Document:

ex10-1

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		Exhibit 10.1
	EX-10.1

Table of Contents

Exhibit 10.1

CODE SHARE AND REVENUE SHARING AGREEMENT

      This CODE SHARE AND REVENUE SHARING AGREEMENT (the “Agreement”) is made
and entered into as of March 20, 2001, to be effective retroactive to February
1, 2001 (the “Contract Date”), by and between AMERICA WEST AIRLINES, INC., a
Delaware corporation (“AWA”), and MESA AIRLINES, INC., a Nevada corporation
(“Mesa”).

RECITALS

      A. AWA holds a certificate of public convenience and necessity issued by
the Department of Transportation (“DOT”) authorizing AWA to engage in the
interstate and overseas air transportation of persons, property and mail
between all points in the United States, its territories and possessions.

      B. Mesa holds a certificate of public convenience and necessity issued by
the DOT authorizing Mesa to engage in the interstate transportation of persons,
property and mail in the United States, its territories and possessions.

      C. AWA owns various trademarks, service marks and logos, including
“America West Airlines,” “America West Express,” and distinctive exterior color
decor and patterns on its aircraft, hereinafter referred to individually and
collectively as the “AWA Service Marks.”

      D. AWA and Mesa entered into that certain Code Share and Revenue Sharing
Agreement, dated July 15, 1998, as amended by those certain First and Second
Amendments to Code Share and Revenue Sharing Agreement, dated January 4, 2000
and May 10, 2000, respectively (the “Original Agreement”), in order to provide
scheduled air transportation services as America West Express and to share in
revenue and costs of such services.

      E. AWA and Mesa desire to terminate the Original Agreement and replace the
Original Agreement, in its entirety, with the terms and conditions of this
Agreement.

      NOW, THEREFORE, in consideration of the promises, covenants,
representations and warranties hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
AWA and Mesa agree as set forth below.

AGREEMENT

	1.	 	Effectiveness. This Agreement replaces the Original Agreement effective
upon the date (the “Effective Date”) that Mesa executes a binding agreement to
acquire the CRJ Aircraft required to be provided by Mesa pursuant to Section
2.2.2 of this Agreement (the “Aircraft Contract”). Mesa shall provide AWA with
written notice of the date the Aircraft Contract is executed together with
copies of the Aircraft Contract. On the date of execution of the Aircraft
Contract, all of the terms and provisions of this Agreement shall be effective
retroactive to the Contract Date. On the Effective Date, the Original
Agreement shall be terminated in its entirety. All sums payable pursuant to
Section 6 of the Original Agreement between the Contract Date and Effective
Date shall be recalculated pursuant to the terms of Section 7 of this
Agreement, and AWA, subject to the rights regarding disputed amounts contained
in Section 7.8, shall pay

 

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	 	 	additional and undisputed sums payable within 30 days after receipt of a
written invoice for such recalculation. Until the Effective Date, AWA and Mesa
shall continue to perform pursuant to the Original Agreement. If the Aircraft
Contract is not executed by May 1, 2001, then this Agreement shall
automatically terminate and the terms and conditions of the Original Agreement
shall remain in full force and effect. Simultaneously with the execution of
this Agreement, AWA and Mesa shall enter into an amendment to the Original
Agreement providing for the addition of 3 CRJs under the Original Agreement if
this Agreement is terminated pursuant to this Section.
	 
	 	 	As of the Contract Date, AWA and Mesa dispute certain amounts that are payable
between AWA and Mesa under the Original Agreement (the “Disputed Amounts”).
Mesa and AWA shall continue to work to resolve their respective obligations
concerning the Disputed Amounts pursuant to the terms of the Original
Agreement. This is a new and separate agreement from the Original Agreement.
The terms of this Agreement shall not be used by either Mesa or AWA to
determine or interpret the respective payment obligations of the parties for
the Disputed Amounts. The respective obligations for the Disputed Amounts and
other matters and disputes arising under the Original Agreement prior to the
Contract Date shall be resolved pursuant to the terms, covenants, rights and
remedies of the Original Agreement, shall not affect the rights, duties and
obligations of AWA or Mesa under this Agreement and shall not permit AWA or
Mesa to exercise any remedies under this Agreement. The intent of AWA and Mesa
is to resolve any disputes concerning the Disputed Amounts or any other matters
and disputes under the Original Agreement under the Original Agreement and not
pursuant to this Agreement.
	 
	2.	 	Rights, Responsibilities and Obligations of Mesa:

		
	 	      2.1  Flight Service. During the term of this Agreement, Mesa
shall operate America West Express air transportation services (the
“Flight Services”), using the Fleet of Aircraft established pursuant
to Section 2.2, to and from the cities and based upon the schedule
established from time to time by AWA (the “Schedule”) in written
notice to Mesa (a “Schedule Notice”). For purposes of this
Agreement, “Flights” means flights operated pursuant to the
Schedule. AWA may change the Schedule by issuance of a Schedule
Notice at any time. When creating a Schedule, AWA shall: (i) take
into account Mesa’s aircraft maintenance requirements; (ii) create a
Schedule which will permit Mesa to schedule flight crews in a manner
consistent with industry operational practices; (iii) schedule block
times based on AWA’s internal block time policy; (iv) provide for
the following turn times: (a) in a hub location: 20 minutes for
Beech 1900s and Dash 8s and 25 minutes for CRJs; and (b) in other
stations: 10 minutes for Beech 1900s, 15 minutes for Dash 8s and 20
minutes for CRJs; (v) take into account airport facilities available
for Aircraft handling; (vi) provide for maintenance as required by
Section 2.6.3 and scheduled heavy maintenance on Aircraft as
required from time to time; and (vii) provide for at least 45 days
prior notice of any holiday cancellations. Mesa shall implement all
changes in the Schedule contained in a Schedule Notice in accordance
with AWA’s scheduling requirements within 60 days after receipt of a
Schedule

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	 	Notice. Mesa or any of its affiliates shall not provide any flight
service for any other airline for flights that originate in or end
in Phoenix, Arizona.
	 
	 	      So long as Air Midwest (“AM”) is a wholly-owned subsidiary of Mesa
Air Group, Inc., Mesa may subcontract with AM for the performance
of those Flight Services, Other Services (as hereinafter defined),
and other related obligations under this Agreement, which are to be
performed by Mesa using the Beech 1900s (the “AM Services”). Mesa
has delivered to AWA an assumption agreement pursuant to which AM
agrees to perform all the duties and obligations of Mesa under this
Agreement relating to the AM Services and to be bound by all of the
liabilities, obligations, and duties of Mesa under this Agreement
applicable to the AM Services, including, without limitation, the
providing of flights, maintenance of aircraft, compliance with
laws, maintenance of insurance and indemnification of AWA (the
“Assumption Agreement”). AWA shall have no duty, obligation or
liability to AM under this Agreement. All payments for the use and
operation of the Beech 1900 Subfleet to be made by AWA under this
Agreement shall be paid to Mesa. Mesa shall pay all sums payable
to AM for the operation of the Beech 1900 Subfleet pursuant to a
separate agreement between AM and Mesa to which AWA is not a party.
Notwithstanding the foregoing, Mesa shall not be released,
discharged, or relieved from any duties, liabilities or obligations
set forth in this Agreement, including those arising from the AM
Services performed by AM. AM shall be deemed a subcontractor of
Mesa, and Mesa shall cause AM’s performance of the AM Services to
comply with all relevant terms and conditions of this Agreement.
If either: (i) AM ceases to be a wholly-owned subsidiary of Mesa
Air Group, Inc.; or (ii) AM fails to comply with the terms and
conditions of this Agreement as required by the Assumption
Agreement, then Mesa, within thirty (30) days after receipt of
written notice from AWA, shall terminate the subcontractor
relationship with AM, acquire the Beech 1900 Subfleet and perform
the duties and obligations applicable to the Beech 1900 Subfleet
pursuant to this Agreement.
	 
	 	      Mesa, with the prior written consent of AWA, which consent shall
not be unreasonably withheld, delayed or conditioned, may
subcontract with a wholly-owned subsidiary of Mesa Air Group, Inc.
for the performance of certain Flight Services, Other Services and
other related obligations under this Agreement, which are to be
performed by Mesa using certain Aircraft on terms and conditions
similar to the terms and conditions applicable to the
subcontracting of the AM Services (the “Subcontracting of
Services”). If AWA consents to the Subcontracting of Services,
then AWA and Mesa shall execute an amendment to this Agreement
permitting the Subcontracting of Services and setting forth the
terms and conditions pursuant to which the Subcontracting of
Services may occur (the “Subcontracting Amendment”). The
Subcontracting of Services shall not occur until the Subcontracting
Amendment and any documents required from the wholly-owned
subsidiary have been executed by Mesa and the affiliate and

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	 	delivered by AWA.
	 
	 	      AM and any other affiliate to which services are subcontracted
under this Agreement are referred to as the “Affiliated Service
Providers.”
	 
	 	      2.2  Fleet.

		
	 	      2.2.1  Initial Fleet. As of the Contract Date, Mesa
and AM provide the Flight Services using the following
aircraft (collectively, the “Fleet”; with respect to any one
aircraft type, the “Subfleet”; and individually, the
“Aircraft”):

	 	 	 
	Number		Aircraft Type ("Subfleet")
	
		

	12		
deHavilland DHC-8-200 (“Dash 8”)
	
	
	
	

	5		
Hawker-Beech 1900 (“Beech 1900”)
	
	
	
	

	22		
Canadair Regional Jet-50 (“CRJ”)

		
	 	      2.2.2  CRJ Fleet Expansion. Pursuant to the Aircraft
Contract, Mesa shall have the right to acquire an additional
83 CRJ Aircraft, 43 by virtue of firm orders (the “Firm
Aircraft”) and 40 by virtue of options (the “Option
Aircraft”), in the configuration, with the seating capacity
and at the times set forth on Exhibit A, attached hereto. The
Firm Aircraft and Option Aircraft will consist of CRJ Models
200s, 700s and 900s as set forth in Exhibit A. For purposes
of this Agreement, the CRJ Model 200s shall be a “CRJ
Subfleet” and the CRJ Model 700s and 900s shall be a “CRJ
Subfleet”.

		
	 	      (a) Each of the Firm Aircraft shall be
placed into Flight Services by Mesa in the calendar
months set forth on Exhibit A (the “Delivery Schedule”).
The Firm Aircraft to be delivered in each of the
calendar months from and including October, 2003 to and
including June, 2004 may be either CRJ Model 700s or
900s (the “Convertible Firm Aircraft”). AWA, by written
notice to Mesa, given on or before the last day of the
18th calendar month prior to the delivery of each
Convertible Firm Aircraft, shall advise Mesa as to which
model is to be added to the Fleet (the “Firm Selection
Notice”). For example, for the CRJ to be delivered in
October, 2003, AWA must provide the Firm Selection
Notice by April 31, 2002. If AWA does not provide the
Firm Selection Notice timely, then AWA shall be deemed
to have elected to have a CRJ Model 700 added to the
Fleet. Mesa shall provide AWA with at least 90 days’
prior written notice of the week each of the Firm
Aircraft will be placed into Flight Service under this
Agreement and at least 60 days’ prior written notice of
the date on which each of the Firm Aircraft will be
placed into Flight Service under this Agreement (each, a
“Scheduled Delivery Date”).

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	 	      (b) AWA shall have the options to expand
the CRJ Fleet by up to 40 additional CRJs from the
Option Aircraft. On or before each option “Exercise
Date” (as set forth on Exhibit A), AWA, by written
notice to Mesa (the “Option Notice”), shall have the
option to require Mesa to increase the CRJ Subfleet by
the addition of the applicable CRJ Aircraft in the
applicable “In Service Months” (as set for on Exhibit
A)(each, a “Fleet Expansion Option”). Each Option
Notice shall specify whether AWA is selecting either a
CRJ Model 700 or 900. If the Option Notice does not
specify the CRJ Model, then AWA shall be deemed to have
selected a CRJ Model 700. The Fleet Expansion Options
are separate and individual options and may be exercised
or not exercised on a separate and individual basis.
The Aircraft that are the subject of each Fleet
Expansion Option shall be added to the Fleet by Mesa in
the applicable In Service Months. Mesa shall provide
AWA with at least 90 days prior written notice of the
week each Option Aircraft will be placed into Flight
Service under this Agreement and at least 60 days’ prior
written notice of the Scheduled Delivery Date for each
Option Aircraft that is the subject of each exercised
Fleet Expansion Option.
	 
	 	      (c) Mesa shall not be liable to AWA for
the failure to deliver any Firm Aircraft or Option
Aircraft on the Scheduled Delivery Date (a “Failed
Delivery”) if: (i) the failure to deliver is the result
of the manufacturer’s failure to deliver the Aircraft to
Mesa as a result of acts of terrorism, hostilities, war,
strikes, labor disputes, work stoppages beyond the
manufacturer’s control, fire, act of government or court
order; (ii) Mesa uses commercially reasonable efforts to
acquire a replacement aircraft for the Aircraft that was
not delivered; and (iii) Mesa pays to AWA any
compensation, damages or award obtained by Mesa from the
manufacturer as a result of the Failed Delivery (an
“Excused Failure”). In the event of a Failed Delivery,
Mesa shall use commercially reasonable efforts to obtain
the applicable Aircraft as soon as practicable after the
Scheduled Delivery Date. If the Aircraft that is the
subject of a Failed Delivery is not delivered within 90
days after the Scheduled Delivery Date, then AWA shall
have the option to elect not to include such Aircraft
under this Agreement by providing written notice to Mesa
at any time prior to the actual delivery of such
Aircraft. If a Failed Delivery is not the result of an
Excused Failure, then AWA shall have all rights and
remedies under this Agreement for such Failed Delivery.

		
	 	      2.2.3  Intentionally Omitted.
	 
	 	      2.2.4  Fleet Reduction. Except as otherwise permitted
by Section 2.2.5, upon

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	 	180 days’ prior written notice from AWA, AWA, subject to
limitations set forth below, may require Mesa to reduce the
number of Aircraft in any Subfleet. AWA shall not require
Mesa to reduce: (i) the number of Aircraft in the Dash 8
Subfleet, Beech 1900 Subfleet or the combined CRJ Subfleets
by more than two Aircraft in any Six Calendar Month Period.
For purposes of this Agreement, “Six Calendar Month Period”
means each period during the Term (as defined below)
commencing on January 1 and ending on June 30 and commencing
on July 1 and ending on December 30, with the first Six
Calendar Month Period commencing on January 1, 2002; (ii) the
number of CRJ Model 200s for a period of 1 year measured from
the last date that a CRJ Model 200 is added to the CRJ
Subfleet; provided, however, that the Scheduled Delivery Date
shall be used to measure the date each CRJ Model 200 is added
to the CRJ Subfleet; (iii) the number of CRJ Model 700s and
900s for a period of 1 year measured from the last date that
a CRJ Model 700 or 900 is added to the CRJ Subfleet;
provided, however, that the Scheduled Delivery Date shall be
used to measure the date such CRJ Model 700 or 900 is added
to the CRJ Subfleet; and (iv) the Dash 8 Subfleet below 6
Aircraft.
	 
	 	      2.2.5  Elimination of Beech 1900s and Dash 8s.
Notwithstanding the provisions of Section 2.2.4, AWA, at any
time during the Term after August 25, 2004, may require the
Subfleet of Beech 1900s to be reduced to zero by providing
Mesa with at least 180 days prior written notice of AWA’s
election to eliminate the Beech 1900s on or after such date
(the “1900 Elimination Notice”). Notwithstanding the
provisions of Section 2.2.4, AWA, at any time during the Term
after August 25, 2006, may require Mesa to reduce the Subfleet
of Dash 8s to zero by providing Mesa with at least 180 days’
prior written notice of AWA’s election to eliminate the Dash
8s on or after such date (the “Dash 8 Elimination Notice”).
The 1900 Elimination Notice may be given at any time during
the Term on or after February 27, 2004. The Dash 8
Elimination Notice may be given at any time during the Term on
or after February 27, 2006.
	 
	 	      2.2.6  Spares. Mesa shall have available at least 1
spare Aircraft available for Flight Services under this
Agreement at any time there are 35 or more CRJ Aircraft and at
least 2 spare Aircraft available for Flight Services under
this Agreement at any time there are 65 or more CRJ Aircraft.
AWA shall pay the Actual Costs, Guaranteed Non-Maintenance
Costs (other than overhead) and Guaranteed Maintenance Costs
actually incurred by or payable to Mesa for each spare
Aircraft as provided in Section 7.
	 
	 	      2.2.7  Transition Costs. As of the Contract Date, all
of the CRJ Aircraft are 50 seat Aircraft. The Firm Aircraft
and Option Aircraft include CRJ-700 and CRJ-900 seat
configurations (the “New CRJ Types”). AWA shall

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	 	reimburse Mesa for actual out-of-pocket costs and expenses
incurred by Mesa in connection with the induction of the New
CRJ Types into Flight Services for a period of 180 days after
the induction of the first of each of the New CRJ Types, not
to exceed [***] for each of the New CRJ Types (the
“Transition Reimbursement”). The Transition Reimbursement
shall be paid by AWA within 30 days after receipt of monthly
written invoices together with commercially reasonable
evidence of the costs actually incurred by Mesa.

		
	 	      2.3  Other Services. In addition to the Flight Services, Mesa,
subject to AWA’s payment of costs pursuant to Section 7.1.8, shall
provide the following services in connection with the Flight
Services (the “Other Services”): (i) curb-side service, other than
at AWA Service Locations (as defined below), in all locations where
it is normal and customary or where another airline offers curbside
check-in; (ii) check-in service with automated baggage tags and
boarding pass printers in all locations, other than AWA Service
Locations; (iii) ticketing and security services in accordance with
the Federal Aviation Administration (“FAA”) and AWA directives and
guidelines, as may be issued from time to time, and any other
directives or guidelines as Mesa and AWA may mutually approve, in
all locations, other than the AWA Service Locations; (iv) Qik-Check
service, to the extent used and supplied by AWA, at all gates used
by Mesa; (v) transfer of all baggage for passengers connecting from
Flights to AWA flights in a timely manner to ensure all baggage is
placed on those connecting flights; and (vi) transportation of mail
and other cargo (other than hazardous materials) on Flights, at the
order of AWA, to the extent of available aircraft capacity. Mesa,
at its expense, shall provide all facilities, machinery, equipment
and inventory required to efficiently, timely and in a manner
consistent with best airline industry practices provide the Other
Services. Mesa shall require personnel providing the Other Services
to comply with all rules, regulations and directives promulgated for
all AWA operations from time to time.
	 
	 	      Mesa may outsource the Other Services performed by Mesa at any
station with the prior written consent of AWA, which consent shall
not be unreasonably withheld or delayed. Mesa shall cause any
subcontractor to which the Other Services are outsourced to comply
with and perform all of the duties and obligations imposed on Mesa
in this Agreement applicable to the Other Services that have been
outsourced.
	 
	 	      Notwithstanding the foregoing, AWA shall provide the services set
forth in subsections (i) – (iii) above at Phoenix Sky Harbor
International Airport, McCarron International Airport and any other
airport that AWA designates with at least 90 days’ prior written
notice to Mesa (the “AWA Service Locations”). In the event AWA
elects to convert any airport to an AWA Service Location, then AWA
shall: (i) either assume Mesa’s lease at the airport or reimburse
Mesa for

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	 	the actual out-of-pocket costs and expenses incurred by Mesa in
terminating the lease, at AWA’s election; (ii) reimburse Mesa for
up to one week’s compensation actually paid to airport employees
that are not offered employment by AWA; and (iii) offer to purchase
from Mesa or assume the lease of any equipment owned or leased by
Mesa at the airport that may be used by AWA in AWA’s operations and
is in good condition and repair for a price equal to the fair
market value of such equipment at the time of such offer.
	 
	 	      2.4  Personnel; Training. Mesa shall hire, engage, employ and
maintain a sufficient number of competent, trained personnel and
subcontractors, including, but not limited to pilots, flight
attendants, ground crew, maintenance and cleaning personnel, baggage
handling personnel and customer service personnel necessary to
provide the Flight Services and Other Services as required by this
Agreement. Subject to FAA approval, CRJ pilots shall be qualified
to fly all models of CRJs providing Flight Services pursuant to this
Agreement. CRJ pilots shall not be scheduled or dedicated to any
particular model line of CRJs without the prior written consent of
AWA. In addition, Mesa shall employ and maintain a commercially
reasonable number of reserve pilots and flight attendants based in
the Phoenix Metropolitan area based on the Flight Services to be
provided pursuant to this Agreement. Mesa shall cause all Mesa
personnel providing Flight Services or Other Services to wear
uniforms approved by AWA and shall comply with all appearance
guidelines required of all AWA personnel.
	 
	 	      Mesa shall provide initial training, recurrent training and
customer service training to personnel and subcontractors
reasonably identified by AWA at programs approved by AWA. AWA
shall provide applicable training materials. In the event AWA
becomes a hazardous materials carrier, Mesa, at AWA’s expense,
shall conduct all hazardous materials training required by AWA or
AWA’s other code share partners.
	 
	 	      2.5  Service Quality and Level. All Flight Services and Other
Services shall be provided by Mesa at a service quality and level of
service equal to or greater than the service quality and level of
service provided by AWA to the extent applicable to the type of
Aircraft used to provide the Flight Services. All Aircraft shall be
equipped with service amenities necessary to provide the service
quality and level of service required by this Section. If AWA
changes AWA’s service requirements and as a result Mesa will be
required to make any capital upgrades to any Aircraft, Mesa, in
writing, shall advise AWA of the need for such upgrades together
with the estimated cost to complete such upgrades (the “Upgrade
Notice”). If, after receipt of the Upgrade Notice, AWA, in writing,
elects to require Mesa to comply with such changes in service
requirements, then AWA, within 30 days after receipt of a written
notice, shall reimburse Mesa for the actual out-of-pocket capital
costs incurred by Mesa in making such capital upgrades. If AWA does
not approve the making of the capital upgrades, then

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	 	Mesa shall not be required to meet the new AWA service requirements.
	 
	 	      2.6  Maintenance.

		
	 	      2.6.1  Obligation. Mesa, at its own cost and expense,
shall be responsible for the service, repair, maintenance,
overhauling and testing of each Aircraft: (i) in compliance
with the maintenance program for each Aircraft as approved by
the FAA and pursuant to all applicable aircraft maintenance
manuals applicable to each Aircraft; (ii) so as to keep each
Aircraft in good and safe operating condition; and (iii) so as
to keep the Aircraft in such operating condition as may be
necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing. Mesa shall retain
full authority and control over the service, repair,
maintenance, overhauling and testing of each Aircraft. AWA
shall have no obligations or duties with respect to the
service, repair, maintenance, overhauling or testing of any
Aircraft.
	 
	 	      2.6.2  Ground Equipment. Mesa, at its sole cost and
expense, shall service, repair, maintain and clean (or cause
to be serviced, repaired, maintained or cleaned) all ground
equipment and facilities in accordance with AWA guidelines,
provided by AWA to Mesa, for cleaning, maintenance and
appearance.
	 
	 	      2.6.3  Location. Mesa shall maintain three maintenance
bases, currently located in Fresno, California for CRJs, Grand
Junction, Colorado for Dash 8s, and Farmington, New Mexico for
Beech 1900s. Each Schedule prepared by AWA shall provide for
not less than 20% of the Dash 8s and CRJs and 1 of the Beech
1900s to remain overnight at the applicable maintenance base
each night. AWA acknowledges that a separate maintenance base
shall be maintained by Mesa for each CRJ Subfleet. One
Aircraft shall remain overnight for 10 hours and the remainder
for at least 8 hours. Mesa shall not relocate any maintenance
base, without the prior written consent of AWA, which consent
may be withheld if the new location fails to meet AWA’s
maintenance base requirements. Each CRJ maintenance base shall
be staffed and equipped to maintain a fleet of up to 25
Aircraft. Mesa shall add maintenance bases as necessary to
provide the Flight Services and Other Services at locations
which meet AWA’s maintenance base requirements and are
approved by AWA. AWA, by providing Mesa with at least 180
days’ prior written notice, may require Mesa to close any
maintenance base. Upon Mesa assigning to AWA all of its
right, title and interest in the lease of the maintenance base
that is closed (together with any required landlord consent),
AWA shall reimburse Mesa for all actual out-of-pocket costs
and expenses incurred by Mesa in closing such maintenance
bases.

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	 	      2.7  Emergency Operations. Mesa and AWA shall coordinate to
develop a plan that complies with applicable Regulations (as defined
below) to be implemented in the event of any incident involving
personal injury or death to a passenger or crew member on a Flight.
The emergency response teams of AWA and Mesa shall coordinate their
efforts and shall cooperate fully in response to such emergency.
	 
	 	      2.8  Fleet Configuration, Cleanliness and Appearance.

		
	 	      2.8.1  Configuration. All Dash 8 and Beech 1900
Aircraft in the Fleet on the Contract Date and Dash 8 and
Beech 1900 Aircraft added to the Fleet shall have a passenger
seating configuration and seating capacity as provided on the
Aircraft in the Fleet on the Contract Date. Each CRJ in the
Fleet on the Contract Date shall retain the seating
configuration and capacity as exists on the Contract Date.
Each CRJ added to the Fleet pursuant to Section 2.2 shall have
the seating configuration and capacity as provided for such
Aircraft on Exhibit A. AWA, at AWA’s cost and expense, may
require Mesa to reconfigure or change the seating capacity of
an Aircraft. All such requested changes shall be implemented
within 180 days after Mesa’s receipt of written request from
AWA.
	 
	 	      2.8.2  Cleanliness. Mesa, at its sole cost and
expense, shall cause all Aircraft to be cleaned and maintained
in an appearance in accordance with cleaning standards,
requirements and guidelines promulgated by AWA from time to
time and provided to Mesa in writing.

		
	 	      2.9  Post-Departure Procedures. Mesa shall perform airport
post-departure procedures (as defined in AWA’s Customer Service
Manual) and be responsible for securing and controlling all the
contents in the ticket lift envelopes. All ticket lift envelopes
should be forwarded and co-mailed to ELP/NPC within 24 hours after
flight operations. Mesa shall be liable for losses to AWA as a
result of the loss, misuse, theft or forgery of AWA passenger
tickets (including lifted flight coupons and auditor’s coupons for
sold tickets) in Mesa’s possession or control or the associated cash
receipts. If actual documented losses to AWA resulting from
erroneous or fraudulent system transactions due to Mesa’s or its
employees’ failure to adhere to AWA policies and procedures exceed
the actual documented losses incurred by AWA from erroneous or
fraudulent system transactions, calculated monthly on a rate per
passenger per month basis for each airline (the “Excess Losses”),
then Mesa, within 10 days after receipt of written demand together
with the calculation of Excess Losses, shall pay to AWA an amount
equal to the Excess Losses times the number of passengers flown on
Flights during the applicable calendar month.
	 
	 	      2.10  Other Aircraft Handling and Ground Services. Mesa, at AWA’s
request, shall provide the Other Services and aircraft ground
handling services for flights and aircraft operated by AWA and its
code share partners at stations at which Mesa

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	 	provides the Other Services pursuant to Section 2.3. The costs and
expenses of providing such Other Services and aircraft ground
handling shall be charged to the airline (other than AWA) at market
rates and in the case of AWA at actual out-of-pocket cost to Mesa
plus 8%.
	 
	 	      2.11 Airport Slots. Upon each written request by AWA to Mesa,
Mesa or the Affiliated Service Providers, as applicable, shall
transfer the rights to airport slots operated by Mesa and used for
America West Express service at New York LaGuardia (LGA), Chicago
O’Hare (ORD), Ronald Reagan Washington National (DCA) and any other
slot controlled airports to any carrier(s) designated by AWA;
provided, however, that Mesa or the Affiliated Service Providers, as
applicable, shall not be required to transfer any slots at slot
controlled airports acquired by Mesa or the Affiliated Service
Providers, as applicable, and used for flights other than Flights
pursuant to this Agreement. Upon receiving such request from AWA,
Mesa shall prepare and process, within thirty (30) days, all
documentation necessary to execute the transfer of the airport slots
requested by AWA in its notice.
	 
	 	      2.12 MAPPER System. AWA and Mesa, at AWA’s cost and expense,
shall use commercially reasonable efforts to install AWA’s internal
MAPPER System (“MAPPER System”) at all airport stations to and from
which Flight Services are provided by September 1, 2001. AWA, at
AWA’s cost and expense, shall train Mesa personnel on the use of the
MAPPER System. The MAPPER System shall be installed in all new
stations when such stations are activated. Mesa shall cause its
employees and subcontractors to input all flight and other
operational and passenger data and information that the MAPPER
System is capable of receiving as soon as such data and information
is available. All operational statistics for each Flight shall be
input into the MAPPER System within 1 hour after each departure.
Commencing on the 90th day after the MAPPER System is installed at a
station, if Mesa fails to input any information or data into the
MAPPER System, then Mesa, within 10 days after receipt of written
demand, shall pay to AWA an amount equal to $100.00 for each entry
not made. Mesa shall not be required to pay a penalty for any data
not entered into the MAPPER System as a result of a system failure.
Absent manifest error, MAPPER System data, information and records
shall be the controlling data, information and records for all
statistics used for purposes of calculation of penalties, payments
and bonuses under this Agreement. No penalty for failure to input
data shall be assessed more than 180 days after the date the data
was to be entered.

	3.	 	Rights, Responsibilities and Obligations of AWA.

		
	 	      3.1 Flight Management Items. AWA, in its sole discretion, shall:
(i) designate from time to time, pursuant to each Schedule Notice,
the routes on and destinations to which Mesa is to provide the
Flight Services and the times of departure for the

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	 	Flights; (ii) set the fares to be paid for such Flights by the
passengers; and (iii) be responsible for the passenger booking,
yield management and overbooking of Flights, limited only by the
Fleet required to be maintained by Mesa pursuant to this Agreement.
	 
	 	      3.2 Marketing/Revenue. AWA, in its sole discretion and at its
sole cost, shall market, advertise and sell tickets on all Flights.
AWA shall provide all reservation services for the Flight Services
and shall pay all ticketing and advertising expenses, credit card
charges, travel agent commissions and CRS fees applicable to such
services. AWA shall be entitled to retain, and Mesa shall pay to
AWA, all revenue and income generated by the Flight Services. Mesa
shall provide to AWA all tickets and other revenue documentation
collected or lifted by Mesa. Mesa, on a daily basis, shall remit to
AWA any revenue collected by Mesa in connection with the Flight
Services and Other Services into bank accounts established by AWA.
Mesa shall be responsible for any revenue shortfall not remitted to
AWA and shall pay such shortfall within 10 days after receipt of
written demand from AWA which demand shall document the shortfall in
reasonable detail. AWA shall process Mesa lifted passenger lift
documents using standard industry pricing procedures. Mesa agrees
to cooperate with AWA on any special pricing or reporting
requirements. Mesa shall supply AWA with specific traffic reporting
requirements.
	 
	 	      3.3 Airport Services. AWA, at its sole cost and expense, shall:
(i) provide curb-side service, check-in service, ticketing and
security services at AWA Service Locations for all Flights; (ii)
transfer all baggage for passengers connecting from AWA flights to
Flights in a timely manner to ensure all baggage is placed on those
connecting Flights; and (iii) provide such other ground services
selected by AWA at locations selected by AWA in writing to Mesa. To
the extent Other Services are provided by AWA, the costs of such
services shall not be included in the Actual Costs or Guaranteed
Non-Maintenance Costs. AWA shall pay the rent for the terminal and
gates at Sky Harbor Airport.
	 
	 	      3.4 Other Code Share Partners. AWA shall have the right to enter
into code share, joint marketing, charter or other alliance-type
agreements with any other flight service commuter operator to
provide flight services to any destinations or for any routes. AWA
may permit any of AWA’s other code share partners to place their
code on any Flight. AWA or its code share partners shall pay all
costs and expenses incurred by Mesa in placing such other code on
such Flights.
	 
	 	      3.5 Charters. AWA, at its sole discretion, may market charter
flights on the Aircraft. Mesa shall operate such charter flights
provided flight crews and Aircraft are available and not otherwise
subject or committed to maintenance requirements. Mesa is required
to operate the charters in a manner consistent with the terms of
this Agreement. In respect of any charter flight, AWA and Mesa, in
good faith,

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	 	shall negotiate the costs and expenses to be paid by AWA for such
services. Mesa, upon 90 days’ prior written notice to AWA, may use
any Aircraft for company business; provided, however, that no such
trips may disrupt scheduled Flights. If such trips disrupt
scheduled Flights, Mesa, within 10 days after receipt of written
demand, shall pay to AWA an amount equal to [***] times the number
of Flights disrupted (the “Disruption Fee”). If the Disruption Fee
is not paid timely, then AWA may offset the Disruption Fee against
the next amounts due by AWA to Mesa.
	 
	 	      3.6 Executive Travel. AWA shall provide Mesa with travel cards
for the five top executives of Mesa for business travel and personal
travel on AWA flights on the same terms and conditions as provided
to AWA officers. Mesa is not permitted to offer barter travel on
AWA flights or Flights in exchange for goods or services. In the
event of any breach of the terms of this Section, Mesa, within 10
days after receipt of written request, shall pay to AWA the full
coach fare for the flight(s) taken in violation of the terms of this
Section.

	4.	 	Compliance with Regulations.

		
	 	      4.1 Regulations. Mesa shall perform its obligations and duties
under this Agreement, including, without limitation, all Flight
Services and Other Services in full compliance with any and all
applicable laws, ordinances, codes, statutes, orders, directives,
mandates, requirements, rules and regulations, whether now in effect
or hereafter adopted or promulgated, of all governmental agencies
having jurisdiction over Mesa’s operations, including but not
limited to the FAA and the DOT (collectively, “Regulations”).
	 
	 	      4.2 Flight Operations. Mesa shall be responsible for the
operation of each Aircraft and the safe performance of the Flights
in accordance with the Regulations and airline industry standard
practice and shall retain full authority, operational control and
possession of the Aircraft to do so. Mesa, its agents or employees,
for the purpose of the safe performance of the Flights, shall have
absolute discretion in and shall have sole responsibility for all
matters concerning the preparation of each Aircraft for its Flights,
and all other matters relating to the technical operation of the
Aircraft. Mesa, insofar as such relates to the safe operation of a
Flight, shall have sole and absolute discretion as to the load
carried and its distribution and as to the decision whether such
Flight shall be taken. Mesa shall be solely responsible for and AWA
shall have no obligations or duties with respect to the dispatch of
all Flights.
	 
	 	      4.3 Registration. All Aircraft shall remain registered in the
United States of America in accordance with the Regulations.
	 
	 	      4.4 Disclosure. Mesa, upon 2 business days’ prior written
request, shall provide

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	 	AWA the opportunity to review all operating specifications,
operational regulations, manuals and calculations with respect to
all Aircraft and flight statistics with respect to all Flights at
Mesa’s corporate or other relevant offices where such records are
located.
	 
	 	      4.5 Review/Audit. AWA or its independent accountants, upon 2
business days’ prior written notice, may review, at Mesa’s corporate
office, airport ticket offices and other relevant offices, all
records, books, logs, files, documentation and information
maintained by Mesa, or any of its maintenance or service contracts,
in connection with Flight operation, safety and regulatory
compliance, employee training, Flight dispatch, Aircraft use,
operation, maintenance and repair, Flight incidents and governmental
orders, mandates and requirements. AWA, to the extent AWA deems
necessary, may make unannounced visits and inspections at airport
ticket offices and stations to insure Mesa’s and its employees’,
agents’ and contractors’ compliance with the terms and conditions of
this Agreement.
	 
	 	      4.6 Reporting. This Agreement shall be treated as a code share
for DOT reporting requirements. AWA shall provide Mesa with such
information necessary for Mesa to make the DOT reports and
disclosures.

	5.	 	Operational Performance Criteria, Incentives and Penalties.

		
	 	      5.1 DOT Complaint Rate Criteria. Mesa shall not permit its
annual DOT Complaint Rate (defined below) for Flight Services to
exceed the annual DOT Complaint Rate of AWA. The “DOT Complaint
Rate” is defined as the number of consumer complaints received by
the DOT for a given calendar year expressed in terms of the number
of complaints per 100,000 passengers flown during that calendar year
by Mesa and AWA; provided, however, that the DOT Complaint Rate
shall exclude consumer complaints relating solely to (i)
overbooking; (ii) fares; (iii) Aircraft size or suitability; (iv)
schedule; and (v) food service. For purposes of this Agreement,
“AWA’s DOT Complaint Rate” shall mean AWA’s actual DOT Complaint
Rate multiplied by 1.05. DOT complaints made against AWA for
America West Express service shall be allocated to Mesa for the
purpose of calculating Mesa’s and AWA’s DOT Complaint Rates. If
Mesa’s DOT Complaint Rate exceeds AWA’s DOT Complaint Rate in any
calendar year during the Term of this Agreement, Mesa, within 10
days after receipt of written demand from AWA, shall pay to AWA a
penalty equal to [***] multiplied by the amount by which Mesa’s DOT
Complaint Rate exceeds AWA’s DOT Complaint Rate. For example, if
AWA’s DOT Complaint Rate for a given year is [***] per 100,000
passengers and Mesa’s is [***] per 100,000 passengers, Mesa would
pay AWA the product of [***] x [***]. On each anniversary date of
the Contract Date, the penalty payment amount shall be increased by
the increase in the CPI, as determined in accordance with Section
7.4.

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	 	      5.2 Mishandled Baggage Rate Criteria. Commencing January 1,
2002, Mesa shall not permit its monthly MBR (defined below) for
Flight Services to exceed the monthly MBR of AWA. The “MBR” is
defined as the number of lost baggage claims entered into the world
tracer system for a given month expressed in the terms of the number
of entries per 1,000 bags handled during that calendar month by Mesa
and AWA. Mesa shall enter all lost baggage claims into the world
tracer system within 2 hours after the lost baggage claim is made by
a passenger. If Mesa’s MBR exceeds AWA’s MBR by [***] or more any
calendar month during the Term of this Agreement, Mesa, within 10
days after receipt of written demand from AWA, shall pay to AWA a
penalty equal to [***]. If Mesa’s MBR exceeds AWA’s MBR for three
consecutive calendar months, Mesa, within 10 days after receipt of
written demand, shall pay to AWA an additional penalty of [***] for
such three-month period and for each consecutive month thereafter
that Mesa’s MBR exceeds AWA’s MBR, the penalty shall be [***] per
month. On each anniversary date of the Contract Date, the penalty
payment amount shall be increased by the increase in the CPI, as
determined in accordance with Section 7.4.
	 
	 	      5.3 On Time Performance Rate Criteria. Mesa shall not permit
Mesa’s OTP Rate (as defined below) for any Six Month Period (as
defined below) to fall below: (i) [***] percentage points above
AWA’s OTP Rate for Schedules operated by Mesa out of the Phoenix Sky
Harbor International hub; and (ii) [***] percentage points below the
Industry’s OTP Rate (as defined below) for Schedules operated out of
the Columbus, Ohio hub (the “OTP Rate Threshold”). The Phoenix Sky
Harbor International hub and Columbus hub are each referred to as a
“Hub.” The “OTP Rate” is defined as the percentage determined by
dividing the number of flight segments not Delayed (as defined
below) by the total number of flight segments during the applicable
Six Month Period. The “Industry’s OTP Rate” shall be the industry
standard rate for flights in and out of the Columbus, Ohio airport,
calculated in accordance with the methodology set forth on Exhibit
F, attached hereto. For purposes of this Agreement, “Delayed” means
a flight segment that does not arrive at the destination within 15
minutes after the scheduled arrival time. All Flights will be
included for calculating the OTP Rate. A canceled flight (except
ones cancelled because of no passengers and the reasons set out in
Section 5.4(v)) is a Delayed flight. To the extent that Mesa’s OTP
Rate for either Hub Schedule falls below the applicable OTP Rate
Threshold for any Six Month Period, Mesa, within 10 days after
receipt of written demand, shall pay to AWA the OTP Penalty Amount
(as defined below) for each percentage point, or portion thereof, by
which Mesa’s OTP Rate for either Hub Schedule falls below the OTP
Rate Threshold for such Six Month Period. The “OTP Penalty Amount”
for each Hub is an amount equal to [***] times a fraction, the
numerator of which is the daily average of Aircraft providing Flight
Services to and from the Hub during the applicable Six Month Period
and the denominator of which is the daily average of all Aircraft
providing Flight Services during the applicable Six Month Period.
On

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	 	each anniversary date of the Contract Date the dollar amounts used
for calculating the OTP Penalty Amount shall be increased by the
increase in the CPI, as determined in accordance with Section 7.4.
AWA, within 10 days after receipt of written demand, shall pay to
Mesa [***] for each percentage point, or portion thereof, by which
Mesa’s OTP Rate system wide exceeds [***] for any Calendar Quarter.
On each anniversary date of the Contract Date, the bonus amount
shall be increased by the increase in CPI, as determined in
accordance with Section 7.4. “Six Month Period” means each January
1 – June 30 and July 1 – December 31 and “Calendar Quarter” means
each 3 calendar month period commencing January 1 of each year.
	 
	 	      5.4 Flight Completion Factor. Mesa shall not permit its FCF
(defined below) for any Calendar Quarter to fall below: (i) [***]
for Schedules operated out of the Phoenix Sky Harbor International
Airport Hub; and (ii) [***] for Schedules operated out of the
Columbus, Ohio Hub (each, an “FCF Threshold”). “FCF” is defined as
the percentage of published, scheduled Flights completed for a
Calendar Quarter. Flights not completed due to: (i) weather; (ii)
cancellation or overflight because of no passengers; (iii) air
traffic control cancellations; (iv) cancellations resulting from an
emergency airworthiness directive from the FAA affecting all
aircraft similarly equipped to the Aircraft in any Subfleet (not
just those owned or operated by Mesa); or (v) cancellations
resulting from the sole acts or omissions of AWA or its employees,
including, without limitation, damage to an Aircraft, will not be
included in either the numerator or denominator for calculating the
FCF. Mesa, within 10 days after receipt of written demand, shall
pay to AWA the FCF Penalty Amount for each tenth of a percentage
point, or portion thereof, by which Mesa’s FCF for either Hub
Schedule falls below the applicable FCF Threshold. The “FCF Penalty
Amount” for each Hub is an amount equal to [***] times a fraction,
the numerator of which is the daily average of Aircraft providing
Flight Services to and from the Hub during the Calendar Quarter and
the denominator of which is the daily average of all Aircraft
providing Flight Services under this Agreement during the Calendar
Quarter. On each anniversary date of the Contract Date the dollar
amount used for calculating the FCF Penalty Amount shall be
increased by the increase in the CPI, as determined in accordance
with Section 7.4. AWA, within 10 days after receipt of written
demand, shall pay to Mesa [***] for each tenth of a percentage
point by which Mesa’s FCF system wide exceeds [***] in any Calendar
Quarter. On each anniversary date of the Contract Date, the bonus
amount shall be increased by the increase in CPI, as determined in
accordance with Section 7.4.
	 
	 	      5.5 Records. Within 5 days after the end of each calendar month
Mesa shall provide to AWA statements certified by Mesa’s chief
financial officer as to Mesa’s OTP Rate and FCF for the prior
calendar month and, as applicable, the prior Calendar Quarter and
Six Month Period, together with such supporting documentation and
information as AWA may request. AWA or its designee, upon 2
business days’

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	 	prior written notice, may review, at Mesa’s corporate or other
relevant offices, all records and files maintained by Mesa in
connection with on-time performance and flight completions. If
AWA’s or its designee’s review of the records or files reveals that
Mesa has under or overstated, as applicable, Mesa’s OTP Rate or
FCF, then Mesa, upon demand, shall pay all sums due based on the
accurate calculations, the actual out-of-pocket costs and expenses
of AWA in completing such review and the applicable penalties
payable based on such new calculation. If such under or
overstatement is willful or intentional, then Mesa, within 10 days
after receipt of written demand, shall pay to AWA an amount equal
to [***] per occurrence.
	 
	 	      5.6 Limitation on Applicability of Standards, Criteria,
Incentives, and Penalties. AWA acknowledges that Mesa and the
Affiliated Service Providers operate flights and provide flight
services and other services under their own names and/or under names
or service marks other than America West Express using aircraft that
are not included in the Fleet and that are not subject to this
Agreement. Notwithstanding any other term, condition or provision
hereof to the contrary, the standards, criteria, incentives and
penalties set forth above in this Section 5 apply only to Flight
Services, Flights and Other Services performed by Mesa and the
Affiliated Service Providers hereunder operating as America West
Express and not to any other flights, flight services or other
services performed by Mesa and the Affiliated Service Providers
under their own names or under a name or service mark other than
America West Express. Thus, in calculating Mesa’s DOT Complaint
Rate, the MBR, the OTP Rate, the FCF, and all incentives and
penalties set forth above, only Flight Services and Other Services
performed by Mesa and the Affiliated Service Providers under the
service mark America West Express shall be taken into account in
calculating such rates and assessing such incentives and penalties.

	6.	 	Irregular Operations. The misconnect and denied boarding benefits
provided by Mesa to passengers (each, a “Misconnect Benefit Package”)
shall be similar in amount and scope to those offered by AWA in similar
circumstances and geographic areas (the “AWA Standards”). AWA shall not be
required to reimburse Mesa for any Misconnect Benefit Package which is in
excess of the AWA Standards.
	 
	7.	 	Payment of Fees/Revenue Sharing. Commencing on the Effective Date and
retroactive to the Contract Date, Mesa and AWA hereby agree to pay the
following sums as consideration for this Agreement and the provision of
the Flight Services and Other Services provided for herein:

		
	 	      7.1 Mesa Actual Costs. AWA, in accordance with Section 7.5,
shall reimburse to Mesa the following actual costs and expenses
actually paid by Mesa in connection with performing the Flight
Services and Other Services (“Actual Costs”):

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	 	      7.1.1 Hull insurance premiums and commissions paid by
Mesa for each Aircraft for the prior calendar month.
Insurance shall be allocated and paid by AWA on a monthly
basis equally over the applicable premium period for which the
insurance is paid. Insurance shall be prorated by Mesa in any
premium period during which an Aircraft is added or deleted
from this Agreement. If the monthly insurance payments made
by AWA are less than the actual premiums paid by Mesa, then
AWA shall pay such excess in the month Mesa pays the insurance
premiums. If the monthly payments made by AWA exceed the
actual insurance premiums, then AWA shall be entitled to a
credit against the next payment of the Actual Costs in an
amount equal to such overpayment. Mesa, within 10 days after
receipt, shall provide AWA with copies of all premium notices
received for insurance premiums.
	 
	 	      7.1.2 Liability insurance premiums and commissions
paid by Mesa for the Flight Services on a revenue passenger
mile basis. Insurance shall be allocated and paid on a monthly
basis equally over the applicable premium period for which the
insurance is paid. Insurance shall be prorated by Mesa in any
premium period during which this Agreement commences,
terminates or expires. If the monthly insurance payments made
by AWA are less than the actual premiums paid by Mesa, then
AWA shall pay such excess in the month Mesa pays the insurance
premiums. If the monthly payments made by AWA exceed the
actual insurance premiums, then AWA shall be entitled to a
credit against the next payment of the Actual Costs in an
amount equal to such overpayment. Mesa, within 10 days after
receipt, shall provide AWA with copies of all premium notices
received for insurance premiums.
	 
	 	      7.1.3 Property taxes paid by Mesa for each Aircraft or
the Fleet. Property taxes shall be allocated and paid on a
monthly basis equally over the applicable tax period for which
the property taxes are assessed and paid. If an Aircraft is
added to the Fleet after property taxes are assessed for a tax
period and Mesa does not owe taxes for such Aircraft for such
tax period, then AWA shall not pay property taxes on the
Aircraft for such tax period. AWA shall pay the full year
property taxes for the year in which an Aircraft is deleted
from the Fleet in the manner provided herein if such Aircraft
is not placed in revenue service outside this Agreement (in
which case such taxes shall be prorated). If the monthly tax
payments made by AWA are less than the actual property taxes
assessed and paid by Mesa, then AWA shall pay such excess in
the month Mesa pays the property taxes. If the monthly
payments made by AWA exceed the actual property taxes
assessed, then AWA shall be entitled to a credit against the
next payment of Actual Costs in an amount equal to such
overpayment. Mesa, within 10 days after receipt, shall
provide AWA with copies of all tax

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	 	notices received for property taxes assessed against any
portion of the Fleet.
	 
	 	      7.1.4 De-Icing expenses paid by Mesa for each Aircraft
for the prior calendar month.
	 
	 	      7.1.5 Fuel costs paid by Mesa during the prior
calendar month, calculated as gallons of fuel burned per hour.
If in any calendar month Mesa’s estimated fuel costs exceed
the Actual Costs for fuel for such calendar month by more than
3%, then thereafter, for the purpose of calculating Estimated
Costs pursuant to Section 7.5 below, Mesa shall use AWA’s fuel
forecast for the fuel costs.
	 
	 	      7.1.6 Landing fees calculated per Flight departure
incurred during the prior calendar month.
	 
	 	      7.1.7 Security outside AWA Service Locations
calculated per America West Express passenger.
	 
	 	      7.1.8 Passenger and ground handling costs incurred at
stations maintained by Mesa more particularly described on
Exhibit B (“Station Costs”), not to exceed in each calendar
year the amount set forth in the budget for each calendar year
(the “Station Budget”); provided, however, that if AWA changes
a Schedule and such change in the Schedule directly results in
any Station Costs exceeding the amount set forth in the
Station Budget, then Station Costs shall include such costs in
excess of the Station Budget to the extent directly
attributable to the Schedule change. The Station Budget for
each calendar year, together with such backup information
requested by AWA, shall be prepared and provided to AWA by
Mesa on or before October 1 of the prior calendar year. The
Station Budget shall be based on Mesa’s commercially
reasonable estimate of the actual costs that are to be
incurred during the next calendar year. If AWA does not
approve the Station Budget for any station, then AWA may
convert such station to an AWA Service Location pursuant to
Section 2.3.

		
	 	      Mesa shall not enter into any contract with an affiliate to provide
the services or materials for which AWA pays the Actual Costs
unless such contract is on commercially reasonable terms
substantially similar to those available in the market place for
arms-length transactions with third parties. In the event any of
the services or materials for which AWA pays the Actual Costs are
purchased for the Flight Services and Other Services provided by
this Agreement and for other services provided by Mesa and its
affiliates, then the costs of such services and materials shall be
equitably allocated to Actual Costs payable by AWA such that AWA
only pays for the portion of such costs attributable to the Flight
Services or

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	 	Other Services provided by this Agreement. Mesa shall use
commercially reasonable efforts to operate the Flight Services and
Other Services in an efficient and cost effective manner to
minimize the Actual Costs payable by AWA while maintaining the
quality and quantity of services required by this Agreement. Mesa
shall take all commercially reasonable actions to minimize the
taxes imposed on the Fleet. If requested by AWA, in writing, AWA
on behalf of Mesa may pursue any tax protest or contest for
property taxes imposed on the Fleet or any Aircraft in the Fleet in
the manner prescribed by applicable law. An “affiliate” of Mesa
means any person or entity controlling, controlled by or under
common control with Mesa.
	 
	 	      7.2 Mesa Guaranteed Costs. AWA, in accordance with Section 7.5,
shall pay to Mesa:

		
	 	      (a) the lesser of: (i) the actual costs and expenses
associated with certain of the Flight Services and Other
Services (the “Guaranteed Non-Maintenance Costs”) set forth in
the cost and expense categories set forth in Exhibit C,
attached hereto (the “Guaranteed Non-Maintenance Costs
Schedule”), or (ii) the amounts set forth in the Guaranteed
Non-Maintenance Costs Schedule for each cost and expense
category set forth in Exhibit C, attached hereto (the
“Guaranteed Non-Maintenance Costs Caps”); and
	 
	 	      (b) an amount for maintenance costs and expenses
equal to the amounts set forth on Exhibit D (the “Guaranteed
Maintenance Costs”).

		
	 	      The Guaranteed Non-Maintenance Costs Caps and Guaranteed
Maintenance Costs shall be adjusted on each anniversary of the
Contract Date in accordance with Section 7.4 below. If the Term of
this Agreement commences or expires or an Aircraft is added or
eliminated from the Fleet on other than the first or last day of a
calendar month, then the Guaranteed Non-Maintenance Costs and
Guaranteed Maintenance Costs payable by AWA under this Agreement or
for such Aircraft shall be prorated based on the actual number of
days this Agreement is in effect or the Aircraft is in the Fleet
during such month and the actual number of days in such month.
Payment of Guaranteed Non-Maintenance Costs and Guaranteed
Maintenance Costs for an Aircraft shall commence on the Aircraft
Scheduled Delivery Date unless the Aircraft is delivered late in
which case payment will begin on the actual delivery date. If an
Aircraft, at AWA’s written request, is placed into Flight Services
prior to the Scheduled Delivery Date, then payment of the
Guaranteed Non-Maintenance Costs and Guaranteed Maintenance Costs
for such Aircraft shall commence on the date requested by AWA.
	 
	 	      7.3 Contract Negotiation. AWA may assist Mesa in the negotiation
of contracts for the provision of materials or services subject to
the Actual Costs, Guaranteed Non-Maintenance Costs and Guaranteed
Maintenance Costs provided Mesa is not subject to an existing
contract for such services or materials.

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	 	      7.4 Guaranteed Costs Adjustment.

		
	 	      7.4.1 CPI Adjustment. For the purposes of calculating
CPI increases in Guaranteed Non-Maintenance Costs Caps,
increases in the Guaranteed Maintenance Costs, increases in
bonuses or penalties pursuant to Section 5 or increases in the
base EAS Subsidies pursuant to Section 7.7 the following
definitions and formulas shall be applied:

		
	 	      (a) Definition. “CPI” shall mean the
Consumer Price Index, U.S. City Average, Urban Wage
Earners and Clerical Workers, All Items (base index year
1982-84 = 100) as published by the United States
Department of Labor, Bureau of Labor Statistics. If the
manner in which the Consumer Price Index as determined
by the Bureau of Labor Statistics shall be substantially
revised, including, without limitation, a change in the
base index year, an adjustment shall be made by the
parties in such revised index which would produce
results equivalent, as nearly as possible, to those
which would have been obtained if such Consumer Price
Index had not been so revised. If the Consumer Price
Index shall become unavailable to the public because
publication is not readily available to enable the
parties to make the adjustment referred to in this
Section, then the parties shall mutually agree to
substitute therefor a comparable index based upon
changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental
agency or, if no such index shall be available, then a
comparable index published by a major bank or other
financial institution or by a university or a recognized
financial publication.
	 
	 	      (b) Adjustment Formula. On each
anniversary of the Contract Date (each an “Adjustment
Date”), to determine the amount of adjustment or
increase based on CPI, the applicable Guaranteed
Non-Maintenance Costs Caps, the Guaranteed Maintenance
Costs, bonuses or penalties and EAS Subsidies, as
applicable, in effect for the prior year, shall be
adjusted by multiplying the Guaranteed Non-Maintenance
Costs Caps on the Guaranteed Non-Maintenance Costs
Schedule, the Guaranteed Maintenance Costs, bonuses or
penalties and EAS Subsidies, as applicable, in effect
for the prior year, by a fraction, the numerator which
shall be the CPI for the third full calendar month
immediately preceding the Adjustment Date, and the
denominator of which shall be the CPI for the same
calendar month in the immediately preceding calendar
year (the “Adjustment”).

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	 	      7.4.2 Governmental Requirements. If any governmental
rule, order, regulation or requirement affecting: (i) all
aircraft similarly equipped as the Aircraft in any Subfleet
(not just those owned by Mesa); or (ii) all airlines flying
similar equipment as the Aircraft (not just Mesa), results in
an increase in any of the Guaranteed Non-Maintenance Costs or
Guaranteed Maintenance Costs such that the actual Guaranteed
Non-Maintenance Costs or Guaranteed Maintenance Costs will
exceed the then applicable Guaranteed Non-Maintenance Costs
Cap or amounts set forth on Exhibit D for the Guaranteed
Maintenance Costs, then the applicable Guaranteed
Non-Maintenance Costs Cap or Guaranteed Maintenance Costs
shall be increased by such amount, as of the effective date of
such governmental regulation, rule, order or requirement.
	 
	 	      7.4.3 Amendment. Mesa and AWA shall execute an
amendment to Exhibit C and Exhibit D within 10 days after each
adjustment occurs pursuant to this Section 7.4. The failure
to execute such an amendment shall not affect the
effectiveness of any adjustment or the bases for any
subsequent adjustment. Each adjusted Guaranteed
Non-Maintenance Costs Cap and Guaranteed Maintenance Costs
shall be effective until the next adjustment of such
Guaranteed Non-Maintenance Costs Cap and Guaranteed
Maintenance Costs pursuant to this Section 7.4.
	 
	 	      7.4.4 Guaranteed Maintenance Costs Reconciliation.
Within 180 days after the expiration or termination of this
Agreement, AWA, by written notice to Mesa, may review and
audit Mesa’s records and files relevant to the actual
maintenance costs paid by Mesa in the categories set forth on
Exhibit D. If AWA’s review of the records and files reveals
that the actual maintenance costs paid by Mesa during the term
of this Agreement was less than the sum of all the Guaranteed
Maintenance Costs paid by AWA during the term of this
Agreement (the “Excess Maintenance Payments”), then Mesa,
within 30 days after receipt of written demand, shall pay to
AWA an amount equal to the Excess Maintenance Payments. The
terms and conditions of this Section shall survive the
termination or expiration of this Agreement. Mesa shall
maintain and retain all maintenance cost and expense records
and files for the entire Term of this Agreement and for at
least one year after the expiration or termination of this
Agreement.

		
	 	      7.5 Payment of Actual and Guaranteed Non-Maintenance Costs.

		
	 	      7.5.1 Estimates. AWA shall pay to Mesa the estimated
Actual Costs, Guaranteed Non-Maintenance Costs (using the
Guaranteed Maintenance Costs Caps) and Guaranteed Maintenance
Costs for each calendar month based on a 98% FCF (the
“Estimated Costs”) as follows: By the 20th day of each
calendar month, Mesa shall provide AWA with a good faith

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	 	statement of the Estimated Costs for the following calendar
month. On or before the 7th, 14th, 21st and 28th day of each
calendar month (or next business day thereafter if any such
dates is other than a business day), AWA shall pay 25% of the
Estimated Costs for such calendar month.
	 
	 	      7.5.2 Monthly Reconciliation. On or before the 120th
day after the last day of each calendar month, Mesa shall
submit to AWA a statement of the actual Guaranteed
Non-Maintenance Costs (using for each monthly statement the
applicable Guaranteed Non-Maintenance Costs Caps), the
Guaranteed Maintenance Costs and Actual Costs incurred by Mesa
(the “Incurred Costs”) and payable by AWA for such calendar
month (the “Incurred Costs Statement”). If the Estimated
Costs paid by AWA in any calendar month exceed the Incurred
Costs in any calendar month, then Mesa, together with the
Incurred Costs Statement for such calendar month, shall
reimburse AWA the amount by which the Estimated Costs paid by
AWA exceeded the Incurred Costs. If the Incurred Costs in any
calendar month exceed the Estimated Costs paid by AWA in any
calendar month, then AWA, subject to the rights and procedures
set forth in Section 7.8, within 45 days after receipt of the
Incurred Costs Statement, shall reimburse and pay to Mesa the
amount by which the Incurred Costs exceed the Estimated Costs
paid by AWA for the subject calendar month.
	 
	 	      7.5.3 Annual Reconciliation. At any time within 120
days after the expiration of each Contract Year (as defined
below), AWA, upon 2 Business Days prior written notice to
Mesa, may review and audit, or cause its independent
accountants to review and audit, all records and files
(including computer databases) maintained by Mesa and relevant
to the calculation of the actual Guaranteed Non-Maintenance
Costs incurred by Mesa during the prior Contract Year (the
“GNMC Audit”). If the GNMC Audit reveals that the actual
Guaranteed Non-Maintenance Costs actually paid by Mesa during
the prior Contract Year was less than the sum of all the
Guaranteed Non-Maintenance Costs Caps paid by AWA during such
Contract Year (the “Excess Non-Maintenance Payments”), then
Mesa, within 30 days after receipt of written demand from AWA,
shall pay AWA an amount equal to the Excess Non-Maintenance
Payment. If Mesa does not pay the Excess Non-Maintenance
Payments to AWA timely, then AWA shall have the setoff rights
contained in Section 7.9 below. For the purposes of this
section, “Contract Year” means each one year period commencing
on April 1 of each calendar year and expiring on March 31 of
the next calendar year. For the purposes of the first
“Contract Year”, the year shall commence on the Contract Date
and expire on March 31, 2002. For purposes of the last
Contract Year, the Contract Year shall commence on April 1 and
expire on the Expiration Date. For the purpose of determining
the actual Guaranteed Non-Maintenance Costs incurred in

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	 	providing the Flight Services and Other Services, Guaranteed
Non-Maintenance Costs subject to allocation to the Flight
Services and Other Services shall be allocated to this
Agreement by Mesa using the same methodology used by Mesa in
establishing the Guaranteed Non-Maintenance Costs Caps.
	 
	 	      7.5.4 Finality. The Incurred Costs Statement issued
by Mesa shall include all and be the final statement for the
Guaranteed Non-Maintenance Costs and Actual Costs payable by
AWA for the period covered by each Incurred Costs Statement.
AWA shall not be obligated to pay any Guaranteed
Non-Maintenance Costs or Actual Costs for a period that are
not included in the applicable Incurred Costs Statement when
initially issued by Mesa to AWA.

		
	 	      7.6 Revenue Sharing. Commencing in the first calendar month
after the month in which the Effective Date occurs, AWA shall pay to
Mesa, by the 20th day of each calendar month, an amount equal to the
product obtained by multiplying the Segment Revenue Percentage by
the Segment Revenue generated during the prior calendar month. For
purposes of this Agreement, the following terms have the following
definitions:
	 
	 	      “Segment Revenue” means the portion of the total fares paid by
passengers allocated to the Flights flown by Mesa or the Affiliated
Service Providers pursuant to this Agreement, less all taxes,
assessments, airport charges and other governmental and
quasi-governmental charges included in the fares. For calculating
Segment Revenue, the portion of the revenue attributed to the Mesa
Flight segment shall be determined in accordance with Straight
Prorate Rule 11B of the Passenger Tariff Manual produced by the
Airline Tariff Publishing Company.
	 
	 	      “Segment Revenue Percentage” means the following percentages based
on the type of Aircraft used to fly the Flight which creates the
Segment Revenue allocable to Mesa Flight segment:

	 	 	 	 	 
	Aircraft		Segment Revenue Percentage
	
		

	Beech 1900			[***]	
	
	
	
	

	Dash 8			[***]	
	
	
	
	

	CRJ Model 200			[***]	
	
	
	
	

	CRJ Model 700			[***]	
	
	
	
	

	CRJ Model 900			[***]	

		
	 	      7.7 Subsidies. Mesa, within 30 days after receipt, shall rebate
to AWA all EAS subsidies paid to Mesa by any governmental entities
for Flights (the “EAS

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	 	Subsidies”). Notwithstanding the foregoing to the contrary, if
Mesa causes any EAS Subsidies to be increased to an amount in
excess of the EAS Subsidies in effect on the Contract Date,
increased annually on the anniversary of each Contract Date by an
amount equal to an increase in the CPI as calculated pursuant to
Section 7.4.1, then AWA shall pay to Mesa 50% of any such increase
within 30 days after receipt of written demand. AWA shall not be
responsible to the DOT for continuing service in any EAS market.
Notwithstanding the foregoing, if AWA directs Mesa to bid to
provide flight service to any EAS market, then AWA shall be
responsible for all liabilities incurred in connection with
discontinuing such service prior to the expiration of any DOT
hold-in order. AWA shall be entitled to retain all payments,
subsidies, revenue guarantees or other similar payments generated
from the Flight Services flown under this Agreement and negotiated
by AWA.
	 
	 	      7.8 Records, Statements and Audit Rights. Mesa shall maintain
separate accounting books and records for the Flight Services and
Other Services performed by Mesa under this Agreement. All Incurred
Costs Statements and other requests for payment made by Mesa
pursuant to this Section 7 shall be accompanied by such supporting
information, documentation and calculations described on Exhibit E,
attached hereto, and as AWA may reasonably request from time to time
(the “Backup Information”). If AWA disputes the amount set forth in
any statement or the Backup Information is inadequate, incomplete or
inaccurate, then AWA shall pay the undisputed portion of such
statement and the portions for which the Backup Information is
adequate, complete and accurate, timely, and together with such
payment provide Mesa with a written statement of any disputed amount
and the amounts for which the Backup Information is inadequate,
incomplete or inaccurate. AWA and Mesa shall meet and confer to
resolve any disputed amount and inadequate, incomplete or inaccurate
Backup Information within 30 days after AWA provides notice of the
dispute. Disputed amounts and amounts for which the Backup
Information is inadequate, incomplete or inaccurate shall not be
payable until the dispute is resolved and then shall be payable
within 10 days after the dispute is resolved.
	 
	 	      AWA, upon 2 business days’ prior written notice, may review and
audit, or cause its independent accountants to review and audit,
all records and files (including computer data bases) maintained by
Mesa and relevant to the calculation of the payments required to be
made by AWA pursuant to this Agreement. If AWA’s review of the
records and files reveals that Mesa has overcharged AWA or
underpaid AWA, then Mesa shall pay to AWA, upon demand, the
overpayments and/or underpayments and the costs and expenses of AWA
incurred in completing such review and audit and, if such
overcharge or underpayment is willful or intentional or exceeds
more than 10% of the sums actually payable or receivable by AWA,
then Mesa, within 10 days after receipt of written demand, shall
pay to AWA an amount equal to 3 times the overcharge or
underpayment. Mesa shall

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	 	maintain all records, files, information, data and documentation
(including computer data bases) used in calculating the sums
payable or receivable by AWA under this Agreement in good condition
and order at Mesa’s corporate headquarters. AWA shall not be
required to pay any sums, and shall be entitled to receive a refund
of any sum paid, for which Mesa is unable to provide supporting
information, documentation or data.
	 
	 	      7.9 Setoff. All undisputed sums payable by Mesa to AWA pursuant
to this Agreement may, at AWA’s election, be setoff against amounts
next due by AWA to Mesa pursuant to this Agreement.

	8.	 	Term and Termination.

		
	 	      8.1 Term. The term of this Agreement (the “Term”) commences on
the Effective Date retroactive to the Contract Date (the
“Commencement Date”) and shall expire (“Expiration Date”) on the 8th
anniversary of the date that the last CRJ Aircraft is added to the
Fleet pursuant to Section 2.2.2 of the Agreement (the “Last Delivery
Date), unless earlier terminated as provided in this Agreement. AWA,
by written notice to Mesa at least 180 days prior to the Expiration
Date, may extend the Expiration Date to the 10th anniversary of the
Last Delivery Date.
	 
	 	      8.2 Early Termination. If: (i) Mesa’s OTP Rate for the Phoenix
Hub falls below AWA’s OTP Rate for the Phoenix Hub for five of any
six calendar months or (ii) Mesa’s FCF for the Phoenix Hub falls
below [***]% for five of any of six consecutive calendar months (each,
a “Cancellation Event”), AWA, at its election, may by written notice
(a “Performance Notice”) inform Mesa that if the Cancellation Event
is not cured within one hundred twenty (120) days from receipt of
such Performance Notice (the “Cure Period”), AWA, at its option may
give a Termination Notice (as defined below). If the Cancellation
Event relates to Mesa’s OTP Rate, the cure shall be effected by Mesa
bringing its OTP Rate for such Hub to a rate that is equal to or
above AWA’s OTP Rate at the Phoenix Hub during the Cure Period. If
the Cancellation Event relates to the Mesa’s FCF for the Phoenix
Hub, the cure shall be effected by Mesa bringing its FCF at the
Phoenix Hub to [***]% or higher during the Cure Period. If, after the
Cure Period has expired and Mesa has not cured the Cancellation
Event as set forth above, then AWA at any time during the thirty
(30) day period following the lapse of the Cure Period without cure
may, upon 90 days’ prior written notice to Mesa (“Termination
Notice”), terminate this Agreement. Such termination right shall be
in addition to any penalty payments set forth in Section 5 and
termination rights for an Event of Default pursuant to Section 13.
	 
	 	      8.3 Change of Control. This Agreement may be terminated by
either AWA or Mesa providing the other party with at least 90 days’
prior written notice (the “Change Termination Notice”) in the event
of a change of control of the other party or a

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	 	sale of substantially all of the other party’s assets. “Change of
Control” means any “person” or “group” (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) either becomes the
beneficial owner (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of voting securities of either party (or
securities converted into or exchangeable for such voting
securities) representing 50% or more of the combined voting power
of all voting securities of the party (on a fully diluted basis) or
otherwise has the ability, directly or indirectly, to elect a
majority of the board of directors of the party or any person or
two or more persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly,
a controlling influence on the management or policies of the party.
	 
	 	      8.4 Effect of Termination. If AWA elects to terminate this
Agreement pursuant to this Section 8, AWA, in the Termination
Notice, shall establish as the termination date any date between 90
and 180 days after delivery of the Termination Notice or Change
Termination Notice, as applicable. Mesa shall continue to provide
the Flight Services and Other Services required by this Agreement
until the termination date set forth in the Termination Notice or
Change Termination Notice, as applicable. AWA and Mesa shall make
all payments as required by this Agreement for the period through
and including the termination date set forth in the Termination
Notice or Change Termination Notice, as applicable.

	9.	 	Service Mark License For Services Provided By Mesa.

		
	 	      9.1 Grant of License. For the payment of $1.00, AWA hereby
grants to Mesa a non-exclusive, non-transferable license to use such
AWA Service Marks as AWA may designate, in writing, from time to
time in connection with the Flight Services and Other Services to be
rendered by Mesa; provided, however, that at any time prior to
expiration or termination of this Agreement AWA may alter, amend or
revoke the license hereby granted and require Mesa’s use of any new
or different AWA Service Mark in conjunction with the Flight
Services and Other Services provided hereunder as AWA may determine
in its sole discretion and judgment.
	 
	 	      9.2 Operation under AWA Service Marks/Aircraft Decor. Mesa, at
its expense (subject to reimbursement in the next sentence), shall
cause the Fleet and any replacement or additional Aircraft utilized
by Mesa, or any of the Affiliated Service Providers, to provide the
Flight Services, to be painted, marked and decorated to bear AWA
Service Marks, consisting of AWA aircraft exterior and interior
color décor and pattern provided by AWA and the name “America West
Express.” AWA shall reimburse Mesa for 50% of the costs of
painting, decorating or marking any new CRJ added to the Fleet
pursuant to Section 2.2. Upon written notice from AWA, which shall
include the specifications for any such changes in AWA Service Marks
and exterior or interior aircraft décor and patterns, Mesa shall
effect changes in the aircraft décor and patterns within 12

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	 	months from the date of such notice. AWA shall reimburse Mesa for
the cost of repainting the Fleet in the event that AWA changes its
logo and color décor and pattern from the design existing as of the
Effective Date. Mesa shall use and display suitable signs on the
interior and exterior of each Aircraft identifying Mesa as the
operator of the Services, such signs shall be subject to the prior
written consent of AWA as to nature, size and location provided
that the signs shall comply with all Regulations. AWA shall
reimburse Mesa for the actual costs and expenses of repainting any
Aircraft eliminated from the Fleet pursuant to Section 2.2. All
announcements, displays or literature used or viewed by Mesa
customers on Flights shall highlight “America West Express.” No
such announcements, displays or literature shall reference “Mesa
Airlines,” other than to identify Mesa or the operator of the
Services, on briefing cards or as required by the Regulations.
	 
	 	      9.3 Terms and Conditions Governing Service Mark License.

		
	 	      9.3.1 Mesa hereby acknowledges AWA’s ownership of the
AWA Service Marks, further acknowledges the validity of the
AWA Service Marks, and agrees that it shall not do anything in
any way to infringe or abridge upon AWA’s rights in the AWA
Service Marks or directly or indirectly to challenge the
validity of the AWA Service Marks.
	 
	 	      9.3.2 To assure that the production, appearance and
quality of the AWA Service Marks is consistent with AWA’s
reputation for high quality and the goodwill associated with
the AWA Service Marks, Mesa agrees to maintain a level of
quality consistent with AWA’s quality in the Flight Services
and Other Services it provides pursuant to this Agreement and
to follow AWA’s written instructions regarding use of AWA’s
Service Marks, as they may be amended from time to time.
	 
	 	      9.3.3 Mesa agrees that, in providing the Flight
Services and Other Services, it shall not advertise or make
use of the AWA Service Marks without the prior written consent
of AWA. AWA shall have absolute discretion to withhold its
consent concerning any and all such advertising and use of the
AWA Service Marks in any advertising by Mesa. In the event
AWA approves the use of such AWA Service Marks in any
advertising, such advertising shall identify AWA as the owner
of such Service Marks and conform with any additional
requirements specified by AWA.
	 
	 	      9.3.4 To the extent that Mesa is licensed to use the
AWA Service Marks, the AWA Service Marks shall be used only in
connection with the Flight Services and Other Services
specifically covered by this Agreement and not in connection
with any other business or activity of Mesa or any other
entity.

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	 	      9.3.5 Nothing in this Agreement shall be construed to
give Mesa the exclusive right to use the AWA Service Marks or
abridge AWA’s right to use and license the AWA Service Marks,
and AWA hereby reserves the right to continue to use the AWA
Service Marks and to license such other uses of the AWA
Service Marks as AWA may desire.
	 
	 	      9.3.6 No term or provision of this Agreement shall be
construed to preclude the use of the AWA Service Marks,
including “America West Express,” or the aircraft exterior
color decor and patterns by other individuals or entities not
covered by this Agreement.
	 
	 	      9.3.7 Upon the termination or expiration of this
Agreement, the license and use of the AWA Service Marks by
Mesa shall cease and such use shall not thereafter occur.

	10.	 	Liability and Indemnification.

		
	 	      10.1 Relationship Between the Parties. Nothing contained in this
Agreement will be deemed to create any agency or partnership or
similar relationship between AWA and Mesa. Nothing contained in
this Agreement will be deemed to authorize either AWA or Mesa to
bind or obligate the other. Mesa and the Affiliated Service
Providers and their employees engaged in performing the Flight
Services and Other Services shall be employees of Mesa or the
Affiliated Service Providers for all purposes, and under no
circumstances shall be deemed to be employees, agents or independent
contractors of AWA. AWA and its employees engaged in performing the
obligations of AWA under this Agreement shall be employees, agents
and independent contractors of AWA for all purposes, and under no
circumstances shall be deemed to be employees, agents or independent
contractors of Mesa. Pursuant to this Agreement, Mesa and the
Affiliated Service Providers shall act, for all purposes, as
independent contractors and not as agents for AWA. AWA shall have
no supervisory power or control over any employees engaged by Mesa
and the Affiliated Service Providers in connection with their
performance hereunder, and all complaints or requested changes in
procedures shall be transmitted by AWA to a designated officer of
Mesa. Nothing contained in this Agreement shall be intended to
limit or condition Mesa’s and the Affiliated Service Providers’
control over their operations or the conduct of their business as
air carriers, and Mesa and the Affiliated Service Providers and
their principals assume all risks of financial losses which may
result form the operation of the Flight Services and Other Services
to be provided by Mesa and the Affiliated Service Providers
hereunder.
	 
	 	      10.2 Indemnification by Mesa. Mesa agrees to indemnify, defend
and hold harmless AWA, its directors, officers, employees, agents,
parent corporation, subsidiaries and affiliates for, from and
against any and all loss, liability, claim, damage, penalty, fine,
charge, cause of action, demand, cost and expense (including

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	 	attorneys’ and consultants’ fees and costs) whatsoever
(collectively, “Damages”), as incurred, arising out of, resulting
from or incurred in connection with: (i) the provision of the
Flight Services and Other Services by Mesa and the Affiliated
Service Providers or any of their employees, agents, licensees,
contractors, suppliers, officers or directors; (ii) Mesa’s or the
Affiliated Service Providers’ breach of this Agreement; (iii)
damage or destruction of property of any person, or injury or death
of any person, caused by, arising out of, or in connection with any
act or omission of Mesa or the Affiliated Service Providers, their
employees, agents, licensees, contractors, suppliers, officers or
directors; (iv) any taxes, impositions, assessments or other
governmental charges incurred by Mesa in providing the Flight
Services or Other Services or imposed on any revenue generated by
this Agreement (except as set forth in Section 7.1.3); (v)
passenger complaints or claims by passengers using the Flight
Services; (vi) the failure or discontinuance of service to any EAS
market (except as specified in Section 7.7); and (vii) failure to
comply with any Regulations. Mesa agrees to indemnify, defend and
hold harmless AWA, its officers, directors, employees, agents,
parent corporation, subsidiaries and affiliates for, from and
against any and all Damages as incurred, arising out of, resulting
from or incurred in connection with any claims for consideration
for performance by the Affiliated Service Providers. Mesa shall
reimburse AWA or other Indemnified Party (as defined below) for any
legal and any other expenses reasonably incurred in investigating,
preparing or defending against any claim or action arising out of
or relating to any of the foregoing.
	 
	 	      10.3 Indemnification by AWA. AWA agrees to indemnify, defend and
hold harmless Mesa, its directors, officers, employees, agents,
parent corporation, subsidiaries and affiliates for, from and
against any and all Damages, as incurred, arising out of, resulting
from or incurred in connection with: (i) AWA’s breach of this
Agreement; (ii) damage or destruction of property of any person, or
injury or death of any person, caused by, arising out of, or in
connection with any act or omission of AWA, its employees, agents,
licensees, contractors, suppliers, officers or directors in
performing AWA’s obligations under this Agreement to the extent not
covered by Mesa’s or the Affiliated Service Providers’ insurance
required to be maintained by this Agreement; and (iii) any taxes,
impositions, assessments or other governmental charges incurred by
AWA for revenue received by AWA under this Agreement. AWA shall
reimburse Mesa or other Indemnified Party (as defined below) for any
legal and any other expenses reasonably incurred in investigating,
preparing or defending against any claim or action arising out of or
relating to any of the foregoing.
	 
	 	      10.4 Conduct of Indemnification Proceedings. The person or entity
claiming indemnification hereunder is referred to as the
“Indemnified Party” and the party against whom such claims are
asserted hereunder is referred to as the “Indemnifying Party”. Each
Indemnified Party shall give reasonably prompt

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	 	notice to the Indemnifying Party of any action or proceeding or
assertion or threat of claim commenced against it in respect of
which indemnity may be sought hereunder, but failure to so notify
the Indemnifying Party (i) shall not relieve the Indemnifying Party
from any liability which it may have under the indemnity agreement
provided in this Agreement, unless and to the extent it did not
otherwise learn of such action, threat or claim and the lack of
notice by the Indemnified Party results in the forfeiture by the
Indemnifying Party of substantial rights and defenses and (ii)
shall not, in any event, relieve the Indemnifying Party from any
obligations to the Indemnified Party other than the indemnification
obligation provided under Sections 10.2 and 10.3 above. If the
Indemnifying Party elects within a reasonable time after receipt of
notice, the Indemnifying Party may assume the defense of the action
or proceeding at Indemnifying Party’s own expense with counsel
chosen by the Indemnifying Party and approved by the Indemnified
Party; provided, however, that, if the Indemnified Party reasonably
determines upon advice of counsel that a conflict of interest
exists where it is advisable for the Indemnified Party to be
represented by separate counsel or that, upon advice of counsel,
there may be legal defenses available to it which are different
from or in addition to those available to the Indemnifying Party,
then the Indemnified Party shall be entitled to separate counsel at
the Indemnifying Party’s expense, which counsel shall be chosen by
the Indemnified Party in its sole discretion. If the Indemnifying
Party does not assume the defense, after having received the notice
referred to in the second sentence of this Section, the
Indemnifying Party will pay the reasonable fees and expenses of
counsel for the Indemnified Party. Unless and until a final
judgment that an Indemnified Party is not entitled to the costs of
defense under the foregoing provision, the Indemnifying Party shall
reimburse, promptly as they are incurred, the Indemnified Party’s
costs of defense. The Indemnifying Party shall not settle or
compromise any claim for which an Indemnified Party is entitled to
indemnity without the prior written consent of the Indemnified
Party.
	 
	 	      10.5 Insurance.

		
	 	      10.5.1 Mesa, at all times during the Term of this Agreement, shall
have and maintain and shall cause the Affiliated Service
Providers to have and maintain in full force and effect,
policies of insurance satisfactory to AWA, of the types of
coverage, and in the minimum amounts stated below with
insurance companies satisfactory to AWA and under terms and
conditions satisfactory to AWA, including insurance coverage
on all Aircraft used to provide Flight Services. Unless
otherwise specified, the minimum amounts of insurance coverage
required hereunder shall be per occurrence, combined single
limit for all insurance coverage required hereunder.

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	1.		
Aircraft Liability and Ground
Liability Insurance
(including Commercial General
Liability)
		$250,000,000 per Occurrence
Combined Single Limit of Liability
for CRJs and Dash 8s and
$150,000,000 per Occurrence
Combined Single Limit of Liability
for Beech 1900s
	
	
	
	

	
	
	
	

			a.	
Bodily Injury and Personal
Injury – Passengers
		Included in Combined Single Limit
	
	
	
	

	
	
	
	

			b.	
Bodily Injury and Personal
Injury – Third Parties
		Included in Combined Single Limit
	
	
	
	

	
	
	
	

			c.	
Property Damage
		Included in Combined Single Limit

Per Accident

	
	
	
	

	
	
	
	

	2.		
Worker’s Compensation
Insurance (Company Employees)
		Statutory
	
	
	
	

	
	
	
	

	3.		
Employers’ Liability (Company
Employees)
		$500,000
	
	
	
	

	
	
	
	

	4.		
All Risk Hull Insurance on

Aircraft Performing Services

Hereunder
		Replacement Cost or Such Lesser
Amount as may be Consented to by
AWA, in writing
	
	
	
	

	
	
	
	

	5.		
Baggage Liability
		$1,250 (per Passenger)
	
	
	
	

	
	
	
	

	6.		
Cargo Liability
		$100,000 any One Aircraft
	
	
	
	

	
	
	
	

				
		$100,000 any One Disaster with
Terms, Limitations and Conditions
Acceptable to AWA

		
	 	      10.5.2 The parties hereby agree that from time to time during the
Term of this Agreement, AWA may require Mesa and the
Affiliated Service Providers to have and maintain amounts of
insurance coverage different from those amounts set forth in
Section 10.5.1, should AWA, in its reasonable judgment, deem
the circumstances and conditions of the Flight Services and
Other Services to require increases in any or all of the
foregoing

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	 	minimum insurance coverages.

		
	 	      10.5.3 Mesa shall cause all policies of insurance which it and the
Affiliated Service Providers maintain pursuant to this
Agreement, to be duly and properly endorsed by Mesa’s and the
Affiliated Service Providers’ insurance underwriters as
follows:

		
	 	      10.5.3.1 To provide that any waiver of rights of
subrogation against other parties by Mesa or the
Affiliated Service Providers shall not affect the
coverage provided hereunder with respect to AWA.
	 
	 	      10.5.3.2 To provide that Mesa’s and the Affiliated Service
Providers’ underwriters shall waive any and all
subrogation rights against AWA, its directors,
officers, agents and employees without regard to any
breach of warranty by Mesa or the Affiliated Service
Providers or to provide other evidence of such waiver
of recourse against AWA, its directors, officers,
agents, or employees as shall be acceptable to AWA.
	 
	 	      10.5.3.3 Be duly and properly endorsed to provide that each
such policy or policies or any part or parts thereof
shall not be canceled, terminated, or materially
altered, changed or amended by Mesa’s and the
Affiliated Service Providers’ insurance underwriters,
until after 30 days’ written notice to AWA which 30
days’ written notice shall commence to run from the
date such notice is actually received by AWA.

		
	 	      10.5.4 With respect to policies of insurance described as Aircraft
Liability and Ground Liability Insurance, Mesa will provide
that Mesa’s and the Affiliated Service Providers’ policies:

		
	 	      10.5.4.1 Endorse AWA, its directors, officers, agents,
parents, subsidiaries and employees as Additional
Insureds thereunder.
	 
	 	      10.5.4.2 Constitute primary insurance for such claims and
acknowledge that any other insurance policy or
policies of AWA will be secondary or excess insurance;
	 
	 	      10.5.4.3 Cover AWA’s costs of defending against such
insured claims including, without limitation, to the
extent permitted by the policies, costs incurred in
the retention of separate legal counsel of its choice;
and

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	 	      10.5.4.4 Provide a cross-liability clause acceptable to
AWA, and a specific contractual liability insurance
provision covering liability assumed by Mesa and the
Affiliated Service Providers under this Agreement.

		
	 	      10.5.5 With respect to policies of insurance for coverage described
as Aircraft Liability and Ground Liability Insurance and All
Risk Hull Insurance, Mesa shall cause its insurance
underwriters to provide a breach of warranty clause.
	 
	 	      10.5.6 All aircraft hull insurance provided pursuant to this
Agreement shall be provided on agreed value basis and, except
with the consent of AWA, shall not be subject to more than the
standard market deductibles. In the event of loss, settled on
the basis of a total loss, all losses shall be payable in
full.
	 
	 	      10.5.7 Upon request by AWA, Mesa shall furnish to AWA evidence
satisfactory to AWA of the aforesaid insurance coverage and
endorsements, including certificates certifying that the
aforesaid insurance policy or policies with the aforesaid
policy limits are duly and properly endorsed as aforesaid and
are in full force and effect.
	 
	 	      10.5.8 With respect to policies of insurance obtained directly from
foreign underwriters, Mesa shall cause such insurance
underwriters to provide that AWA may maintain against Mesa’s
and the Affiliated Service Providers’ underwriters a direct
action in the United States upon such insurance policies and
to this end to provide a standard service of suit clause
designating an agent for service of process in the United
States of America.
	 
	 	      10.5.9 In the event Mesa or the Affiliated Service Providers fails
to maintain in full force and effect any of the insurance and
endorsements described in Section 10.5, AWA shall have the
right (but not the obligation) to procure and maintain such
insurance or any part thereof. The cost of such insurance
shall be payable by Mesa to AWA upon demand by AWA. The
procurement of such insurance or any part thereof by AWA shall
not discharge or excuse Mesa’s or the Affiliated Service
Providers’ obligation to comply with the provisions of Section
10.5. Mesa agrees not to cancel, terminate or materially
alter, change or amend any of the policies referred to in
Section 10.5 without 30 days’ prior written notice to AWA of
its intent to cancel, terminate or materially alter, change or
amend said policies or insurance which 30 day notice period
shall commence to run from the date notice is actually
received by AWA.
	 
	 	      10.5.10 AWA shall maintain cargo liability coverage, in types and
amounts

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	 	required by law, for all air freight transported by Mesa or
the Affiliated Service Providers under an AWA airbill on
any Flights.

	11.	 	Confidentiality.

		
	 	      11.1 AWA and Mesa agree that the terms of this Agreement shall be
treated as confidential and shall not be disclosed to third parties
without the express written consent of AWA and Mesa, or as required
by law. In the event of disclosure required by law, only those
portions of this Agreement required to be disclosed shall be
disclosed. The disclosing party shall make good faith efforts to
minimize the portions to be disclosed and shall seek confidential
treatment by the receiving party or agency for any portions
disclosed. In the event of one party being served a subpoena or
discovery request, prior to responding to the subpoena or request,
the party served shall notify the other party to provide the other
party an opportunity to contest the disclosure of any terms of this
Agreement.
	 
	 	      11.2 “Confidential Information” means any information in any form,
including, without limitation, the terms of this Agreement, written
documents, oral communications, recordings, videos, software, data
bases, business plans, and electronic and magnetic media, provided
to or observed by AWA or Mesa pursuant to this Agreement, including
information owned or provided by either party to the other party,
except for information generally available to the public. AWA and
Mesa agree that they shall maintain all Confidential Information in
confidence and use such Confidential Information solely for purposes
of performance under this Agreement. Such Confidential Information
shall be distributed within each party’s company only to personnel
and to its legal counsel, auditors and other consultants on a
need-to-know basis for purposes related to this Agreement or in
compliance with a court order or statutory or regulatory
requirements. Except for legal counsel and auditors, and as
permitted by Section 11.1, in no event shall either party disclose
Confidential Information to any third parties except subcontractors
and independent consultants and then only if approved by both
parties in writing in advance of such disclosure. Confidential
Information does not include information that is available to the
general public other than as a result of disclosure by the
disclosing party or information that was known or independently
developed by the receiving party prior to disclosure, as evidenced
by records kept in the ordinary course of business.
	 
	 	      11.3 Mesa acknowledges and agrees that any Confidential
Information shared or given to AWA pursuant to this Agreement may be
shared by AWA on a confidential basis with America West Holdings
Corporation, The Leisure Company and other subsidiaries and
affiliates of AWA. AWA acknowledges and agrees that any
Confidential Information shared or given to Mesa pursuant to this
Agreement may be shared by Mesa on a confidential basis with Mesa
Air Group, Inc. and other subsidiaries or affiliates of Mesa.

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	12.	 	Taxes. Mesa shall pay, prior to delinquency, all airport, property,
sales, use, excise or any other taxes, impositions, assessments or other
governmental charges incurred in connection with the provision of the
Flight Services and Other Services under this Agreement and all taxes
imposed or any sums paid by AWA to Mesa under this Agreement. AWA shall
pay, prior to delinquency, all taxes imposed on any sums paid by Mesa to
AWA under this Agreement.
	 
	13.	 	Defaults and Remedies.

		
	 	      13.1 Default by Mesa. The occurrence of any one or more of the
following events shall constitute a material default and breach of
this Agreement by Mesa (an “Event of Default”):

		
	 	      13.1.1 The failure of Mesa to make any payment required to be made
by Mesa to AWA hereunder, as and when due, and such failure
continues for 10 business days after Mesa’s receipt of written
notice from AWA;
	 
	 	      13.1.2 If Mesa or any of the Affiliated Service Providers is
required by the FAA or DOT to suspend a substantial portion of
its operations for any safety reason and has not resumed such
operation within 3 business days of the suspension or if Mesa
suspends a substantial portion of the Flight Services for any
other reason, except as a result of an emergency airworthiness
directive from the FAA affecting all aircraft similarly
equipped to the Aircraft (not just those owned or operated by
Mesa);
	 
	 	      13.1.3 The failure of Mesa or any of the Affiliated Service
Providers to observe or perform any of the covenants,
conditions or provisions of this Agreement to be observed or
performed by Mesa or any of the Affiliated Service Providers,
other than as described in Sections 8 or 13.1.1 or 13.1.2
above, and such failure shall continue for a period of 15 days
after written notice thereof from AWA to Mesa or such longer
period as may be reasonably necessary to complete the cure of
such failure (not to exceed an additional 30 days); provided
Mesa commences such cure during the initial 15-day period and
continuously and diligently pursues the cure to completion;
	 
	 	      13.1.4 (i) the cessation of Mesa’s business operations as a going
concern; (ii) the making by Mesa of any general assignment, or
general arrangement for the benefit of creditors; (iii) the
failure of Mesa to generally pay Mesa’s debts as they come due
or Mesa’s written admission of its inability to pay its debts
as they come due; (iv) the filing by or against Mesa of a
petition to have Mesa adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of petition filed against
Mesa, the same is dismissed, stayed or vacated within 60
days); (v) an adjudication of Mesa’s insolvency; (vi)

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	 	appointment of a trustee or receiver to take possession of
substantially all of Mesa’s assets which is not dismissed,
stayed or vacated within 60 days; or (vii) the attachment,
execution or other judicial seizure of all of Mesa’s assets.
	 
	 	      13.1.5 Upon an Event of Default, AWA may: (a) by written notice to
Mesa (a “Default Termination Notice”) terminate this Agreement
effective as of the date set forth in the Default Termination
Notice which date shall not be less than 30 nor more than 180
days after the date of the Default unless the event in 13.1.2
occurs, in which case immediate; and/or (b) pursue all other
rights and remedies available at law or in equity to AWA for
the Event of Default, including, without limitation,
injunctive relief, specific performance and damages. After
receipt of a Default Termination Notice, Mesa and the
Affiliated Service Providers shall continue to provide the
Flight Services and Other Services in accordance with this
Agreement until the termination date set forth in the Default
Termination Notice. No remedy or election by AWA hereunder
shall be deemed exclusive, but shall, wherever possible, be
cumulative with all other rights and remedies at law or in
equity.

		
	 	      13.2 AWA Default. The occurrence of any one or more of the
following events shall constitute a material default and breach of
this Agreement by AWA (an “AWA Event of Default”):

		
	 	      13.2.1 The failure of AWA to make any payment required to be made
to Mesa by AWA hereunder, as and when due, and such failure
continues for 10 business days after AWA’s receipt of written
notice from Mesa;
	 
	 	      13.2.2 The failure of AWA to observe or perform any of the
covenants, conditions or provisions of this Agreement to be
observed or performed by AWA, and such failure shall continue
for a period of 15 days after written notice thereof from Mesa
to AWA or such longer period as may be reasonably necessary to
complete the cure of such failure (not to exceed an additional
30 days); provided AWA commences such cure during the initial
15-day period and continuously and diligently pursues the cure
to completion;
	 
	 	      13.2.3 (i) the cessation of AWA’s business operations as a going
concern; (ii) the making by AWA of any general assignment, or
general arrangement for the benefit of creditors; (iii) the
failure of AWA to generally pay AWA’s debts as they come due
or AWA’s written admission of its inability to pay its debts
as they come due; (iv) the filing by or against AWA of a
petition to have AWA adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of petition filed against AWA,
the same is dismissed, stayed or vacated

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	 	within 60 days); (v) an adjudication of AWA’s insolvency;
(vi) appointment of a trustee or receiver to take possession
of substantially all of AWA’s assets which is not dismissed,
stayed or vacated within 60 days; or (vii) the attachment,
execution or other judicial seizure of all of AWA’s assets
which is not dismissed, stayed or vacated within 60 days.
	 
	 	      13.2.4 Upon the occurrence and continuance of an AWA Event of
Default, Mesa may: (a) by written notice to AWA (an “AWA
Default Notice”) terminate this Agreement effective as of the
date set forth in the AWA Default Notice which date shall not
be less than 30 nor more than 180 days after the date of the
AWA Event of Default; and/or (b) pursue all other rights and
remedies available at law or in equity to Mesa for the AWA
Event of Default, including, without limitation, injunctive
relief, specific performance and damages. After receipt of an
AWA Default Notice, AWA shall continue to perform its
obligations under this Agreement until the termination date
set forth in the AWA Default Notice. No remedy or election
by Mesa hereunder shall be deemed exclusive, but shall,
wherever possible, be cumulative with all other rights and
remedies at law or in equity.

	14.	 	Records and Reports.

		
	 	      14.1 Retention of Records. Mesa shall keep accurate and complete
books and records of all Flight Services and Other Services
performed under this Agreement as well as any additional records
that the parties agree may be required in accordance with AWA’s
procedures and the Regulations. Mesa shall retain such records in
accordance with applicable law, AWA’s procedures and the
Regulations.
	 
	 	      14.2 Provision of Financial Records. Upon AWA’s request, and
until such time as AWA advises Mesa that such reports are no longer
necessary, Mesa shall furnish to AWA, within 60 days following the
close of the first three fiscal quarters of Mesa, unaudited
financial statements including Mesa’s current corporate balance
sheets and profit and loss statements, and within 120 days after the
close of its fiscal year, Mesa shall furnish AWA with audited
financial statements of Mesa (or its parent company) including,
either separately or on a consolidated basis, the balance sheet and
profit and loss statements of that party. The appropriate reports
filed on Form 10-Q and 10-K shall be satisfactory to fulfill such
obligation.
	 
	 	      14.3 Provision of Additional Records. Mesa shall promptly furnish
AWA with a copy of every report that it prepares and is required to
submit to the DOT, FAA, National Transportation Safety Board or any
other governmental agency, relating to any accident or incident
involving an Aircraft used in performing Flight Services under this
Agreement, when such accident or incident is claimed to have
resulted in the death of or substantial injury to any person or the
loss of, damage

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	 	to, or destruction of any property.
	 
	 	      14.4 Additional Reports. Mesa shall promptly notify AWA in
writing of: (i) any change in or relinquishment of control of Mesa;
(ii) any agreement contemplating such a change or relinquishment
with a copy of such agreement, if in writing, to AWA; or (iii) any
change or contemplated change in the Chief Executive Officer
position of Mesa.

	15.	 	Miscellaneous Provisions.

		
	 	      15.1 Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party
pursuant to this Agreement shall be in writing and given by: (i)
hand delivery; (ii) facsimile; (iii) express overnight delivery
service; or (iv) certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses
(or facsimile numbers, as applicable) specified below and shall be
effective upon receipt or the rejection of such delivery, except if
delivered by facsimile outside of business hours in which case they
shall be effective on the next succeeding business day:

	 	 	 
	If to AWA:		
America West Airlines, Inc.

4000 E. Sky Harbor Blvd.

Phoenix, Arizona 85034

Attn: Vice President and General Counsel

Telephone:   (602) 693-5805

Facsimile:   (602) 693-5932
	
	
	
	

	
	
	
	

	
	
	
	

	If to Mesa:		
Mesa Air Group

410 N. 44th Street, Suite 700

Phoenix, Arizona 85008

Attn: General Counsel

Telephone:   (602) 685-4051

Facsimile:   (602) 685-4352

		
	 	      15.2 Waiver and Amendment. No provisions of this Agreement shall
be deemed waived or amended except by a written instrument
unambiguously setting forth the matter waived or amended and signed
by the party against which enforcement of such waiver or amendment
is sought. Waiver of any matter shall not be deemed a waiver of the
same or any other matter on any future occasion.
	 
	 	      15.3 Captions. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in any
manner in the construction or interpretation hereof.
	 
	 	      15.4 Attorneys’ Fees. In the event of any judicial or other
adversarial proceeding

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	 	between the parties concerning this Agreement, the prevailing party
shall be entitled to recover its attorneys’ fees and other costs in
addition to any other relief to which it may be entitled.
	 
	 	      15.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof, and there are no other representations, warranties or
agreements, written or oral, between AWA and Mesa with respect to
the subject matter of this Agreement.
	 
	 	      15.6 Jurisdiction; Choice of Law. For purposes of any action or
proceeding arising out of this Agreement, the parties hereto hereby
expressly submit to the jurisdiction of all federal and state courts
located in the State of Arizona. This Agreement shall be governed by
and construed in accordance with the laws of the State of Arizona.
	 
	 	      15.7 Severability. If this Agreement, any one or more of the
provisions of this Agreement, or the applicability of this Agreement
or any one or more of the provisions of this Agreement to a specific
situation, shall be held invalid, illegal or unenforceable or in
violation of any contract or agreement to which Mesa or AWA are a
party, then AWA and Mesa shall in good faith amend and modify this
Agreement, consistent with the intent of Mesa and AWA, as evidenced
by this Agreement, to the minimum extent necessary to make it or its
application valid, legal and enforceable and in accordance with the
applicable agreement or contract, and the validity or enforceability
of all other provisions of this Agreement and all other applications
of any such provision shall not be affected thereby.
	 
	 	      15.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
	 
	 	      15.9 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of AWA and Mesa and their respective successors
and permitted assigns.

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	 	      15.10 No Assignment. The rights, obligations and duties of AWA
and Mesa under this Agreement may not be assigned or delegated,
except as may otherwise be mutually agreed by AWA and Mesa, in their
sole and absolute discretion.

	 	AWA:

	 	America West Airlines, Inc.,

a Delaware corporation

	 	By: /s/ William A. Franke

Name: William A. Franke

Title: Chairman of the Board and

Chief Executive Officer

	 	MESA:

	 	Mesa Airlines, Inc.,

a Nevada corporation

	 	By: /s/ Jonathan G. Ornstein

Name: Jonathan G. Ornstein

Title: Chief Executive Officer

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Table of Contents

EXHIBITS

	 	 	 
	Exhibit A		
Delivery Schedule
	
	
	
	

	Exhibit B		
Station Costs
	
	
	
	

	Exhibit C		
Guaranteed Non-Maintenance Costs
	
	
	
	

	Exhibit D		
Guaranteed Maintenance Costs
	
	
	
	

	Exhibit E		
Backup Information

 

Table of Contents

EXHIBIT A

Delivery Schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
																			Convertible
	In Service Months		Additional		Firm		Firm		Firm		Option
	Delivery		       Month		CRJ-200		CRJ-700		CRJ-900		CRJ-7/900		CRJ 7/900
	

	Seating Configuration		50Y		6F/58Y		6F/74Y
	
	
	
	

	
	
	
	

	

				Apr-01	
				May-01	
				Jun-01	
				July-01	
				Aug-01	
				Sep-01	
				Oct-01	
				Nov-01	
				Dec-01	
	

				Jan-02	
				Feb-02	
				Mar-02	
				Apr-02	
				May-02	
				Jun-02	
				July-02	
				Aug-02	
				Sep-02	
				Oct-02	
				Nov-02	
				Dec-02	
	

				Jan-03	
				Feb-03	
				Mar-03	
				Apr-03	
				May-02	
				Jun-03	
				July-03	
				Aug-03	
				Sep-03	
				Oct-03	
				Nov-03	
				Dec-03	
	

				Jan-04	
				Feb-04	
				Mar-04	
				Apr-04	
				May-04	
				Jun-04	
				July-04	
				Aug-04	
				Sep-04	
				Oct-04	
				Nov-04	
				Dec-04	
	

	Each calendar month
	thereafter through Oct-07
	
	
	
	

	

 

Table of Contents

EXHIBIT B

Station Costs

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Note 1 — Some or all of these expenses are already included in pass through amounts.

 

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EXHIBITS C and D — Page 1

(See Note 4)

Guaranteed Non-Maintenance Costs (Exhibit C)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COST CATEGORY		UNIT		B1900D		DHC-82		CRJ 200		CRJ 700		CRJ 900
	

	Aircraft Lease & Overhead			A/C MONTH	
	
	
	
	

	Note 1 Ownership							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Overhead							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Crew RON							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

		Total							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Flight Crew			BLK HR	
	
	
	
	

	Note 3 Pilot							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 3 Flight Attendant							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

		Total							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Dispatchers			DEP				[***]				[***]				[***]				[***]				[***]	

 

Table of Contents

Guaranteed Maintenance Costs (Exhibit D)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COST CATEGORY		UNIT		B1900D		DHC-82		CRJ 200		CRJ 700		CRJ 900
	

	Maintenance cost per aircraft			A/C MONTH	
	
	
	
	

	Note 2 MX Employees							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Engine & APU Depreciation							[***]				[***]				[***]				[***]				[***]	
								

		Total							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Maintenance Base Cost			BASE/MONTH	
	
	
	
	

	Note 2 Rent & Utilities							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Personnel							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Parts Depreciation							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Equipment Depreciation							[***]				[***]				[***]				[***]				[***]	
								

		Total							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Maintenance cost per block hour			BLK HR	
	
	
	
	

	Note 2 Engine MX —Contractual							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Engine MX —Other							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Airframe MX							[***]				[***]				[***]				[***]				[***]	
								

		Total							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Maintenance cost per departure			DEP	
	
	
	
	

	Note 2 Airframe MX							[***]				[***]				[***]				[***]				[***]	
	
	
	
	

	Note 2 Engine MX							[***]				[***]				[***]				[***]				[***]	
								

		Total							[***]				[***]				[***]				[***]				[***]	

Note 1 — [***].

Note 2 — [***].

Note 3 — [***].

Note 4 — [***].

	 	 	 	 	 	 	 	 	 	 	 	 	 
	ASSUMPTIONS:
			

	Flight Hours Per Year			[***]				[***]				[***]	
			

	Average Flight Hours Per Cycle			[***]				[***]				[***]	
			

 

Table of Contents

EXHIBITS C and D — Page 2

CRJ -2000 A/C Ownership Schedule

	 	 	 	 	 	 	 	 	 	 	 
									Monthly
	Tail						Amount
		

	1					[***]				[***]	
	
	
	
	

	2					[***]				[***]	
	
	
	
	

	3					[***]				[***]	
	
	
	
	

	4					[***]				[***]	
	
	
	
	

	5					[***]				[***]	
	
	
	
	

	6					[***]				[***]	
	
	
	
	

	7					[***]				[***]	
	
	
	
	

	8					[***]				[***]	
	
	
	
	

	9					[***]				[***]	
	
	
	
	

	10					[***]				[***]	
	
	
	
	

	11					[***]				[***]	
	
	
	
	

	12					[***]				[***]	
	
	
	
	

	13					[***]				[***]	
	
	
	
	

	14					[***]				[***]	
	
	
	
	

	15					[***]				[***]	
	
	
	
	

	16					[***]				[***]	
	
	
	
	

	17					[***]				[***]	
	
	
	
	

	18					[***]				[***]	
	
	
	
	

	19					[***]				[***]	
	
	
	
	

	20					[***]				[***]	
	
	
	
	

	21					[***]				[***]	
	
	
	
	

	22					[***]				[***]	
	
	
	
	

	23					[***]				[***]	
	
	
	
	

	24					[***]				[***]	
	
	
	
	

	25					[***]				[***]	
		

	Average							[***]	
		

 

Table of Contents

EXHIBIT E

Mesa Codeshare

Minimum Required Backup – Trueup Billings

	 	 	 	 	 	 
	Costs		Backup Required		Minimum Frequency
	
	
	
	

	
	
	
	

	Actual Costs (All use actual $ rates)
		Hull Insurance		
Insurance Policy/Bill
		Annually or when changes occur
		Liability Insurance		
Insurance Policy Bill/
		Annually or when changes occur
		Property Taxes		
All Invoices & Assessment Notices
		Semi-Annually
		De-Icing		
All Invoices
		Monthly
		Fuel Costs		
Station Invoices
		Audited Basis
		Catering		
All Invoices
		Monthly
		Landing Fees		
All Invoices
		Monthly
		Security Service		
All Invoices
		Monthly
		Station Rent		
All Invoices
		Monthly
		CRJ Leases		
Lease Payment Schedule
		Every new
Delivery or Change in

      Lease
		Station Costs		
All Invoices
		MonthlyGUARANTEED PROMISSORY NOTE

U.S. $25,000,000                                            February 22, 2001

     FOR VALUE RECEIVED as a loan, the undersigned PANAMCO DE VENEZUELA
S.A., a corporation duly constituted and domiciled in Venezuela (the
"Borrower"), unconditionally promises to pay to the order of THE CHASE
MANHATTAN BANK (the "Bank"), at its principal office, 270 Park Avenue, New
York, New York 10017 (the "Principal Office"), the principal sum of TWENTY
FIVE MILLION UNITED STATES DOLLARS (U.S. $25,000,000) on the Maturity Date
(as defined below).

     The Borrower promises to pay interest on the unpaid balance of the
Loan (as defined below) from and including the date of such Loan to but
excluding the date such Loan is due at a rate per annum for such period
equal to the Eurodollar Rate (as defined below) for each Interest Period
(as defined below) for such Loan during such period plus the Margin (as
defined below), subject to the provisions of Section 3(c) hereof. Accrued
interest shall be payable on each Interest Payment Date, provided that
interest payable at the Default Rate (as defined below) pursuant to Section
3(c) hereof shall be payable upon demand.

     All payments hereunder shall be made in U.S. Dollars and in
immediately available funds, without deduction, set-off or counterclaim.
The Bank shall maintain on its books records setting forth the amounts of
principal, interest and other sums paid or payable by the Borrower from
time to time hereunder. In the event of any dispute, action or proceeding
relating to this Note, such records shall be conclusive in the absence of
manifest error.

     1. Certain Definitions. As used herein, the following terms shall have
the corresponding meanings.

     (a) "Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City, Caracas and Panama City
and which is also a day on which dealings in U.S. Dollar deposits are
carried out in the London interbank market.

     (b) "Closing Date" means the date hereof.

     (c) "Commitment" means U.S. $25,000,000.

     (d) "Default Rate" means, in respect of any amount not paid when due,
a rate per annum during the period commencing on the due date until such
amount is paid in full equal to a fixed rate of 2.00% above the rate of
interest applicable to principal hereof (including the Margin) at the time
of default until the end of the then current Interest Period and,
thereafter, a floating rate 2% above the Variable Rate.

     (e) "Drawdown Date" means the date on which the Bank makes the Loan to
the Borrower, such date to occur on or prior to February 28, 2001.

<PAGE>

     (f) "Eurodollar Base Rate" means, with respect to any Interest Period
for the Loan, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the principal office of the Bank in London at
approximately 11:00 a.m. London time (or as soon thereafter as practicable)
two Banking Days prior to the date which is the first date of such Interest
Period for the offering by the Bank to leading banks in the London
interbank market of U.S. Dollar deposits having a term comparable to the
Loan and in an amount comparable to the principal amount of the Loan.

     (g) "Eurodollar Rate" means the Eurodollar Base Rate divided by 1
minus the Reserve Requirement.

     (h) "Event of Default" shall have the meaning set forth in Section 10
hereof.

     (i) "Federal Funds Rate" means, with respect to the Loan when accruing
interest at the Variable Rate (i) for the first day of the Loan is to
accrue interest at the Variable Rate, the rate per annum at which U.S.
Dollar deposits with an overnight maturity and in a comparable principal
amount to the Loan are offered by the Bank in the Federal funds market at
approximately the time the Loan is to commence accrual of interest at the
Variable Rate on such day, and (ii) for each day thereafter that the Loan
is outstanding and accruing interest at the Variable Rate, the rate per
annum at which U.S. Dollar deposits with an overnight maturity and in a
comparable principle amount to the Loan are offered by the Bank in the
Federal funds market at approximately the time the Borrower notifies the
Bank pursuant to Section 5(c) hereof of its election to continue the Loan
accruing interest at the Variable Rate; provided that if the Borrower fails
to notify the Bank pursuant to Section 5(c) of its election to continue or
repay the Loan, the rate per annum determined by the Bank to be its cost of
funding such Loan for such day; and (b) any other amount hereunder which
bears interest at the Variable Rate, the rate per annum at which U.S.
Dollar deposits with an overnight maturity and in a comparable amount are
offered by the Bank in the Federal funds market at approximately 2:00 p.m.
New York City time.

     (j) "Guaranty" means the Guaranty dated the Closing Date issued by the
Guarantor in favor of the Bank and/or any of its subsidiaries or
affiliates, as amended from time to time.

     (k) "Guarantor" means Panamerican Beverages Inc., a company duly
constituted and domiciled in Panama.

     (l) "Indebtedness" means, with respect to any Person, any amount
payable by such Person pursuant to an agreement or instrument involving or
evidencing money borrowed or received, the advance of credit, a conditional
sale or a transfer with recourse or with an obligation to repurchase,
pursuant to a lease with substantially the same economic effect as any such
agreement or instrument, or any such agreement, instrument or arrangement
secured by any lien or other encumbrance upon any property owned by such
Person, even though such Person has not assumed or become liable for the
payment of any money under such agreement, instrument or arrangement, to
which such Person is a party as debtor, borrower or guarantor.

                                     2

<PAGE>

     (m) "Interest Payment Date" for the Loan means (i) the Maturity Date
of the Loan, (ii) the date of each three month interval after the first day
of the Loan and (iii) the date of any prepayment or repayment of principal
of the Loan.

     (n) "Interest Period" for the Loan means the period commencing on the
date of the Loan and ending on the numerically corresponding day in each
three month period thereafter; provided, however, that: (A) any Interest
Period which would otherwise end on a day which is not a Banking Day shall
be extended to the next succeeding Banking Day unless such Banking Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Banking Day, (B) any Interest Period which begins
on the last Banking Day of a calendar month (or on a day for which there is
no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Banking Day of the last calendar
month of such Interest Period; and (C) if any Interest Period includes a
date on which a payment of principal of the Loan is required to be made but
does not end on such date, then (x) the principal amount of the Loan
required to be paid on such date shall have an Interest Period ending on
such date and (y) the remainder (if any) of the Loan shall have an Interest
Period determined as set forth above.

     (o) "Loan" shall have the meaning set forth in Section 2.

     (p) "Margin" shall mean 1.75% per annum.

     (q) "Maturity Date" means February 21, 2001.

     (r) "Note" means this Promissory Note.

     (s) "Person" means any corporation, natural person, firm, joint
venture, partnership, trust, unincorporated organization or government, or
any political subdivision, department or agency of any government.

     (t) "Prime Rate" means the rate of interest per annum publicly
announced from time to time by the Bank as its prime rate in effect at its
principal office in New York City; any change in the Prime Rate shall be
effective from and including the date such change is publicly announced as
being effective.

     (u) "Regulatory Change" means any change after the date hereof in
United States federal, state or foreign laws or regulations (including
Regulation D (as defined in the definition of Reserve Requirement)) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including the Bank of or under any
United States federal or state, or any foreign, laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration
thereof.

     (v) "Reserve Requirement" means, with respect to any Interest Period,
the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during
the Interest Period under Regulation D of the Board of Governors of the
Federal Reserve System as amended or supplemented from time to time

                                     3

<PAGE>

("Regulation D") by member banks of the Federal Reserve System in New York
City with deposits exceeding one billion U.S. Dollars against "Eurocurrency
Liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the Eurodollar Rate is to be determined or
(ii) any category of extensions of credit or other assets which includes
the Loan evidenced by this Note.

     (w) "Subsidiary" means, with respect to the Borrower, at any time, any
entity of which more than fifty percent (50%) of the outstanding voting
stock or other equity interest entitled ordinarily to vote in the election
of the directors or other governing body (however designated) of such
entity is at the time beneficially owned or controlled directly or
indirectly by the Borrower.

     (x) "Variable Rate" means, for any day, the higher of (i) Federal
Funds Rate for such day plus 1/2 of 1% and (ii) the Prime Rate.

     (y) "Venezuela" means The Republic of Venezuela.

     (z) "Syndicated Facility" means the U.S.$265,000,000 Amended and
Restated Credit Agreement entered into by the Guarantor on November 21,
2000.

     2. The Loan.

     (a) The Bank agrees, on the terms and conditions of this Note, to make
one loan (the "Loan") to the Borrower on the Drawdown Date in an aggregate
principal amount up to but not exceeding the aggregate amount of the
Commitment.

     (b) The Borrower may borrow the Loan by giving the Bank notice by
12:00 noon, New York City time, at least three Banking Days prior to the
date of such borrowing.

     (c) Amounts that are prepaid may not be reborrowed.

     3. Payments; Prepayments; Fees.

     (a) Place and Time of Payment. All payments of principal of and
interest on this Note and all other amounts payable hereunder shall be made
by deposit to account no. 544748148 of the Bank at the Principal Office not
later than 12:00 p.m. (New York time) on the dates due, or to such other
account as the Bank may designate in writing to the Borrower.

     (b) Payments to be on Banking Days. Whenever any payment hereunder
shall be stated to be due on a day other than a Banking Day, such payment
shall be made on the next succeeding Banking Day (unless such next
succeeding Banking Day would fall in the succeeding calendar month, in
which case such payment shall be made on the next preceding Banking Day),
and any such extension or reduction of time shall in such case be reflected
in the computation of payment of interest.

                                     4

<PAGE>

     (c) Interest on Overdue Principal and Other Amounts. In the event that
any principal hereof, any interest hereon or any other amount payable by
the Borrower hereunder is not paid when due (by reason of demand or
otherwise) in accordance with the terms of this Note, the Borrower will
pay, to the extent permitted by applicable law, interest on such past-due
amount from the date such amount becomes due until the date the same is
paid in full, at a rate per annum equal to the Default Rate in effect from
time to time.

     (d) Voluntary Prepayments. The Borrower may, upon five Banking Days'
notice to the Bank, prepay this Note on any Banking Day; provided, however,
that (x) the minimum amount of any such prepayment shall be $1,000,000.00
or any larger multiple thereof and (y) such prepayment is made together
with accrued interest and any break-funding amounts due pursuant to Section
5(b).

     4. Interest. All computations of interest hereon shall be made on the
basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which
interest is payable.

     5. Additional Costs, Etc.; Illegality

     (a) If as a result of any Regulatory Change, the Bank determines that
the cost to the Bank of making or maintaining the Loan is increased, or any
amount received or receivable by the Bank hereunder is reduced, or the Bank
is required to make any payment in connection with any transaction
contemplated hereby, then the Borrower shall pay to the Bank on demand such
additional amount or amounts as the Bank determines will compensate the
Bank for such increased cost, reduction or payment.

     (b) The Borrower shall pay to the Bank, upon the request of the Bank,
such amount or amounts as shall be sufficient (in the reasonable opinion of
the Bank) to compensate it for any loss, cost or expense which the Bank
determines is attributable to any prepayment of any Loan.

         (c) Notwithstanding any other provision in this Note, in the event
that it becomes unlawful for the Bank or its lending office to honor its
obligation to make or maintain the Loan bearing interest at the Eurodollar
Rate, then the Bank shall promptly notify the Borrower thereof and the Bank's
     obligation to make or maintain the Loan bearing interest at the
Eurodollar
Rate shall be suspended until such time as the Bank may again make and
maintain the Loan bearing such interest rate, and the interest rate on the
Loan shall be automatically converted to the Variable Rate on the date
specified by the Bank in such notice, unless the Bank shall have received
written notice from the Borrower of its decision to prepay the Loan and such
notice is received by the Bank prior to 11:30 a.m. on the day of such
prepayment.

     6. Taxes.

     (a) Payments Free and Clear. Any and all payments by the Borrower
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies,

                                     5

<PAGE>

imposts, deductions, charges or withholdings, and all interest, penalties
or other liabilities with respect thereto, excluding taxes imposed on or
measured by the net income or capital of the Bank by the jurisdiction (or
any political subdivision of such jurisdiction) in which the Bank's lending
office is located or under which the Bank is organized (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter called "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Bank, (x) the Borrower shall forthwith pay to the Bank
such additional amount as may be necessary so that after making all
required deductions for Taxes (including deductions applicable to
additional amounts payable under this Section 6) the Bank receives an
amount equal to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions and (z) the Borrower
shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law.

     (b) Payment of Stamp Taxes. In addition, the Borrower shall pay any
present or future stamp or documentary taxes or other excise or property
taxes, charges or similar levies which arise in any jurisdiction from any
payment made hereunder or from the execution, delivery, registration or
enforcement of, or otherwise with respect to, this Note (all such taxes,
charges or levies being herein called "Other Taxes").

     (c) Reimbursement of Taxes Paid by the Bank. The Borrower will
reimburse the Bank for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed on amounts payable
under this Section 6) paid by the Bank or any liabilities (including,
without limitation, penalties, interest and expenses other than those
attributable to the gross negligence of the Bank) arising therefrom or with
respect thereto. Reimbursement under this Section 6(c) for any Taxes, Other
Taxes or liabilities shall be made within 30 days from the date the Bank
makes written demand therefor.

     (d) Tax Certificates. Within 45 days after the date of any payment of
Taxes, the Borrower will furnish to the Bank the original or a certified
copy of a receipt evidencing payment thereof.

     7. Conditions Precedent to the Loan.

     In addition to having received a notice of borrowing as set forth in
Section 2(b) hereof, the obligation of the Bank to make the Loan hereunder
is subject to the condition precedent that the following conditions shall
have been fulfilled to the satisfaction of the Bank and its counsel on or
before the Drawdown Date:

     (a) Guaranty. The Bank shall have received a duly executed copy of the
Guaranty.

     (b) Corporate Documents. The Bank shall have received certified copies
of the charter and by-laws (or equivalent documents) of the Borrower and
the Guarantor and of all corporate authority for the Borrower and the
Guarantor (including, without limitation, board of director resolutions,
powers of attorney and evidence of the incumbency of officers) with respect
to the execution, delivery and performance of this Note and the Guaranty
and each other

                                     6

<PAGE>

document to be delivered by the Borrower in connection with the Loan and
the Guarantor in connection with the Guaranty.

     (c) Opinion of Counsel. The Bank shall have received (i) an opinion,
dated the Drawdown Date, from Rafael Villegas Ascanio, special Venezuelan
counsel to the Borrower, satisfactory in form and substance to the Bank,
and in each case covering such other matters as the Bank may reasonably
request (and the Borrower shall have instructed such counsel to deliver
such opinion to the Bank) and (ii) an opinion dated the Drawdown Date, from
Arias, Fabrega & Fabrega, special Panamanian counsel to the Guarantor
satisfactory in form and substance to the Bank, and in each case covering
such other matters as the Bank may reasonably request (and the Guarantor
shall have instructed such counsel to deliver such opinion to the Bank).

     (d) Process Agent Acceptance. The Bank shall have received an executed
letter, in form and substance satisfactory to the Bank, from a process
agent, located in New York State and acceptable to the Bank, acknowledging
such agent's acceptance of its appointment as agent for service of process
with respect to the Borrower and the Guarantor.

     (e) No Material Adverse Change. There shall not have occurred any
event which, in the opinion of the Bank, would involve a material adverse
change in the economic or financial condition of the Borrower or the
Guarantor or in general market conditions.

     (f) No Event of Default; Accuracy of Representations and Warranties.
On the Drawdown Date, both immediately prior to the making of such Loan and
also after giving effect thereto and to the intended use thereof (x) no
Event of Default or an event that with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing; and
(y) the representations and warranties made by the Borrower in Section 8
hereof and the Guarantor in Section 9 of the Guaranty shall be true and
correct on and as of such Drawdown Date.

     (g) Government Approvals. The Bank shall have received certified
copies of English language translations of all approvals and consents
required by any governmental authority for the incurrence by the Borrower
of the Loan and for the issuance by the Guarantor of the Guaranty.

     (h) Other Documents. The Bank shall have received such other documents
as the Bank or its counsel may reasonably request.

     8. Representations and Warranties. The Borrower represents and
warrants to the Bank as follows:

     (a) Incorporation and Existence. The Borrower is a company duly
organized and validly existing under the laws of Venezuela and has the
power and authority to execute and deliver this Note, to incur the
obligations to be incurred by it hereunder and to perform and observe the
provisions hereof.

                                     7

<PAGE>

     (b) Corporate Power and Authority. The Borrower has taken all
necessary action to authorize the execution and delivery of this Note and
all other documents to be executed and delivered by it in connection
herewith and the performance of its obligations hereunder.

     (c) Legally Enforceable Note. This Note has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

     (d) Governmental Authorizations. All governmental authorizations, if
any, and actions of any kind necessary for the due execution, delivery and
performance of this Note by the Borrower or required for the validity or
enforceability against the Borrower of this Note, have been obtained or
performed and are valid and subsisting in full force and effect.

     (e) Consent and Approvals. No consent or approval of, or notice to,
any creditor of the Borrower is required by the terms of any agreement or
instrument evidencing any Indebtedness of the Borrower for the execution or
delivery of, or the performance of the obligations of the Borrower under,
this Note, and such execution, delivery and performance will not result in
any breach or violation of, or constitute a default under, the charter or
by-laws of the Borrower or any agreement, instrument, judgment, order,
statute, rule or regulation applicable to the Borrower or to any of its
property.

     (f) Pari Passu Status. The payment obligations of the Borrower under
this Note rank at least pari passu with all of its other unsecured
Indebtedness, whether now existing or hereafter outstanding, except for
obligations accorded preference by mandatory provisions of law.

     (g) Absence of Litigation. There are no actions, proceedings or claims
pending or, to the knowledge of the Borrower, threatened, the adverse
determination of which might have a materially adverse effect on the
financial condition of the Borrower or impair its ability to perform its
obligations under, or affect the validity or enforceability of, this Note.

     (h) Withholding. Except for the 4.95% withholding tax imposed by
Venezuela, to be applied on interest payments made to banks incorporated
outside of Venezuela, no withholding in respect of any taxes imposed by or
within Venezuela or any political subdivision or taxing authority thereof
or therein is required to be made from any payment by the Borrower under
this Note.

     (i) Waiver of Sovereign Immunity; Commercial Activity. Neither the
Borrower nor its property has any right of immunity on the grounds of
sovereignty or otherwise from jurisdiction, attachment (before or after
judgment) or execution in respect of any action or proceeding relating in
any way to this Note that may be brought in the courts of Venezuela. The
execution, delivery and performance of this Note by the Borrower constitute
commercial transactions.

                                     8

<PAGE>

     (j) Use of Proceeds. The Borrower is a non-United States resident and
the proceeds of the Loan shall be used for general corporate purposes and
only to finance the Borrower's operations outside the United States.

     9. Covenants. From the Closing Date, the Borrower covenants as
follows:

     (a) Lines of Business. The Borrower will at all times continue to
engage in the same line of business engaged in by the Borrower on the date
hereof and will not engage to any substantial extent in any line or lines
of business activity other than such current lines of business.

     (b) Limitation on Fundamental Changes. The Borrower will not convey,
sell, lease, transfer or otherwise dispose of, in one transaction or in a
series of transactions, a material portion of the property necessary or
useful in the conduct of its business.

     (c) Financial Information. The Borrower shall deliver to the Bank
promptly, and in any event within 60 days, following the end of each fiscal
quarter of the Borrower such financial statements and other financial
information concerning the Borrower as the Bank may reasonably request.

     (d) Government Approvals. The Borrower shall maintain and keep in full
force and effect all approvals and consents required by any governmental
authority for the incurrence of the Loan.

     10. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

     (a) The Borrower fails to pay any principal, interest, or other amount
hereunder as and when such amount becomes payable (whether at stated
maturity or otherwise); or

     (b) The Borrower fails to perform or observe any covenant or agreement
contained herein to be performed or observed by it or any representation or
warranty of (i) the Borrower in this Note or (ii) the Guarantor in the
Guaranty or (iii) the Borrower or the Guarantor in any other document
delivered in connection herewith proves to have been incorrect, incomplete
or misleading in any material respect at the time it was made or repeated
or deemed to have been made or repeated; or

     (c) The Borrower or any material Subsidiary or the Guarantor (A) fails
to pay any of its Indebtedness in an aggregate amount equal to or exceeding
U.S. $20,000,000 (or its equivalent in other currencies) as and when such
Indebtedness becomes payable (subject to any applicable grace period) (as
used in this clause (e), "Indebtedness" shall not include any Indebtedness
of the Borrower or any material Subsidiary or the Guarantor owing to any
other material Subsidiary or the Borrower or the Guarantor) or (B) fails to
perform or observe any material covenant or agreement to be performed or
observed by it under one or more agreements or instruments evidencing
Indebtedness in an aggregate amount equal to or exceeding U.S. $20,000,000
(or its

                                     9

<PAGE>

equivalent in other currencies) (subject to any applicable grace period)
if, as a result of such failure, any other party to such agreements or
instruments is entitled to exercise, and has not irrevocably waived, the
right to accelerate the maturity of any amount owing thereunder; or

     (d) The Borrower or any material Subsidiary or the Guarantor (i) is
dissolved, (ii) fails or is unable to pay its debts generally as they
become due, (iii) commences a voluntary case in bankruptcy or any other
action or proceeding for any other relief under any law affecting
creditors' rights that is similar to a bankruptcy law or (iv) consents by
answer or otherwise to the commencement against it of an involuntary case
in bankruptcy or any other such action or proceeding, or a proceeding is
commenced in an involuntary case in bankruptcy in respect of the Borrower
or any material Subsidiary or the Guarantor or any property of the Borrower
or any such material Subsidiary or the Guarantor if such proceeding is not
dismissed or stayed on or before the thirtieth day after the entry thereof
or if any such dismissal or stay ceases to be in effect and such
proceeding, in the reasonable opinion of the Bank, materially affects the
ability of the Borrower to perform its obligations under this Note or the
Guarantor to perform its obligations under the Guaranty; or

     (e) Any governmental authorization necessary for the performance of
any obligation of the Borrower under this Note or the Guarantor under the
Guaranty fails to become or remain valid and subsisting in full force and
effect; or

     (f) Any governmental authority or court takes any action that, in the
reasonable opinion of the Bank, materially adversely affects the condition
of the Borrower or the Guarantor or the ability of the Borrower or the
Guarantor to perform their respective obligations under this Note or the
Guaranty; or

     (g) The aggregate amount of unsatisfied judgments, decrees or orders
for the payment of money against the Borrower or any material Subsidiary or
the Guarantor exceeds U.S. $20,000,000 or the equivalent thereof in any
other currency or currencies; or

     (h) The Borrower or any material Subsidiary or the Guarantor sells or
otherwise disposes of all or a substantial part of its assets or ceases to
conduct all or a substantial part of its business as now conducted, or
merges or consolidates with any other company without the prior written
consent of the Bank, unless the entity surviving such merger or
consolidation is the Borrower or the Guarantor; or

     (i) The payment obligations of the Borrower under this Note cease to
rank at least pari passu with all of its other unsecured Indebtedness,
except for obligations accorded preference by mandatory provisions of law;
or

     (j) The Guarantor shall cease at any time to have, directly or
indirectly, voting, disposition and economic rights in respect of at least
51% of the outstanding capital stock of the Borrower;or

                                     10

<PAGE>

     (k) The Guaranty shall at any time after its execution and delivery
and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Guarantor or the Guarantor shall deny it has any further
liability or obligation thereunder or shall fail to perform its obligations
thereunder; or

     (l) Any event of default under the Guarantor's Syndicated Facility
shall have occurred.

THEN, in any such case, if the Bank shall elect by notice to the Borrower,
the unpaid principal amount of this Note, together with accrued interest,
shall become forthwith due and payable; provided that in the case of an
Event of Default under clause (f) above, the unpaid principal amount of
this Note, together with accrued interest, shall immediately become due and
payable without any notice or other action by the Bank.

     11. Notices. All notices, requests, demands or communications
hereunder shall be in writing and shall be given to or made upon the
respective parties hereto at the following addresses:

     If to the Borrower:                           If to the Bank:
     Panamco de Venezuela S.A.                     The Chase Manhattan Bank
     4th Transversal de los Cortijos de Lourdes    270 Park Avenue 19th Floor
     Edificio Panamco Venezuela                    New York, New York 10017
     Caracas, Venezuela 1070                       Attn.:  Linda M. Meyer
     Attn.:  Chief Financial Officer               Tel: (212) 270-6776
     Tel: (582) 203-6411                           Fax: (212) 270-8890
     Fax: (582) 203-6169

     12. Miscellaneous.

     (a) The Borrower waives presentment, notice of dishonor, protest and
any other formality with respect to this Note.

     (b) This Note sets forth the entire agreement between the parties
hereto, supersedes all prior communications and understandings of any
nature and may not be amended, supplemented or altered except in a writing
signed by both parties hereto.

     (c) The Borrower agrees to reimburse the Bank on demand for all
reasonable costs, expenses and charges (including reasonable fees and
charges of external and in-house legal counsel for the Bank) in connection
with the preparation, negotiation, execution, interpretation, performance
or enforcement of this Note.

     (d) This Note shall be binding on the Borrower and its successors and
assigns and shall inure to the benefit of the Bank and its successors and
assigns, except that the Borrower may not delegate any obligations
hereunder without the prior written consent of the Bank. The Bank may at
any time assign, pledge or otherwise transfer or sell participations in
this Note or any of its

                                     11

<PAGE>

rights with respect thereto to any third party, including, but not limited,
to any Federal Reserve Bank.

     (e) The Bank agrees (on behalf of itself and each of its affiliates,
directors, officers, employees and representatives) to use reasonable
precautions to keep confidential, in accordance with safe and sound banking
practices, any non-public information supplied to it by the Borrower
pursuant to this Note which is identified by the Borrower as being
confidential at the time the same is delivered to the Bank, provided that
nothing herein shall limit the disclosure of any such information (A) to
any subsidiaries or affiliates of the Bank, (B) to the extent required by
statute, rule, regulation or judicial process, (C) to counsel for the Bank,
(D) to bank examiners, auditors or accountants, (E) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding
relating to this Note or the enforcement of rights hereunder, (F) to any
actual or prospective assignee or participant, or (G) to any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations; provided,
further, that in no event shall the Bank be obligated or required to return
any materials furnished by the Borrower.

     (f) Any suit, action or proceeding against the Borrower with respect
to this Note or on any judgment entered by any court in respect thereof may
be brought in the Supreme Court of the State of New York, County of New
York, or in the United States District Court for the Southern District of
New York or in the courts of Panama or Venezuela, as the Bank may elect in
its sole discretion, and the Borrower submits to the nonexclusive
jurisdiction of such courts for the purpose of any such suit, action or
proceeding or judgment. The Borrower hereby waives any objection which it
may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Note brought in such courts,
and hereby further irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. The Borrower irrevocably appoints CT Corporation System, which
currently maintains a New York City office situated at 111 Eighth Avenue,
13th Floor, New York, New York 10011, U.S.A., as its agent to receive
service of process or other legal summons for purposes of any such suit,
action or proceeding, and agrees that the failure of such agent to give any
notice of any such process or summons to the Borrower shall not impair or
affect the validity of such service or of any judgment based thereon. So
long as the Borrower has any obligation under this Note, it will maintain a
duly appointed agent in New York City for the service of such process or
summons.

     (g) The Borrower hereby waives any right the Borrower may have to jury
trial.

     (h) This Note shall be governed by and interpreted and construed in
accordance with the law of the State of New York, without regard to
principles of conflicts of laws.

     (i) To the extent that the Borrower may now or hereafter be entitled,
in any jurisdiction in which judicial proceedings may at any time be
commenced with respect to this Note, to claim for itself or its revenues or
properties any immunity from the jurisdiction of any court or from legal
process (whether from service or notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or
otherwise), and to the

                                     12

<PAGE>

extent that in any such jurisdiction there may be attributed to the
Borrower any such immunity (whether or not claimed), the Borrower hereby
irrevocably agrees not to claim, and hereby waives, such immunity in
respect of its obligations under this Note.

     (j) Each reference in this Note to U.S. Dollars is of the essence. The
obligation of the Borrower in respect of any amount due under the Note
shall, notwithstanding any payment in any other currency (whether pursuant
to a judgment or otherwise), be discharged only to the extent of the amount
in U.S. Dollars that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the Banking Day immediately following the
day on which the Bank receives such payment. If the amount in U.S. Dollars
that may be so purchased for any reasons falls short of the amount
originally due, the Borrower shall pay such additional amounts, in U.S.
Dollars, as may be necessary to compensate for such a shortfall. Any
obligation of the Borrower not discharged by such payment shall be due as a
separate and independent obligation and, until discharged as provided
herein, shall continue in full force and effect.

     (k) The Borrower acknowledges that the Bank may have and may in the
future have investment and commercial banking, trust and other
relationships with other companies in respect of which the Borrower may
have conflicting interests regarding the transactions described herein and
otherwise. The Borrower acknowledges that the Bank may perform its
functions in connection with such fiduciary or other relationships without
regard to its relationship with the Borrower hereunder. The Bank will not
use confidential information obtained from Borrower by virtue of the
transactions contemplated by this Note or its other relationships with the
Borrower in connection with the performance by the Bank of services for
other companies, and the Bank will not furnish any such information to
other companies. The Borrower also acknowledges that the Bank has no
obligation to use in connection with the transactions contemplated by this
Note, or to furnish to the Borrower, confidential information obtained from
other companies.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.

                                 PANAMCO DE VENEZUELA S.A.

                                 By:
                                    ------------------------------------
                                    Name:
                                    Title:

                                    13

<PAGE>

                                  GUARANTY

     GUARANTY dated as of February 22, 2001 made by PANAMERICAN BEVERAGES
INC., a Panamanian corporation (the "Guarantor"), in favor of The Chase
Manhattan Bank (the "Bank").

     PRELIMINARY STATEMENTS: The Bank is willing to make a u.s.$25,000,000
loan to PANAMCO DE VENEZUELA S.A. (the "Borrower") (such loan being the
"Facility" and any writing evidencing, supporting or securing a Facility
being a "Facility Document"). The Guarantor indirectly owns 100% of the
stock or other ownership interests of the Borrower and is financially
interested in its affairs.

     THEREFORE, in order to induce the Bank to extend credit or give
financial accommodation under the Facility, the Guarantor agrees as
follows:

     Section 1. Guaranty of Payment. The Guarantor unconditionally and
irrevocably guarantees to the Bank the punctual payment of all sums now
owing or which may in the future be owing by the Borrower under the
Facility, when the same are due and payable, whether on demand, at stated
maturity, by acceleration or otherwise, and whether for principal,
interest, fees, expenses, indemnification or otherwise (all of the
foregoing sums being the "Liabilities"). The Liabilities include, without
limitation, interest accruing after the commencement of a proceeding under
bankruptcy, insolvency or similar laws of any jurisdiction at the rate or
rates provided in the Facility Documents. This Guaranty is a guaranty of
payment and not of collection only. The Bank shall not be required to
exhaust any right or remedy or take any action against the Borrower or any
other person or entity or any collateral. The Guarantor agrees that, as
between the Guarantor and the Bank, the Liabilities may be declared to be
due and payable for the purposes of this Guaranty notwithstanding any stay,
injunction or other prohibition which may prevent, delay or vitiate any
declaration as regards the Borrower and that in the event of a declaration
or attempted declaration, the Liabilities shall immediately become due and
payable by the Guarantor for the purposes of this Guaranty.

     Section 2. Guaranty Absolute. The Guarantor guarantees that the
Liabilities shall be paid strictly in accordance with the terms of the
Facility. The liability of the Guarantor under this Guaranty is absolute
and unconditional irrespective of: (a) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Facility
Documents or Liabilities, or any other amendment or waiver of or any
consent to departure from any of the terms of any Facility Document or
Liability; (b) any release or amendment or waiver of, or consent to
departure from, any other guaranty or support document, or any exchange,
release or non-perfection of any collateral, for all or any of the Facility
Documents or Liabilities; (c) any present or future law, regulation or
order of any jurisdiction (whether of right or in fact) or of any agency
thereof purporting to reduce, amend, restructure or otherwise affect any
term of any Facility Document or Liability; (d) without being limited by
the foregoing, any lack of validity or enforceability of any Facility
Document or Liability; and (e) any other defense whatsoever which might
constitute a defense available to, or discharge of, the Borrower or a
guarantor.

     Section 3. Continuing Guaranty. This Guaranty is a continuing guaranty
of the payment of all Liabilities now or hereafter existing under the
Facility and shall remain in full force

<PAGE>

and effect until payment in full of all Liabilities and other amounts
payable under this Guaranty and until the Facility are no longer in effect
or, if earlier, when the Guarantor has given the Bank written notice that
this Guaranty has been revoked; provided that any notice under this Section
shall not release the Guarantor from any Liability, absolute or contingent,
existing prior to the Bank's actual receipt of the notice at its branches
or departments responsible for the Facility.

     Section 4. Reinstatement. This Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any of
the Liabilities is rescinded or must otherwise be returned by the Bank on
the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though the payment had not been made.

     Section 5. Subrogation. The Guarantor shall not exercise any rights
which it may acquire by way of subrogation, by any payment made under this
Guaranty or otherwise, until all the Liabilities have been paid in full and
the Facility are no longer in effect; provided that if the Guarantor is an
"insider" of the Borrower, as such term is defined in Section 101 of the
Federal Bankruptcy Code, the Guarantor hereby irrevocably waives any and
all right to which it may be entitled, by operation of law or otherwise,
upon making any payment hereunder, to be subrogated to the rights of the
Bank against the Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Borrower in respect thereof.
If any amount is paid to the Guarantor on account of subrogation rights
under this Guaranty at any time when all the Liabilities have not been paid
in full, the amount shall be held in trust for the benefit of the Bank and
shall be promptly paid to the Bank to be credited and applied to the
Liabilities, whether matured or unmatured or absolute or contingent, in
accordance with the terms of the Facility. If the Guarantor makes payment
to the Bank of all or any part of the Liabilities and all the Liabilities
are paid in full and commitments under the Facility are no longer
outstanding, the Bank shall (subject to the proviso in the first sentence
of this Section), at the Guarantor's request, execute and deliver to the
Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by
subrogation to the Guarantor of an interest in the Liabilities resulting
from the payment.

     Section 6. Subordination. Without limiting the Bank's rights under any
other agreement, any liabilities owed by the Borrower to the Guarantor in
connection with any extension of credit or financial accommodation by the
Guarantor to or for the account of the Borrower, including but not limited
to interest accruing at the agreed contract rate after the commencement of
a bankruptcy or similar proceeding, are hereby subordinated to the
Liabilities, and such liabilities of the Borrower to the Guarantor, if the
Bank so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Bank and shall be paid over to the Bank on
account of the Liabilities but without reducing or affecting in any manner
the liability of the Guarantor under the other provisions of this Guaranty.

     Section 7. Payments Generally. All payments by the Guarantor shall be
made in the manner, at the place and in the currency (the "Payment
Currency") required by the Facility Documents; provided, however, that (if
the Payment Currency is other than U.S. dollars) the Guarantor may, at its
option (or, if for any reason whatsoever the Guarantor is unable to effect
payments in the foregoing manner, the Guarantor shall be obligated to) pay
to the Bank at its principal office the equivalent amount in U.S. dollars
computed at the selling rate of the Bank or a selling rate chosen by the
Bank, most recently in effect on or prior to the date the Liability becomes
due, for cable transfers of the Payment Currency to the place where the
Liability is

                                     2

<PAGE>

payable. In any case in which the Guarantor makes or is obligated to make
payment in U.S. dollars, the Guarantor shall hold the Bank harmless from
any loss incurred by the Bank arising from any change in the value of U.S.
dollars in relation to the Payment Currency between the date the Liability
becomes due and the date the Bank is actually able, following the
conversion of the U.S. dollars paid by the Guarantor into the Payment
Currency and remittance of such Payment Currency to the place where such
Liability is payable, to apply such Payment Currency to such Liability. Any
payment obligation of the Guarantor under this Guaranty in U.S. dollars
shall not be discharged by an amount paid in another currency or in another
place, pursuant to a judgment or otherwise, to the extent that the amount
so paid on prompt conversion to U.S. dollars and transfer to New York, New
York under normal banking procedures does not yield the amount of U.S.
dollars in New York, New York due under this Guaranty, and the Bank shall
have a separate cause of action against the Guarantor in case of any such
shortfall.

     Section 8. Certain Taxes. The Guarantor further agrees that all
payments to be made hereunder shall be made without setoff or counterclaim
and free and clear of, and without deduction for, any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings or restrictions or
conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed by any country or by any political
subdivision or taxing authority thereof or therein ("Taxes"). If any Taxes
are required to be withheld from any amounts payable to the Bank hereunder,
the amounts so payable to the Bank shall be increased to the extent
necessary to yield to the Bank (after payment of all Taxes) the amounts
payable hereunder in the full amounts so to be paid. Whenever any Tax is
paid by the Guarantor, as promptly as possible thereafter, the Guarantor
shall send the Bank an official receipt showing payment thereof, together
with such additional documentary evidence as may be required from time to
time by the Bank.

     Section 9. Representations and Warranties. The Guarantor represents
and warrants that this Guaranty: (a) has been authorized by all necessary
action; (b) does not violate any agreement, instrument, law, regulation or
order applicable to the Guarantor; (c) does not require the consent or
approval of any person or entity, including but not limited to any
governmental authority, or any filing or registration of any kind; and (d)
is the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except to the extent
that enforcement may be limited by applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally.

     Section 10. Covenants The Guarantor covenants as follows:

     (a) Incorporation by Reference. The Guarantor will comply with and be
bound by the covenant provisions set forth in Section 5 of the Syndicated
Facility during the term of the Facility. The covenants under section 5 of
the Syndicated Facility, together with the related definitions, as in
effect on the date hereof are hereby incorporated herein by reference
(mutandis mutandis) for the benefit of the Bank and shall continue for the
purposes of this section 10 regardless of any amendment of, or any consent
to any deviation from or other modification of the Syndicated Facility. If
there is (x) any repayment in full of the loans, and termination of the
commitments, under the Syndicated Facility, or (y) the termination of the
Syndicated Facility or the participation of the Bank therein, in each case,
prior to the Maturity Date of the Facility, then the Guarantor and the Bank
shall negotiate in good faith mutually agreeable covenants with which the
Guarantor shall comply hereunder to replace the covenants set forth in
section 5 of the

                                     3

<PAGE>

Syndicated Facility. As used herein, the term "Syndicated Facility" means
the U.S.$265,000,000 Credit Agreement entered into by the Borrower on
November 21, 2000.

     (b) Financial Information. The Guarantor shall deliver to the Bank
promptly, and in any event within 30 days, following the end of each fiscal
quarter of the Guarantor such financial statements and other financial
information concerning the Guarantor as the Bank may reasonably request.

     (c) Government Approvals. The Guarantor shall maintain and keep in
full force and effect all approvals and consents required by any
governmental authority for the issuance of the Guaranty.

     Section 11. Remedies Generally. The remedies provided in this Guaranty
are cumulative and not exclusive of any remedies provided by law.

     Section 12 Setoff. The Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim
the Bank may otherwise have, the Bank shall be entitled, at its option, to
offset balances (general or special, time or demand, provisional or final)
held by it for the account of the Guarantor at any of the Bank's offices,
in U.S. dollars or in any other currency, against any amount payable by the
Guarantor under this Guaranty which is not paid when due (regardless of
whether such balances are then due to the Guarantor), in which case it
shall promptly notify the Guarantor thereof; provided that the Bank's
failure to give such notice shall not affect the validity thereof.

     Section 13. Formalities. The Guarantor waives presentment, notice of
dishonor, protest, notice of acceptance of this Guaranty or incurrence of
any Liability and any other formality with respect to any of the
Liabilities or this Guaranty.

     Section 14. Amendments and Waivers. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
therefrom, shall be effective unless it is in writing and signed by the
Bank and the Guarantor, and then the waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
No failure on the part of the Bank to exercise, and no delay in exercising,
any right under this Guaranty shall operate as a waiver or preclude any
other or further exercise thereof or the exercise of any other right.

     Section 15. Expenses. The Guarantor shall reimburse the Bank on demand
for all reasonable costs, expenses and charges (including without
limitation fees and charges of external legal counsel for the Bank and
costs allocated by its internal legal department) incurred by the Bank in
connection with the preparation, performance or enforcement of this
Guaranty. The obligations of the Guarantor under this Section shall survive
the termination of this Guaranty.

     Section 16. Assignment. This Guaranty shall be binding on, and shall
inure to the benefit of the Guarantor, the Bank and their respective
successors and assigns; provided that the Guarantor may not assign or
transfer its rights or obligations under this Guaranty without the written
consent of the Bank. Without limiting the generality of the foregoing: (a)
the obligations of the Guarantor under this Guaranty shall continue in full
force and effect and shall be binding on any successor partnership and on
previous partners and their respective estates if the Guarantor is

                                     4

<PAGE>

a partnership, regardless of any change in the partnership as a result of
death retirement or otherwise; and (b) the Bank may assign, sell
participations in or otherwise transfer its rights under the Facility to
any other person or entity, and the other person or entity shall then
become vested with all the rights granted to the Bank in this Guaranty or
otherwise.

     Section 17. Captions. The headings and captions in this Guaranty are
for convenience only and shall not affect the interpretation or
construction of this Guaranty.

     Section 18. Governing Law. This Guaranty shall be governed by the law
of the State of New York.

     Section 19. Jurisdiction; Service of Process. The Guarantor hereby
agrees that any action or proceedings against the Guarantor with respect to
this Guaranty or any judgment entered by any court in respect thereof may
be brought in any court of or in the State of New York, and the Guarantor
submits to the non-exclusive jurisdiction of each such court for the
purpose of any such action or proceeding. The Guarantor agrees that service
of all legal process in any action or proceeding in New York may be made
upon its process agent in New York, C T Corporation, having offices on the
date hereof at 111 Eighth Avenue, 13th Floor, New York, New York, 10011
(the "New York Process Agent"). The Guarantor hereby irrevocably appoints
the New York Process Agent its true and lawful attorney-in-fact in its
name, place and stead to accept such service of any and all such process
and agrees that the failure of the New York Process Agent to give any
notice of any such service of process to the Guarantor shall not impair or
affect the validity of such service or of any judgment based thereon. The
Guarantor agrees that it will at all times maintain in New York an agent
for service of process in connection with any such action or proceeding
against the Guarantor, and irrevocably consents to the service of process
in any action or proceeding in said courts by the mailing thereof by
registered or certified mail, postage prepaid, to the Guarantor at its
address provided for herein. The foregoing shall not, however, limit the
right of the Bank to serve process in any other manner permitted by law or
to commence any action or proceeding or to obtain execution of judgment in
any appropriate jurisdiction including but not limited to Panama or
Venezuela. The Guarantor irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any action or proceeding
arising out of or relating to this Guaranty brought in New York, and
further irrevocably waives any claim that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. The
Guarantor may not bring any action or proceeding against the Bank or any of
its affiliates with respect to this Guaranty or any other document
delivered in connection with this Guaranty in any jurisdiction other than
the courts of the State of New York and the United States District Court
located in the Borough of Manhattan in New York City. The Guarantor waives
any right it may have to jury trial. To the extent that the Guarantor has
or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether from service or notice, attachment prior to
judgment, attachment in aid of execution of a judgment, execution or
otherwise), the Guarantor hereby irrevocably waives such immunity in
respect of its obligations under this Guaranty.

     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its authorized officer as of the date first above
written.

                                             PANAMERICAN BEVERAGES INC.

                                     5

<PAGE>

                                             By:
                                                -----------------------------
                                                 Name:
                                                 Title:

                                             Address:

                                             Torre Dresdner Bank
                                             Floor 7, Calle #50
                                             Panama City 55-0820
                                             Republic of Panama

                                     6

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