Document:

exv10w2

 

Exhibit 10.2

* TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

Execution Copy

DELTA CONNECTION

AGREEMENT

          This Delta Connection Agreement (this “Agreement”), dated and effective the
3rd day of May, 2005 (the “Effective Date”), is between Delta Air Lines, Inc.,
whose principal address is 1030 Delta Boulevard, Atlanta, Georgia 30320 (“Delta”), Freedom
Airlines, Inc. (“Operator”), a wholly-owned subsidiary of Mesa Air Group, Inc. holding a
certificate of Public Convenience and Necessity issued by the Federal Aviation Administration
(“FAA”), whose principal address is 410 North 44th Street, Suite 700, Phoenix,
Arizona 85008 and Mesa Air Group, Inc. (“Parent”), parent company and sole shareholder of
Operator, whose principal address is 410 North 44th Street, Suite 700, Phoenix,
Arizona 85008.

          WHEREAS, Delta operates the Delta Connection program; and

          WHEREAS, Operator desires for Delta to perform and provide various marketing, schedule
and fare related, and other services for Operator in connection with the Delta Connection
program; and

          WHEREAS, Delta is willing to perform and provide various marketing, schedule and fare
related, and other services for Operator in connection with the Delta Connection program; and

          WHEREAS, this Agreement will enhance the ability of Operator and Delta to serve the
public and the communities that they serve or may choose to serve.

          NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual
undertakings set for herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Delta and Operator, intending to be legally
bound, hereby agree to enter into this Agreement as follows:

ARTICLE 1. FARES AND RULES PUBLICATION.

A. Delta Connection Program and Appointment of Delta as Agent. Operator hereby
appoints Delta as its agent to publish its fares, schedules and related information under
Delta’s two letter flight designator code in city pairs specified by Delta on the twenty five
(25) 50-seat regional jet aircraft set forth on Exhibit A attached hereto; provided,
however, in the event Delta is able to cause it affiliates to (i) reduce their existing order
of 50-seat

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regional jets with Bombardier by at least five (5) aircraft or (ii) convert nine
(9) or more of the 50-seat regional jets currently on order from Bombardier to 70-seat regional jets, then
the number of 50-seat regional jet aircraft shall be increased from twenty-five (25) to thirty
(30), and any other aircraft subsequently agreed by the parties to be operated by Operator
(collectively, the “Aircraft”), and Delta hereby accepts such appointment. Delta hereby
grants Operator the authority to operate as a Delta Connection Carrier, and Operator hereby
accepts such grant, to conduct air transportation operating the Aircraft utilizing certain
services together with certain trademarks and service marks owned by Delta or which Delta has
the right to use, all as provided herein. The parties acknowledge and agree that one (1) of
the Aircraft shall be used as an operational spare and one (1) of the Aircraft shall be used
as a maintenance spare for the remaining Aircraft which shall be in service on a full time
basis. From time to time, Operator may require an additional Aircraft removed from service
for heavy maintenance and the parties shall mutually agree on such removal times so as to
minimize the impact on the scheduling of the Aircraft.

B. Fares, Rules and Seat Inventory. Delta, in its sole discretion, shall establish and
publish all fares and related tariff rules for all seats, cargo and freight on the Aircraft,
including fares and rules for local traffic in the city pairs served by such Aircraft. In
addition, Delta will control all seat inventory and revenue management decisions for the Aircraft.

C. Schedules Publication. Delta, in its sole discretion, shall establish and publish all
schedules for the Aircraft, including city-pairs served, frequencies, and timing of scheduled
departures. Where practical, Delta will collaborate with Operator to determine mutually optimal
schedules. Operator shall operate the Aircraft in the city pairs designated by Delta, subject to
the frequency, scheduling and other requirements established by Delta from time to time. In
addition, it is agreed and understood that Delta may utilize and schedule any of the Aircraft to
perform various charter operations on behalf of Delta as can be reasonably accommodated by
Operator.

     Delta will make commercially reasonable efforts to notify Operator of schedule times,
frequencies and related information for the Aircraft as sufficiently in advance of the schedule
publication date so that the information can be properly disseminated to Operator for pilot and
flight attendant staffing, and related operational requirements. Additionally, Delta will make
commercially reasonable efforts to make reasonable accommodation for Operator’s operational needs
including without limitation, crew overnights and maintenance requirements for the Aircraft.

     In the event Delta changes the hub location served by the Aircraft, Delta shall provide
Operator with ninety (90) days prior written notice of such change and Delta and Operator shall
meet as soon as practicably possible to review and revise the Direct Costs and corresponding Base
Compensation as a result of such change in the manner provided in Section 3(J) hereof. In the
event Delta opens or closes a non-hub station served or to be served by Operator, Delta shall
provide Operator with sixty (60) days prior written notice of such opening or closing unless such
station is staffed by, or to be staffed by, Operator, in which case Delta shall provide Operator
with ninety (90) days prior written notice of such opening or closing

 

			
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     Notwithstanding any other provisions of this Agreement, Delta shall not change the hub
location served by Operator to any of the following airports: ORD, IAD, LAX, SFO, DEN, PHX, LAS,
CLT or PHL.

ARTICLE 2. EXCLUSIVITY.

A. Operator agrees that, except as otherwise directed or approved in writing by Delta, in
Delta’s sole discretion, (i) the Aircraft may be used only to provide the air services
contemplated by this Agreement (the “Delta Connection Flights”) and (ii) the Aircraft may not
be used by Operator for any other purpose including, without limitation, flying for any other
airline, providing charter services other than pursuant to Section 1(C) hereof, or on
Operator’s own behalf.

B. With the exception of flights operated by Operator or an affiliate of Operator pursuant to
codeshare agreements in effect as of April 15, 2005, with each of America West Airlines, United
Airlines and U.S. Airways, notwithstanding anything herein to the contrary, except as otherwise
directed or approved in writing by Delta, in Delta’s sole discretion, during the Term (including
any renewals or extensions thereof) of this Agreement neither Operator, nor any affiliate of
Operator, shall operate more than eight (8) flights per day for any third party or under any air
carrier’s flight designator code into or out of [*] and any other airport which has on average [*]
or more flights per day that are operated by Delta or one or more Delta Connection operators under
the ‘DL’ flight designator code (each, a “Restricted Airport”). In the event that Operator or an
affiliate of Operator is operating eight (8) or more flights for another airline at a location
prior to such location qualifying as a Restricted Airport hereunder, the prohibition in the
previous sentence shall not apply with respect to such operations.

C. During the Term of this Agreement, except as otherwise directed or approved in writing by
Delta, in Delta’s sole discretion, neither Operator, nor any affiliate of Operator, shall operate
more than eight (8) flights per day under its own flight designator code into or out of [*] or any
Restricted Airport. In the event that Operator or an affiliate of Operator is operating eight (8)
or more flights under its own flight designator code into or out of a location prior to such
location qualifying as a Restricted Airport hereunder, the prohibition in the previous sentence
shall not apply with respect to such operations.

D. Neither Operator, nor any affiliate of Operator, shall use any of the services, facilities
or equipment provided by Delta, or an affiliate of Delta, to Operator in connection with the
Aircraft or the Delta Connection Flights outside the scope of this Agreement without the prior
written consent of Delta. With respect to any ancillary facilities or equipment used by
Operator, or an affiliate of Operator, in connection with providing the services contemplated
by this Agreement, such use for the benefit of Delta shall have priority over any other use
contemplated by Operator, or any affiliate of Operator. With respect to facilities, equipment
owned, leased or otherwise used by Operator in connection with providing services contemplated
by this Agreement, Delta shall have the right to designate from time to time which property
shall be used to carry out Operator’s obligations under this Agreement.

 

			
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ARTICLE 3. COMPENSATION.

A. Base Compensation.

     In exchange for the flying and operation of the Aircraft, Delta shall pay Operator one hundred
percent (100%) of the “Base Rate Costs” and the “Pass Through Costs” (each as such term is defined
below, and collectively, the “Direct Costs”) and one hundred percent (100%) of the “Reimbursable
Costs” (as such term is defined below), in each case, as relates to the operation of the Delta
Connection Flights and as determined in the annual rate setting. It is understood that Direct Costs
and Reimbursable Costs shall be based on market-based, direct operating costs and generally
accepted accounting principles (“GAAP”), and specifically exclude any pre-paid expenses except as
expressly provided herein. In addition, in any month in which Operator achieves a completion rate
for the Delta Connection Flights of at least [*]%, Delta shall pay Operator a mark-up (the “Base
Mark-up”) of [*] percent ([*]%) of such Direct Costs incurred during such month, subject to certain
limitations and adjustments set forth below.

(i) The “Base Rate Costs” shall include all direct, operating costs recorded in accordance with
generally accepted accounting principles (“GAAP”), (but specifically excluding any prepayments
except as expressly provided herein) based upon the model attached hereto as Exhibit B (as
modified from time to time) including, without limitation, the following:

	 	(1)	 	“Engine Maintenance Expense” — Operator’s engine maintenance costs as set forth
on Exhibit B, less any warranty payments or credits Operator receives. Notwithstanding
the foregoing, Base Rate Costs shall not include any engine maintenance performed
unreasonably in advance of the time such maintenance is required in accordance with
Operator’s FAA approved maintenance program for the applicable Aircraft.
	 
	 	(2)	 	“Aircraft Rent/Ownership Costs” — Operator’s actual aircraft rent/ownership
expenses for the Aircraft; provided, however, no such aircraft rent/ownership expense
shall exceed the lesser of (a) the average aircraft rent/ownership expense for the
entire fleet of CRJ-200 aircraft operated by Operator or any affiliate of Operator and
(b) [*] Dollars ($[*]) per month per Aircraft on average for all of the Aircraft,
without the prior written consent of Delta. Operator shall not re-finance any Aircraft
without the prior written consent of Delta if such refinancing would result in higher
aircraft rent or ownership costs in the Base Rate Costs.
	 
	 	(3)	 	“Terminal Facility Rent and Use Charges” — Operator’s actual applicable
terminal facility rent and use charges (including common use, ramp rent and jet bridge
expenses), including without limitation facilities maintenance and operation expenses,
but excluding any such rent and use charges if premises are provided by Delta or any
affiliate of Delta.

 

			
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	 	(4)	 	Recurrent Training Costs.
	 
	 	(5)	 	General Overhead — the allocated proportion of Operator’s overhead based on a
percentage of block hours (or other mutually acceptable statistic) for Operator’s Delta
Connection operations versus the total block hours (or other mutually acceptable
statistic) of all operating carriers of Parent; provided; however, that in the event
that any of the Aircraft hereunder are incremental aircraft to Parent’s overall fleet
as of the date hereof (net of any like-aircraft substitutions), then, with respect to
any such Aircraft, only incremental, direct overhead shall be included in the Base Rate
Costs.

     Notwithstanding anything herein to the contrary, at all times during the Term of this
Agreement, Operator’s Base Rate Costs (on a unit basis and taken as a whole) shall not exceed (a)
the Base Rate Costs (on a unit basis and taken as a whole) of any other carrier within the Delta
Connection program operating aircraft similarly configured as the Aircraft and (b) the Base Rate
Costs (or similarly categorized costs) (on a unit basis and taken as a whole) charged by Operator,
or any affiliate of Operator, to another codeshare partner for aircraft similarly configured as the
Aircraft.

(ii) The “Pass Through Costs” shall include the following variable costs for which Delta shall
bear the risk of price and volume fluctuations, provided that such costs shall be reconciled on a
monthly basis to reflect the actual costs incurred by Operator:

	 	(1)	 	Landing Fees;
	 
	 	(2)	 	Hull Insurance ;
	 
	 	(3)	 	Passenger Liability Insurance Costs;
	 
	 	(4)	 	War Risk Insurance;
	 
	 	(5)	 	Fuel Expense — Operator’s actual fuel, into-plane expenses and fuel taxes;
provided, however, any Mark-Up of the Fuel Expense shall be capped at an amount
equivalent to a $[*] per gallon fuel price;
	 
	 	(6)	 	Glycol and de-icing services (but not if provided by Delta or an affiliate of
Delta);
	 
	 	(7)	 	Catering Costs;
	 
	 	(8)	 	Property Taxes(including any reasonable fees and costs associated with
appealing and obtaining reductions in Property Taxes); provided, however, any Mark-Up
of any Property Tax on the Aircraft shall be capped at an amount equivalent to [*]% of
the value of the Aircraft; and
	 
	 	(9)	 	All costs to initially change the internal (but not external) livery of any
Aircraft and any subsequent change the internal or external livery of any Aircraft
pursuant to any request by Delta during the Term of this Agreement.

     Notwithstanding the foregoing, Pass Through Costs shall not include any late payment charges,
penalties and/or fees which Operator incurs in connection with the payment of the expenses listed
above.

     Notwithstanding anything herein to the contrary, at all times during the Term of this
Agreement, Operator’s Pass Through Costs (on a unit basis and taken as a whole) shall not

 

			
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exceed (a) the Pass Through Costs (on a unit basis and taken as a whole) of any other carrier
within the Delta Connection program operating aircraft similarly configured as the Aircraft taking
into account geographic locations and (b) the Pass Through Costs (or similarly categorized costs)
(on a unit basis and taken as a whole) charged by Operator, or any affiliate of Operator, to
another codeshare partner for aircraft similarly configured as the Aircraft.

B. Reimbursable Costs not Subject to Mark-up.

     Delta shall reimburse Operator for one hundred percent (100%) of the costs incurred for the
following items (“Reimbursable Costs”), but it is expressly agreed that no Mark-Up (including any
incentive compensation) of such costs shall be paid by Delta:

	 	(1)	 	Any FAA or Department of Transportation (“DOT”) fines administered or
levied against Operator due to an action or omission principally caused by Delta or
an affiliate of Delta.

C. Non-Reimbursable Costs.

     The parties hereby acknowledge and agree that Operator shall be solely responsible, and Delta
shall not be responsible, nor reimburse Operator, for any of the following costs:

	 	(1)	 	Any and all [*] and/or [*]; and
	 
	 	(2)	 	Any and all FAA, DOT or any other government agency fines administered
or levied against Operator due to any action or omission not principally caused by
Delta or an affiliate of Delta; and
	 
	 	(3)	 	Passenger amenities costs and other interrupted trip expenses,
including without limitation denied boarding compensation, food and lodging
expenses and other transportation costs incurred by Operator due to any action or
omission principally caused by Operator or an affiliate of Operator; and
	 
	 	(4)	 	Any Base Rate Costs or Pass Through Costs deemed commercially
unreasonable by Delta, in its reasonable discretion.

D. Delta Costs.

The parties acknowledge and agree that the following costs related to Operator’s services
hereunder shall be paid directly by Delta and shall not be included in the Base Compensation or
any incentive compensation calculation or payment:

	 	(1)	 	Travel agency commissions, if any;
	 
	 	(2)	 	Credit card fees;
	 
	 	(3)	 	Reservations handling charges;
	 
	 	(4)	 	Booking fees;

 

			
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	 	(5)	 	Frequent flyer charges;
	 
	 	(6)	 	Denied boarding costs, interrupted trip expense, baggage delivery and
damaged/lost baggage compensation, except as set forth in Section 3(C)(3) above;
	 
	 	(7)	 	Advertising;
	 
	 	(8)	 	Glycol and de-icing services (if provided by Delta or an affiliate of Delta);
	 
	 	(9)	 	Terminal Facility Rent and use charges, including without limitation facilities
maintenance and operations costs (if premises are provided by Delta or an affiliate of
Delta); and
	 
	 	(10)	 	The cost of any Support Services (as defined herein) and any ticketing
services, if provided by Delta or an affiliate of Delta.

E. Incentive Compensation.

	1.	 	Definitions. The parties agree that for purposes of this Agreement the following terms
shall have the respective meanings as set forth below:

	 	a.	 	“Monthly Incentive Goal” shall mean each of the seasonalized monthly
operational performance goals for (i) completion rate, and (ii) on-time arrival
(“A-15”) (collectively, the “Performance Categories”), respectively, as established by
Delta for Operator from time to time, taking into account geographic location, historic
actual performance and performance trends of Operator, Delta mainline performance in
such categories in the same locations, schedule difficulty, aircraft type and
Operator’s input. Operator’s initial Monthly Incentive Goals for each Performance
Category are set forth on Schedule 3 attached hereto, which shall be modified from time
to time in the event that one or more of Monthly Incentive Goals is modified by Delta.
	 
	 	b.	 	“Semi-Annual Seasonalized Goal” shall mean the respective six-month weighted
average of each of the Monthly Incentive Goals for January through June and July
through December of each calendar year during the Term.
	 
	 	c.	 	“Semi-Annual Incentive Goal” shall mean:

	 	i.	 	With respect to completion rate and A-15, [*]% of
the difference between 100% and the appropriate Semi-Annual Seasonalized
Goal, plus the Semi-Annual Seaonalized Goal.
	 
	 	ii.	 	By way of example: If Operator’s Semi-Annual
Seasonalized Goal for completion rate for January through June 2006 is
[*]%, its Semi-Annual Incentive Goal for such period shall be calculated
as follows:

[([*]) * [*]%] + [*]= [*]%

	 	iii.	 	Operator’s initial Semi-Annual Incentive Goals for
each Performance Category are set forth on Schedule 3 attached hereto,
which shall be

 

			
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modified from time to time in the event that one or more of Monthly
Incentive Goals is modified by Delta pursuant to Section 3(E)(1)(a) above.

	2.	 	Monthly Incentive Compensation. In addition to the Base Compensation, Operator
shall have the opportunity to earn additional compensation (the “Monthly Incentive
Compensation”) based upon its actual performance in the Performance Categories as compared
to the applicable Monthly Incentive Goal. For each month during the Term of this
Agreement, Delta shall pay Operator an additional [*] percent ([*]%) mark-up of the actual
Direct Costs (as calculated monthly based on the established Annual Rate Plan) for each of
the following performance goals that Operator achieves during such month:

	 	(i)	 	Actual completion rate (excluding cancellations due to charter flights
pursuant to Section 1(C) hereof) for its Delta Connection Flights equal to or
greater than the applicable Monthly Incentive Goal; and
	 
	 	(ii)	 	Actual A-15 rate for its Delta Connection Flights equal to or greater
than the applicable Monthly Incentive Goal.

	3.	 	Semi-Annual Incentive Compensation. In addition to the Base Compensation and
the Monthly Incentive Compensation, Operator shall have the opportunity to earn additional
compensation (the “Semi-Annual Incentive Compensation”) based upon its semi-annual
performance in the Performance Categories as compared to the Semi-Annual Incentive Goal for
each Performance Category. During each six-month period (measured from each January 1
through June 30 and July 1 through December 31) during each year of the Term of this
Agreement, Delta shall pay Operator a [*] percent ([*]%) mark-up of actual Direct Costs
(as calculated monthly based on the established Annual Rate Plan) for each of the following
performance goals that Operator achieves during the applicable six-month period:

(i) Actual Completion rate (excluding cancellations due to charter flights pursuant to
Section 1(C) hereof) for its Delta Connection Flights equal to or greater than the
applicable Semi-Annual Incentive Goal; and

(ii) Actual A-15 rate for its Delta Connection Flights equal to or greater than the
applicable Semi-Annual Incentive Goal;.

F. Margin Cap. Within sixty (60) days after the end of each calendar year during the
Term, Operator shall provide Delta a certificate (the “Margin Certificate”) signed on behalf of
Operator by its chief financial officer, that states the actual total margin that Operator earned
on operating the Delta Connection Flights (and any charter operations pursuant to Section 1(C)
hereof) (the “Actual Margin”) during such calendar year. Such Margin Certificate shall include an
exhibit that fully sets forth Operator’s calculation of its Actual Margin and certify to the
accuracy of the Actual Margin. Actual Margin for any given calendar year shall be determined, on a
pre-tax

 

			
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basis, by subtracting Operator’s aggregate actual Direct Costs incurred to operate the
Delta Connection Flights (and any charter operations pursuant to Section 1 (C) hereof) for such calendar year from
the total payments (the “Total Payments”) made by Delta to Operator for such Delta Connection
Flights for such year, including any and all Base Mark-up, Monthly Incentive Compensation and
Semi-Annual Compensation, and dividing such difference by the Total Payments. In the event that
Operator’s Actual Margin is greater than [*] percent ([*]%), Operator shall pay Delta an amount
equal to the amount necessary to reduce the Total Payments such that the Actual Margin for such
calendar year will equal [*]%. Any payment made pursuant to this Section 3. F. shall be made
within thirty (30) days of Delta receiving the Margin Certificate.

G. Fuel Burn Cap and Penalty. Delta and Operator agree to review the fuel burn performance
of the Aircraft for Delta Connection Flights for compliance with the performance measure (“Burn
Rate Ceiling”) of *. Either party may initiate the Burn Rate Ceiling.

     In the event that the Aircraft’s actual fuel burn for the period of review is above the Burn
Rate Ceiling, the parties will work together in good faith to explain the variance relative to the
Burn Rate Ceiling and to resolve the cause of the variance. If it is determined that actual fuel
burn was above the Burn Rate Ceiling for reasons within the control of Operator, Operator will be
charged a “Fuel Burn Penalty Payment” and such charge shall be accounted for in the next applicable
monthly reconciliation payment made pursuant to Section 3(H) below. The Fuel Burn Penalty Payment
shall be calculated as follows:

Fuel Burn Penalty Payment = [(total fuel expense/actual fuel price) / scheduled
Block Hours – Burn Rate Ceiling] * completed scheduled Block Hours * actual fuel
price + applicable Mark-up on fuel overpayment.

H. Accounting Provisions.

     Delta shall retain all revenues (including, without limitation, passenger, cargo, mail, food,
beverage and duty-free services or any other revenue including, without limitation, any guaranteed
or incentive payments from airport, local or municipal authorities in connection with scheduling
flights to such airport or locality or any federal funds payments in connection with the operation
of the Delta Connection Flights. Operator shall promptly remit to Delta all monies with respect to
all airline ticket sales, on-board sales, baggage charges, passenger charges, cargo sales and all
other revenue collected by Operator or any agent or employee of Operator in connection with the
operation of the Aircraft (including credit card transactions).

     On the 1st, 8th, 15th and 22nd day of each month (or if not a business day, on the
following business day) Delta will advance to Operator, via wire transfer or through the Airline
Clearing House (the “Clearing House”) in Delta’s discretion, [*] percent ([*] %) of the estimated
monthly Direct Costs and Base Mark-Up (collectively, the “Base Compensation”). In computing the
amount of the advance, Operator shall submit an invoice to Delta will shall be based on the

 

			
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projected fuel costs and will estimate the anticipated number of weekly revenue block hours,
departures and passengers.

     Within sixty (60) days following the end of each month, Delta and Operator will reconcile the
actual costs incurred by Operator for the Base Compensation, the final operating results (including
actual performance in the Performance Categories) of, and actual revenue block hours flown by,
Operator with the estimated payments made pursuant to the previous paragraph. Within five (5)
business days of completing such reconciliation, Delta or Operator, as the case may be, shall pay,
via wire transfer or the Clearing House in Delta’s discretion, to an account designated by the
other party, monies equal to the reconciled amount. If certain actual costs are not known by the
end of such 60-day period, Operator shall provide Delta with a good faith estimate of such unknown
costs and such estimated amount shall be included in the initial 60-day reconciliation. As soon as
commercially reasonable, such estimated amounts shall be reconciled with the actual costs for such
expenses, and Delta or Operator, as the case may be, shall pay, via wire transfer or the Clearing
House in Delta’s discretion, to an account designated by the other party, monies equal to the
reconciled amount.

     Notwithstanding anything herein to the contrary, in the event Operator is unable to operate
any of the Aircraft, or any of the Delta Connection Flights, due to weather, fire, war, terrorism,
act of God, a strike, labor dispute, work stoppage or similar event, or any other event, provided
such other event is substantially not within the control of or not caused by some action or
inaction of Delta, Delta shall not be obligated to pay Operator any portion of the Base
Compensation, incentive compensation, or any other reimbursements, in connection with such
non-operated Aircraft or Delta Connection Flights. If the non-operated Aircraft or Delta
Connection Flight is caused by some action or inaction of Delta, Delta shall pay Operator’s fixed
costs on Exhibit B attached hereto, as well as Aircraft Rent/Ownership Costs, Hull Insurance,
Property Taxes and Heavy Inspection Costs for inspections already in process prior to any such
event), but not any variable costs or Base Mark-Up, with respect to such non-operated Aircraft and
Delta Connection Flights during the period that Operator is unable to operate such Aircraft or the
Delta Connection Flights.

I. Audit of Costs, Operations and Service Levels.

     Operator shall maintain complete and accurate books and records to support and document all
revenues, costs and expenses related to the Aircraft and its Delta Connection operations hereunder,
in accordance with generally accepted accounting principles consistently applied and in accordance
with the accounting policies and procedures used by the parties to develop the Direct Costs.
Delta’s in-house finance staff and any independent consultants selected by Delta shall be entitled,
following reasonable notice to Operator, to audit and inspect Operator’s books and records with
respect to services provided hereunder, the service levels achieved, and the determination of
charges due pursuant to this Agreement for the purpose of (i) prospectively adjusting the Base Rate
Amount in connection with any annual review pursuant to Section 3(H) hereof or (ii) auditing
Reimbursable Costs, Pass Through Costs, Other Reimbursable Costs, any Mark-up or incentive
compensation due or paid hereunder, the Margin Cap and Fuel Burn Penalty Payment. Any such audit
will be conducted during regular business hours and be paid for by Delta unless such audit
determines that Operator owes Delta in excess

 

			
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of $1,000,000, then Operator shall pay Delta the
costs and expenses incurred by Delta in connection with such audit.

J. Rate Setting.

     Promptly upon receiving pro forma operating statistics from Delta for the next year, Operator
shall provide Delta an estimate of the next year’s projected operating costs by no later than
September 30th of each year during the Term. Such projected operating costs shall
include an off-set of any guaranty, incentive payments or rebates from any airport, local or
municipal authorities Operator anticipates receiving related to the Delta Connection Flights during
such year. Delta will have the right to review and provide comments and suggestions to such
estimate, and such suggestions will be duly considered by Operator. With respect to aircraft
acquisition costs for any aircraft added to the scope of this Agreement after the Effective Date
for which Operator acquires without any leasing or financing arrangement (i.e. Operator pays
purchase price completely in cash at the time of acquisition), an imputed rent may be applied to
Operator’s operating costs with respect to any such aircraft at a rate as mutually agreed by the
parties. Operator and Delta hereby agree to meet promptly after Delta’s receipt of Operator’s
projected operating costs in order to review and revise the Direct Costs and corresponding Base
Compensation, as well as Exhibit B hereto, as appropriate, for the subsequent year (the
“Annual Operating Plan”). In the event that the parties are unable to agree on any Annual
Operating Plan [*] the parties further agree that (i) at the request of either party, and at the
expense of the requesting party, the parties shall engage a mutually agreed independent consultant
to determine the applicable Annual Operating Plan [*] and (ii) if no new Annual Operating Plan has
been adopted by the beginning of the next calendar year, the existing Annual Operating Plan shall
be used on an interim basis to determine the Direct Costs and Base Compensation, subject to
reconciliation and retroactive adjustment upon adoption of the new Annual Operating Plan. Any such
determination by the independent consultant shall be binding on and implemented by the parties.
The Annual Rate Plan will apply for all Delta Connection Flights during the year applicable to such
plan, and Operator will bear any risks of additional expenses not reflected therein. Operator will
use its best efforts to minimize its costs to operate the Aircraft in accordance with this
Agreement, and Operator and Delta each agree to notify the other as soon as reasonably practicable
of any anticipated or potentially substantial change of cost or operational performance. If during
a current year and after an Annual Operating Plan is established, Operator’s projected Direct Costs
materially changes due to some action by Delta, then the parties shall meet and, to the extent
applicable, revise the Annual Operating Plan then in effect for the remainder of such year to take
into account such change to Operator’s Direct Costs-based rates (a “Modified Annual Operating
Plan”).

K. Right of Set-off. Delta may offset against the next scheduled payment to be made
pursuant to Section 3(H) above the amount of any undisputed payment that Operator or an affiliate
of Operator owes to Delta of an affiliate of Delta but has not made when due.

 

			
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ARTICLE 4. TICKETING SERVICES; SIGNAGE; FACILITIES; SLOTS AND ROUTES.

A. Ticketing Services. Either Delta or Operator will provide primary airport ticketing
services in connection with the Delta Connection Flights, and, if applicable, the other party
will provide supplemental ticketing services for the Delta Connection Flights at Delta’s
airport ticketing locations and will use Delta ticket stock for such purposes.

B. Signage. Unless otherwise agreed by the parties, Delta will design, provide and pay
for appropriate airport and other signage installed after the Effective Date to reflect the
Delta Connection and the relationship between Operator and Delta. The nature and type of such
signage will be in the sole discretion of Delta, subject to any airport, governmental or
quasi-governmental restrictions or requirements. Delta will be responsible for installing and
maintaining all such signage, but the parties will mutually determine which party will obtain
any necessary formal or informal approvals from appropriate airport or other authorities to
install such signage. The parties will fully cooperate with each other in all endeavors
relating to such signage and any necessary approvals.

C. Facilities.

     (1) In connection with the Delta Connection Flights, Operator shall use the gates and
facilities designated by Delta from time to time at the locations in which Operator operates
such Delta Connection Flights. No other use of such gates and other facilities by Operator or
parties other than Delta shall be allowed without Delta’s express written consent.

     (2) Delta’s right to designate gates and other facilities to be used by Operator in
connection with providing Delta Connection Flights shall include the right at each airport, in
Delta’s discretion, to either: (a) provide for use of some or all of the needed facilities to
Operator through mutually acceptable subleases, ground handling agreements, licenses, permits
or otherwise; or (b) require Operator to obtain use of such facilities from the airport
operator or other lessors (subject to Delta providing mutually acceptable backstop protection
in signatory airport leases for Delta Connection Flights). Delta and Operator agree that
Delta may relocate Operator to comparable facilities at the service locations, provided that
Delta pays Operator’s reasonable relocation expenses.

     (3) All leases, subleases, permits, licenses and other use agreements of airport facilities
used in connection with Delta Connection Flights (each, a “Facility Lease” and collectively,
“Facilities Leases”) entered into by Operator shall be assignable to Delta or Delta’s designee, at
Delta’s election, without the consent of the other party to such Facility Lease on termination of
this Agreement, the withdrawal of Delta Connection Flights from such airport or upon written notice
from Delta to Operator, provided that if the consent of the facility lessor is required by contract
or governmental regulations, Operator will use its best efforts to obtain such consent: (a) at the
time the Facility Lease is entered into and to incorporate such consent in the terms of the
Facility Lease; or (b) for an already existing Facility Lease, if and at such time as Delta may
direct. Subject only to Operator obtaining any necessary consent of such other party, Operator
shall, at Delta’s option, assign such Facilities Leases as Delta shall designate to Delta or
Delta’s

 

			
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designee on termination of this Agreement, the withdrawal of Delta Connection Flights from
such airport or upon receipt of written notice from Delta. If Delta elects and if the other party
to the Facilities Lease agrees, instead of an assignment, this transfer can be accomplished by
either: (x) a termination of the applicable Operator Facilities Lease and a direct lease of such
premises to Delta or Delta’s designee; or (y) a release of premises designated by Delta from the
applicable Operator Facility Lease and lease of such premises directly to Delta or Delta’s
designee. On termination of this Agreement, Delta shall have the option to purchase from Operator
all facilities and equipment used in connection with Delta Connection Flights then owned by
Operator for an amount equal to such assets’ then fair market value or Delta depreciated book
value, whichever is less. On the assignment of a Facility Lease to Delta or on the withdrawal of
Delta Connection Flights from an airport and for a period of thirty (30) days thereafter, Delta
shall have the option to purchase from Operator all facilities and equipment used in connection
with Delta Connection Flights at such airport then owned by Operator for an amount equal to such
assets’ then fair market value or Delta depreciated book value, whichever is less.

     (4) All Facilities Leases entered into by Operator shall expressly provide that Delta or
Delta’s designee, at Delta’s election, shall have the right to sublease any or all of the
premises covered by the applicable Facilities Lease without the consent of the other party to
such Facility Lease on termination of this Agreement, the withdrawal of Delta Connection
Flights from such airport or upon written notice from Delta to Operator, provided that if the
consent of the facility lessor is required by contract or governmental regulations, Operator
will use its best efforts to obtain such consent: (a) at the time the Facility Lease is
entered into and to incorporate such consent in the terms of the Facility Lease; or (b) for an
already existing Facility Lease, if and at such time as Delta may direct. Subject only to
Operator obtaining any necessary consent of such other party, Operator shall, at Delta’s
option, sublease the premises Delta specifies under any applicable Facilities Lease to Delta
or Delta’s designee on termination of this Agreement, the withdrawal of Delta Connection
Flights from such airport or upon receipt of written notice from Delta. If Delta or Delta’s
designee enters into such a sublease, at Delta’s option, Operator shall enter into a
sub-sublease of all or the portion of the subleased premises that Delta designates.

     (5) In addition to Delta’s other options with respect to premises occupied by Operator
pursuant to any Facilities Lease, sublease or sub-sublease, Delta shall have the right from
time to time to direct Operator to handle or allow Delta to handle other carriers designated
by Delta at any such premises. If Operator is the handling carrier, it will do so on terms
consistent with the applicable Facilities Lease and handling arrangements and at fees mutually
agreed upon by Delta and Operator.

     (6) Operator shall not assign, transfer, sublease, alter, amend, modify or terminate any
Facilities Lease to which it is a party without the prior written consent of Delta.

     (7) Notwithstanding anything to the contrary in this Agreement, Delta may, at
its option, elect to enter the Facilities Lease in lieu of Operator for any facilities to be
used by Operator at any new or existing city to be served by Operator pursuant to this
Agreement, and in the event Delta exercises this option (i) Delta shall enter into a Facilities Lease
with

 

			
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the lessor of such facilities, (ii) Operator shall utilize such facilities pursuant to a
sublease, license agreement, permit, facilities use agreement or ground handling agreement
with Delta, (iii) at Delta’s option, the sublease, facilities use agreement or ground handling
agreement shall terminate when Operator ceases to operate Delta Connection Flights at the
airport, and (iv) Delta shall enter into agreements for facilities which are reasonably
suitable for Operator’s operational needs. If for any reason Delta fails to provide such
facilities, such failure shall not be a breach hereof and Operator shall be obligated to
secure such facilities.

     (8) At any location in which Operator is the signatory carrier of the applicable Facility
Lease, Operator shall vote as directed by Delta on any matters submitted to the signatory
carriers for a vote.

     (9) Operator shall comply with all requirements of such Facilities Leases, subleases and
sub-subleases described in this Section 4.C. and a default by Operator under any such
agreements shall be a breach of this Agreement. If Operator receives any notice of default or
breach with respect to any Facilities Lease, Operator shall promptly provide a copy to Delta,
consult with Delta on handling and advise Delta on Operator’s plans for resolving the matter.

D. Slots and Route Authorities. During the Term of this Agreement (including any
renewal terms or extensions) or upon the expiration or termination of this Agreement, Delta
may, in its sole discretion, require Operator to transfer to Delta or its designee at no
charge any airport takeoff or landing slots, route authorities or other regulatory authorities
as Delta shall designate which have been or are being used for Delta Connection Flights under
this Agreement.

ARTICLE 5. CUSTOMER SERVICES.

A. Operator will handle all customer related services in connection with the Delta Connection
Flights in a professional, businesslike and courteous manner. In order to ensure a high level
of customer satisfaction for the Delta Connection Flights, Operator will (i) establish and
maintain customer handling procedures and policies that are substantially similar to those
utilized by Delta (“Customer Service Policies”) and (ii) establish, maintain and enforce
employee conduct, appearance and training standards and policies that are substantially
similar to those used by Delta. All uniforms worn by Operator employees on the Delta
Connection Flights and by any Operator employees providing support services in connection with
such flights shall be subject to the prior approval of Delta and shall at all times be
consistent with Delta’s existing uniform standards.

B. Operator and Delta will periodically meet to discuss and review Operator’s customer
handling procedures and policies to insure compliance with this Article 5. Each party will
seek to set forth concerns and complaints under this Article 5 in writing to the other party.
To the extent Delta advises Operator of any deviation from Article 5(A) hereof, the parties
shall meet to mutually determine appropriate solutions and to agree on the terms of a
corrective action plan and the timing of its implementation. In the event Operator shall
fail,

 

			
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in any material respect, to adopt or implement any such agreed corrective action plan in the
time period described therein, any such failure may be deemed a material breach of this
Agreement.

C. Operator shall adopt as its own Delta’s Terms and Conditions of Contract of Carriage
(“Contract of Carriage”), baggage liability policies and denied boarding compensation
policies, each as amended from time to time, and be bound by their respective terms with
respect to its operation of Delta Connection Flights.

D. Operator shall reimburse Delta for any expenses incurred as a result of Operator’s
non-compliance with any of the Customer Service Policies, Contract of Carriage, baggage
liability policies and denied boarding compensation policies.

ARTICLE 6. TRAFFIC DOCUMENTS AND RELATED PROCEDURES. To the extent that the parties
subsequently agree that Operator will handle traffic documents or passenger handling services
in connection with any Delta Connection Flights, the following terms and conditions shall
apply:

A. Pursuant to mutually acceptable procedures, either Operator will purchase (which shall be a
Pass Through Cost), or Delta will periodically provide Operator with, Delta machine and manual
ticket stock, miscellaneous charges orders, credit card refund drafts, credit card refund
vouchers, FIMS, expense vouchers, expense checks, travel credit vouchers and other related
documents (collectively referred to as “Traffic Documents”). Delta will maintain a supply of
Traffic Documents at a suitable location and, upon written request from Operator, will provide
Operator with appropriate supplies of Traffic Documents.

B. Unless otherwise agreed to by Delta in writing, Traffic Documents may be used, completed,
validated and issued only by Operator and only in connection with transactions related to
Delta Connection Flights and for no other purpose.

C. Operator will promptly surrender and return all Traffic Documents to Delta upon Delta’s
written request.

D. Operator will maintain records of the Traffic Documents in a manner and format acceptable
to Delta. Operator will acknowledge receipt in writing of all Traffic Documents in the manner
prescribed by Delta.

E. Operator will conform with and abide by all of Delta’s rules and regulations regarding the
Traffic Documents.

F. Operator will take all reasonable and necessary measures to safeguard the Traffic Documents
as of the time of receipt and thereafter and will maintain the Traffic Documents in accordance
with mutually agreed upon security procedures. Operator shall be responsible for all risk of
loss, use, misuse, misappropriation or theft of Traffic Documents as of the time Operator
takes possession of the Traffic Documents.

 

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G. Reporting and Remitting With Respect to Traffic Documents.

     1. On a daily basis, Operator will provide Delta with a report for each Operator
ticketing location of all ticketing and related transactions on Traffic Documents for the
prior day. Such report will be in a format determined by Delta and will include, without
limitation, all credit card transactions and supporting documentation.

     2. Operator will issue all Traffic Documents, and will collect appropriate charges, in
accordance with the tariffs, fares, rates, rules and regulations of Delta and any other
applicable carriers. Operator shall be responsible for all undercharges and incorrect fares,
rates and charges on Traffic Documents issued by or for Operator, and Delta may deduct from
sums due Operator or bill Operator for the amount of any such undercharges or incorrect fares,
rates and charges. The amount of such undercharges will be determined by utilizing the ACH
Procedures for passenger tickets and on a direct billing basis for baggage/cargo related
items.

H. Refund Vouchers.

     1. Delta will use Delta refund vouchers for all refund transactions handled by Delta
involving Operator.

     2. Operator will use Delta refund vouchers, and Delta credit card refund vouchers for
credit card sales refunds, and will comply with Delta’s rules and regulations for handling and
processing such refunds.

ARTICLE 7. FREQUENT FLYER PARTICIPATION. During the Term of this Agreement, the parties
agree that passengers on Operator’s Delta Connection Flights will be eligible to participate in the
Delta SkyMiles frequent flyer program, as may be amended from time to time, or any other similar
program developed by Delta (the “Program”) and all Program award tickets will be honored for travel
on Delta Connection Flights on the following terms and conditions:

A. Administration. Administration of the Program shall be performed by and at the cost of
Delta. Delta will promote and administer the Program.

B. Program Information. Title and full and complete ownership rights to Program
membership data and information developed by Delta, wherever located, shall remain with Delta or an
affiliate of Delta. Operator understands and agrees that such data and information constitutes
Delta’s (or its affiliates’) proprietary information. Any membership lists, labels, data, or other
compiled membership information supplied to Operator in any form and any and all copies thereof are
to be used by Operator exclusively in the performance of its obligations under this Agreement and
will not be otherwise used, sold, licensed, leased, transferred, stored, duplicated or transmitted,
in any form or by any means, without Delta’s prior written consent. All such information will
either be returned to Delta or destroyed at Delta’s request.

 

			
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C. Accrual and Redemption. Passengers on the Delta Connection Flights shall be eligible
to accrue and redeem Program mileage on such flights, and Operator shall carry all passengers
traveling pursuant to award travel under the Program at no charge to Delta.

ARTICLE 8. SUPPORT SERVICES. Notwithstanding anything to the contrary in this Agreement,
but subject to any existing obligations of Operator at the time, from time to time during the Term,
Delta may, at its sole discretion, require Operator to utilize Delta, an affiliate of Delta or a
another third party designated by Delta for certain services or products including, without
limitation, information technology hardware, software, maintenance and support; catering and
on-board provisioning; aircraft and engine maintenance and ground handling (collectively, “Support
Services”) in connection with the Aircraft or Delta Connection Flights.

ARTICLE 9. AUTOMATION SERVICES. Delta may provide Operator the following
automation and related services for the Delta Connection Flights, and if provided by Delta,
Operator agrees to participate in such services in the manner described below.

A. Internal Reservations Equipment. Delta shall provide or arrange for the provision to
Operator of an electronic reservations system (currently referred to as “Deltamatic” but including
any successor reservations system adopted by Delta) and shall provide Operator with: (i) the
ability to access passenger name records, (ii) automated ticketing capabilities, (iii) operational
messaging switching capabilities, (iv) the ability to update Delta Connection Flight information,
(v) the ability to distribute flight releases and weather packages, and (vi) perform other
reservations-related functions for the Delta Connection Flights (Deltamatic and any successor
system are hereinafter referred to as the “Res System”). Delta reserves the right to modify the
functionality of the Res System at any time. Operator will use the Res System made available by
Delta for the Delta Connection Flights only.

B. Delta’s Rights and Obligations.

     1. Delta will install or cause to be installed the equipment requested by Operator at the
locations set forth on Exhibit C to this Agreement and shall provide Operator connection to
the Res System. The equipment described on Exhibit C and any software installed on the
Equipment at the time of its delivery to Operator are hereinafter referred to as the “Equipment.”
Operator understands and agrees that: (i) all Equipment shall remain the sole property of Delta;
(ii) Operator shall not remove any identifying marks from the Equipment; (iii) Operator shall not
subject the Equipment to any lien; and (iv) Delta may enter Operator’s premises to remove the
Equipment immediately upon termination of this Agreement. Exhibit C may be amended from
time to time by mutual agreement of the parties to reflect the installation, removal or relocation
of Equipment.

     2. Delta will provide initial and recurrent training to Operator training staff and other key
designated personnel in the use of the Res System, at Delta’s training centers unless otherwise
agreed. Delta may remove from a training program any Operator employee who is not satisfactorily
participating therein. Delta shall not charge Operator for any such training.

 

			
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     3. Delta will provide, or arrange to provide, all repairs and maintenance services required
for the Equipment and will use reasonable business efforts to keep the Equipment and the Res System
in good repair and condition. Operator will not perform or attempt to perform repairs or
maintenance of any kind on the Equipment without prior consultation with Delta and will promptly
contact Delta regarding the need for repairs or maintenance.

C. Operator’s Rights and Obligations.

     1. Operator will not for any reason relocate or remove any of the Equipment without Delta’s
prior written consent. Delta will pay all costs associated with the installation, relocation or
removal of Equipment.

     2. Operator will use the Equipment and the Res System in strict conformity with the training
and operating instructions provided by, or arranged to be provided by, Delta. Without limiting the
generality of the foregoing, unless authorized by Delta, Operator will not use the Res System to
develop or publish any reservation, ticketing, sales, cargo, tariff or other guide, to provide
services not authorized by this Agreement to third parties, to train persons other than Operator’s
employees in the use of the Equipment or the Res System, or for other uses designated by Delta in
writing as prohibited. Operator may not publish, disclose or otherwise make available to any third
party the compilations of air carrier service or fares obtained from the Res System; provided,
however, that Operator may use specific air carrier service and fare data for the benefit of its
customers.

     3. Operator will encourage and allow its employees to attend training sessions related to the
Res System, and it is Operator’s responsibility to insure that each employee receives full and
adequate training on the Res System.

     4. Operator will protect the Equipment from loss, damage or theft and shall prevent its
unauthorized use or improper operation. Operator will make no alterations to the Equipment and
will return the Equipment to Delta upon the termination of this Agreement in the same condition as
received, excepting only ordinary wear and tear in the normal course of Operator’s operations.
Operator will obtain and maintain insurance for the Equipment against all risks of damage and loss,
including without limitation loss by fire, theft and such other risks of loss as are customarily
insured in a standard all-risk policy. Such insurance shall also provide the following:

          (a) Full replacement value coverage for the Equipment (subject to policy deductibles);

          (b) An endorsement naming Delta as the loss payee to the extent of its interest in the
Equipment; and

          (c) An endorsement requiring the insurer to give Delta at least thirty (30) days prior written
notice of any intended cancellation, nonrenewal or material change of coverage; provided that only
ten (10) days prior written notice of cancellation, nonrenewal or material

 

			
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change of coverage need be given in the event that such cancellation, nonrenewal or material change in coverage is caused
solely by failure to make a premium payment.

     Upon request by Delta, Operator will promptly provide satisfactory evidence of the insurance
required pursuant to this Section 9(C)(4). Notwithstanding the foregoing, Operator shall be liable
to Delta for any loss or damage to the Equipment, regardless of cause, occurring while the
Equipment is in the possession, custody or control of Operator.

     5. Operator waives any proprietary rights that it may have with respect to information entered
into the Res System.

D. Entry and Inspection. Delta personnel and persons designated or authorized by Delta may
enter Operator’s premises during normal business hours for the purposes of (a) monitoring,
inspecting, and reviewing Operator’s use of and operations with respect to the Res System, (b)
performing repairs or maintenance on the Equipment, (c) installing, removing, replacing or
relocating the Equipment (unless otherwise permitted by this Agreement), or (d) training or
retraining Operator’s employees in the use of the Res System; provided that such activities may not
unreasonably interfere with Operator’s business.

E. Limitations on Liability. In addition to any other limitations on liability set forth
herein:

     1. Delta is not responsible for errors or inaccuracies in the availability records, fare
quotes, or other information contained in the Res System at any time, for any planned or unplanned
interruptions, delays or malfunctions in the operation of the Res System or the Equipment or for
the merchantability or fitness for a particular purpose of any of the data or Equipment made
available to Operator.

     2. OPERATOR HEREBY WAIVES AND RELEASES DELTA AND ITS AFFILIATES AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM ANY AND ALL OBLIGATIONS AND LIABILITIES AND ALL
RIGHTS, CLAIMS AND REMEDIES OF OPERATOR AGAINST DELTA OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO
ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR ERRORS OR MALFUNCTIONS BY, SOFTWARE, THE EQUIPMENT
OR THE RES SYSTEM, INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR REMEDY IN TORT, AND
INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY
OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES. FURTHER, DELTA DISCLAIMS
AND OPERATOR HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO THE RES SYSTEM, THE EQUIPMENT,
DATA, OR SERVICES FURNISHED HEREUNDER.

F. Patent and Copyright Indemnity. Delta will defend or settle, at its own expense, any
action brought against Operator to the extent that it is based on a claim that the Res System

 

			
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provided by Delta pursuant to this Agreement, in its normal use, or any part thereof, infringes any
U.S. copyright or patent; and Delta will pay those costs, damages and attorney’s fees finally
awarded against Operator in any such action attributable to any such claim, but such defense,
settlements and payments are conditioned on the following: (1) that Delta shall be notified
promptly in writing by Operator of any such claim; (2) that Delta shall have sole control of the
defense of any action on such claim and of all negotiations for its settlement or compromise; (3)
that Operator shall cooperate with Delta in a reasonable way to facilitate the settlement or
defense of such claim, provided that Delta shall pay all of Operator’s reasonable expenses in
connection with any such cooperation requested by Delta; and (4) should such Res System become, or
in Delta’s opinion be likely to become, the subject of such claim of infringement, then Operator
shall permit Delta, at Delta’s option and expense, either to (a) procure for Operator the right to
continue using the Res System, or (b) replace or modify the same so that it becomes noninfringing
and functionally equivalent, or (c) upon failure of (a) and (b) above despite the reasonable
efforts of Delta, accept immediate termination of this Agreement as it relates to such system.
This paragraph (F) states the entire liability of Delta with respect to the infringement of
copyrights and patents by the Res System provided hereunder or the operation thereof.

ARTICLE 10. OPERATION PERFORMANCE.

A. Operator agrees to provide the following information (excluding sub-paragraphs (iv) and (v)) to
Delta for each day during the Term of this Agreement within one (1) business day after the
applicable day:

               (i) The number of mishandled bags per 1,000 passengers (including, without limitation,
international and non-revenue passengers) flown on Delta Connection Flights during such month.
Operator understands that it is Delta’s current requirement, as of the Effective Date, that
carriers in the Delta Connection Program maintain a number of mishandled bags as set forth on
Schedule 10 attached hereto and made a part hereof.

               (ii) The completion rate (actual) of the Delta Connection Flights during such month. Operator
understands that it is Delta’s current requirement, as of the Effective Date, that carriers in the
Delta Connection Program maintain a completion rate as set forth on Schedule 10 attached
hereto and made a part hereof. For purposes of this Agreement, Delta Connection Flights operated
with no revenue passengers or completed over four (4) hours late shall be considered as cancelled.

               (iii) The number of scheduled Delta Connection Flights that do not arrive at their scheduled
destination prior to 15 minutes after their respective scheduled arrival times during such month.
Operator understands that it is Delta’s current requirement, as of the Effective Date, that
carriers in the Delta Connection Program maintain a percentage of on-time arrivals as set forth on
Schedule 10 attached hereto and made a part hereof.

               (iv) Operator’s overall customer satisfaction rating as complied and reported by the Customer
Satisfaction Monitor, or any successor thereto or replacement thereof. Operator understands that
it is Delta’s current requirement, as of the Effective Date, that carriers

 

			
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in the Delta Connection Program maintain a customer satisfaction rating as set forth on Schedule 10 attached hereto
and made a part hereof .

               (v) The number of complaints per 1,000 passengers flown on Delta Connection flights during
such month. Operator understands that it is Delta’s current requirement that carriers in the Delta
Connection Program achieve a number of complaints per 1,000 passengers flown that is no more than
the number as set forth on Schedule 10 attached hereto and made a part hereof.

B. If Delta is concerned about Operator’s performance in connection with any of the performance
standards set forth in Section 10(A), Operator agrees to discuss with Delta such performance and
potential ways to improve such performance at Delta’s request. The parties shall have ten (10)
days to determine appropriate solutions and/or a corrective action plan, and Operator agrees to
diligently comply with the terms and conditions of any such solutions and corrective action plans.

C. The parties recognize and agree that the performance requirements set forth on Schedule
10 may be modified or adjusted by Delta from time to time during the Term of this Agreement.

ARTICLE 11. TERM AND TERMINATION.

A. This Agreement is effective as of the Effective Date and shall terminate with respect to each
Aircraft, on an Aircraft by Aircraft basis, at the same time as the leases with respect to certain
Dornier 328 regional jets to which Delta is a party (each, a “FRJ Lease”) expire in accordance with
the respective FRJ Lease terms, without regard to any early termination of such FRJ Leases and
commencing with the first FRJ Lease to expire (such period, and any extension or renewal thereof,
the “Term”) unless terminated earlier in accordance with the terms of this Agreement or the mutual
agreement of the parties. At the end of such initial term, this Agreement shall automatically
renew for successive one (1) year terms on the same terms and conditions unless Delta provides
Operator with not less than one hundred eighty (180) days prior written notice of its intention not
to renew this Agreement for the next one-year period. In the event of a Merger (as defined below)
or Change of Control (as defined below) of Operator, Delta shall have the right to either (i)
extend the term of the Agreement for an additional ten (10) years beyond the applicable termination
date of this Agreement pursuant to this Section 11(A) or (ii) terminate this Agreement effectively
immediately upon any such Merger or Change of Control.

B. Notwithstanding the provisions of Section 11(A), either party may terminate this Agreement
immediately if the other party files a voluntary petition in bankruptcy, makes an assignment
for the benefit of creditors, fails to secure dismissal of any involuntary petition in
bankruptcy within sixty (60) days after the filing thereof, or petitions for reorganization,
liquidation, or dissolution under any federal or state bankruptcy or similar law.

C. Notwithstanding the provisions of Section 11(A), in the event of a material breach (except
for a breach set forth in Section 11(D) below when the applicable shorter cure period shall
apply) of this Agreement by either party remaining uncured for more than thirty (30) days
after receipt of written notification of such breach by the nonbreaching party, then the

 

			
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nonbreaching party may immediately terminate this Agreement at its sole option. If a notice
of breach is delivered under this Section and a notice of termination is not delivered within
ninety (90) days thereafter, then either party shall be deemed to have waived its right to
terminate under this Section for such occurrence.

D. (1) In the event Delta fails to make any undisputed payment required to be made by Delta
to Operator hereunder on and when due and such failure continues for seven (7) days after
Delta’s receipt of written notice of such failure from Operator, then Operator may immediately
terminate this Agreement at its sole option.

     (2) The parties acknowledge and agree that a breach by a party of that certain
Reimbursement Agreement dated as of the date hereof by and Between the parties hereto (the
“Reimbursement Agreement”) shall also be deemed a breach of this Agreement. In the event of
such a breach, and such breach is not timely cured in accordance with the Reimbursement
Agreement, then the nonbreaching party may immediately terminate this Agreement at its sole
option.

E. Notwithstanding the provisions of Section 11(A), in the event a “Force Majeure Event” (as
defined in Article 21) substantially prevents one party’s performance of its obligations
pursuant to this Agreement, for a period of thirty (30) or more consecutive days, Delta may
(i) temporarily suspend some or all of the Aircraft from the scope of this Agreement upon
written notice to the Operator, or (ii) terminate this Agreement in its entirety upon thirty
(30) days prior written notice to Operator.

F. Notwithstanding the provisions of Sections 11(A), (B), (C) and (E), Delta shall have the
right to terminate this Agreement immediately and at its sole option upon the occurrence of
one or more of the following:

          (i) Operator or Parent agrees to merge into or with any entity, agrees to be acquired by
any entity, agrees to sell substantially all of its assets or enters into a letter of intent,
or similar document, to merge into or with any entity, to be acquired by any entity, or to
sell substantially all of its assets (each such event, a “Merger”);

          (ii) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”))
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than forty-nine percent (49%) of either (a) the then outstanding shares
of common stock of Operator or Parent , or (b) the combined voting power of the then
outstanding voting securities of Operator or Parent entitled to vote generally in the election
of such party’s directors or managers, as applicable (each such event, a “Change of Control”);

          (iii) Operator’s level of safety with respect to its operation of the Aircraft or the
Delta Connection Flights is not reasonably satisfactory to Delta;

 

			
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          (iv) a breach by Operator of Section 19(H) hereof;

          (v) Operator’s failure to pass, in Delta’s sole discretion, a safety and codeshare audit
to be conducted by Delta, at its sole discretion, at any time during the Term of this
Agreement;

          (vi) Operator fails to maintain a completion rate of [*] percent ([*]%) with respect to
the Delta Connection Flights during any three (3) months during any consecutive six (6) month
period commencing with the date at least [*] percent ([*]%) of the Aircraft have been
scheduled to be placed into service in the Delta Connection Program. For purposes of this
Agreement, Delta Connection Flights operated with no revenue passengers or completed over four
(4) hours late shall be considered as not completed;

          (vii) a material breach of any representation or warranty by Operator of Section
16(A)(5);

          (viii) Operator’s failure to comply with the insurance provisions of Articles 13 and 14
hereof;

          (ix) Operator’s FAA or DOT Certification is for any reason suspended or revoked or
otherwise not in full force and effect so as to permit Operator to operate the Delta
Connection Flights required under this Agreement;

          (x) Operator shall commence operating an aircraft type which causes Delta to be in
violation of its existing collective bargaining agreement with its pilots; and

          (xi) Operator’s average hourly rates payable at all seniority levels (including, without
limitation, any bonuses and incentive payments) for any group of its employees generally
compensated pursuant to a pay scale including, without limitation, pilots, flight attendants,
mechanics, aircraft handling employees and customer service agents, increase in an amount
greater than four percent ([*]%) in any year as compared to the prior year.

G. Termination for Convenience. Notwithstanding anything herein to the contrary,
effective at any time after the earlier of (i) the sixth anniversary of the in-service date of
the 25th (or 30th, if applicable in accordance with Section 1(A) hereof)
Aircraft and (ii) 90 months after the Effective Date, either party may terminate this
Agreement without cause upon providing the other party not less than twelve (12) months’ prior
written notice.

H. Termination of this Agreement for any reason shall not relieve either party of rights
and obligations incurred prior to the effective date of termination. A party’s right to
terminate this Agreement shall be in addition to any other rights or remedies, in law or
equity, available to such party.

 

			
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ARTICLE 12. INDEPENDENT CONTRACTORS; LIABILITY PROVISIONS.

A. Operator shall act as an independent contractor. The employees, agents and/or independent
contractors of Operator engaged in performing any of the services Operator is obligated to perform
pursuant to this Agreement shall be employees, agents and independent contractors of Operator for
all purposes and under no circumstances shall employees, agents or independent contractors of
Operator be deemed to be employees, agents or independent contractors of Delta. In its performance
of obligations under this Agreement, Operator shall act, for all purposes, as an independent
contractor and not as an agent for Delta. Delta shall have no supervisory power or control over
any employees, agents or independent contractors engaged by Operator in connection with Operator’s
performance of its obligations hereunder, and all complaints or requested changes in procedure
shall, in all events, be transmitted by Delta to a designated representative of Operator. Nothing
contained in this Agreement is intended to limit or condition Operator’s control over its operation
or the conduct of its business as an air carrier, and Operator assumes all risks of financial
losses which may result from the operation of the air services to be provided by Operator
hereunder.

B. Delta shall act as an independent contractor. The employees, agents and/or independent
contractors of Delta engaged in performing any of the services Delta is to perform pursuant to this
Agreement shall be employees, agents and independent contractors of Delta for all purposes and
under no circumstances shall employees, agents and independent contractors of Delta be deemed to be
employees, agents or independent contractors of Operator or Parent. In performing its obligations
under this Agreement, Delta shall act, for all purposes, as an independent contractor and not as an
agent for Operator or Parent. Neither Operator nor Parent shall have supervisory power or control
over any employees, agents or independent contractors engaged by Delta in connection with the
performance of its obligations hereunder, and all complaints or requested changes in procedure
shall, in all events, be transmitted by Operator or Parent to a designated representative of Delta.
Nothing contained in this Agreement is intended to limit or condition Delta’s control over its
operation or the conduct of its business as an air carrier.

C. Operator and Parent, jointly and severally, shall be liable for and hereby agrees fully to
defend, release, discharge, indemnify, and hold harmless Delta and its affiliates, and each of
their respective directors, officers, employees and agents (each, a “Delta Indemnitee”) from
and against any and all claims, demands, damages, liabilities, suits, judgments, actions,
causes of action, losses, costs and expenses of any kind, character or nature whatsoever (in
each case whether groundless or otherwise), including reasonable attorneys’ fees, costs and
expenses in connection therewith and expenses of investigation and litigation thereof, which
may be suffered by, accrued against, charged to, or recoverable from any Delta Indemnitee in
any manner arising out of, connected with, or attributable to this Agreement, the performance,
improper performance, or nonperformance of any and all obligations to be undertaken by
Operator pursuant to this Agreement, the loss, theft, use, misuse or misappropriation of
Traffic Documents, or the operation, non-operation, or improper operation of Operator’s
aircraft, equipment or facilities at any location, excluding only claims, demands, damages,
liabilities, suits, judgments, actions, causes of action, losses, costs and expenses resulting
from the gross negligence or willful misconduct of Delta, its

 

			
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affiliates, and
their respective directors, officers, agents or employees. Operator will do all things
necessary to cause and assure, and will cause and assure, that Operator will at all times be
and remain in custody and control of all aircraft, equipment, and facilities of Operator, and
no Delta Indemnitee shall, for any reason, be deemed to be in custody or control, or a bailee,
of Operator’s aircraft, equipment or facilities.

D. Delta shall be liable for and hereby agrees fully to defend, release, discharge, indemnify,
and hold harmless Operator, and each of its directors, officers, employees, and agents (each,
an “Operator Indemnitee”) from and against any and all claims, demands, damages, liabilities,
suits, judgments, actions, causes of action, losses, costs and expenses of any kind, character
or nature whatsoever (in each case whether groundless or otherwise), including reasonable
attorneys’ fees, costs and expenses in connection therewith and expenses of investigation and
litigation thereof, which may be suffered by, accrued against, charged to, or recoverable from
any Operator Indemnitee in any manner arising out of, connected with, or attributable to
Delta’s performance, improper performance or nonperformance of any and all obligations to be
undertaken by Delta pursuant to this Agreement, or the operation, non-operation or improper
operation of Delta’s aircraft, equipment or facilities at any location, excluding only claims,
demands, damages, liabilities, suits, judgments, actions, causes of action, losses, costs and
expenses resulting from gross negligence or willful misconduct of Operator, its affiliates,
and their respective directors, officers, agents or employees. Delta will do all things
necessary to cause and assure, and will cause and assure, that Delta will at all times be and
remain in custody and control of any aircraft, equipment and facilities of Delta used in
connection with performance of this Agreement, and no Operator Indemnitee shall, for any
reason, be deemed to be in the custody or control, or a bailee, of such Delta aircraft,
equipment or facilities.

E. Operator and Delta agree to comply with all lawful rules, regulations, directives and
similar instructions of appropriate governmental, judicial and administrative entities
including, but not limited to, airport authorities, the Federal Aviation Administration and
the Department of Transportation (and any successor agencies) with respect to operations
covered by this Agreement.

F. OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS AGREEMENT, EACH PARTY DISCLAIMS
AND THE OTHER PARTY HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH
RESPECT TO THIS AGREEMENT OR ITS PERFORMANCE OF ITS OBLIGATIONS HEREUNDER INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO ANY
EQUIPMENT, DATA, INFORMATION OR SERVICES FURNISHED HEREUNDER. EACH PARTY AGREES THAT THE
OTHER PARTY IS NOT LIABLE TO IT OR ANY OTHER PERSONS FOR CONSEQUENTIAL OR PUNITIVE DAMAGES
UNDER ANY CIRCUMSTANCES.

G. Indemnification Claims. A party (the “Indemnified Party”) entitled to
indemnification from the other party under the terms of this Agreement (the “Indemnifying

 

			
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Party”) shall provide the Indemnifying Party with prompt written notice (an “Indemnity
Notice”) of any third party claim which the Indemnified Party believes gives rise to a claim
for indemnity against the Indemnifying Party hereunder, and the Indemnifying Party shall be
entitled, if it accepts financial responsibility for the third party claim, to control the
defense of or to settle any such third party claim at its own expense and by its own counsel;
provided that the Indemnified Party’s prior written consent (which may not be
unreasonably withheld or delayed) must be obtained prior to settling any such third party
claim. If the Indemnifying Party does not accept financial responsibility for the third party
claim or fails to defend against the third party claim that is the subject of an Indemnity
Notice within thirty (30) days of receiving such notice (or sooner if the nature of the third
party claim so requires), or otherwise contests its obligation to indemnify the Indemnified

Party in connection therewith, the Indemnified Party may, upon providing written notice to the
Indemnifying Party, pay, compromise or defend such third party claim. The Indemnified Party
shall provide the Indemnifying Party with such information as the Indemnifying Party shall
reasonably request to defend any such third party claim and shall otherwise cooperate with the
Indemnifying Party in the defense of any such third party claim. Except as set forth above in
this Section 12(G), the Indemnified Party shall not enter into any settlement or other
compromise or consent to a judgment with respect to a third party claim as to which the
Indemnifying Party has an indemnity obligation hereunder without the prior written consent of
the Indemnifying Party (which may not be unreasonably withheld or delayed), and the entering
into any settlement or compromise or the consent to any judgment in violation of the foregoing
shall constitute a waiver by the Indemnified Party of its right to indemnity hereunder to the
extent the Indemnifying Party was prejudiced thereby. Any Indemnifying Party shall be
subrogated to the rights of the Indemnified Party to the extent that the Indemnifying Party
pays for any Loss suffered by the Indemnified Party hereunder. Notwithstanding anything
contained in this Section 12(G) to the contrary, Operator, Parent and Delta will cooperate in
the defense of any claim imposed jointly against them or as the result of the conduct of the
other.

ARTICLE 13. WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY INSURANCE PROVISIONS.

A. For purposes of workers’ compensation insurance, Delta’s employees, agents and independent
contractors under no circumstances shall be deemed to be, or shall be, employees, agents or
independent contractors of Operator.

B. For purposes of workers’ compensation insurance, Operator’s employees, agents and
independent contractors under no circumstances shall be deemed to be, or shall be, the
employees, agents or independent contractors of Delta.

C. Each party assumes full responsibility for, and liability to, its own employees on account
of injury, or death resulting therefrom, sustained in the course of their employment. Each
party, with respect to its own employees, accepts full and exclusive liability for the payment
of applicable workers’ compensation and employers’ liability insurance premiums with respect
to such employees, and for the payment of all taxes, contributions or other payments for
unemployment compensation and old age benefits, and other similar benefits

 

			
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now or hereafter imposed upon employers by any government or agency thereof having
jurisdiction in respect of such employee. Each party also agrees to make such payments and to
make and file all reports and returns and to do all things necessary to comply with all
applicable laws at any time imposing such taxes, contributions, or payments.

D. Each party will have their workers’ compensation insurance carrier endorse its policy to
provide a waiver of subrogation against the other party.

ARTICLE 14. INSURANCE PROVISIONS.

A. Operator shall procure and maintain in full force and effect during the term of this
Agreement policies of insurance of the types and in the minimum amounts set forth below, with
such insurers and under such terms and conditions as are satisfactory to Delta:

	 	1.	 	All risk hull insurance on an agreed value basis, not to exceed replacement
value, except as required by financing agreements.
	 
	 	2.	 	Comprehensive aviation liability (including premises, products and completed
operations) covering bodily injury, personal injury and property damage in an
amount not less than $[*] per occurrence; provided, however, that non-passenger
personal injury coverage may be limited to $[*] per occurrence.
	 
	 	3.	 	Workers’ compensation for statutory limits.
	 
	 	4.	 	Employer’s liability in an amount not less than $[*].
	 
	 	5.	 	Baggage liability in an amount not less than $[*] per occurrence.
	 
	 	6.	 	Cargo liability in an amount not less than $[*] per loss, casualty or
disaster.
	 
	 	7.	 	Automobile liability in an amount not less than $[*] combined single limit per
occurrence.
	 
	 	8.	 	War, Hijacking and Other Allied Perils insurance protecting against the
perils in AVN52D, as amended from time to time, or its U.S. equivalent through the
FAA War Program in an amount not less than $[*] per occurrence. Such insurance may
be maintained through a combination of primary and excess layers.
	 
	 	9.	 	Insurance required by any Facilities Lease.

B. Operator shall cause the policies of insurance described in Article 14(A) above to be duly
and properly endorsed by Operator’s insurance underwriters as follows:

 

			
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	 	1.	 	As to the policies of insurance described in Articles 14(A)(1), (A)(2),
(A)(3), (A)(4), (A)(5), (A)(6), (A)(7) and (A)(8): (a) to provide that any waiver
of rights of subrogation against other parties by Operator will not affect the
coverage provided hereunder with respect to Delta, its affiliates, and their
directors, officers, employees and agents; and (b) to provide that Operator’s
underwriters shall waive all subrogation rights arising out of this Agreement
against Delta, its affiliates, and their directors, officers, employees and agents
without regard to any breach of warranty on the part of Operator.
	 
	 	2.	 	As to the policies of insurance described in Articles 14(A)(2), (A)(5),
(A)(6), (A)(7) and (A)(8): (a) to provide that Delta, its affiliates, and their
directors, officers, employees and agents shall be named as additional insured
parties thereunder; and (b) to provide that such insurance shall be primary
insurance as respects any insurance carried by Delta.
	 
	 	3.	 	As to the policies of insurance described in Articles 14(A)(2) and (A)(7):
(a) to provide a cross-liability clause as though separate policies were issued for
Delta and Operator and their respective affiliates, and their directors, officers,
employees and agents; and (b) to provide contractual liability insurance coverage
for liability assumed by Operator under this Agreement.
	 
	 	4.	 	As to any insurance obtained from foreign underwriters, to provide that
Delta may maintain against such underwriters a direct action in the United States
upon such insurance policies and, to this end, to include a standard service of
process clause designating a United States attorney in Washington, D.C. or New
York, New York.
	 
	 	5.	 	All insurance policies shall provide that the insurance shall not be
invalidated by any action or inaction of Operator.

C. Operator shall cause each of the insurance policies to be duly and properly endorsed to
provide that such policy or policies or any part or parts thereof shall not be canceled,
terminated or materially altered, changed or amended by Operator’s insurance underwriters
until after thirty (30) days’ written notice to Delta, which thirty (30) days’ notice shall
commence to run from the date such notice is actually received by Delta.

D. Not later than the Effective Date, and upon renewal thereafter or upon request by Delta,
Operator shall furnish Delta evidence satisfactory to Delta of the aforesaid insurance
coverages and endorsements, including certificates certifying that the aforesaid insurance
policy or policies with the aforesaid limits are duly and properly endorsed as aforesaid and
are in full force and effect.

E. In the event Operator fails to maintain in full force and effect any of the insurance and
endorsements required to be maintained by Operator pursuant to Article 14(A), Delta shall have
the right (but not the obligation) to procure and maintain such insurance or any part

 

			
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thereof on behalf of Operator. The cost of such insurance shall be payable by Operator to
Delta upon demand by Delta. The procurement of such insurance or any part thereof by Delta
does not discharge or excuse Operator’s obligation to comply with the provisions set out
herein. Operator agrees not to cancel, terminate or materially alter, change or amend any of
the policies until after providing thirty (30) days’ advance written notice to Delta of
Operator’s intent to so cancel, terminate or materially alter, change or amend such policies
of insurance, which thirty (30) day notice period shall commence to run from the date notice
is actually received by Delta.

F. With respect to all claims against Operator (but not against Delta) with respect to which
Operator is not entitled to be indemnified by Delta pursuant to Article 12(B), whether or not
covered by the insurance policies set forth in this Article 14 or otherwise, Delta is
responsible only for filing an initial report and has no other obligations with respect to
such claims, and Operator is fully responsible for handling all adjustments, settlements,
negotiations, litigation and similar activities in any way related to or connected with such
claims.

G. The parties hereby agree that from time to time during the term of this Agreement Delta may
require Operator to procure and maintain insurance coverages in amounts in excess of the
minimum amounts set forth in Article 14(A) should the circumstances and conditions of
Operator’s operations under this Agreement be deemed, in Delta’s sole discretion, to require
reasonable increases in any or all of the foregoing minimum insurance coverages.

ARTICLE 15. OPERATIONS OF OPERATOR AS A DELTA CONNECTION CARRIER.

A. Delta and Operator agree that, subject to the provisions of this Agreement, Operator will
operate the Delta Connection Flights exclusively as a Delta Connection carrier. Unless
otherwise agreed by Delta, Operator will operate all Delta Connection Flights and the Aircraft
with the passenger seat capacity as determined by Delta from time to time.

B. Operator acknowledges and agrees that participation in the Delta Connection program
obligates Operator to offer and maintain a professional, high quality level of service in
terms of schedules, customer service and the like. Accordingly, at the request of Delta, the
parties will: (a) meet to mutually review and discuss the services, operations and plans of
Operator and Delta for the Delta Connection program; and (b) jointly develop a written
business plan for the Delta Connection operations and services of Operator. Operator will
comply with the business plans so developed and all reasonable recommendations of Delta in
this area.

C. Delta shall have the right, from time to time, to inspect Operator’s Delta Connection
service, including without limitation Operator’s in-flight service, flight, maintenance,
technical operations, gate-check in service, ground operations, Aircraft cleaning and any and
all other services and operations performed by Operator in connection with the Delta
Connection Flights. Such inspections may be announced or unannounced, but under no
circumstances shall they interfere with the operation of Operator’s business.
Failure on the

 

			
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part of Delta to conduct such inspections shall not relieve Operator of its obligations to
conform with the service and performance standards set forth in this Agreement.

ARTICLE 16. REPRESENTATIONS AND WARRANTIES.

A. Representations; Warranties and Covenants of Operator and Parent. Operator and
Parent each represents and warrants to Delta as of the date hereof as follows:

          (1) Organization and Qualification. Each of Operator and Parent is a duly
organized and validly existing corporation in good standing under the laws of the State of
Nevada and has the corporate power and authority to own, operate and use its assets and
operate the Delta Connection Flights.

          (2) Authority Relative to this Agreement. Each of Parent and Operator has the
corporate power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Operator and Parent.
This Agreement has been duly and validly executed and delivered by Operator and Parent and is,
assuming due execution and delivery thereof by Delta, a valid and binding obligation of
Operator and Parent, enforceable against Operator and Parent in accordance with its terms.

          (3) Conflicts; Defaults. Neither the execution or delivery of this Agreement nor
the performance by Operator or Parent of the transactions contemplated hereby will (i)
violate, conflict with, or constitute a default under any of the terms of Operator’s or
Parent’s articles of incorporation, by-laws, or any provision of, or result in the
acceleration of any obligation under, any contract, sales commitment, license, purchase order,
security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including
without limitation, any order, judgment or decree relating to the Delta Connection Flights,
(ii) result in the creation or imposition of liens in favor of any third person or entity,
(iii) violate any law, statute, judgment, decree, order, rule or regulation of any
governmental authority, or (iv) constitute any event which, after notice or lapse of time or
both, would result in such violation, conflict, default, acceleration or creation or
imposition of liens.

          (4) Broker. Neither Operator nor Parent has not retained or agreed to pay any
broker or finder with respect to this Agreement and the transactions contemplated hereby.

          (5) Compliance. All air transportation services performed pursuant to this Agreement
or otherwise shall be conducted in full compliance with all applicable statutes, orders, rules,
regulations and notifications, whether now in effect or hereafter promulgated, of all governmental
agencies having jurisdiction over its operations, including, but not limited to, the FAA, DOD, and
DOT. Operator’s compliance with such governmental statutes, orders, rules, regulations and
notifications will be the sole and exclusive obligation of Operator and Parent,

 

			
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and Delta will have no obligation, responsibility, or liability, whether direct or indirect, with
respect to such matters.

B. Representations and Warranties of Delta. Delta represents to Operator and Parent
as of the date hereof as follows:

          (1) Organization and Qualification. Delta is a duly incorporated and validly
existing corporation in good standing under the laws of the State of Delaware.

          (2) Authority Relative to this Agreement. Delta has the corporate power and
authority to execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Delta. This Agreement has been
duly and validly executed and delivered by Delta and is, assuming due execution and delivery
thereof by Operator and Parent and that Operator and Parent have full legal power and right to
enter into this Agreement, a valid and binding obligation of Delta, enforceable against Delta
in accordance with its terms.

          (3) Conflicts; Defaults. Neither the execution or delivery of this Agreement nor
the performance by Delta of the transactions contemplated hereby will (i) violate, conflict
with, or constitute a default under any of the terms of Delta’s articles of incorporation,
by-laws, or any provision of, or result in the acceleration of any obligation under, any
contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed,
lien, lease, agreement or instrument, including without limitation, any order, judgment or
decree relating to the Delta Connection Flights, (ii) result in the creation or imposition of
any liens in favor of any third person or entity, (iii) violate any law, statute, judgment,
decree, order, rule or regulation of any governmental authority, or (iv) constitute any event
which, after notice or lapse of time or both, would result in such violation, conflict,
default, acceleration or creation or imposition of liens.

          (4) Broker. Delta has not retained or agreed to pay any broker or finder
with respect to this Agreement and the transactions contemplated hereby.

ARTICLE 17. RIGHT OF FIRST REFUSAL ON REGIONAL JETS AND OTHER PROPERTY OR SERVICES.

A. Subject to existing contractual codeshare agreements of Operator and Parent as of April 15,
2005, as well as any confidentiality agreements to which Operator or Parent are a party to, if
at any time during the Term of this Agreement, Operator or Parent receives an offer, bid,
inquiry or other expression of interest (“Offer”) to purchase, lease, sublease, encumber or
otherwise acquire any interest in, or to operate on behalf of any third party (excluding any
ordinary course re-financing or sale/leaseback transaction) (i) any aircraft owned or leased
by Operator or Parent; (ii) any aircraft to which Operator or Parent has an option order; or
(iii) any slots, gates or other facilities (each of (i), (ii) and (iii) an “ROFR

 

			
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Property” and collectively, the “ROFR Property”), which Offer Operator or Parent desires to
accept, Operator or Parent will, within ten (10) business days of receiving such Offer, notify
Delta in writing of such Offer and the material terms and conditions thereof (the “Offer
Notice”) and offer Delta the right of first refusal to consummate the transaction described in
the Offer Notice. Upon receipt of an Offer Notice, Delta will have twenty (20) days to either
(i) notify Operator or Parent that it wishes to consummate the transaction for or in
connection with the ROFR Property set forth in the Offer Notice (the “Offered Property”) on
the same financial terms and conditions as are in such Offer Notice, or (ii) notify Operator
or Parent that it does not wish to consummate such transaction (failure to reply in such 20
day period shall be deemed to be an election by Delta not to consummate such transaction). If
Delta elects to consummate the transaction involving the Offered Property, Operator or Parent
and Delta shall consummate the transaction contemplated in the Offer Notice as soon as
reasonably practicable but no later than sixty (60) days after any and all governmental
approvals required for such transaction have been obtained (Delta and Operator or Parent agree
to use their commercially reasonable efforts to obtain such approvals as soon as practicable).
If Delta elects not to consummate the transaction contemplated in the Offer Notice, Operator
or Parent may consummate such transaction with the third party or parties making the Offer.

B. During the Term of this Agreement, Parent, on behalf of itself and each of its affiliates,
hereby grants to Delta and its affiliates a right of first refusal to perform airframe and engine
maintenance for any regional jets or small jets operated by Parent or an affiliate of Parent
(collectively, “Maintenance Services”), provided Delta or its affiliate can meet or exceed, in the
reasonable discretion of Parent, the cost, quality and turn-around times Parent or its affiliate
could procure in the general marketplace at such time, and provided further that Parent or the
affiliate of Parent is not contractually prohibited from procuring such Maintenance Services from
Delta or an affiliate of Delta at such time.

ARTICLE 18.  {Intentionally Omitted.}

ARTICLE 19. COVENANTS OF OPERATOR AND PARENT. Operator and Parent hereby covenant
and agree that:

A. If requested by Delta at any time during the Term of this Agreement, Operator shall place
its flight designator code, “F8”, on certain flights operated by Delta or an affiliate of
Delta.

B. [*]

C. Operator shall not enter into any binding agreement or arrangement (or series of
agreements or arrangements) with any third party (excluding any employee collective bargaining
units) for the procurement of any goods or services relating to Operator, the Aircraft or
operation of any of the Delta Connection Flights that may materially increase

 

			
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Operator’s Direct Costs to perform its services hereunder without the prior written consent of
Delta.

D. At the request of Delta, Operator, in connection with providing services contemplated
by this Agreement, shall procure certain goods and/or services under strategic sourcing
arrangements with affiliated or third parties established by Delta from time to time.

E. At the request of Delta, Operator agrees to enter into such agreement(s) with another air
carrier as may be necessary to implement shared code-sharing on the Delta Connection Flights with
such other air carrier.

F. Operator agrees that any pilot furloughed by Delta will be given preferential new hire
opportunities at Operator if such pilot completes all new hire paper work, meets all new hire
airman and medical qualifications, satisfies background checks and successfully completes an
interview and employment process. Operator and Delta shall determine and implement mutually
acceptable procedures and processes to effectuate the new hire opportunity commitment set
forth above. Delta agrees to offer preferential interviews for employment to airmen employed
by Operator, subject to Delta’s objectives for diversity and experience among newly hired
pilots.

G. Operator shall file all reports and plans relating to its operations with the DOD, DOT, FAA,
NTSB or any state or airport authority, and Operator shall promptly furnish Delta with copies of
all such reports and such other available traffic and operating reports as Delta may request from
time to time. Delta shall provide Operator with any required information maintained by Delta in
connection herewith. Additionally, Operator will promptly furnish Delta with a copy of every
report and plan that Operator 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 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.

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

I. In the event Parent is no longer a public reporting company, Operator shall furnish to Delta
(1) within 45 days after the end of each of the three interim calendar quarters, unaudited
financial statements including Operator’s then current corporate balance sheet and profit and loss
statement and (2) within 91 days after the end of Operator’s fiscal year, Operator’s then current,
audited financial statements including, either separately or on a consolidated basis, the balance
sheet and

 

			
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the profit and loss statement, together with associated footnotes, and a copy of the independent
auditor’s report. Notwithstanding the reporting status of Parent, Operator shall furnish to Delta
within 91 days after the end of Operator’s fiscal year, a profit and loss statement with respect to
Operator’s Delta Connection operations prepared by SEC line-item and certified by Operator’s chief
financial officer.

ARTICLE 20. CONTRACT INTERPRETATION.

A. This Agreement is subject to, and will be governed by and interpreted in accordance with, the
laws of the State of New York, excluding conflicts of laws principles, and of the United States of
America. Any action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may only be brought in the courts of the State of Georgia in Fulton
County, or, if it has or can acquire jurisdiction, in the United States District Court for the
Northern District of Georgia, and each of the parties hereto irrevocably consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives, to the fullest extent permitted by law, any objection to venue laid
therein. Process in any action or proceeding referred to in the proceeding sentence may be served
on any party anywhere in the world. EACH PARTY FURTHER AGREES TO WAIVE ANY RIGHT TO A TRIAL BY
JURY.

B. The descriptive headings of the several articles and sections of this Agreement are
inserted for convenience only, confer no rights or obligations on either party, and do not
constitute a part of this Agreement.

C. Time is of the essence in interpreting and performing this Agreement.

D. This Agreement (including the Exhibits and Schedules hereto), together with the
Reimbursement Agreement, constitutes the entire understanding between the parties with respect
to the subject matter hereof, and any other prior or contemporaneous agreements, whether
written or oral, are expressly superseded hereby.

E. If any part of any provision of this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such provision or
the remaining provisions.

F. This Agreement may be executed in any number of counterparts, including via facsimile, each
of which shall be deemed to be an original and all of which, taken together, shall constitute
one and the same instrument.

G. Because a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled to an injunction restraining such breach
or threatened breach and to specific performance of any provision of this Agreement and,

 

			
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in either case, no bond or other security shall be required in connection therewith, and the
parties hereby consent to the issuance of such injunction and to the ordering of specific
performance.

H. NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST
REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE, ARISING FROM THIS AGREEMENT OR ANY
BREACH HEREOF.

ARTICLE 21. CIRCUMSTANCES BEYOND THE PARTIES’ CONTROL.

With the exception of outstanding rights and obligations, and subject to Section 3(H) hereof,
each party will be relieved of its obligations under this Agreement in the event, to the
extent and for the period of time that performance is delayed or prevented caused by any acts
of God, acts of terrorism or hostilities, war, strike, labor disputes, work stoppage, fire,
act of government, court order, or any other act reasonably beyond the control of that party,
including but not limited to, non-delivery or delay in delivery of the Aircraft or delay in
the completion of required training of the Operator’s employees by the Aircraft manufacturer
(each, a “Force Majeure Event”).

ARTICLE 22. NO LICENSE GRANTED.

A. This Agreement is not, and shall not be construed to be, a license for either party to use
the trade names, trademarks, service marks, or logos of the other party, or its affiliates,
without such party’s prior written consent.

B. Operator will conduct all operations described herein under the service mark “Delta Connection.”
Delta hereby grants to Operator a nonexclusive, nontransferable, non-sublicensable license to use
certain trademarks, service marks, logos and trade names that Delta owns or has the right to use,
including, “Delta,” “Delta Connection,” “SkyMiles,” and the Delta widget design (collectively, the
“Delta Marks”) in connection with the services to be rendered by Operator pursuant to this
Agreement; provided, however, that at any time during the Term of this Agreement, Delta may alter,
amend or revoke the license hereby granted and require Operator’s use of a new or different Delta
Mark in connection with the services provided hereunder as Delta may determine in its sole
discretion.

C. Operator hereby acknowledges Delta’s right to use the Delta Marks, further acknowledges the
validity of the Delta Marks, and agrees that it will not do anything in any way to infringe or
abridge Delta’s, or any of its affiliates’, rights in the Delta Marks or directly or indirectly to
challenge the validity of the Delta Marks.

D. Operator shall not use any of the Delta Marks without Delta’s prior written consent.

E. Nothing in this Agreement shall be construed to give Operator the exclusive right to use any of
the Delta Marks, or to abridge Delta’s right to use or license any of its trademarks, service

 

			
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marks, trade names or logos (collectively, “Identification”) and to license such other uses of such
Identification as Delta or its affiliates may desire.

F. Should this Agreement be canceled or otherwise terminated for any reason as set forth in Article
11 hereof, all right to use the Delta Marks shall revert to Delta and shall not thereafter be used
by Operator in any form or fashion.

G. Branding.

     1. Livery. Each of the Aircraft shall be in the color scheme, including
exterior paint and interior upholstery and appointments (“Livery”) of the Delta Connection
Livery, as provided by Delta to Operator from time to time. Any changes to the Livery of any
of the Aircraft shall be done on a schedule as mutually agreed by the parties.

     2. On Board Branding. Delta shall control all on board branding and in-flight
materials including, without limitation, in-flight publications, food and beverage products,
paper goods and service ware. In the event of any change to the on-board branding or
in-flight materials, Delta shall be responsible for reimbursing Operator for any reasonable
costs and expenses incurred by Operator in connection therewith. Operator shall be solely
responsible for maintaining all licenses necessary for the serving of in-flight food and
beverages on the Delta Connection Flights.

ARTICLE 23. MODIFICATION AND WAIVER.

No amendment, modification, supplement, termination or waiver of any provision of this
Agreement, and no consent to any departure by either party therefrom, shall in any event be
effective unless in writing signed by authorized representatives of both parties, and then
only in the specific instance and for the specific purpose given.

ARTICLE 24. NOTICES.

     Unless otherwise provided herein, all notices, requests and other communications required
or provided for hereunder shall be in writing (including telecopy or similar teletransmission
or writing) and shall be given at the following addresses:

	 
	(1) If to Delta:

	 
	Delta Air Lines, Inc.

	1030 Delta Boulevard

	Atlanta, GA 30354

	Dept. 034

	Attention: Senior Vice President and Chief Officer of Operations

	 

	Telecopy: (404) 715-7352

 

			
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	with copies to:

	 
	Delta Connection, Inc.

	1025 Virginia Avenue

	Suite 410

	Atlanta, GA 30354

	Dept. 009

	Attn: Chief Financial Officer

	Telecopy: (404) 677-6247

	 

	Delta Air Lines, Inc.

	1030 Delta Boulevard

	Atlanta, GA 30354

	Dept. 981

	Attn: Sr. V.P. and General Counsel

	Telecopy: (404) 715-2233

	 
	(2) If to Operator or Parent:

	 
	Mesa Air Group, Inc.

	410 North 44th Street, Suite 700

	Phoenix, AZ 85008

	Attention: President

	Telecopy: (602) 685-4350

	 
	with copies to:

	 
	Mesa Air Group, Inc.

	410 North 44th Street, Suite 700

	Phoenix, AZ 85008

	Attn: Chief Financial Officer

	Telecopy: (602) 685-4352

	 

	Mesa Air Group, Inc.

	410 North 44th Street, Suite 700

	Phoenix, AZ 85008

	Attn: Vice President & General Counsel

	Telecopy: (602) 685-4352

Any such notice, request or other communication shall be effective (i) if given by mail, upon
the earlier of receipt or the third business day after such communication is deposited in the
United States mails, registered or certified, with first class postage prepaid, addressed as
aforesaid or (ii) if given by any other means including, without limitation, by air courier,
when delivered at the address specified herein. Each party may change its address for notice
purposes by notice to the other party in the manner provided herein.

 

			
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ARTICLE 25. ASSIGNMENT.

This Agreement shall bind and inure to the benefit of Delta, Operator and Parent and their
respective successors and assigns; provided, however, neither party may assign or transfer
this Agreement or any portion hereof to any person or entity without the express written
consent of the other party. Any assignment or transfer, by operation of law or otherwise,
without such consent shall be null and void and of no force or effect.

ARTICLE 26. GOOD FAITH.

Each party shall exercise good faith in its dealings with the other party hereto and in
performance of its obligations under this Agreement.

ARTICLE 27. CONFIDENTIALITY.

A. Except as otherwise provided below, each party shall, and shall ensure that its directors,
officers, employees, affiliates and professional advisors (collectively, the
“Representatives”), at all times, maintain strict confidence and secrecy in respect of all
Confidential Information (as defined below) of the other party (including its affiliates)
received directly or indirectly as a result of this Agreement. If a party (the “Disclosing
Party”) in good faith determines that it is required to disclose any Confidential Information
of other party (the “Affected Party”) in order to comply with any applicable law or government
regulation, or under the terms of a subpoena or order issued by a court or governmental body,
it shall (a) notify the Affected Party immediately of the existence, terms and circumstances
surrounding such request, (b) consult with the Affected Party on the advisability of taking
legally available steps to resist or narrow such request and (c) if any disclosure of
Confidential Information is required to prevent the Disclosing Party from being held in
contempt or subject to other legal penalty, furnish only such portion of the Confidential
Information as it is legally compelled to disclose and use commercially reasonable efforts (at
the cost of the party whose Confidential Information is being protected) to obtain an order or
other reliable assurance that confidential treatment shall be accorded to the disclosed
Confidential Information. Each party agrees to transmit Confidential Information only to such
of its Representatives as required for the purpose of implementing and administering this
Agreement, and shall inform such Representatives of the confidential nature of the
Confidential Information and instruct such Representatives to treat such Confidential
Information in a manner consistent with this Article 27.

     For purposes of this Agreement, “Confidential Information” shall mean (a) all
confidential or proprietary information of a party, including, without limitation, trade
secrets, information concerning past, present and future research, development, business
activities and affairs, finances, properties, methods of operation, processes and systems,
customer lists, customer information (such as passenger name record or “PNR” data) and
computer procedures and access codes; and (b) the terms and conditions of this Agreement and
any reports, invoices or other communications between the parties given in connection with the

 

			
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negotiation or performance of this Agreement; and (c) excludes (i) information already in a
party’s possession prior to its disclosure by other party; (ii) information obtained from a
third person or entity that is not prohibited from transmitting such information to the
receiving party as a result of a contractual, legal or fiduciary obligation to the party whose
information is being disclosed; (iii) information that is or becomes generally available to
the public, other than as a result of disclosure by a party in violation of this Agreement; or
(iv) information that has been or is independently acquired or developed by a party, or its
affiliate, without violating any of its obligations under this Agreement.

B. Each party acknowledges and agrees that in the event of any breach of this Article 27, the
Affected Party shall be irreparably and immediately harmed and could not be made whole by
monetary damages. Accordingly, it is agreed that, in addition to any other remedy at law or
in equity, the Affected Party shall be entitled to an injunction or injunctions (without the
posting of any bond and without proof of actual damages) to prevent breaches or threatened
breaches of this Article 27 and/or to compel specific performance of this Article 27.

C. The confidential obligations of the parties under this Article 27 shall survive the
termination or expiration of this Agreement.

ARTICLE 28. ADDITIONAL DOCUMENTS.

The parties hereby covenant and agree, prior to the first Aircraft being placed into Delta
Connection revenue service, to execute and deliver the following additional documents in
connection with this Agreement, if applicable:

A. A ground handling agreement, providing for ground handling by Delta, or its designee,
at certain stations operated by Operator; and

B. An agreement for the provision of emergency response services to be provided by Delta
and Operator with respect to Delta Connection Flights; and

C. A Free and Reduced Rate Travel Agreement between Delta and Operator as mutually
agreed upon among the parties.

 

			
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     IN WITNESS WHEREOF, the parties have executed this Agreement by their undersigned duly
authorized representatives:

	 	 	 	 	 	 	 	 	 
	Mesa Air Group, Inc.	 	 	 	Delta Air Lines, Inc.
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 

	 	 	 
	Freedom

	 	Airlines, Inc.
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Name:
	 	 
	 

	 	 
	 
	 	 
	Title:
	 	 
	 

	 	 

 

			
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EXHIBIT A

The Aircraft

	 	 	 
	Aircraft	 	In-Service Date

{To be mutually agreed upon in good faith with the goal to be placing five (5) Aircraft into

service in October, 2005 and two (2) Aircraft per month thereafter }

 

			
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Exhibit B

The Base Rate Costs Model

Annual Rate Plan — 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cost	 	Unit of	 	 	Unit	 	 	Number	 	 	Total	 
	Element	 	Measure	 	 	Rate	 	 	of Units	 	 	Cost	 
	 
	Fixed Costs:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Overhead Allocation
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Crew RON
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Maintenance Burden
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Aircraft ownership costs (owned or leased)
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Maintenance G&A
	 	Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Maintenance Depreciation
	 	Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Monthly Fixed Costs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Variable Costs:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Flight Operations-Pay/Recurrent Training
	 	Blk Hrs	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Inflight-Pay/Recurrent Training
	 	Blk Hrs	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Maintenance-Direct (ex engine overhauls)
	 	Blk Hrs	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Dispatch
	 	Departures	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Engine Overhauls
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[*]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Monthly Variable
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pass Thru Costs: (estimates)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Landing Fees
	 	Departures	 	 	 	 	 	 	 	 	 	 	[*]	 
	Hull Insurance
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Pax Liability Insurance
	 	Pax	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Pax Liability Insurance
	 	1,000 RPMs	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Fuel @ $1.25/gallon
	 	Blk Hrs	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Deicing
	 	Departures	 	 	 	 	 	 	 	 	 	 	[*]	 
	Catering
	 	Pax	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	Property Tax
	 	A/C Months	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Monthly Pass Thru Costs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CY2005 Total Monthly Reimbursed Costs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 

Note 1: [*].

Note 2: [*].

 

			
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Exhibit C

RES SYSTEM EQUIPMENT

Equipment, as defined in Section 9(B)(1) of the Agreement, may be provided to Operator by Delta for
installation at one or more of the following locations of Operator:

	 	1.	 	Headquarters
	 
	 	2.	 	Dispatch
	 
	 	3.	 	Training
	 
	 	4.	 	Maintenance base for the Aircraft
	 
	 	5.	 	Stations handled by Operator, if any.

 

			
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 Schedule 3

Monthly Incentive Goals — 2005

	 	 	 	 	 
	 	 	Completion	 	On Time
	Month	 	Rate	 	Arrivals
	 
	Jan-05

	 	[*]%
	 	[*]%
	Feb-05

	 	[*]%
	 	[*]%
	Mar-05

	 	[*]%
	 	[*]%
	Apr-05

	 	[*]%
	 	[*]%
	May-05

	 	[*]%
	 	[*]%
	Jun-05

	 	[*]%
	 	[*]%
	Jul-05

	 	[*]%
	 	[*]%
	Aug-05

	 	[*]%
	 	[*]%
	Sep-05

	 	[*]%
	 	[*]%
	Oct-05

	 	[*]%
	 	[*]%
	Nov-05

	 	[*]%
	 	[*]%
	Dec-05

	 	[*]%
	 	[*]%
	Annual

	 	[*]%
	 	[*]%

Semi—Annual Incentive Goals — 2005

	 	 	 	 	 
	 	 	Completion	 	On Time
	 	 	Rate	 	Arrivals
	 
	Jan-05 to Jun-05

	 	[*]%
	 	[*]%
	Jul-05 to Dec-05

	 	[*]%
	 	[*]%

 

			
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Schedule 10

MIMIMUM PERFORMANCE REQUIREMENTS

	1.	 	Mishandled Baggage: [*].
	 
	2.	 	Completion Rate (actual): [*]% or greater.
	 
	3.	 	On-time Arrivals: [*]% of all flights flown or greater.
	 
	4.	 	Overall Customer Satisfaction: [*].
	 
	5.	 	Passenger Complaints: [*].

 

			
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Exhibit 10.3

* TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2

Execution Copy

REIMBURSEMENT AGREEMENT

               This Reimbursement Agreement (this “Agreement”), dated and effective the ___day of May,
2005, is between Delta Air Lines, Inc., whose principal address is 1030 Delta Boulevard, Atlanta,
Georgia 30320 (“Delta”), Freedom Airlines, Inc. (“Operator”), a wholly-owned subsidiary of Mesa Air
Group, Inc., holding a Certificate of Public Convenience and Necessity issued by the Federal
Aviation Administration (“FAA”), whose principal address is 410 North 44th Street, Suite 700,
Phoenix, Arizona 85008, and Mesa Air Group, Inc. (“Parent” and together with Operator, “Mesa”),
parent company and sole shareholder of Operator, whose principal address is 410 North 44th Street,
Suite 700, Phoenix, Arizona 85008.

               WHEREAS, Delta operates the Delta Connection program; and

               WHEREAS, Delta is party to certain aircraft leases and other agreements (the “FRJ Leases”)
whereby Delta leases thirty (30) Dornier 328 regional jets (the “FRJ Aircraft”); and

               WHEREAS, Mesa desires to operate regional jets under Delta’s flight designator code, “DL,” as
a Delta Connection operator; and

               WHEREAS, to be a Delta Connection operator, Mesa is willing to reimburse Delta for certain of
its obligations under the FRJ Leases.

               NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual undertakings
set forth herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Delta and Mesa, intending to be legally bound, hereby agree to enter into
this Agreement as follows:

1. Reimbursement of FRJ Expenses. 

1.1 Mesa hereby covenants and agrees to pay to Delta the sum of [*] Dollars ($[*]) per FRJ
Aircraft per month as reimbursement for certain lease rent costs incurred by Delta relating
to such aircraft. Mesa’s payment obligations hereunder shall commence with respect to each
FRJ Aircraft upon the earlier of (1) in accordance with the schedule attached hereto as
Exhibit 1.1 and (2) the actual in-service date of each “RJ50 Aircraft”
(as defined below); provided, however, if the initial RJ50 Aircraft actual in-service date
is delayed beyond October 1, 2005 due solely to the actions or inactions of Delta, Mesa’s
payment obligations hereunder shall be temporarily suspended until such initial RJ50
Aircraft are actually placed into Delta Connection service. Mesa’s payment obligation with
respect to the FRJ Leases rent expense shall continue until the earlier of the: (1) Delta’s
full release from all of its rights and obligations with respect to each of the thirty

 

	
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(30)
FRJ Aircraft including, without limitation, all of the rights and obligations of Delta in,
under and with respect to the participation agreements, the FRJ Leases, and all other
operative documents relating thereto under which Delta has any right or obligation with
respect to each of the FRJ Aircraft (collectively, the “FRJ Obligations”); (2) the
expiration of the term of the applicable FRJ Lease, (3) termination of the “RJ50 Delta
Connection Agreement” (as defined below) by Mesa pursuant to Sections 11(C) or 11(D)
thereof, (4) subject to Section 4.3 hereof, termination of the RJ50 Delta Connection
Agreement by Delta pursuant to Sections 11(F) or 11(G) thereof; or (5) Delta filing a
petition in bankruptcy or reorganization under any federal or state bankruptcy or similar
law.

1.2 Each monthly payment required pursuant to Section 1.1 hereof shall be due and payable on
the 15th day of each applicable month; provided, however, in lieu of such
payment, at Delta’s sole option, so long as the RJ50 Delta Connection Agreement is in
effect, Delta may off set and deduct a given’s month’s payment due from Mesa from any
payments due Mesa from Delta during such month under the RJ50 Delta Connection Agreement.

2. Assumption of FRJ Aircraft Obligations.

2.1 Mesa hereby covenants and agrees to diligently pursue a full release of Delta from all
of the FRJ Obligations, all on terms and conditions that are reasonably satisfactory to
Delta.

2.2 If Mesa identifies a potential sublease for the FRJ Leases, then, subject to the terms
and conditions thereof, Delta agrees to negotiate sublease documentation with such potential
sublessee on terms and conditions reasonably satisfactory to Delta. Any and all reasonable
fees and expenses (including attorneys’ fees) incurred by Delta in connection with any such
sublease or similar transaction, whether or not consummated, shall be promptly reimbursed by
Mesa.

2.3 (a) In the event that, subject to Delta’s reasonable satisfaction with respect to the
terms and conditions thereof, the release of Delta from the FRJ Obligations requires a
monetary payment to one or more of the other parties thereto (a “Financial Settlement”),
Delta hereby agrees to participate in such Financial Settlement on a dollar-for-dollar basis
with Mesa, up to a maximum contribution by Delta of [*] Dollars ($[*]) (the “Delta
Contribution”); provided, however, if any such Financial Settlement is in any way related to
or part of any other non-FRJ Aircraft-related transaction, series of transactions, agreement
or series of agreements involving Mesa or any affiliate of Mesa, and not Delta, Delta shall
not be obligated to participate in such Financial Settlement.

       (b) Commencing on the first anniversary date of the 25th (or
30th, if applicable) RJ50 Aircraft being placed into revenue service pursuant to
the RJ50 Delta Connection Agreement, Delta shall pay to Mesa the Delta Contribution in equal
annual installments based on the remaining years of the initial term of the RJ50 Delta
Connection Agreement.

       (c) If, prior to the second anniversary of the 25th (or 30th, if
applicable) RJ50

 

	
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Aircraft being placed into revenue service pursuant to the RJ50 Delta
Connection Agreement, Delta files a petition in bankruptcy or reorganization under any
federal or state bankruptcy or similar law, Mesa shall, no later than five (5) days after
such filing, re-pay to Delta that portion of the Delta Contribution which Delta had
previously paid to Mesa prior to such filing and, pursuant to Section 1.1 hereof, Mesa’s
payment obligations with respect to the FRJ Leases shall cease.

3. RJ50 Delta Connection Operations.

3.1 Concurrently with the execution of this Agreement, Mesa and Delta agree to execute and
enter into a Delta Connection Agreement in the form attached hereto as Exhibit 3.1
and incorporated herein by reference (the “RJ50 Delta Connection Agreement”) for the
operation by Mesa of up to thirty (30) 50-Seat regional jet aircraft (the “RJ50 Aircraft”).

4. Default.

4.1 In the event of a material breach of this Agreement by either party remaining uncured
for more than five (5) days after receipt of written notification of such breach by the
nonbreaching party, then the nonbreaching party may immediately terminate this Agreement at
its sole option. If a notice of breach is delivered under this Section and a notice of
termination is not delivered within sixty (60) days thereafter, then the nonbreaching party
shall be deemed to have waived its right to terminate under this Section for such
occurrence.

4.2 Termination of this Agreement for any reason shall not relieve either party of rights
and obligations incurred prior to the effective date of termination. A party’s right to
terminate this Agreement shall be in addition to any other rights or remedies, in law or
equity, available to such party.

4.3 In the event that Delta terminates the RJ50 Delta Connection Agreement pursuant to
Sections 11(F) thereto and Mesa’s payment obligation required pursuant to Section 1.1 hereof
is terminated in accordance with such section, Mesa shall immediately pay to Delta the
appropriate amount set forth in the table on Exhibit 4.3 attached hereto and
incorporated herein.

5. Miscellaneous.

5.1 This Agreement is subject to, and will be governed by and interpreted in accordance
with, the laws of the State of New York, excluding conflicts of laws principles, and of the
United States of America. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement may only be
brought in the courts of the State of Georgia in Fulton County, or, if it has or can acquire
jurisdiction, in the United States District Court for the Northern District of Georgia, and
each of the parties hereto irrevocably consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and waives, to
the fullest extent permitted by law, any objection to venue laid therein.

 

	
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Process in any
action or proceeding referred to in the proceeding sentence may be served on any party
anywhere in the world. EACH PARTY FURTHER AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY.

5.2 The descriptive headings of the several articles and sections of this Agreement are
inserted for convenience only, confer no rights or obligations on either party, and do not
constitute a part of this Agreement.

5.3 Time is of the essence in interpreting and performing this Agreement.

5.4 This Agreement (including the Exhibits hereto), together with the RJ50 Delta Connection
Agreement, constitutes the entire understanding between the parties with respect to the
subject matter hereof, and any other prior or contemporaneous agreements, whether written or
oral, are expressly superseded hereby.

5.5 If any part of any provision of this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such provision or
the remaining provisions.

5.6 This Agreement may be executed in any number of counterparts, including via facsimile,
each of which shall be deemed to be an original and all of which, taken together, shall
constitute one and the same instrument.

5.7 Because a breach of the provisions of this Agreement could not adequately be compensated
by money damages, any party shall be entitled to an injunction restraining such breach or
threatened breach and to specific performance of any provision of this Agreement and, in
either case, no bond or other security shall be required in connection therewith, and the
parties hereby consent to the issuance of such injunction and to the ordering of specific
performance. NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE,
ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.

5.8 No amendment, modification, supplement, termination or waiver of any provision of this
Agreement, and no consent to any departure by either party therefrom, shall in any event be
effective unless in writing signed by authorized representatives of both parties, and then
only in the specific instance and for the specific purpose given.

5.9 Unless otherwise provided herein, all notices, requests and other communications
required or provided for hereunder shall be in writing (including telecopy or similar
teletransmission or writing) and shall be given at the following addresses:

(1) If to Delta:

	 	 	 
	 

	 	Delta Air Lines, Inc.

 

	
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	 	1030 Delta Boulevard
	 

	 	Atlanta, GA 30354
	 

	 	Dept. 034
	 

	 	Attention; Senior Vice President and Chief Officer of Operations
	 

	 	Telecopy: (404)715-7352

with copies to:

	 	 	 
	 

	 	Delta Connection, Inc.
	 

	 	1025 Virginia Avenue Suite 410
	 

	 	Atlanta, GA 30354
	 

	 	Dept, 009
	 

	 	Attn: Chief Financial Officer
	 

	 	Telecopy: (404) 677-6247
	 
	 	 
	 

	 	Delta Air Lines, Inc.
	 

	 	1030 Delta Boulevard
	 

	 	Atlanta, GA 30354
	 

	 	Dept. 981
	 

	 	Attn: Sr. V.P. and General Counsel
	 

	 	Telecopy: (404)715-2233

(2) If to Operator and Parent:

	 	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ S5008
	 

	 	Attention: President
	 

	 	Telecopy: (602)685-4350

with copies to:

	 	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ 85008
	 

	 	Attn: Chief Financial Officer
	 

	 	Telecopy: (602) 685-4352
	 
	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ 85008
	 

	 	Attn: Vice President & General Counsel
	 

	 	Telecopy: (602)685-4352

Any such notice, request or other communication shall be effective (i) if given by mail,
upon the earlier of receipt or the third business day after such communication is deposited
in the United States mails, registered or certified, with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means including, without limitation,

 

	
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by
air courier, when delivered at the address specified herein. Delta or Operator may change
its address for notice purposes by notice to the other party in the manner provided herein.

5.10 This Agreement shall bind and inure to the benefit of Delta, Operator and Parent and
their respective successors and assigns; provided, however, neither party may assign or
transfer this Agreement or any portion hereof to any person or entity without the express
written consent of the other party. Any assignment or transfer, by operation of law or
otherwise, without such consent shall be null and void and of no force or effect.

5.11 Each party hereby agrees and acknowledges that the existence and contents of this
Agreement are regarded by the other party as being confidential, sensitive, trade secret
information. Accordingly, each party hereby agrees it shall not disclose nor use any such
information without such other party’s prior written consent, which consent may be withheld
in such other party’s sole discretion.

{remainder of page intentionally left blank}

 

	
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IN WITNESS WHEREOF, the parties have executed this Agreement by their undersigned duly authorized
representatives:

	 	 	 	 	 	 	 	 	 
	Mesa Air Group, Inc.	 	 	 	Delta Air Lines, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Freedom Airlines, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

	
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EXHIBIT 1.1

Commencement of Payment Obligations

	 	 	 	 	 	 	 
	 	 	 	 	 	 	AGGREGATE
	 	 	 	 	 	 	AMOUNT OF
	 	 	AIRCAFT IN	 	CUMULATIVE	 	MONTHLY PAYMENT
	DATE	 	SERVICE DATE	 	AIRCRAFT	 	OBLIGATION
	July 2005

	 	[*]
	 	[*]
	 	$ [*]
	August 2005

	 	[*]
	 	[*]
	 	$ [*]
	September 2005

	 	[*]
	 	[*]
	 	$ [*]
	October 2005

	 	[*]
	 	[*]
	 	$ [*]
	November 2005

	 	[*]
	 	[*]
	 	$ [*]
	December 2005

	 	[*]
	 	[*]
	 	$ [*]
	January 2006

	 	[*]
	 	[*]
	 	$ [*]
	February 2006

	 	[*]
	 	[*]
	 	$ [*]
	March 2006

	 	[*]
	 	[*]
	 	$ [*]
	April 2006

	 	[*]
	 	[*]
	 	$ [*]
	May 2006

	 	[*]
	 	[*]
	 	$ [*]
	June 2006

	 	[*]
	 	[*]
	 	$ [*]
	July 2006

	 	[*]
	 	[*]
	 	$ [*]
	August 2006 and
thereafter

	 	[*]
	 	[*]
	 	$ [*]

 

	
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EXHIBIT 3.1

 Form of RJ50 Delta Connection Agreement

{see attached}

 

	
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EXHIBIT 4.3

Payment Amounts

	 	 	 	 	 
	Period in which RJ50 Delta Connection Agreement is Terminated	 	Amount of Payment from Mesa to Delta
	1.

	 	Effective Date through 4th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	2.

	 	1 Day after 4th Anniversary of Effective Date through
7th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	3.

	 	1 Day after 7th Anniversary of Effective Date through
10th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	4.

	 	1 Day after the 10th Anniversary of Effective Date
and beyond
	 	$ [*]

 

	
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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]