuit, that such court does not have
jurisdiction over such party.  Nothing in this Agreement precludes
either party hereto from bringing Lawsuits in any other jurisdiction in order to
enforce any judgment obtained in any Lawsuit referred to in the preceding
sentence, nor will the bringing of such enforcement Lawsuit in any one or more
jurisdictions preclude the bringing of any enforcement Lawsuit in any other
jurisdiction.

    


    XXII. NOTICES

     

    Any and
all notices, approvals or demands required to be given in writing by the parties
hereto will be sufficient if sent by certified mail, postage prepaid, overnight
delivery by a nationally recognized delivery company or hand delivery, to
United, addressed to:

    


    United
Air Lines, Inc.

    1200 E.
Algonquin Road

    Elk Grove
Township, Illinois 60007

    Attn:  [***]

    


    and to
Contractor, addressed to:

    


    Colgan
Air, Inc.

    c/o
Pinnacle Airlines Corp.

    1689
Nonconnah Blvd.

    Suite
111

    Memphis,
TN 38132

    Attn:
[***]

    


    or to
such other addresses in the continental United States as the parties may specify
in writing. Notices may be sent by facsimile to the above addresses and will be
deemed delivered two (2) hours after the time of their transmission if confirmed
in writing on the day of transmission by certified mail, postage prepaid or
overnight delivery.

    


    XXIII. APPROVALS
AND WAIVERS

     

    A. Whenever
this Agreement requires the prior approval or consent of United, Contractor will
make a timely request to United therefore and the consent will be obtained in
writing. United will also consider, in its sole discretion, other reasonable
requests individually submitted in writing by Contractor for United’s consent to
a waiver of any obligation imposed by this Agreement.

     

    B. United
assumes no liability or obligations to Contractor by providing any waiver,
approval, consent or suggestion to Contractor in connection with this Agreement,
or by reason of any neglect, delay or denial of any request
therefore.

     

    C. Except as
otherwise provided for in this Agreement, no failure by either party to execute
any power reserved to it by this Agreement, or to insist upon strict compliance
by the other party with any obligation or condition hereunder, and no custom or
practice of the parties at variance with the terms hereof will constitute a
waiver of such party’s right to demand exact compliance with any of the terms
herein.   Waiver by such party of any particular default by the
other party will not affect or impair such party’s rights with respect to any
subsequent default of the same, similar or different nature, nor will any delay,
forbearance or omission of such party to exercise any power or right arising out
of any breach or default by the other party of any of the terms or provisions
hereof will affect or impair such party’s right to exercise the same or
constitute a waiver by such party of any right hereunder or the right to declare
any subsequent breach or default and to terminate this Agreement prior to the
expiration of its term.  Subsequent acceptance by such party of any
payments due to it hereunder will not be deemed to be a waiver by such party of
any preceding breach by the other party of any terms, covenants or conditions of
this Agreement.

     

    XXIV. GOVERNING
LAW

     

    This
Agreement and any dispute arising thereunder, including any action in tort, will
be governed by and construed and enforced in accordance with the internal laws
of the State of Illinois.

    


    XXV. CUMULATIVE
REMEDIES

     

    Unless
and to the extent as may be otherwise expressly stated in this Agreement, no
right or remedy conferred upon or reserved to Contractor or United by this
Agreement is intended to be, nor shall be deemed, exclusive of any other right
or remedy herein or by law or equity provided or permitted, but each will be
cumulative of every other right or remedy.

    


    XXVI. FORCE
MAJEURE

     

    A. Generally.  Except
for any payments due hereunder, neither party shall be liable for delays or
failure in performance hereunder caused by acts of God, acts of terrorism or
hostilities, war, strike, labor dispute, work stoppage, fire, act of government,
court order or any other cause, whether similar or dissimilar, beyond the
control of that party.

     

    B. Extraordinary
Events.  If United reports operating losses resulting in an
operating margin that is worse than minus [***] for [***] consecutive quarters
and such losses are the direct result of acts of God, acts of terrorism or
hostilities, war, strike, labor dispute, work stoppage, fire, act of government,
or court order and United expects the event to continue to cause such losses,
United will notify Contractor of the expected duration of the event and the
effect on Contractor’s schedule and operations.  Upon Contractor’s
receipt of such notice, Contractor will take such actions as it deems reasonable
to attempt to reduce its costs for the expected duration of the event and, if
successful, will agree to adjust the compensation payable to it under this
Agreement to pass the cost savings directly resulting from such actions on to
United until such time as United’s quarterly operating margin is not worse than
minus [***].  Subject to the preceding sentence, the actions that
Contractor takes under this Article XXVI.B may
include, but are not required to include, employee furloughs and layoffs, wage
freezes, capital expenditure freezes, management wage reductions, hiring freezes
and seeking temporary concessions from its labor unions.

     

    XXVII. SEVERABILITY
AND CONSTRUCTION

     

    A. Each term
or provision of this Agreement will be considered severable, and if, for any
reason, any such term or provision herein is determined to be invalid and
contrary to, or in conflict with, any existing or future law or regulation by a
court or agency having valid jurisdiction, such will not impair the operation
of, or have any other effect upon, other terms or provisions of this Agreement
as may remain otherwise enforceable, and the latter will continue to be given
full force and effect and bind the parties hereto, and said invalid terms or
provisions will be deemed not to be a part of this Agreement.

     

    B. The
captions appearing in this Agreement have been inserted for convenience only and
will not control, define, limit, enlarge or affect the meaning of this Agreement
or any of its provisions.

     

    XXVIII. ACKNOWLEDGMENT

     

    A. Each
party expressly disclaims the making of, and acknowledges that it has not
received, any warranty or guarantee, express or implied, as to the potential
volume, profits or success of the business venture contemplated by this
Agreement.

     

    B. Each
party acknowledges that it has received, read and understood this Agreement and
the Appendices hereto.

     

    XXIX. CONFIDENTIALITY

     

    A. Except as
required by law (including federal or state securities laws or regulations) or
by the rules and regulations of any stock exchange or association on which
securities of either party or any of its affiliates are traded, or in any
proceeding to enforce the provisions of this Agreement, United and Contractor
hereby agree not to publicize or disclose to any third party the terms or
conditions of this Agreement or any of the Related Agreements without the prior
written consent of the other parties thereto.

     

    B. Except as
required by law (including federal or state securities laws or regulations) or
by the rules and regulations of any stock exchange or association on which
securities of either party or any of its affiliates are traded, or in any
proceeding to enforce the provisions of this Agreement, United and Contractor
hereby agree not to disclose to any third party any confidential information or
data, both oral and written, received from the other and designated as such by
the other without the prior written consent of the party providing such
confidential information or data.

     

    C. If either
party is served with a subpoena or other process requiring the production or
disclosure of any of the agreements, information or data described in Article XXIX.A or Article XXIX.B,
then the party receiving such subpoena or other process, before complying with
such subpoena or other process, shall immediately notify the other party of same
and permit said other party a reasonable period of time to intervene and contest
disclosure or production.

     

    D. Upon
termination of this Agreement, each party must return to the other any
confidential information or data received from the other and designated as such
by the party providing such confidential information or data which is still in
the recipient’s possession or control.

     

    XXX. RELATED
AND THIRD PARTY AGREEMENTS

     

    A. United
and Contractor will enter into the agreements listed below in this Article XXX (the “Related Agreements”), which
relate to the terms hereof and continue to have full force and
effect.  All Related Agreements listed in this Article XXX are hereby amended such that each of such Related
Agreements will continue in effect for a term equal to the term of this
Agreement; provided, however, that all such Related Agreements will
automatically terminate contemporaneously with the termination of this
Agreement, which termination shall otherwise be effected in accordance with the
procedural terms of such Related Agreements.

     

    1. United
and Colgan Air Pro-Rate Agreement

     

    2. Interline
Agreement Space Available Employee and Eligible Travel

     

    3. United
Express Agreement Positive Space Employee Travel

     

    4. Emergency
Response Services Agreement.

     

    B. United
and Contractor will enter into a Slot Agreement which provides Contractor with
the ability to serve the specific markets defined in the Slot
Agreement.  This Slot Agreement will continue in effect for a term
equal to the term of this Agreement; provided, however, that the Slot Agreement
will automatically terminate upon the occurrence of either of the following
events: (i) at such time as Contractor no longer serves the specific markets as
a United Express partner or (ii) contemporaneously with the termination of this
Agreement.

     

    XXXI. ENTIRE
AGREEMENT

     

    This
Agreement, together with the Related Agreements, including any Appendices,
Attachments and Exhibits attached hereto and thereto, contains the complete,
final and exclusive agreement between the parties hereto with respect to the
subject matter hereof, and this Agreement supersedes all previous agreements and
understandings, oral and written, other than the Related Agreements, and by
operation of this clause, this Agreement specifically terminates, supersedes and
replaces the prior United Express®
Agreement entered into between United and Contractor, dated October 4,
2005 and denominated as United Contract Number 170197. This Agreement will not
be modified or amended by mutual agreement or in any manner except by an
instrument in writing, executed by the parties hereto.

    


    XXXII. REFERENCES
TO TIME PERIODS

     

    All
references to the term “year” in this Agreement shall
mean contract year unless specifically stated otherwise.  All
references to the term “month” in this Agreement
shall mean a full calendar month; provided that if the Effective Date shall be
other than the first day of a calendar month, then the first “month” of this Agreement
shall commence on the Effective Date and end on the last day of the month in
which the Effective Date occurs.  All references to the term “quarter” in this Agreement
shall mean a calendar quarter; provided that the first “quarter” of this Agreement
shall commence on the Effective Date and terminate on the last day of the
calendar quarter in which the Effective Date occurs.  Calendar
quarters shall be January 1 through March 31, April 1 through June 30, July 1
through September 30, and October 1 through December 31.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    IN
WITNESS WHEREOF, the parties hereto have by their duly authorized officers
caused this Agreement to be entered into and signed as of the day and year first
above written.

    
      	
               

              COLGAN
      AIR, INC.

               

               

               

              By:

              ______________________________

              George
      Casey

              President
      & General Manager

               

            	
               

              UNITED
      AIR LINES, INC.

               

               

               

              By:

              ______________________________

              John
      Tague

              Executive
      Vice President and Chief Operating Officer

               

            
	 
      	 
      


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
A

    


    UNITED
MARKS

    


    


    UNITED
EXPRESS

    


    Stylized
UNITED EXPRESS lettering

    


    UNITED
EXPRESS colors

    


    Stylized
letters UA

    


    Uniform
Design

    


    Aircraft
exterior and interior color decor

    


    Other
United Marks approved by United for use by Contractor


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
B

    


    MARKETS TO BE
SERVED

    


    Non-Directional
O&D                                                                Minimum
Frequency

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    [***]                                                                           [***]

    


    Minimum
frequencies for EAS markets will be defined by the government EAS
contract.  If at any time Contractor desires to make changes to the
frequencies, or eliminates service to any of the cities defined above, they must
communicate their intent in accordance with Article XXI, in writing, at least 90
days prior to the schedule change. Should Contractor eliminate service to any of
the above cities, Contractor is responsible for a prorated share of the IT
removal costs, based on the date of discontinued service and the number of
months remaining in the contract term.

    


    AIRCRAFT
FLEET

    


    Contractor
will operate [***] Saab 340-B turboprop aircraft.  At least [***] of
the aircraft are to be painted in United livery.  Contractor will also
have at least [***] operational spare in Contractor’s livery.

    


    GROUND
HANDLING

    


    Contractor
will provide ground handling services for Contractor-operated United Express
flights at no cost to United at the following
stations:  [***].

    


    For the
stations in which Contractor is responsible for providing ground handling
services, Contractor may, upon receiving written approval from United, assign
these duties to its parent company or other wholly owned subsidiaries of its
parent company or subcontract ground handling services to another United
Airlines approved ground handling company.

    


    United
will arrange for ground handling services to be provided on behalf of the
Contractor at the following stations:  [***].  The ground
handling fee specified in Article IX.B will be charged to Contractor for all
Contractor operated departures from the aforementioned
stations.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
C

    


    GROUND HANDLING
SERVICES

    


    The
Ground Handling Provider(s) will provide the following minimum
services:

    


    (a)           Employees
shall be fully qualified personnel to handle Contractor’s
operations.

    


    (b)           Posting
of signage and decor appointment as specified by United.

    


    (c)           Adequate
check-in areas including passenger waiting room facilities.

    


    (d)           Security
facilities, personnel and passenger screening procedures as are required by
applicable orders, rules and regulations of the FAA and those standards
specified by United.

    


    (e)           Capability
of operating Automation Equipment (Apollo Services) for the purpose of providing
passenger processing and operations in the configuration and under the
procedures specified by United.

    


    (f)           Baggage
handling, delivery and tracing in accordance with procedures issued by
United.

    


    (g)           Special
services required by passengers, including wheelchair service


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
D

    


    LIABILITY
INSURANCE

    


    Issued
by:

    


    Date of
Issue:

    


    THIS IS
TO CERTIFY TO: UNITED AIR LINES, INC.

    that
Insurers are providing 100% of the following Aircraft Hull & Liability
Insurances:

    


    
      	
              NAME
      INSURED:

            	 
      
	
              PERIOD
      OF INSURANCE:

            	 
      
	
              INSURERS:

            	 
      
	
              POLICY
      NUMBER:

            	 
      
	
              GEOGRAPHICAL
      LIMITS:

            	
              Worldwide
      Hull War limited to Western Hemisphere with commercial and or FAA provided
      insurance; territorial limitations not defined in FAA
    policy.

            
	
              AIRCRAFT
      INSURED:

            	
              All
      aircraft owned or operated by the Named Insured.

            
	
              DESCRIPTION
      OF COVERAGE:

            	
              Comprehensive
      Airline Liability Insurance, Contractual Liability, including Aircraft
      Liability, Passenger Liability, War Risk should the FAA stop carrying it,
      including both Passengers and Other Third Parties, Cargo Liability and
      Comprehensive General Liability, including Hangarkeepers, Excess
      Automobile, Host Liquor Liability, Personal Injury, and Products
      Liability/Completed Operations coverage.  All Risk Physical
      Damage Hull Coverage.

            
	
              LIMIT
      OF LIABILITY

            	
              Combined
      Single Limits to be specified consistent with Article XII, or up to
      [***].

            


    

    


    SPECIAL
PROVISIONS:

    


    The
insurers agree that coverage under this policy, by formal endorsement or
otherwise, is extended to insure all relevant terms and conditions of the United
Express Agreement, subject to the policy terms, conditions, limitations and
exclusions, between Contractor and United concerning Contractor’s Aircraft,
(hereinafter referred to as “Agreement”), including, inter alia:

    


    1. The
Insurers accept and insure the Indemnity and Hold Harmless provisions of the
Agreement, subject to the policy terms, conditions, limitations and
exclusions.

     

    


    2. United,
its affiliates, and their respective directors, officers, employees, agents and
indemnitees are named as additional insureds to the extent of the liability
assumed by Contractor under the Agreement, subject to the policy terms,
conditions, limitations and exclusions.

     

    3. The
Insurers agree that United shall not be liable for, nor have any obligation to
pay any premium due hereunder, and Insurers further agree that they shall not
offset or counter-claim any unpaid premium against the interest of
United.

     

    4. The
Insurers agree that all provisions of this insurance, except for the limits of
liability, shall operate in the same manner as if there were a separate policy
issued to each Insured.

     

    5. The
Insurers agree that this insurance shall be primary insurance without any right
of contribution from any other insurance which is carried by
United.

     

    6. The
Insurers agree to waive their rights of subrogation against United, its
officers, directors, employees and indemnitees, to the extent the Contractor has
waived and released its rights under the Agreement.

     

    7. The
Insurers agree that as respects the interest of United, its directors, officers,
employees and indemnitees, this insurance shall not be invalidated by any action
or inaction of the Contractor, its officers, directors or employees, and shall
insure United, its directors, officers, employees and indemnitees regardless of
any breach or violation of any warranties, declarations, conditions or
exclusions contained in the policy by the Contractor, its officers, directors or
employees.

     

    8. In the
event of cancellation for any reason whatever or if any change of a restrictive
nature is made affecting the insurance certified hereunder, or if this insurance
is allowed to lapse due to non-payment of premium, such cancellation, change or
lapse shall not be effective as to United, its directors, officers, employees
and indemnitees for at least thirty (30) days (ten (10) days in the case of
non-payment of premiums, seven (7) days notice of cancellation with respect to
war risk) after written notice by registered mail of such cancellation, change
or lapse shall have been mailed to United.

     

    9. With
respect to claims or causes of action in favor of United or its directors,
officers, agents or employees, they shall not be considered as additional
insured thereunder.

     

    Dated:  ___________________________

    


    Authorized
Representative:


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
E

    


    SAFETY STANDARDS FOR UNITED
AIRLINES AND UNITED EXPRESS CARRIERS

    


    We have
developed common safety standards to evaluate and effectively manage safety. We
will commit to:

    


    
      	
              ·  

            	
              Mutual
      support of one another in implementing these standards by sharing safety
      data, information and expertise.

            


    

    
      	
              ·  

            	
              Quality
      maintenance and operations training
programs

            


    

    
      	
              ·  

            	
              A
      carrier internal evaluation program to monitor key safety issues,
      including maintenance practices, required inspection items, technical
      document control, dangerous goods handling, training records and
      qualifications for all personnel.

            


    

    
      	
              ·  

            	
              Quality
      programs to manage outsourcing of
services.

            


    

    
      	
              ·  

            	
              A
      formalized maintenance quality assurance
  program.

            


    

    
      	
              ·  

            	
              Implementation
      of a program to rectify FAA inspection
findings.

            


    

    
      	
              ·  

            	
              Presence
      of a voluntary disclosure program.

            


    

    
      	
              ·  

            	
              Formal
      process to routinely bring safety and compliance issues to the attention
      of carrier’s senior management.

            


    

    
      	
              ·  

            	
              Anonymous
      safety hazard reporting system.

            


    

    
      	
              ·  

            	
              A
      Senior Management policy statement supporting open safety reporting by
      employees.

            


    

    
      	
              ·  

            	
              Director
      of Safety, reporting to the highest levels of management, overseeing the
      carrier’s safety programs.

            


    

    
      	
              ·  

            	
              Process
      for managing required corrective actions from FAA and internal audit
      program as well as employee
disclosure.

            


    

    
      	
              ·  

            	
              Ongoing
      flight safety education/feedback
program.

            


    

    
      	
              ·  

            	
              Ground
      safety program in airport operating
areas.

            


    

    
      	
              ·  

            	
              Incident
      investigation process that includes accountability, recommendations and
      actions taken.

            


    

    
      	
              ·  

            	
              Establishment
      and maintenance of emergency response procedures and
    manual.

            


    

    
      	
              ·  

            	
              Participation
      in UAL/industry safety information exchange
  forum.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
F

    


    RAMP, DEICING AND CUSTOMER
SERVICE STANDARDS

    


    Ramp Service
Standards

    


    Overview

    


    These
Service Standards are meant to provide an overview for Contractor as well as
establishing service expectations for the day-to-day delivery of the United
Express product. This document is not intended to be an all-inclusive manual.
Please reference The Regional Ground Operations Manual (RGOM), and United Series
45 for procedures and regulations. The Service Standards outlined herein may
change periodically, subject to the needs of the operation and our product
delivery.  Any changes to these standards are at the sole discretion
of United Airlines and are not subject to contractual negotiations.

    


    Safety

    


    In all
facets of United Express Carrier operations, SAFETY is our #1 priority. It is
expected that Contractor ensure all personnel maintain this same standard during
the course of performing their duties.

    


    Service
Standards

    


    Aircraft
Loading

    All
aircraft must be loaded in accordance with system loading standards. These
loading requirements may vary based on equipment type, weight and balance
constraints, and specific flight destinations

    


    Baggage
Handling

    The
complexity of work processes varies by location. Baggage handling at non-hub
locations consists primarily of originating and terminating product.
Expectations for these locations are incorporated with hub locations, with
variances determined by the level of work required.  In a hub or
connecting station, Contractor is responsible for the transfer of all baggage to
United and other airlines. Transferred bags are delivered as
follows:

    


    City Bags
(terminating) are to be delivered directly to the baggage claim area. The last
bag should be on the claim device within [***] minutes of block
arrival.

    


    “Hot”
Connecting Bags, defined by length of connection time determined on a local
level by United Airlines, are to be delivered to the connecting flight at the
gate. The gate drop point is to be determined locally by the
station.

    


    “Cold”
Connecting Bags, bags whose connect time is outside the Hot Bag timeframe, are
to be delivered to the designated sorter belt or transfer point.

    


    Interline
Bags (other airline connections) are to be delivered to the designated interline
drop point.

    


    Catering

    The
Contractor is responsible for providing ice on overnight aircraft and for other
flights when requested.

    


    Scanning

    The
scanning of baggage is an integral part of United and United Express ground
handling. Training for the execution of these processes will be provided to the
Contractor by United.  UA will provide the initial scanning
equipment

    


    REGIONAL GROUND ANTI ICING /
DEICING SERVICE STANDARDS

    


    Overview

    


    These
Service Standards are meant to provide an overview for Contractor as well as
establishing service expectations for the day-to-day delivery of the United
Express product. This document is not intended to be an all-inclusive manual.
The Service Standards outlined herein may change periodically, subject to the
needs of the operation and our product delivery.  Any changes to these
standards are at the sole discretion of United Airlines and are not subject to
contractual negotiations.

    


    Safety

    


    In all
facets of United Express operations, SAFETY is our #1 priority. It is expected
that Contractor ensure all personnel maintain this same standard during the
course of performing their duties.

    


    Service
Standards

    


    It is
expected that Contractor and its employees will adhere to the performance
standards outlined in this document and comply with any and all De/Anti icing
procedures as outlined in the Certificate holders FAA approved
program.

    


    All
De/Anti-icing Services to be performed by Contractor shall comply with the
requirements of the Federal Aviation Administration (FAA) and/or other
applicable governmental agencies.

    


    The
performance of any De/Anti-icing Service shall be subject to Contractor’s
applicable airport use of lease agreements and to all applicable federal, state
and local laws, statues, ordinance, rules and regulations.

    


    Prior to
the commencement of De/Anti-icing Services hereunder United or the Flying
Partners shall provide Handling
Company with all material, whether in written or electronic format, which
pertains to the
method and procedures to be used to perform services on aircraft types operated
as United Express.

    


    Performance
Standards

    


    Contractor
agrees to establish and maintain a timeframe of readiness (“callout period”),
satisfactory
to United for deicing event staffing, and agrees to staff the operation for
imminent

    snow
events.

    


    Contractor
agrees to provide a written performance review, when applicable, summarizing the
elapsed
time and actual gallons used by aircraft type for each deicing/anti-icing
event.

    


    Fluid
Usage

    


    Trucks
and or fluid containers will require that the fluid used is recorded either by
electronic or manual
means. The readings will include a start reading and an end reading. These
readings will be
attached to invoices for payment.  Tactile
checks will be performed (hands on check) on the leading edge of wings, on
winglets and on the
flaps on all rear engine aircraft.

    


    Service
Providers

    


    Service
Providers are other Air Carriers or Fixed Base Operators (FBOs) that are
contracted by United
Airlines or the United Express Handling Companys to de/anti-ice United Express
aircraft. These
other Air Carriers or FBOs may be either domestic or international.

    


    United or
the United Express Handling Companys may contract with other Air Carriers
foreign or
domestic using their deicing program as long as the program is approved by the
FAA and United
Express Carriers, their national regulator agency and accepted by the Corporate
Winter Operations
Committee (CWOC) and approved by the United Express carriers.

    


    United or
the United Express Handling Companys may contract with FBOs that use other Air
Carriers
approved deicing programs or that have their own approved deicing program and is
accepted by the Corporate Winter Operations Committee (CWOC) and approved by the
United Express carriers. (Ref. The Winter Operations Document Library in SkyNet,
Secondary Provider Engagement.)

    


    United or
the United Express Handling Companys may contract with FBOs that do not have a
deicing program, as long as they are using and have been trained to the approved
United Airlines/ United Express deicing program  and is approved by
the Corporate Winter Operations Committee (CWOC) and the United Express
carriers.

    


    Service
Providers may have their own approved deicing program that does not contain
United Express specific requirements (fleet).  United Express differences
(aircraft) must accompany their program.  Service Providers that use
the United Express program may have specific requirements per topic in this
program. These specifics are addressed in each section as required.

    


    When
using a Service Provider's de/anti-icing program, United / United Express
Station Management is still responsible of assuring compliance with United/
United Express requirements, including Post Deicing Check and Post Deicing
Communications procedures. Subjected to airport authority restrictions,
oversight is required and documented to ensure compliance. Documentation must be
kept in a local file for the season.

    


    The
Captain of the aircraft in coordination with the United Express air carrier
company’s control center will be directly responsible for a clean aircraft, and
is the final authority as to the operation of that aircraft.

     

    Stations
that contract the use of a Service Provider's ground equipment, personnel must
be trained to the identified differences.

    


    REFERENCED
PROCEDURES

    


    FAA
Documents

    FAA, FAR
121.629, “Operation in icing conditions”

    FAA, FSAT
bulletin, “FAA-Approved Deicing Program Updates”

    FAA,
Advisory Circular, "Ground Deicing and Anti-icing Program"

    United
Documents

    FOM, Cold
Weather Operations and individual Airport Information (10-7, 20-7)

    Aircraft
Flight Manuals Adverse Weather Operations section

    Regulations
45-5, Deicer Operation

    Ground
Safety 5-12 > part-04 Safety Precautions No. 5-12-11 Unit Check

    Deice
001

    Industry
Documents

    SAE, ARP
4737 Aircraft Deicing/Anti-icing Methods

    SAE, ARP
5149 Training Program Guidelines for De/Anti-icing of Aircraft

    SAE, ARP
1971 Aircraft Deicing Vehicle - Self-Propelled, Large and Small
Capacity

    SAE, AMS
1424 Deicing Type I fluid

    SAE, AMS
1428 Anti-icing Type II/III/IV fluid

    SAE, AMS
1431 Runway deicer – liquid

    SAE, AMS
1435 Runway deicer – solid

    ISO
standard 11075 Type I

    ISO
standard 11078 Type II/III/IV

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
 

    CUSTOMER SERVICE
STANDARDS

    


    Overview

    


    These
Service Standards are meant to provide an overview for Contractor as well as
establishing service expectations for the day-to-day delivery of the United
Express product. This document is not intended to be an all-inclusive manual.
Please reference United Series 65 for procedures and regulations. The Service
Standards outlined herein may change periodically, subject to the needs of the
operation and our product delivery.  Any changes to these standards
are at the sole discretion of United Airlines and are not subject to contractual
negotiations.

    


    Safety

    


    In all
facets of United Express operations, SAFETY is our #1 priority. It is expected
that Contractor ensure all personnel maintain this same standard during the
course of performing their duties.

    


    Service
Standards

    


    It is
expected that Contractor employees providing service to United’s customers
demonstrate the following behaviors:

    Sincerely
welcome customers, make eye contact, and use names when appropriate

    Engage
customers in a pleasant tone and manner

    Acknowledge
any customer problems and work to fix them, apologizing if
necessary

    Thank
United’s customers for their business

    


    It is
expected that Contractor employees participate and comply with United’s customer
service commitments that were shared with the US Department of
Transportation.  The current provisions of “Our Customer Commitment”
are as follows:

    


    
      	
              ·  

            	
              Offer
      the lowest fare available

            


    

    
      	
              ·  

            	
              Notify
      customers of known delays, cancellations and
  diversions

            


    

    
      	
              ·  

            	
              Provide
      on-time baggage delivery

            


    

    
      	
              ·  

            	
              Provide
      a fair baggage liability limit

            


    

    
      	
              ·  

            	
              Allow
      reservations to be held or
cancelled

            


    

    
      	
              ·  

            	
              Provide
      prompt ticket refunds

            


    

    
      	
              ·  

            	
              Readily,
      capably and respectfully accommodate travelers with special
      needs

            


    

    
      	
              ·  

            	
              Meet
      customer’s essential needs during long on-aircraft or in-airport delays,
      diversions and cancellations

            


    

    
      	
              ·  

            	
              Treat
      involuntarily denied boarding customers with fairness and
      consistency

            


    

    
      	
              ·  

            	
              Disclose
      up-to-date travel itinerary, cancellation policies, frequent flyer rules
      and aircraft configurations to our
customers

            


    

    
      	
              ·  

            	
              Work
      closely with our regional flying partners to deliver responsive customer
      service

            


    

    
      	
              ·  

            	
              Respond
      quickly, appropriately and courteously to customer questions and
      complaints

            


    

    


    Baggage Management
Services

    
      	
              ·  

            	
              Manage
      claim area

            


    

    
      	
              ·  

            	
              Maintain
      communications with customers

            


    

    
      	
              ·  

            	
              Process,
      manage and closeout Missing Baggage
Claims

            


    

    
      	
              ·  

            	
              Process
      and secure unclaimed baggage

            


    

    
      	
              ·  

            	
              Accept
      or deny and process damaged baggage
claims.

            


    

    
      	
              ·  

            	
              Scan
      baggage tag information

            


    

    
      	
              ·  

            	
              Enter
      tracing information into United’s tracing system,
    Worldtracer

            


    

    
      	
              ·  

            	
              Monitor
      Priority bag and claim area delivery times providing input to ramp as
      appropriate.

            


    

    


    Gate Management
Services

    
      	
              ·  

            	
              Manage
      gate departure

            


    

    
      	
              ·  

            	
              Board
      aircraft according to premium boarding
standards

            


    

    
      	
              ·  

            	
              Maintain
      communication with passengers and follow SOPs for announcements (see
      S*UAL/ANNOUNCE) (FastAir Format see PROFILE NAME: UAL; NAME:
      ANNOUNCE)

            


    

    
      	
              ·  

            	
              Perform
      crew ID checks

            


    

    
      	
              ·  

            	
              Perform
      document checks

            


    

    
      	
              ·  

            	
              Perform
      Denied Boarding process (Voluntary and
  Involuntary)

            


    

    
      	
              ·  

            	
              Process
      Departure Management list

            


    

    
      	
              ·  

            	
              Manage
      process of Standby lists

            


    

    
      	
              ·  

            	
              Perform
      Seat allocation

            


    

    
      	
              ·  

            	
              Reconcile
      passenger lists and boarding with aircraft  documents prior to
      departure

            


    

    
      	
              ·  

            	
              Complete
      Cargo Load Record passenger count at least [***] minutes prior to
      departure

            


    

    
      	
              ·  

            	
              Operate
      Passenger Loading Bridge (where applicable) or arrange for a qualified
      operator

            


    

    
      	
              ·  

            	
              Provide
      qualified personnel to operate passenger loading bridge and open and close
      aircraft door

            


    

    
      	
              ·  

            	
              Manage
      boarding process: ensure FAA minimums are onboard prior to
      boarding

            


    

    


    Lobby Management
Services

    
      	
              ·  

            	
              Make
      announcements directing customers for appropriate
    processing

            


    

    
      	
              ·  

            	
              Check
      and verify travel documents

            


    

    
      	
              ·  

            	
              Check-in
      customer, allocate seat assignment

            


    

    
      	
              ·  

            	
              Check
      baggage

            


    

    
      	
              ·  

            	
              Assist
      customers when flights are interrupted, delayed, or
    cancelled.

            


    

    
      	
              ·  

            	
              Arrange
      and perform porter services

            


    

    
      	
              ·  

            	
              Arrange
      and assist customers with special
needs

            


    

    
      	
              ·  

            	
              Perform
      E-ticket functions

            


    

    
      	
              ·  

            	
              Manage
      automated check-in device(s)

            


    

    
      	
              ·  

            	
              Perform
      administrative functions supporting customer
  service

            


    

    
      	
              ·  

            	
              Collect
      fees, service charges, surcharges, and
taxes

            


    

    
      	
              ·  

            	
              Follow
      prescribed lobby wait service
standards

            


    

    
      	
              ·  

            	
              GS/United
      First International – [***] serviced within [***] min. [***] serviced
      within [***] min

            


    

    
      	
              ·  

            	
              1K
      /United Business/United First Domestic – [***] serviced within [***] min.,
      [***] serviced  within [***]
min

            


    

    
      	
              ·  

            	
              1P/
      2P / 3P /Star Gold/Silver – [***] serviced within [***] min., [***]
      serviced within [***] min

            


    

    
      	
              ·  

            	
              United
      Economy – [***] serviced within [***] min., [***] serviced within [***]
      min

            


    

    


    Special
Services

    
      	
              ·  

            	
              Provide
      assistance and services for persons with special
  needs

            


    

    
      	
              ·  

            	
              Fully
      comply with all government regulations including the US Department of
      Transportation’s Air Carrier Access Act (14CFR Part 382) –
      Nondiscrimination on the Basis of Disability in
      Air  Travel.  Recognize, acknowledge, and provide
      appropriate services to United’s Global Services and high-profile
      customers.  Provide differentiated services to United’s premium
      customers.

            


    

    


    Flight Close
Out

    Contractor
is responsible for ensuring all flights are closed out in Apollo/ACI immediately
after

    departure
(completed within [***] minutes of flight departure). This includes making the
appropriate PB, PFS and PD entries. All customer counts, including revenue and
non-revenue customers, denied, as well as an accounting of any bags held off due
to weight/space restrictions, should be noted in the open comments field of the
flight close out.

    


    


     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
G

    


    AIRCRAFT APPEARANCE
STANDARDS

    


    Overview

    


    These
Service Standards are meant to provide an overview for Contractor as well as
establishing service expectations for the day-to-day delivery of the United
Express product. This document is not intended to be an all-inclusive manual.
Please reference United Series 55 and the RGOM for procedures and regulations.
The Service Standards outlined herein may change periodically, subject to the
needs of the operation and our product delivery.  Any changes to these
standards are at the sole discretion of United Airlines and are not subject to
contractual negotiations.

    


    Safety

    


    In all
facets of Carriers operations, SAFETY is our #1 priority. It is expected that
Contractor ensure all personnel maintain this same standard during the course of
performing their duties.

    


    Service
Standards

    


    Cabin
Amenities and Provisioning Supplies

    Contractor
will maintain custody and responsibility for all cabin amenity and provisioning
supplies. Local Station management is responsible for the ordering, stocking,
storing and auditing of all provisioning supplies and materials. Contractor will
issue all provisioning supplies, including cabin amenity products in order to
meet flight schedule requirements and service level expectations.

    


    Those
items include but are not limited to:

    Garbage
Bags for the Flight Deck, Galley and Lavatory Paper Towels, Cleaning Chemicals,
Soap and Disinfectants, Customer Lavatory Supplies, All Customer Amenities
identified in Series 55-4, Extended Delay Kits.

    


    Cabin
Search Procedures

    In
accordance with regulations mandated by the Transportation Security
Administration, (TSA), all passenger aircraft designated as “Remain Overnight”,
(RON), “Red Eye”, and “International” (either inbound or outbound) are to be
completely searched.

    


    Carriers
aircraft are to be searched in accordance with the procedures identified in
Series 55-2-10. Requirements as contained in the AOSSP or other published TSA
Security Directives shall supercede Series 55 Regulations.

    


    Cleaning
Chemicals

    United
will provide Contractor with a list of all approved chemicals required to
perform the contracted services, and shall make available all applicable
Material Safety Data Sheets (MSDS).  Handling Company is responsible
for providing all daily disposable and/or reusable supplies used in the actual
cleaning of the aircraft.

    Those
items, which Contractor is expected to provide at their expense include, but are
not limited to, the following:

    


    Mop
heads, Rags, Cleaning Towels, Scrapers, Gloves, Sponges, Scrub Pads, Vacuum
cleaners with attachments, Buckets, Window Squeegees, Brushes, Sprayer and
Bottles, Bags, Paper Towels, and Safety Equipment (Face shields and gloves for
lavatory servicing) or other type of carrier supplies identified on the current
supply sheet.

    


    Lavatory
Service Requirements

    Effective
with each flight schedule revision, United will identify by flight segment and
station those planes that require lavatory service. The frequency of this type
of service is determined by United in order to meet customer expectations and
aircraft maintenance requirements including adhoc requests.  Lavatory
service is to be performed in accordance with the procedures identified in
Series 55-052-02, 55-05-03, and 55-05-04.  Should lavatory service
failures occur; in addition to any recovery costs see Exhibit C,
“Aircraft/GSE/Facilities Damage” for details.

    


    Monthly
Literature Change Outs/Improper Placement

    At the
end of each calendar month, aircraft cleaning vendor will remove old literature
(Weekly and Monthly) off of assigned aircraft and dispose of
accordingly.  Handling Company will insure every F and Y class seat is
provisioned with Safety Cards and new literature in each seat
pocket.  Handling Company will ensure all assigned aircraft are
completed within the layover period of aircraft at their respective location and
prior to departure. United will be responsible for ordering the necessary amount
of literature required for mission compliance.  If insufficient
inventory prevents the vendor from completing the literature change, United must
be notified and the required inventory amounts for mission completion by the
vendor will be provided as soon as possible.

    


    A mission
failure is hereby defined as any aircraft assigned for literature change that is
completely missed, partially completed (i.e., 1 or more rows not complete), or
provisioned incorrectly (i.e., incorrect order placement, resulting in wrong
display of literature in 1 or more rows).

    


    Overnight
Aircraft Cleaning

    Overnight
aircraft are defined as those with a layover of five (5) hours or
greater.  Overnight aircraft are to be cleaned and secured in
accordance with the procedures identified in Series 55-2-02.

    


    See
attached cleaning matrix below:

    


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
H

    


    CUSTOMER RELATIONS SERVICE
STANDARDS

    


    General

    Headquarters
must have a management level contact designated as primary liaison for Customer
Relations contact in addressing problem resolution and potential
investigations.   Additional staff to be provided as necessary to
ensure effective response to customer complaints.

    


    


    Department of Transportation
consumer issues:

    Carrier
shall participate in monthly review of customer complaints sent to the US
Department of Transportation.   Such review will likely include
shifting of responsibility for such complaints from United to the carrier for
DOT accounting and enforcement purposes.

    


    Based on
DOT regulations, carriers will be responsible for directly preparing dispositive
replies to disability and discrimination claims by customers, as well as any
related investigatory work, record-keeping or reporting required by the
DOT.  UA will be available for guidance.

    


    


    Customer compensation and
goodwill:

    Airports
will be equipped with and agents trained for use of Customer Problem Resolution
(CPR) tools to assist with front-line problem resolution.  Guidelines
on the program and monthly reporting on utilization will be provided to the
carrier by United.

    


    Carrier
will ensure that Skykits are available for use onboard by flight attendants
onboard  for shortfalls in product or service.   Flight
attendants will be trained in Skykit use.   Guidelines and
quarterly activity reporting will be provided by United.  The carrier
will take action on any  trends identified in the
reports.

    


    Customer
Communication:

    Carrier
communication with customers will be completed within United Airlines customer
relations service standards.

    


    All
communication with customers which includes compensation will
be  copied to United for inclusion in the customer relations’ tracking
system.

    


    Customer
Comment Cards will be provided at stations.   Where allowed by
airports, such cards will be displayed at counters and
gates.  Otherwise, they will be available upon customer
request.  Carriers will use feedback from such cards for action or
communication in stations.

     

    Reporting

    Carriers
will be responsive to trends reported by station or issues that are brought to
UA attention by customers.

    


    Carrier
will be provided a monthly report detailing customer complaints, compliments and
comments.  Carrier will receive complaints of an egregious nature on
an immediate basis for investigation and remedial action.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
I

    


    UNITED EXPRESS MAIL AND SPD
SERVICE STANDARDS

    


    United
Express (UAX) carrier flights are listed in the Official Airlines Guide (OAG)
publications as United (UA) flights and the destinations served are extensions
of the United Airlines network. Due to current aircraft capacity, mail and small
package service are the only cargo services currently provided by UAX carriers.
United Express carriers will participate in and adhere to United Airlines’
standards for mail and SPD (Small Package Dispatch). Mail and SPD shipments
tendered to and originating on UAX flights, and those shipments transferred to
and delivered on UAX flights, are subject to the rules and regulations published
in UA Cargo Regulations 45-12 (Mail), 50-6 (SPD), 50-14 (UAX), and 50-16
(Station Service Standards), and Ramp Service Regulations 45-2 &
8.

    


    Mail and SPD
Services:

    


    
      	
              ·  

            	
              UAX
      personnel will adhere to UA published procedures and provide for the safe
      and expeditious transportation of U.S. Mail as agreed to in the
      contract(s) between the United States Postal Service (U.S.P.S.) and United
      Airlines.

            


    

    
      	
              ·  

            	
              UAX
      personnel will provide acceptance, processing and handling of all Small
      Package Dispatch (SPD) products in accordance with UA published
      procedures.

            


    

    


    Training

    


    
      	
              ·  

            	
              Each
      United Express carrier/ handler is responsible to train all employees who
      perform mail and SPD service activities using the curriculum provided by
      United Airlines.

            


    

    
      	
              ·  

            	
              United
      Airlines will provide the necessary materials and will provide “Train the
      Trainer” support when notified and coordinated with sufficient
      lead-time.

            


    

    
      	
              ·  

            	
              It
      is the responsibility of each United Express carrier/handler to maintain
      employee proficiency, knowledge and skill level with a system for training
      new employees and providing recurrent training for existing
      employees.

            


    

    
      	
              ·  

            	
              Each
      UAX carrier/handler will be required to keep updated training
      records.

            


    

    
      	
              ·  

            	
              Each
      UAX carrier/handler will ensure its employees remain in compliance with
      United Airlines’ Dangerous Goods, and all FAA or TSA mandated Security
      policies and procedures.

            


    

    


    Standards

    


    Each UAX
carrier/handler will achieve all UA mail and SPD service goals:

    


    MAIL

    
      	
              ·  

            	
              All
      Mail must be scanned with the applicable and appropriate scans as required
      by the U.S.P.S. using the scanners provided by
  UA.

            


    

    
      	
              ·  

            	
              All
      originating mail must receive a tender scan and a load scan to the
      specific planned flight.

            


    

    
      	
              ·  

            	
              Mail
      transferring from one flight to another flight will receive a transfer
      load scan.

            


    

    
      	
              ·  

            	
              All
      mail terminating will receive a delivery scan within the required delivery
      times set forth by the U.S.P.S. and United
  contract.

            


    

    
      	
              ·  

            	
              By
      contract, the U.S.P.S. does not pay for mail moved if the required scans
      are not performed. UAX carrier/handler will perform 100% of all required
      scans.

            


    

    


    SPD

    
      	
              ·  

            	
              UAX
      carriers/handlers will accept SPD shipments at the ticket counter or
      designated area up to [***] prior to the departure of each
      flight.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will properly complete and distribute copies of an Air
      Way bill (AWB) for each SPD
shipment.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will correctly input all AWB information into United
      Airlines’ Unimatic AFIS display. BSPD/BCOR to be completed prior to the
      departure of the selected flight.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will deliver all received SPD shipments to the
      designated delivery point within [***] of the arrival of each
      flight.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will enter on-hand info (BSOH) into AFIS within [***]
      after flight arrival.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will ensure date; time, customer’s name and signature
      are entered on the Delivery Receipt of the AWB when customer picks SPD
      up.

            


    

    
      	
              ·  

            	
              UAX
      carriers/handlers will complete the AWB at destination and input into AFIS
      using the TERM format in Unimatic within [***] after customer
      sign-off.

            


    

    
      	
              ·  

            	
              United
      Airlines requires the UAX carriers/handler to correctly input all data
      into AFIS with [***] accuracy. All fields must be input correctly for
      an AWB to be considered accurate.

            


    

    


    Performance

    
      	
              ·  

            	
              United
      Airlines will apply a chargeback of [***] for each AWB that is not input
      or is input incorrectly into the AFIS display in Unimatic and that causes
      a customer claim.

            


    

    
      	
              ·  

            	
              The
      UAX carrier/handler will be held responsible and charged back for all Lost
      and Damaged claims arising from mis-handling of shipments in their
      control.

            


    

    
      	
              ·  

            	
              United
      Airlines will apply a chargeback against the UAX carrier/handler for the
      total value of any shipment that fails to meet the time standards for
      acceptance or delivery that causes a customer
  claim.

            


    

    
      	
              ·  

            	
              United
      Airlines will apply a chargeback against the UAX carrier/handler for the
      total value of all mail payments withheld by the U.S.P.S. due to missed or
      improper scans.

            


    

    
      	
              ·  

            	
              United
      Airlines will apply a chargeback against the UAX carrier/handler for the
      total value of all mine fines issued by the U.S.P.S. due to loss,
      depredation, or damage while in the UAX carrier/handler’s custody or
      control.

            


    

     

    Reference

    


    
      	
              ·  

            	
              United
      Airlines ramp service regulations (Series
45)

            


    

    
      	
              o  

            	
              Chapter
      45-2:    Ramp

            


    

    
      	
              o  

            	
              Chapter
      45-12:  Mail Handling

            


    

    
      	
              ·  

            	
              United
      Airlines cargo service regulations (Series
50)

            


    

    
      	
              o  

            	
              Chapter
      50-06:  Small Package Dispatch
(SPD)

            


    

    
      	
              o  

            	
              Chapter
      50-14:  United Express

            


    

    
      	
              o  

            	
              Chapter
      50-16:  Station Service
Standards

            


    

    
      	
              ·  

            	
              United
      Airlines Small Package Dispatch Quick Reference
  Guide

            


    

    
      	
              ·  

            	
              Unitedcargo.com

            


    

    
      	
              ·  

            	
              United
      Express Customer Service Standards
Manual

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     APPENDIX
J

    


    PROGRAM
FEES

     

    [***]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    APPENDIX
K

    


    IAD HARDSTAND
OPERATION

    


    Summary of
Operation:

    


    Colgan
Air may operate in a hardstand operation during the 17:00 bank at
IAD.

    


    United is
not responsible for any costs associated with the hard stand operation,
including but not limited to costs associated with the movement of aircraft, the
movement of crews.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    APPENDIX
L

    


    PERFORMANCE
GOALS

    


     

    [***]

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    APPENDIX
M

    


     

    OFFICER POSITION’S ENTITLED
TO POSITIVE SPACE LEISURE TRAVEL ON CONTRACTOR’S UNITED EXPRESS
FLIGHTS

     

    


    


    Phil Trenary and
spouse

    CEO
and President, Pinnacle

    


    Peter Hunt and
spouse

    CFO,
Pinnacle & Colgan Air

    


    Doug Shockey and
spouse

    COO,
Pinnacle & Colgan Air

    


    George Casey and
spouse

    President
and General Manager, Colgan Air