Document:

Exhibit 10.5(a)

 

CONFIDENTIAL
TREATMENT

REQUESTED
PURSUANT TO RULE 406

 

United
Contract No. 165824-1

 

February 13, 2004

 

Amendment
No. 1 to

 

United
Express® Agreement

 

between

 

United
Air Lines, Inc.

 

and

 

Republic
Airline, Inc.

 

 

CERTAIN PORTIONS OF
THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 406 OF THE SECURITIES ACT OF 1933. 
THE OMITTED MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

AMENDMENT NO. 1 TO

UNITED EXPRESSÒ
AGREEMENT

 

This Amendment No. 1 (the “Amendment”) dated
February 13, 2004, amends the United ExpressÒ
Agreement, dated as of February 9, 2004 (the “Agreement”), between UNITED
AIR LINES, INC. (“United”), and Republic Airline, Inc. (“Contractor”).

 

WHEREAS, United and Contractor entered into
the Agreement; and

 

WHEREAS, United and Contractor seek to amend
the Agreement as and to the extent provided herein;

 

NOW, THEREFORE, in consideration of the
foregoing premises, mutual covenants and obligations hereinafter contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

 

1.                                      Defined
Terms.  All
capitalized terms used but not defined herein shall have the meaning set forth
in the Agreement.

 

2.                                      Call
Option.  Section XVI.I.2
of the Agreement shall be deleted and replaced with the following:

 

2.                                       The
Call Option shall be governed and limited by the following:

 

a.                                       The
Call Option shall apply to any or all regional jet aircraft operated by
Contractor as United Express pursuant to the terms of this Agreement at the
time of the event or events described in Article XVI.I.1 above, provided
that if United exercises the Call Option for less than all of such regional jet
aircraft, it shall not exercise such Call Option for at least [*] such aircraft
which are to be selected by United.

 

b.                                      United
shall deliver notice of its election to exercise the Call Option no later than
45 days following the date of notice of termination of this Agreement.

 

c.                                       Within
[*] business days following its receipt of a notice by United of its notice of
termination, Contractor shall provide United with: (i) copies of documentation
relating to interests to be assumed by United or retired at United’s expense as
a result of an aircraft lease assignment, sublease or purchase; (ii) lease
rates and other financial information relevant to the assignment, sublease or
purchase; and (iii) the identity of and contact information for all parties
with an interest in said aircraft.

 

d.                                      [Intentionally
Omitted.]

 

e.                                       In
the event United exercises its Call Option (i) with respect to aircraft that
are owned by Contractor or an affiliate of Contractor, Contractor or such
affiliate shall sell the aircraft to United for the purchase price set forth in
paragraph f below, and (ii) with respect to aircraft that are leased by
Contractor, (A) if the leases to such aircraft may be assigned to United,
United shall assume the leases with respect to such aircraft, and (B) if the
leases to such aircraft may not be assigned to United or a consent required
cannot be obtained, United shall sublease such aircraft from Contractor
pursuant to a sublease with terms and conditions that are the same for the
remaining term as they are in the lease under which Contractor leases the

 

* Confidential

 

 

aircraft.  The effective date of
any such sale, lease, or sublease shall occur promptly after United’s election
to exercise the Call Option but no later than [*] days after the notice.

 

f.                                         In
the event of a sale of an aircraft under paragraph e(i) above, the purchase
price for the aircraft shall be [*].

 

g.                                      In
the event of a lease assumption under sub paragraph e(ii)(A) above, Contractor
shall be entitled to either a full release from all liabilities and obligations
under such lease other than obligations relating to periods prior to the date
of assignment to United or United shall indemnify the Contractor from
liabilities and obligations  arising
after the date of assignment. Contractor shall indemnify United from all
liabilities and obligations arising prior to the date of the assignment.

 

h.                                      In
the event of either a lease assumption under 
paragraph e(ii)(A) above or a sublease under paragraph e(ii)(B) above
United will indemnify Contractor against all liabilities arising from and after
such assignment or sublease as the case may be. Contractor shall indemnify
United from all liabilities and obligations arising prior to the date of the
assignment or sublease, as the case may be. 
United shall also attempt to obtain a termination of all guarantees and
return to Contractor (or reimburse) all applicable deposits, letters of credit,
or other collateral, but such release shall not include (and instead Contractor
shall assign to the extent assignable to United without further compensation,
and if not assignable, Contractor shall subrogate its rights regarding any such
deposits or reserves held by or subject to the security interest of third
parties to United or otherwise put United in the same position as if such
rights were assignable) any deposits or reserves held by or subject to the
security interest of third parties related to the maintenance or operation of
the aircraft (including the airframe, any engine, any landing gear, or other
component or part).  United shall assume
all obligations of Contractor with respect to such lease or sublease as of the
date of assignment or sublease and adjustments shall be made between the
parties for advance or arrears payment of rent.  Such adjustment shall be the difference between:  (i) the cash amount of rent actually paid
under the lease during its entire term as of the time of the assignment, and
(ii) the total rent due during the entire term of the lease times the
percentage of the number of days since the beginning of the lease to the total
number of days in the entire term of the lease.  In the event that United and the Contractor working together are
unable to obtain a release, for the benefit of Contractor, then United shall
indemnify Contractor from and against all losses and liabilities of any kind
arising from and after such assignment or sublease in the same manner
contemplated above.

 

i.                                          Following
a notice of termination from United, provided that Contractor does not operate
the aircraft in a manner that is prohibited under the terms of this Agreement,
United shall continue to pay aircraft ownership costs as provided in
Section VIII.A.8 hereof in respect of all aircraft subject to United’s
exercise of its Call Option until (a) in the event United exercises its Call Option,
the effective date of the sale, lease or sublease of the respective aircraft as
provided herein, or (b) in the event that United does not exercise its Call
Option, the date of expiration of its Call Option, the date of United’s written
notice providing United’s early release of its rights to such Call Option, or
the date of United’s revocation of its exercise of the Call Option as provided
under paragraph f, in each case with respect to any particular aircraft.

 

j.                                          For
each aircraft that United acquires pursuant to the Call Option, United will
purchase from the Contractor and take delivery of a mutually-selected,
proportional share of Contractor’s spare engines, rotable and expendable spare
parts, and tools, owned by Contractor to support the operation of the aircraft
type.  The aggregate proportional share
of Contractor’s

 

* Confidential

 

 

spare engines, spare parts and tools shall be determined as the number
of aircraft acquired by United as a percentage of the Contractor’s fleet, by
aircraft type.  Spare parts, spare
engines and tools will be purchased by United at fair market value in “as is
where is” condition with fair market value determined in the manner provided in
paragraph f above.

 

k.                                       In
the event United exercises its Call Option with respect to any aircraft as to
which Contractor has prepaid rent under the terms of any lease or financing
agreement, United shall reimburse Contractor for all prepaid rent to the extent
not previously included in the aircraft ownership costs previously paid by United
or otherwise.

 

3.                                      Miscellaneous.

 

A.                                   This
Amendment constitutes the entire understanding of the parties with respect to
the subject matter hereof, and supersedes all previous agreements and
understandings, oral and written, with respect to such specific matter and will
not be modified, amended or terminated by mutual agreement or in any manner
except by an instrument in writing, executed by the parties hereto.

 

B.                                     This
Amendment may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which, taken together, shall constitute a
single instrument.

 

C.                                     Except
as expressly amended herein, the Agreement shall remain in full force and
effect.

 

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

 

	
  REPUBLIC
  AIRLINE, INC.

  	
  UNITED AIR
  LINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Bryan K. Bedford

  	
   

  	
  By:

  	
   /s/ Gregory T. Taylor

  	
   

  
	
  Name:  Bryan K. Bedford

  	
  Name: Gregory T. Taylor

  
	
  Title:   Chief Executive Officer

  	
  Title: Senior Vice President PlanningExhibit 10.5(b)

 

CONFIDENTIAL TREATMENT

REQUESTED PURSUANT TO RULE 406

 

United Contract No. 165974

 

February 13, 2004

 

 

United
Express® Agreement

 

between

 

United
Air Lines, Inc.

 

and

 

Chautauqua
Airlines, Inc. 

 

 

CERTAIN PORTIONS OF
THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 406 OF THE SECURITIES ACT OF 1933. 
THE OMITTED MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE

  	
  TITLE

  	
   

  
	
  I.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  II.

  	
  SCOPE,
  TERM, AND CONDITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. SCOPE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. TERM

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. CONDITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. CERTAIN ACTIONS UPON EFFECTIVENESS

  	
   

  
	
   

  	
   

  	
   

  
	
  III.

  	
  SUPPORT
  SERVICES AND FACILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. GENERAL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. SPECIAL SUPPORT SERVICES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. COMMUNICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. RESERVATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E. OPERATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. STATION SUPPORT SERVICES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  G. TARIFFS AND SCHEDULE PUBLICATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  H. SALES SETTLEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  I. ADVERTISING AND PROMOTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  J. AUTOMATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  K. OTHER SUPPLIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  L. CONTRACTOR ASSISTANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  AIR SERVICES
  TO BE PROVIDED BY CONTRACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. AIRCRAFT TO BE USED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. TECHNICAL SPECIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. SCHEDULES AND CHARTERS TO BE OPERATED BY
  CONTRACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. INVENTORY

  	
   

  

 

i

 

	
   

  	
  E. FLIGHT CREWS TO BE USED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. INFLIGHT SALES

  	
   

  
	
   

  	
   

  	
   

  
	
  V.

  	
  OPERATING
  RESTRICTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. UNITED EXPRESS OPERATIONS ONLY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. CODE SHARE LIMITATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. NO OPERATION OUTSIDE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. SEVERABILITY AND REMEDY

  	
   

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  LICENSE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. GRANT OF LICENSE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. TERMS AND CONDITIONS GOVERNING LICENSE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. INFRINGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  ADDITIONAL
  UNDERTAKINGS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. PASS THROUGH COSTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. BULK PURCHASES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. FUEL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. UNIFORMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E. PASSES AND REDUCED RATE TRAVEL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. ENVIRONMENTAL

  	
   

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  RATES
  PAYABLE TO CONTRACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. RATES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. MARKUP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. OPERATING GOALS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. WIRE TRANSFER AND RECONCILIATION

  	
   

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  FEES
  PAYABLE TO UNITED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. GOVERNMENT ASSISTANCE

  	
   

  

 

ii

 

	
  X.

  	
  MAINTENANCE
  AND FUELING

  	
   

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  U.S. MAIL

  	
   

  
	
   

  	
   

  	
   

  
	
  XII.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. INSURANCE TYPES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. 30-DAY NOTICE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. ALTERATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. FAILURE TO MAINTAIN INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  XIII.

  	
  LIABILITY
  AND INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. EMPLOYER’S LIABILITY AND WORKERS’
  COMPENSATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. INDEMNIFICATION BY CONTRACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. INDEMNIFICATION BY UNITED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E. CONTRACTOR’S SUPPLIES LIABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. INDEMNITY FOR INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  G. UNITED DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  XIV.

  	
  REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. BOARDING INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. OPERATING PERFORMANCE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. ANNUAL COST DATA

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E. FINANCIAL STATEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. BENCHMARKING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  G. GOVERNMENT FILINGS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  H. COPY OF GOVERNMENT REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
  XV.

  	
  INDEPENDENT
  CONTRACTORS AND UNAUTHORIZED OBLIGATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. INDEPENDENT CONTRACTORS

  	
   

  

 

iii

 

	
   

  	
  B. EMPLOYEES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. UNAUTHORIZED OBLIGATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. CONTRACTOR OPERATED FLIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  XVI.

  	
  DEFAULT
  AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. OPERATIONS DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. COVENANT DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. DEFAULT BY CONTRACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  D. SIMILAR AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E. NON-COMPLIANCE WITH STANDARDS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  F. CONSEQUENCES OF TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  H. RESTRICTED ACTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  I. CALL OPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  XVII.

  	
  ASSIGNMENT,
  MERGER AND ACQUISITION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. MERGER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. ACQUISITION

  	
   

  
	
   

  	
   

  	
   

  
	
  XVIII.

  	
  CHANGE
  OF LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  XIX.

  	
  TAXES,
  PERMITS AND LICENSES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A. TRANSACTION TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. PAYROLL TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. PERMITS AND LICENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  XX.

  	
  REVIEW

  	
   

  
	
   

  	
   

  	
   

  
	
  XXI.

  	
  JURISDICTION

  	
   

  
	
   

  	
   

  	
   

  
	
  XXII.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  XXIII.

  	
  APPROVALS
  AND WAIVERS

  	
   

  

 

iv

 

	
  XXIV.

  	
  GOVERNING
  LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  XXV.

  	
  CUMULATIVE
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  XXVI.

  	
  FORCE
  MAJEURE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A .FORCE MAJEURE.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  B. EFFECT ON MARKUP.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  C. FIXED AND OVERHEAD REDUCTION.

  	
   

  
	
   

  	
   

  	
   

  
	
  XXVII. SEVERABILITY AND CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  XVIII. ACKNOWLEDGMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  XXIX. CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  XXX.

  	
  RELATED AND THIRD PARTY AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  XXXI.

  	
  ENTIRE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  XXXIII. REFERENCES TO TIME PERIODS

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX A

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX B

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX E

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX F

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX G

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX H

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX I

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX J

  	
   

  

 

v

 

UNITED EXPRESSÒ
AGREEMENT

 

This Agreement, dated as of February 13,
2004, is between UNITED AIR LINES, INC., a Delaware corporation, with its
worldwide headquarters located at 1200 E. Algonquin Road, Elk Grove Township,
IL 60007 (“United”),
and Chautauqua Airlines, Inc., a Delaware corporation, and a wholly owned
subsidiary of Republic Airways Holdings Inc. (“Republic”), having its principal
mailing address at 2500 South High School Road, Suite 160, Indianapolis,
Indiana 46241 (“Contractor”).

 

WITNESSETH:

 

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

 

WHEREAS, Contractor is an air carrier holding
a certificate of public convenience and necessity to be issued pursuant to the
Federal Aviation Act of 1958 that will authorize it to engage in air
transportation of persons and property and provide high frequency, short-haul
scheduled service in particular regions; 

 

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

 

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

 

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

 

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

 

I.                                         DEFINITIONS

 

A.            “Aircraft Used in United Express
Service” means any type and amount of aircraft set forth in Appendix B.

 

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

 

C.            “Carrier
Controlled Costs” means those types and categories of costs deemed within
the control of Contractor as provided in Appendix E.

 

D.            “Contractor’s
United Express Services” means the services or operations provided and
maintained by Contractor in connection with providing scheduled air
transportation service as a United Express Carrier and related ground and other
services to United and its affiliates pursuant to the terms of this Agreement
(including, without limitation, the services required under Article IV).

 

7

 

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

 

F.              [Intentionally
Omitted]

 

G.            “Effective
Date” means the date upon which this Agreement is executed. 

 

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

 

I.                 “Ground
Handling” means the provision of duties applicable to one or more of the
following: (1) customer service ticket counter, (2) customer service gates (3)
ground handling ramp, including mail and freight, (4) gate receipt and
dispatch; all in accordance with United Express Service Standards.  

 

J.              “Joint
Location” means any airport terminal where Contractor provides Contractor’s
United Express Services pursuant to this Agreement and both United and
Contractor have employees stationed.

 

K.            “Marks”
or “United Marks” shall have the meaning set forth in the recitals of this
Agreement.

 

L.             “Pass
Through Cost” means those type and categories of costs deemed not to be
within the control of Contractor, as specified in Appendix E.

 

M.          “Rates”
shall have the meanings set forth in Article VIII.

 

N.            “Related
Agreements” shall have the meaning set forth in Article XXX 

 

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

 

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

 

Q.           “Termination
Date” shall mean, with respect to the Article II specified aircraft types
and ground operations, the applicable expiration, removal, or cancellation
dates set forth in Article II. 

 

8

 

R.            “United
Express Best Practice Operating Performance” means for each of the
four operating performance metrics outlined in Article VIII.C, the
simple average of the calendar year’s twelve operating performance levels (or
results) generated by using the best operating performance attained (whether
“best” is the highest or the lowest, as applicable) for each performance metric
of all United Express Carriers in each month.

 

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

 

T.             “United
Express Service Standards” or “Service Standards” means the procedures
prescribed by United that describe United’s approved standards, policies,
requirements and procedures for various activities relating to the provision of
air transportation services.   These
Service Standards are provided in Appendix I.

 

U.             “United
Location” means any airport terminal facility where Contractor and United
both have operations and United, but not Contractor, has employees stationed.

 

V.            “United’s
Actual Cost” means any and all costs or expenses actually incurred by
United, not including any markup by United, any allocation of administrative or
overhead expenses, or any administrative service charge imposed by United.

 

II.                                     SCOPE,
TERM, AND CONDITIONS

 

A.            SCOPE

 

The scope of this Agreement pertains to the
type and amount of Contractor’s aircraft set forth on Appendix B hereto, and as
such, operations may be amended in accordance herewith from time to time.

 

B.            TERM   This
Agreement is effective as of the Effective Date, and shall terminate with
respect to the applicable aircraft types and amounts as set forth below:

 

1.               Regional
Jets Term.  For any ERJ-145
regional jet aircraft subject to this Agreement, the aircraft shall be divided
into two  (2) tranches of 8 aircraft
each. The term of this Agreement for the first ERJ tranche (the first eight
aircraft delivered) shall expire on June 30, 2014.  The term of the Agreement for the second ERJ
tranche ( the next eight aircraft) shall expire on June 30, 2015, provided
that United shall have the right to terminate this Agreement upon 18 months prior
written notice to Contractor and provided further that such notice shall not be
delivered as to the first tranche of aircraft prior to December 31, 2007,
or as to the second tranche of aircraft prior to December 31, 2008.  

 

2.               [INTENTIONALLY
OMITTED] 

 

C.            CONDITIONS

 

1.               Renewal
Option.  Upon expiration of
the term of this Agreement for each tranche of ERJ-145 aircraft as described in
Article II.B.1,
United may renew the term for all or none of the ERJ-145 aircraft covered under
the terms of this Agreement, for an additional term of five (5) years or less,
by providing written notice to Contractor by no later than eighteen months
prior to the expiration of the Term for the first tranche of aircraft which
notice shall specify the period of the renewal term.

 

9

 

2.               [INTENTIONALLY
OMITTED] 

 

3.               Ground
Operations.  Contractor
agrees to be ground handled by ground service providers of United’s
choosing.  Notwithstanding this,
Contractor’s incentive goals will be based on the operating performance at all
stations for which it provides air service. 
United shall issue a Standards of Service document to all ground service
providers, which will outline United’s expectations  for the ground service
provider’s responsibilities, duties, and processes and procedures.

 

D.            BANKRUPTCY PROVISION

 

Except as provided in this
paragraph, United’s obligations under this Agreement shall be allowable
post-petition, administrative expense obligations of United’s bankruptcy estate
under Section 503 of the Bankruptcy Code. If United breaches this
Agreement before the effective date of its plan of reorganization, Contractor
shall have, subject to objection as provided below, allowed post-petition
administrative expense claims as provided in the Bankruptcy Code.  In addition, and notwithstanding the
foregoing, this Agreement shall be terminated upon the happening of either of
the following events: (i) United’s plan of reorganization (the “Plan”) in its
Chapter 11 bankruptcy case (the “Case”) under which United continues to operate
as an airline is not confirmed by the Bankruptcy Court and United discontinues
all or substantially all flight operations, or (ii) the Case is dismissed or
converted to a case under Chapter 7 of the Bankruptcy Code and United suspends
or discontinues flight operations.  In
the event of such termination, United shall be deemed to have breached the
Agreement as of the effective date of such termination (the “Breach Date”) and
Contractor shall have, subject to objection as provided below, allowed
administrative expense claims (the “Claims”) (a) for any obligations of United
under this Agreement arising before the Breach Date, provided, however, that
this administrative expense claim shall be limited to actual services rendered
at the contract rate and shall not include any claim for future damages or lost
profits resulting from such termination, (b) for any amounts paid or required
to be paid by Contractor (i) to United Express passengers, (ii) under interline
and clearinghouse agreements and (iii) to Contractor’s United Express employees
in each case for which Contractor has not already been reimbursed by United;
(c) for any sums paid or required to be paid by Contractor to third parties in
connection with the manufacture, purchase, lease or financing of aircraft
undertaken as part of Contractor’s commitments under this Agreement and any
maintenance equipment or services or spare parts associated with such aircraft
, including, but not limited to, deposits, down payments, prepayments and
financing and similar fees; (d) for two year’s aircraft ownership costs,
calculated as provided in Section VIII.A.8 for each aircraft as to which
Contractor has taken delivery prior to the Breach Date, provided that if
Contractor is able to utilize such aircraft in some other manner then United
will only be responsible for the variance between the cost stated in
section VIII.A.8 and the aircraft ownership costs recovered by Contractor
during such two year period in connection with such utilization;  (e) for $[ * ] in respect of Contractor’s reasonable startup
costs and expenses such as pilot training expenses and certification costs;
provided, however, that Contractor shall take commercially reasonable actions
to mitigate its damages from the the categories of  activities set forth in clauses (a) through (d) above upon a
termination of this Agreement.  All of
Contractor’s obligations to United under the Agreement shall immediately
terminate as of the Breach Date.   Any
party in interest, including United, shall retain the right, during the normal
claims objection process, to object to the amount (but not the administrative
claim character or priority) of any claim filed by Contractor except with
respect to the damages set forth in clause (e) above.  In addition, subject to Contractor’s rights of setoff and
recoupment under Section 553 of the Bankruptcy Code, Contractor agrees to
refund to United any amounts prepaid on account of services to be performed
after the Breach Date by Contractor or its agents pursuant to this Agreement,
but only to the extent such services are not subsequently performed upon
request of United and that Contractor realizes an actual savings by not
performing such services. United agrees to file and diligently prosecute a

 

* Confidential

10

 

motion seeking bankruptcy court
approval of the terms and conditions of this Agreement. In the event United
does not obtain such bankruptcy court approval in an order in form and substance
satisfactory to Contractor by no later than March 19, 2004, Contractor
shall have the right to terminate this Agreement. Unless waived by United,
Contractor must make such termination decision by March 23, 2004. 

 

III.                               SUPPORT SERVICES
AND FACILITIES

 

A.            GENERAL

 

1.               Support
Services.

 

United and Contractor will
provide Support Services and facilities to the extent and in the manner set
forth in the subsequent provisions of this Article III.  All such Support Services and facilities set forth in this Article III
will be furnished only with respect to Contractor’s United Express
Services.   

 

2.               Approval of
Support Services.

 

United reserves the right to
approve or disapprove the implementation of any Support Services or facilities
offered to Contractor for Contractor’s United Express Services by any third
party at any location.  Such approval
shall not be unreasonably withheld.

 

B.            SPECIAL SUPPORT
SERVICES

 

In addition to other services to be made
available to or provided to Contractor pursuant to this Agreement, and as
summarized in and in accordance with Appendix C (Ground Handling) and Appendix D
(Contractor Support Services), United agrees that it or its designees will
provide and Contractor agrees to use the following services and facilities for
Contractor’s United Express Services, be they provided by United or its
designee:

 

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

 

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

 

3.               Participating
in United’s Mileage PlusÒ Program. At United’s discretion, all
passengers with paid tickets traveling on a flight segment included in
Contractor’s United Express Services, whether or not in conjunction with a
United flight segment, will be awarded mileage credits for United’s Mileage
Plus Program or any other frequent flyer program as specifically approved by
United.  Contractor shall not
participate in the frequent traveler program of any other carrier in connection
with Contractor’s United Express Services, unless otherwise mutually agreed
between United and Contractor in writing. 
United has sole discretion concerning decisions relating to accrual or redemption
of award travel on Contractor’s United Express flights.  In addition, United will bear the cost of
providing redemption travel and receive all revenue and benefits from the sale
of frequent flyer credits (e.g. miles) related to Contractor’s United Express
service.

 

11

 

4.               [Intentionally
omitted.]

 

5.               Customer
Service Training.  On a
schedule, at a place, to an extent, for a number of persons, and in a manner
determined by United, United will provide training for Contractor’s instructors
that United deems sufficient to permit Contractor’s instructors to be able to
provide and train others to provide customer services for Contractor’s United
Express Services.  Contractor will have
no obligation to pay United for such training. 
However, Contractor agrees to adhere to the United Express Service
Standards as outlined in Appendix I for all Customer Service of
their United Express flights.

 

C.            COMMUNICATIONS

 

1.               Telephone
and Data Lines. United, at its expense, will provide and maintain or
arrange for the provision of reservations telephone lines connecting the cities
served by Contractor in connection with Contractor’s United Express Services
with United’s Reservations Centers. 
United, at its expense, will establish, operate and maintain or arrange
for the provision of the data circuits from Contractor’s mutually agreed upon
locations linking the United-approved data processing equipment at those
locations with Apollo Services.  United,
at its expense, will also provide and arrange for Contractor’s SOC
Communication with Apollo Services. 
United will determine, at its sole discretion, the necessity and
feasibility of installing all such communications equipment.  All other telephone expenses, such as
Contractor’s long distance expenses shall be borne by Contractor as a station
operating expense.

 

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

 

D.            RESERVATIONS

 

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

 

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

 

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

 

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

 

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

 

e.               Reviewing
and processing inbound prepaid ticket advices.

 

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

 

g.              Comply
with DOT disclosure requirements.

 

2.               Apollo
Services Activities. Contractor agrees to use Apollo Services for
the following activities for Contractor’s United Express Services, which are to
be provided by United:

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

3.               CRS Fees.
Computer Reservations System fees (“CRS Fees”) charged to Contractor as a
result of passengers booked on Contractor’s United Express service will be
direct billed to and payable by United. 

 

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

 

E.              OPERATIONS

 

1.               Scheduled
Service Update.  Following the departure of a Contractor’s United Express flight the
Contractor will provide accurate updates of its flights’ planned and actual
departure and arrival times (including updates of irregularities) in Apollo
Services as soon as the planned flight schedule is changed and the flight
departs and arrives or suffers an irregularity.  Specifically, this includes updating via ACARS or if ACARS is
malfunctioning via a mutually agreed upon manual process the out, off, on and
in times for the aircraft within [ * ] minutes of the occurrence of
each event.  In the event of a
Contractor’s controllable flight delays, cancellations or other
schedule irregularities affecting Contractor’s United Express Service
flights, and as soon as information concerning such irregularities is
available, Contractor shall update Apollo Services and, when requested by
United, notify the designated United organization. On board delayed flights,
Contractor shall provide updates to Customers in no less than [ * ]
minute intervals. For purposes of this Agreement, such scheduled and actual
departure and arrival and irregularity information shall be known as
“FLIFO.”  United will notify Contractor
in writing as soon as practicable after United determines that Contractor has
failed to update FLIFO in a timely and accurate manner.  If Contractor fails [ * ] times in
any consecutive [ * ] period (the “FLIFO Threshold”) to update FLIFO
in a timely and accurate manner as soon as it becomes evident to Contractor
that a schedule deviation shall take place, then upon notification by
United to Contractor, Contractor shall pay United damages of [ * ]
for each occurrence over and above the first [ * ] occurrences during
such [ * ] period  United
agrees to bill Contractor any amount owed under this Section within
[ * ] days after the end of each calendar [ * ] day period
during which Contractor has exceeded the FLIFO Threshold.  Such damages shall be United’s exclusive
remedy for Contractor’s non-compliance with this paragraph and may be collected
by setoffs against other amounts owed by United to Contractor hereunder.  Contractor shall not be responsible for any
costs or failure by the Ground Handlers to update FLIFO information.

 

* Confidential

13

 

2.               Denied
Boarding (Payload Range Restrictions).  
Contractor is required to provide to
United, upon specific written request from United, specific station best
estimates regarding the weight restrictions and aircraft limitations, which
could reasonably be expected to routinely result in denied boardings.  Such requests shall be made by United’s
Revenue Management Department (WHQIM) and responses from Contractor shall be
provided within two (2) weeks of such request. 
In the event Contractor fails to respond to such requests or such
responses are materially inaccurate, United reserves the right to bill
Contractor, and Contractor shall reimburse United, for denied boarding expenses
resulting from weight restrictions relating to such failure to respond or
materially inaccurate response.

 

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

 

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

 

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

 

6.               Diversions.  United will
pay Contractor for all diversions completed within [ * ] hours of the
scheduled arrival time based on the actual block hours flown from the original
departure city to the diversion point and from the diversion point to the
original destination city.  A diversion
flight will also be considered completed if the passengers arrive at the
scheduled arrival city within [ * ] hours of the scheduled arrival
time via ground transportation from the diversion point to the original
destination city.  The cost of busing to
the originally scheduled airport will be borne by Contractor.  Contractor will use its best efforts to
assure that no bus segment exceeds 100 air miles as defined in the Apollo
mileage database.  United will pay
Contractor for a diverted flight that is completed via ground transportation
based on the original scheduled block hour time for that segment.  In the event a diverted flight is not
completed within the [ * ] hour time frame, no payment is due for the
diverted flight segment (e.g. flight segment will be excluded from the monthly
operating statistics used in calculating payments to Contractor).  In addition, United will not pay any costs
associated with aircraft repositioning.

 

7.               Ground
Delay Program.  Contractor will participate in United’s ground delay program,
which stipulates that United may request Contractor to cancel, and Contractor
shall cancel, flights to free ATC slots at a hub when the FAA or United’s
Station Control Center has initiated a Ground Delay Program (“GDP”).  For cancellations requested by United as part
of the GDP, and in accordance with Article VIII, United shall pay
Contractor only a portion of the amounts normally due had the flights not been
cancelled.  United will pay
[ * ] of the Completed Block Hour and Completed Departure rates

 

* Confidential

14

 

(Carrier Controlled
Costs only). All payments will be based upon the scheduled block hours and
departures for such scheduled flights. No payments will be made with respect to
Pass Through Costs in these categories. (e.g. fixed overhead).

 

8.               Significantly
Delayed Flights. In the event that Contractor
operates a flight more than [ * ] hours late from the scheduled
departure time with a revenue passenger load factor of less than
[ * ]%, OR, more than [ * ] hours late with [ * ]
revenue passengers (“Significantly Delayed Flight”). Contractor shall not be
reimbursed for such flight (e.g. flight segment will be excluded from the
monthly operating statistics used in calculating payments to Contractor).
United and Contractor will make good faith efforts to establish a process by
which Contractor may solicit and receive United’s concurrence to be paid for an
otherwise Significantly Delayed Flight.

 

F.              STATION SUPPORT
SERVICES

 

1.               If United would
like Contractor to provide station support services Contractor will provide a
bid for these services.

 

2.               Contractor agrees
to be ground handled by ground service providers of United’s choosing provided
that the ground handler complies with Contractor’s procedures. 

 

3.               Within one year
from the Effective Date, United shall issue a Standards of Service document to
all ground service providers, which outline United’s expectations of the ground
service providers responsibilities, duties and processes. 

 

4.               Contractor agrees to
participate in the creation of United Express Standard Operating Procedures and
will subsequently seek approval of those procedures from the FAA as
Contractor’s own ramp handling procedures. 
Within a reasonable period of time, Contractor will obtain approval from
the FAA and will participate in the current United Airlines Deicing Committee.

 

5.               Contractor is required
to participate in CORA and United will be responsible for slot management of
Contractor’s United Express flights

 

G.            TARIFFS AND
SCHEDULE PUBLICATION 

 

1.               General.

 

a.               United shall have
the sole right and power to establish and modify, from time to time, the
fare/rate classes and fare/rate levels (including through fares) and fare/rate
descriptions for all Contractor’s United Express Services in the city pairs
operated by Contractor under this Agreement, in a manner consistent with
pricing (including joint fares) established by United.  United shall comply with applicable
governmental regulations pertaining to public disclosure of fares, rates and
rules tariffs and shall pay for any fines or civil penalties incurred by
Contractor as a result of violations by United thereof, and for the cost of
defense of such claims of violations including the cost of defending or
negotiating the terms of a consent order or decree.

 

* Confidential

15

 

2.               Passenger
Fare Tariffs.

 

a.               United
shall be entitled to 100% of the fares and prorates received by United or
Contractor in connection with any fares attributable to passengers who travel
on Contractor’s United Express Services. 
All passenger fare tariffs published for Contractor’s United Express
Services shall be included as part of United’s tariffs.

 

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

 

3.               Air Freight
and Mail Rates.

 

a.               For all markets operated
by Contractor under this Agreement, United shall have the sole right and power
to establish and modify from time to time all air freight and cargo rates and
mail rates covering mail, general commodity, Small Package DispatchÔ
(SPD) and priority air freight shipments and all other air transportation
services (other than mail delivery) for Contractor’s United Express Services in
these markets.  All such airfreight
rates for Contractor’s United Express Services shall be included as part of
United’s airfreight and cargo rates tariffs. 
Contractor shall notify ATPCO that United is authorized to supply,
modify or withdraw such rates with ATPCO.

 

b.              United shall be
entitled to 100% of the fares and prorates received by United or Contractor in
connection with any fares attributable to mail or freight shipped on
Contractor’s United Express Services.  

 

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

 

H.            [INTENTIONALLY OMITTED]

 

I.                 ADVERTISING AND
PROMOTIONS

 

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

 

2.               Right to
Advertise Using Marks. To the extent Contractor is licensed to use
the Marks, Contractor may in its capacity as a United Express Carrier and at
its sole expense, with no reimbursement from United, use the marks to advertise
Contractor’s United Express Services. 
However, any and all such advertisements using one or more of the United
Marks will identify United as the owner of those United Marks (including in any
state company name registrations required of Contractor), and to the extent
that any Mark is registered, will so specify. 
Notwithstanding the above, no advertisement, solicitation, document or
other material using any United Mark will be published or otherwise promulgated
without United’s prior inspection and approval.  No advertising that relates in any way to United, United Express
or Contractor’s United Express Services will be placed by Contractor with an
outside advertising agency

 

16

 

unless United has given its
prior consent regarding copy, layout and the specific media plan.  In addition, where United has agreed to
share the costs of any such advertising, Contractor will obtain the prior
consent of United regarding the funds to be expended for such advertising.

 

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

 

J.              AUTOMATION

 

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

 

2.               Installation
and Training. United shall install or cause to be installed a
minimum of one terminal plus associated equipment for printing messages, data,
air tickets, boarding passes and baggage tags (“Automation Equipment”) at
Contractor’s airport locations and selected administrative locations.  United will determine, in the exercise of
its sole discretion and judgment, the necessity and feasibility of installing
and upgrading Automation Equipment, so long as the quantity and quality of
Automation Equipment installed at Contractor’s airport locations are sufficient
to permit Contractor to satisfy the standards for Contractor’s United Express
Services under this Agreement.  Any and
all modifications, enhancements, improvements or developments pertaining to the
Automation Equipment, or other new related technology, may be made available to
Contractor by United, in its sole discretion, under terms and conditions to be
determined by United on a case-by-case basis. 
United will train Contractor’s instructors, as applicable, in the proper
use of Apollo Services and Automation Equipment as described in the Customer
Service/Reservations Handbook or any other related United guidelines.
Contractor agrees to establish a training program with internal
instructors.  Only qualified personnel
who have satisfactorily completed a United prescribed training program will be
permitted to operate any Automation Equipment (hereinafter “Designated
Users”).  United may, at its discretion,
monitor or test the proficiency level of Designated Users.  If United determines that their proficiency
levels are insufficient for the proper use of the Automated Equipment or Apollo
Services, then Contractor must arrange for its Designated Users to undertake
any further training which United determines necessary to bring such Designated
Users to the desired proficiency level.

 

3.               Standards of
Use.

 

a.               To
maintain an effective interconnection between Apollo Services and the
Automation Equipment and to prevent misuse thereof, when Contractor uses Apollo
Services and the Automation Equipment, Contractor must use and operate these
(a) in strict accordance with operating instructions provided by United or its
affiliates in the Customer Services Policies and Procedures, United’s Computer
Security Regulations, and any other related United or affiliate guidelines, and
(b) solely for the

 

17

 

performance of
the specific business functions designated by United.  Any undesignated business use and all non-business uses are
strictly prohibited.  Prohibited uses
include, but are not limited to, personal messages, servicing subscribers,
travel agencies, or any other third party, training any other party or any other
use designated as prohibited in the Apollo Services Manual.  Contractor will maintain a list of all
employees and agents who have access to Apollo Services and their assigned file
numbers and passwords.  United may at
any time deny access to Apollo Services to any employee of Contractor if such
employee is found by United to have abused Apollo Services or the Automation
Equipment.  Contractor will take all
precautions necessary to prevent unauthorized operation or use of Apollo
Services and the Automation Equipment.

 

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

 

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

 

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

 

4.               Maintenance,
Repair and Modification.

 

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

 

b.              Contractor
will reimburse United for the costs of any such repairs or maintenance
attributable to Contractor’s willful misconduct, gross negligence, or
persistent, negligent acts or omissions.

 

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

 

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

 

18

 

6.               No Warranty;
Release.

 

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

 

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

 

Contractor shall not be liable for, and United releases Contractor
from, any liability for any flight cancellation or delay, to the extent it
results from any malfunction in or interruption of Apollo Services or the
Automation Equipment; and, notwithstanding any other provision hereof, no such
cancellation or delay shall be included in any performance calculation relating
to operating goals except for occasions to the extent such failure is the
result of Contractor’s own misuse or negligence. 

 

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

 

K.            [INTENTIONALLY OMITTED]

 

L.             CONTRACTOR ASSISTANCE

 

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

 

IV.                                AIR
SERVICES TO BE PROVIDED BY CONTRACTOR

 

A.            AIRCRAFT TO BE USED

 

1.               Aircraft
Types. Unless otherwise agreed by United, Contractor will provide
Contractor’s United Express Services, in accordance with its United Express
Schedule as referenced in Article IV.B.1, and as amended from
time to time in accordance with the terms of this Agreement, using the type and
amount of aircraft set forth in Appendix B.  The aircraft will be scheduled, taking into account heavy
scheduled maintenance requirements, the spare ratio indicated in Article IV.B.2
below, and the schedule requirements in Appendix K:

 

19

 

a.               In
accordance with the terms and conditions of this Agreement, Contractor is
authorized to fly the following aircraft under Contractor’s United Express
Services:  

 

i.                              16 ERJ-145 aircraft which
Contractor shall cause to be delivered in a timeline substantially consistent
with the schedule set forth on Appendix B.

 

B.            TECHNICAL SPECIFICATIONS

 

1.               Technical
Specifications

 

a.               Any
aircraft used in United Express service by Contractor pursuant to Article IV.A
will bear those United Marks which are expressly designated by
United, whether included on Appendix A or otherwise established by
United. Technical specifications covering aircraft colors, schemes, United
Marks and other elements of exterior and interior aircraft decor will be
provided to Contractor by United.  Except
as provided herein, Contractor will have all aircraft used to provide
Contractor’s United Express Services painted and decorated with the exterior
and interior color decors and patterns specified by United at Contractor’s sole
expense.  In accordance with the
technical specifications referenced in this Article IV.B.1,
Contractor will be responsible for maintaining all of its aircraft.

 

b.              In
addition to the use of the United Marks on its aircraft, Contractor will use
and display a suitable sign or insignia on the exterior of its aircraft that
identifies Contractor as the operator of the services being provided pursuant
to this Agreement. The use and display of such sign or insignia will be subject
to the prior written approval of United, such approval not to be unreasonably
withheld or delayed, as to its nature, size and location on Contractor’s
aircraft.

 

c.               Aircraft
Communications Addressing and Reporting System –ACARS. Contractor is required to use an ACARS system on all United Express
flights for the purpose of providing timely, automated, and accurate off, on,
in and out times. If ACARS is not currenty installed on any given aircraft,
Contractor is required to install ACARS on such aircraft within a year of the
Effective Date of this Agreement. Contractor agrees to cover the cost of the
equipment (excluding systems programming, integration or IT related expense
related to installation) and the ongoing operation of the equipment (excluding
any periodic IT related expenses due to the integration of ACARS with United
systems.) 

 

2.               Spare
Aircraft. In addition to the aircraft
referenced in Article IV.A.1
above, if requested by United, Contractor will use reasonable efforts to
arrange for and make available for its use such spare aircraft as are required
to effectively maintain Contractor’s United Express Services.  Pursuant to this Agreement, a spare aircraft
shall be provided such that the ratio of “aircraft in schedule” divided by
“aircraft in fleet” shall not exceed [ * ] for all aircraft types.
United shall pay costs that are consistent with every other aircraft in the
program, including aircraft ownership costs and one-time startup costs relating
to such spare aircraft.  This is
equivalent to one spare for every [ * ] aircraft.  Notwithstanding the preceding sentence,
Contractor will be authorized to operate the thirteenth regional jet put into
service as a spare aircraft. 
[ * ]  Additionally, all
other airlines that Contractor provides service for must have a spare ratio
equal to or greater than United’s.

 

3.               Mark
Change. United may from time to time change
the Marks to be used for United Express Carriers.  At any time during the term of this Agreement, and in the sole
discretion of United, Contractor may be required to use such new or different
Marks, external or internal color decors and patterns on its aircraft and
uniform design as United may determine and to discontinue use of old marks,
external and internal color decors and patterns, and uniform designs.  Upon written notice from United, which will
include the specifications for any such changes in Marks or exterior or
interior aircraft decor and patterns or uniform designs, Contractor will effect
such changes in accordance with the schedule

 

* Confidential

20

 

mutually agreed to
by the parties.  United will pay all
costs incurred in complying with the requirements established in this
paragraph.

 

4.               Substitute
Aircraft.  

 

a.               In the event that a
scheduled aircraft is down-gauged to a smaller aircraft, United will pay the
rates for the smaller aircraft that actually flies the departure.  In the event that a scheduled aircraft is
up-gauged to a larger aircraft, United will pay the rate for the originally
scheduled departure for both the original and return flight, if
applicable.  If United requests in
writing that a larger aircraft is substituted for a smaller scheduled aircraft,
United will pay the rates for the larger aircraft.  United will not pay for any additional substitutions that are a
result of the original United requested substitution beyond those approved by
United.  Contractor will provide to
United along with the normal reconciliation support materials, copies of
United’s request to substitute aircraft. 

 

b.              Subject to the
provisions of IV.B.2, in the event Contractor is unable to operate a particular
scheduled frequency with an aircraft bearing United Marks, Contractor will
notify United of such event and the circumstances of Contractor’s inability to
operate and Contractor will be permitted to operate an aircraft bearing
different elements of aircraft exterior decor than those specified above.  If such operations extend beyond a
continuous forty-eight (48) hour period, Contractor must seek and obtain
United’s approval for such aircraft substitutions; provided that if Contractor
purchases or leases a used aircraft which does not contain appropriate United
Marks, Contractor will notify United and Contractor may operate such aircraft
without United’s Marks for up to 60 days after the date of purchase or lease of
such aircraft by Contractor.

 

C.            SCHEDULES AND
CHARTERS TO BE OPERATED BY CONTRACTOR

 

1.               United
Express Schedule.  Commencing on the in service date of the first
aircraft, Contractor will provide Contractor’s United Express Services in the
markets determined by United. 
Subsequently, United will provide at least sixty (60) days notice of any
planned scheduled changes.  United may
under extraordinary circumstances provide less than sixty (60) days notice on
city pairs to be served, which Contractor shall use commercially reasonable
efforts to accommodate.   For any new
cities, Contractor and United will determine a mutually viable ramp-up plan for
implementation of service.

 

2.               United
Schedule Consent Required.  United may adjust Contractor’s
schedule from time to time subject to (i) a minimum of sixty (60) days’
prior written notice to Contractor except for schedule changes that
introduce new international or FAA Designated Special Training Airports, for
which United will provide a minimum of ninety (90) days’ notice to Contractor.
Should Contractor be unable to start service, due to a legal or regulatory
constraint, Contractor will provide United notice of this within 7 days after
receipt of original notice, and (ii) compliance with any regulatory
requirements with respect to service to affected airports. Contractor will
ensure that any of its requests for changes in the use by Contractor of the
“UA” or “UA*” code on future routes or in the flight frequencies or city pairs,
or any of them, as operated or served by Contractor (whether necessitated by
altered connections, operating experience or other reason) must be submitted to
United within 14 days from the date that the proposed schedule is
delivered to the Contractor.  Contractor
and United will work to complete Contractor’s review at least ninety (90) days
prior to the effective date of such change. 
All such changes must be approved in advance by United.  The requests for such changes, and the
approvals thereof, must be made in writing, by mail, facsimile, telegram, telecopy
or other electronic message transmittal. 
If upon review of Contractor’s request, the parties mutually agree to
make a Contractor requested change, and the automation equipment needed to
implement the change is available, then such change will be made as soon as
reasonably practicable within the aforementioned ninety (90) day period. Within
the operating capability of the aircraft used by Contractor, as described in Article IV.A, and subject to the provisions with respect to

 

21

 

changes in city
pairs as provided above, Contractor will comply with all requests by United to
increase, decrease or in any other way adjust or terminate the flight
frequencies or city pairs, or both, as operated and served by Contractor
pursuant to this Agreement.

 

3.               Charter.  Contractor
may provide charter flights in any aircraft used in Contractor’s United Express
Services and shall be permitted to retain all revenues from such charters,
provided that Contractor agrees to pay United a fee of [ * ] per
block hour for use of any aircraft covered under the terms of this Agreement
(both United Express liveried and spare aircraft) and provided that operation
of such charter services do not impede in any way the ability of Contractor to
provide United Express services and operations required by this Agreement. In
the case of each such charter, Contractor hereby agrees that it will not (and
it will not permit others to) operate, promote or otherwise market the charter
under the United Express name, the UA or UA* designator code or any other
United Marks or identification (excepting only the unavoidable use of United
Express liveried aircraft and permanent airport signage).  Contractor shall provide written notice to
United of any charter flight using aircraft used in Contractor’s United Express
Services not later than the later of (i) the thirtieth day prior to the date of
such charter flight or (ii) three business days after Contractor finalizes the
arrangements for such charter.

 

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

 

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

 

D.            INVENTORY  

 

1.               United will have
the sole right to use, set and control availability, levels and use of all seat
inventory for the aircraft used by Contractor in Contractor’s United Express
Services.  United will take all revenue
and inventory risk and will maintain inventory and pricing responsibility.
Contractor is prohibited from providing positive space leisure travel, or any
other confirmed leisure travel that requires removal of a seat from inventory,
to any person other than the people outlined in Appendix J, on Contractor’s
United Express flights without the prior written consent of United. All positive
space and leisure travel must be ticketed on United approved ticket stock with
Contractor’s full IATA serial and ticketing numbers. Positive space travel is
permitted for Contractor’s, Contractor’s affiliates and United’s employees for
actual business purposes, including deadheading flight crews, and for
Contractor’s employees and Contractor’s affiliates and Eligibles in emergency
situations only.  Contractor may not
issue positive space business travel to anyone other than Contractor’s own
employees and Contractor’s affiliates’ employees and only in connection with
business purposes and emergency situations related to United Express
Services.  If in any way Contractor
issues tickets in violation of this provision in any form, within two (2) years
of each such violation, Contractor may be billed via the ACH, and Contractor
will pay United, the full unrestricted fare for the class of service provided
on such route for any such inappropriate ticketing.  Contractor also agrees to comply with all rules and regulations
for positive space and space available travel as outlined in the Related
Agreements.  

 

E.              FLIGHT CREWS TO BE
USED

 

1.               Flight
Crew.  All
of Contractor’s United Express Services will be operated with crews consisting
of a captain or pilot, and a first officer or co-pilot.  All such crew members will at all times

 

* Confidential

22

 

meet all currently
applicable governmental requirements, as such requirements may be amended from
time to time during the life of this Agreement, and will be fully licensed and
qualified for the services to be performed hereunder.  In addition, each of Contractor’s captains will hold a current
Airline Transport Pilot Certificate and an adequate number of Flight Crews to
be used in United Express service must be qualified to fly between all city
pairs that Contractor will be serving hereunder.   Crewmembers will also meet all requirements imposed by the
insurance policies that are to be maintained pursuant to
Article XII.

 

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

 

F.              INFLIGHT SALES

 

Contractor may, at United’s request, be
required to sell beer, liquor and other goods on flights included in
Contractor’s United Express Service. 
Any additional goods or services Contractor would like to sell or promote
onboard the aircraft are subject to United’s approval.  Contractor agrees that such in-flight sales
shall be conducted in a manner consistent with in-flight sales provided on
United’s flights.  For beer and liquor
sales only, Contractor will be solely responsible for the direct costs
associated with such in-flight sales and shall be entitled to all revenues
generated from such in-flight sales (except SkyMall).  For all other products, services or food put on the aircraft at
United’s request, United shall be responsible for the incremental costs of such
products, services or food and shall be entitled to all of the revenue
associated with such products, services or food.  United shall use its commercially reasonable efforts to assist
Contractor in securing an economical price for the in-flight items.

 

V.                                    OPERATING RESTRICTIONS

 

A.            UNITED EXPRESS
OPERATIONS ONLY

 

Other than pursuant to this Agreement,
including Article V.B
below, Contractor shall not, and directly or indirectly, engage or attempt to
engage, on its or their own behalf or on behalf of a third party, in the
business of providing air transportation at any of United’s Hubs (DEN, IAD,
LAX, ORD, SEA, SFO) for any carrier that has or attempts to have hub operations
at any of those same hubs in connection with such hub operations of such
carrier. 

 

B.            CODE SHARE LIMITATION

 

 Other than pursuant to code
share or marketing agreements with US Airways, Inc. and/or Delta Air Lines,
Inc. entered into prior to the date of the Agreement, each of which are
expressly excluded from the provisions of Sections V.A and B, Contractor will
not operate any additional regional jets (50 seat or larger) or turbo prop
aircraft pursuant to a marketing or code share relationship with any party
other than United at the following airports: DEN, LAX, SFO, ORD, IAD or SEA
(the “United
Hubs”) for the term of this agreement.  Should United decide to cease major hub operations at any United
Hub, the provisions of Sections V.A and B, will not apply at that airport.  Notwithstanding the foregoing, Contractor
may (i) fly to any United Hub under codeshare or marketing relationships with
another carrier as a ‘spoke service’ from another carrier’s hubs from an
airport other than the United Hubs, and (ii) [ * ].   To the
extent Contractor terminates any existing Delta Air Lines, Inc. or US Airways,
Inc. code share agreements, which contractually provide for service obligations
at the United Hubs, Contractor may not recommence hub operations at the United
Hubs with that party for the duration of the term of this Agreement other than
pursuant to clause ii hereof.  [ * ]

 

* Confidential

23

 

C.            NO OPERATION
OUTSIDE AGREEMENT

 

Without the prior written consent of United,
Contractor will not use any of the services (excluding maintenance service)
afforded to Contractor by United to provide air transportation or related
services to other carriers or affiliates of Contractor without the consent of
United. Under no circumstances will Contractor be permitted to operate aircraft
bearing the United Marks in city pairs other than those specified by United
pursuant to Article IV, without the prior written consent of United,
other than charters operated as provided in Article IV.C.3 hereof.
Contractor will not, without United’s prior written consent, permit any third
party, whether under a lease arrangement or otherwise, to operate any aircraft
bearing the United Marks.

 

D.            SEVERABILITY AND
REMEDY

 

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

 

VI.                                LICENSE

 

A.            GRANT OF LICENSE

 

Contractor will conduct all operations
described in Article IV.B, and any additional operations undertaken by
subsequent amendment hereto, under the Marks set forth in Appendix A or other marks
designated by United pursuant to this Article VI.A and subject to Article IV.A.  In consideration for the services to be
provided by Contractor under this Agreement, United hereby grants to
Contractor, upon the terms and conditions herein contained, a nonexclusive,
nontransferable, non sub-licensable right and license to use the United Marks,
and Contractor hereby undertakes the obligation to use the licensed United
Marks in connection with the services to be rendered by Contractor under this
Agreement; provided, however, that at any time during the term of this
Agreement, United may alter, amend or revoke the license hereby granted and
require Contractor’s use of any new or different Marks in conjunction with the
air transportation services provided hereunder as United may determine in the exercise
of its sole discretion and judgment.

 

B.            TERMS AND CONDITIONS
GOVERNING LICENSE

 

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

 

2.               Service
Standards. Contractor agrees that, in
providing services under this Agreement in conjunction with one or more of the
United Marks, it will comply with all service quality standards prescribed by
United for United Express Carriers (“United Express Service Standards or
Service”). 
United Express Service Standards include, but are not limited to, United
standards for (a) aircraft types, as referenced in Article IV.A, (b) customer service, as set forth in United’s
Customer Service Policies and Procedures, (c) minimum customer service training
requirements consistent with United’s customer service practices and
procedures, (d) in-flight amenities and service, (e) aircraft appearance, (f)
United/United Express safety programs (and Contractor will enter into any
agreements relating to such

 

24

 

programs that are
similar to those offered to other United Express Carriers), (g) any other
quality control measures designated by United, as such standards may be
prescribed by United from time to time and (h) customer problem resolution (“CPR”).  As
necessary, United will provide training to Contractor’s designated instructors
in the requirements of United’s Customer Service Policies and Procedures and
CPR programs; provided that United will at its expense provide a trainer and
materials, and United agrees that the Service Standards prescribed by it will
not be unreasonable in light of the facilities and aircraft available to
Contractor.  United will have the right,
from time to time, to inspect Contractor’s United Express Services to determine
if they conform to the United Express Service Standards. In the event United
determines that Contractor is not in compliance with the Service Standards
United will notify Contractor and Contractor will promptly rectify any such
noncompliance.  Failure on the part of
United to conduct such inspections will not relieve Contractor of its
obligations to conform to United’s Service Standards.  If Contractor fails to comply with any material part of the
Service Standards and such failure is not corrected as soon as practicable
(and, in any event, within 30 days or with respect to a failure that cannot be
corrected within 30 days, if Contractor has not commenced corrective action
within 30 days) after Contractor’s receipt of written notice of such failure
from United, then United may, at its discretion, following 30 days prior
written notice to Contractor restrict or eliminate Contractor’s pleasure travel
privileges, require Contractor to bear costs reasonably related to such failure
in excess of normal guidelines, suspend Contractor’s authority to serve
specified city pair markets, or impose other available remedies.  The United Express Service Standards are
outlined in Appendix I, and may be
changed by United upon notice given to Contractor from time to time.

 

3.               [Intentionally
omitted.]

 

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

 

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

 

6.               Reversion
of Marks. Upon termination of this Agreement
for any reason, the right to use herein granted for the United Marks will
immediately revert back to United, and Contractor will have no right to use
such Marks in any way.  Further,
Contractor will, at its sole cost and expense immediately upon termination of
this Agreement, remove all United Marks from its aircraft, its other vehicles,
the uniforms of its personnel, its facilities and from any and all other places
or things controlled or formerly controlled by Contractor.

 

C.            INFRINGEMENT

 

United will, at its expense, defend,
indemnify, release, protect, save and hold Contractor, its officers, directors,
agents and employees harmless from and against any and all liabilities,
damages, expenses, losses, claims, demands, suits, fines or judgments,
including but not limited to attorneys’ and witnesses’ fees, costs and expenses
incident thereto, which may be suffered by, accrue against, be charged to or be
recovered from Contractor as a result of any third-party claim that the use by
Contractor of any United Mark in accordance with the terms of this Agreement
infringes a registered trademark or service mark of any third party in the
United States, and will pay all costs, damages and attorneys’ fees that a court
finally awards as a result of such claim. 
To qualify for such defense and payment, Contractor must (i) give United
prompt written notice of any such claim and (ii) allow United to control the
defense of the claim and all related settlement negotiations and fully
cooperate with United in its defense of the claim

 

25

 

and the conduct of any
settlement negotiations.  United’s
obligation hereunder is conditioned on Contractor’s agreement that if any Mark
becomes, or in United’s opinion is likely to become, the subject of such a claim,
Contractor will not dispute that United, at its option, may either procure the
right for Contractor to continue using such Mark or to replace or modify such
Mark so that it becomes non-infringing. If a United Mark is changed, it is
United’s responsibility to compensate Contractor for any incremental costs due
to the Mark being changed. This Article VI.C states United’s entire
obligation to Contractor regarding infringement or the like.

 

VII.                            ADDITIONAL
UNDERTAKINGS

 

A.            PASS THROUGH COSTS

 

From time to time and at anytime, United
reserves the right to assume responsibility from Contractor for purchasing of
all Pass Through Cost products and services used by Contractor pursuant to this
Agreement, including the right to return such responsibility to Contractor with
reasonable notice not to exceed 365 days.

 

B.            BULK PURCHASES

 

Each party may assist the other in obtaining
goods and services useful to the other party, including, without limitation,
fuel, uniforms, supplies and ground equipment, in a more economical
manner.  If United identifies opportunities
for cost savings as a result of bulk purchasing on behalf of Contractor,
Contractor is obligated to participate in the new cost saving initiative.  Contractor and United shall agree on a
case-by-case basis how to share the benefits of any cost savings
initiatives.  

 

C.            FUEL

 

United, by or through it’s subsidiaries,
agents or affiliates, shall have the option to procure fuel and fuel services
for or on behalf of Contractor. 
Contractor agrees to assist United, its subsidiaries, agents or
affiliates in identifying fuel or fuel service procurement opportunities, to
provide data or analysis pursuant thereto, and to enter into agreements for the
provision of said fuel or fuel services, including any provisions therein, at
the direction of United.  United shall
use its best efforts to accommodate any operational or other requirements of
Contractor related to fuel or fuel services procured for or on behalf of
Contractor.

 

D.            UNIFORMS

 

Contractor, at its own expense, shall pay for
and require all of its Flight Crews, defined as all Pilots, First Officers, and
Flight Attendants who provide Contractor’s United Express Services, to wear
uniforms which are in the United Express colors and styles, as approved by
United, such approval not to be unreasonably withheld or delayed, while
performing Contractor’s United Express Services and as outlined in Appendix I.
Contractor agrees that all such Flight Crews employed by Contractor shall wear
the above-described uniforms while performing United Express services.  Any other employees of Contractor who are
visible to the public, other Flight Crews, will wear uniforms reviewed and
approved by United, which approval shall not be unreasonably withheld. If
United develops or designs new uniforms for United Express operations, United
will cover any incremental costs to Contractor of such new uniforms. 

 

E.              PASSES AND REDUCED
RATE TRAVEL

 

Each party will comply with the terms of a
separate agreement between them under which are granted to certain employees of
the other party certain passes and reduced rate pleasure travel privileges.

 

26

 

However, United has the right
to retain all revenue generated from reduced rate travel, including companion
passes, both on United and United Express operated flights.

 

F.              ENVIRONMENTAL 

 

1.               With respect to all matters that relate to or may
affect the environment, Contractor agrees to conduct its operations in a
prudent manner, taking reasonable preventive measures to avoid environmental
liabilities, including, without limitations, measures to prevent unpermitted
releases to the environment.

 

2.               Contractor agrees, at its own expense, to conduct
its operations in compliance with all local, state, and federal environmental
laws and regulations, including all environmental rules, regulations, and
policies dictated by the applicable airport authority, including ensuring its
employees are trained in the procedures required to meet all environmental laws
and regulations. 

 

3.               To the extent associated with Contractor’s
activities (or its agents, provided that ground service providers or its agents
shall not be deemed agents of Contractor), Contractor shall be responsible, and
will indemnify United, for any and all environmental liabilities, including,
without limitation, any penalties or costs associated with any enforcement
action, airport authority action, or private claim, any remediation or
restoration costs, any investigation costs, legal or environmental consultant
costs, or any property damage costs.

 

4.               For any leased areas that are jointly operated by
both Contractor and United, the following additional provisions apply.

 

a.               Contractor shall
ensure its own activities comply with Environmental Laws, which may include,
when appropriate, coordination with United, such as to identify spill
prevention procedures for any shared equipment.  If any tanks for ground support equipment (“GSE”) fueling are
shared, both parties must ensure the fuel complies with the sulfur concentration
limitations required under Section 211(g) of the Clean Air Act, and its
implementing regulations at 40 CFR Part 80, (including any amendments,
revisions, or succeeding statues and regulations), and provide documentation if
requested.

 

b.              Except for de minimis amounts, Contractor
shall promptly notify United’s facility Environmental Coordinator of any spills
or leaks of hazardous substances, including petroleum substances, and provide
copies of any written reports provided to the applicable agencies and airport
authorities.  

 

c.               Contractor shall provide copies of any
notices of violations for environmental compliance received from any
environmental agency or airport authorities.

 

VIII.                        RATES
PAYABLE TO CONTRACTOR

 

A.            RATES

 

1.               Consideration.  For and in consideration of the transportation
services, facilities and other services to be provided by Contractor hereunder,
the right of United to (i) control all aspects of inventory as described in Article IV.D,
(ii) receive and retain all air fares, cargo rates and mail charges received by
Contractor and United, and (iii) receive and retain all other revenue received
by Contractor and United as provided in this Agreement, and other valuable
consideration provided under this Agreement, United shall pay Contractor
specified “Carrier
Controlled Costs” (together with “Markup” as defined in Article VIII.B)

 

27

 

and specified “Pass
Through Costs” for the Reimbursement Categories as detailed in Appendix E for
each aircraft type.  

 

2.               Definitions.  Contractor and United agree to the
definitions for both Carrier Controlled and Pass Through Costs as defined
in Appendix
E. Except as otherwise provided herein, Contractor is responsible
for any and all other costs necessary to operate the aircraft covered under the
terms of this Agreement in accordance with the “United Express Service
Standards.” United is not responsible for any other costs not specifically
covered in this Agreement.

 

3.               Reimbursement
Categories.  The Pass Through
Costs and Carrier Controlled Costs are grouped by “Reimbursement Categories” for
each aircraft type.  Within each Reimbursement Category, are
specific kinds or types of expenses as outlined in Appendix E.

 

4.               Unit Rate.  Each Reimbursement Category, whether the
costs are Pass Through Costs or Carrier Controlled Costs, is expressed in terms
of one or more “Unit Rates.”  The
Unit Ratesexpress the basic measurement and constitute the driver of costs for
each Reimbursement Category.  Each
Reimbursement Category has specific Unit Rates as outlined in Appendix E.

 

5.               Annual
Adjustment Factors. 
Effective as of January 1st 2005 and each January 1st
thereafter for the term of this agreement, Contractor and United agree to
increase or leave constant all Carrier Controlled Costs, excluding aircraft
ownership, within the Reimbursement Categories for the ensuing contract year by
an amount equal to the then applicable Carrier Controlled Costs multiplied by
the applicable “Annual Adjustment Factors” set forth on Appendix E.  Rates shall be adjusted in accordance with
the procedures set forth in Appendix E.  Except
as expressly provided in this Agreement, the parties do not want to perform,
and have not provided for, any additional rate changes, rate negotiations or
rate setting process.  Annual CPI increases
(if any) are to be capped at [ * ].
If during any year during the first [ * ]
of the term of this Agreement, CPI is negative, the rates that are subject to
CPI adjustment for such year will remain unchanged.  If during any year after the first [ * ] of the term of this Agreement, (a) CPI is between [ * ] and [ * ], the rates that are
subject to CPI adjustment for such year will increase by CPI [ * ]; (b) CPI is a negative
number in excess of [ * ],
the rates that are subject to CPI adjustment for such year will remain
unchanged. Example.  For example,
if as of the anniversary of the Effective Date, for the Completed Block Hours
Reimbursement Category, the rate is [ * ]
per block hour and the annual adjustment factor is [ * ], then the annual the Carrier Controlled Cost
element effective as of such anniversary of this Agreement shall be [ * ] ([ * ] multiplied by [ * ]).

 

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

 

* Confidential

28

 

7.               Commercially
Reasonable Efforts. 
Contractor agrees to use commercially reasonable efforts to control its
Carrier Controlled Costs and Pass Through Costs.  The parties agree to discuss any failure by Contractor to use
reasonable efforts to control costs.  

 

8.               Aircraft
Ownership Costs.  

 

a)              Regional Jet
Aircraft Rent and Hull Insurance. 
United will pay aircraft ownership costs and hull insurance costs as
outlined in Appendix E.  No
adjustment shall be made to regional jet aircraft rent and hull insurance
during the Term of this Agreement. 

 

b)                                                                                     [INTENTIONALLY
OMITTED]

 

B.            MARKUP

 

1.               Markup.  Markup will remain fixed for the duration of
this Agreement.  Markup will be applied
only to Carrier Controlled Costs (excluding aircraft ownership and hull
insurance).  

 

a.               Operating
goals will be set consistent with the methodology outlined in Article VIII.C.  

 

b.              “A”
level performance in all categories will result in a [ * ] markup

 

c.               “B”
level performance in all categories will result in a [ * ] markup

 

d.              “C”
level performance in all categories will result in a [ * ] markup

 

e.               “D”
level performance in all categories will result in a [ * ] markup

 

2.               One-Time
Markup on New Aircraft. With any new aircraft brought in the United
system, United shall pay a markup of [ * ]
on only the one-time startup costs noted in Appendix E.

 

3.               Markup on
Aircraft Ownership Costs.

 

a.               Markup
on Aircraft.  United agrees to pay
aircraft ownership costs and hull insurance costs on all Aircraft as stated in Appendix E
plus a markup of [ * ]
per aircraft per month.  

 

C.            OPERATING GOALS

 

For each calendar month and for Contractor’s entire United Express
operations, Contractor’s actual Performance Level shall be measured as the
combined performance of Contractor’s and Republic Airline, Inc.’s United
Express operations with respect to each of four Operating Goals.  To establish the Total Markup to be applied
hereunder, add together the four applicable Markup Points (percentage figures)
associated with the relevant Performance Metrics set forth on Appendix F,
yielding a sum that is designated as the Total Markup Factor. Multiply the Total
Markup Factor by the total aggregate Carrier Controlled Costs for the month in
question, and the resultant amount is designated as the Markup as detailed in Appendix F.

 

1.               Operating
Goals Methodology.  Up until
the earlier of i.) the time at which Contractor first has [ * ] aircraft in
schedule for United Express or ii.) Contractor has operated for [ * ] months for United
Express, Contractor will be paid a “B” level markup across all operating
goals.  After which the Contractor’s
Monthly Operating Goals for the calendar year will be established using one of
the two predetermined methodologies set forth below and will take effect on
January 1 of each year.  

 

* Confidential

29

 

a.               When
United’s annual Mainline performance (defined as performance for United
Airlines’ domestic, mainline flights, weighted by departures) for any of the
four Operating Goals for the most recent calendar year completed is better than
United Express Best Practice Operating Performance for the most recent calendar
year completed, the below methodology shall be used to determine the goal for
upcoming calendar year for that individual Operating Goal.

 

i.                  Contractor’s
On-Time Zero (“On-Time Zero or On-Time”) Operating Goal is calculated as
equal to United’s Operating Mainline Performance (United Airlines’ domestic
mainline flights, weighted by departures), adjusted downwards [ * ] percentage points then
adjusted for regional differences. Regional differences will be accounted for
by taking the resulting goal generated by the previous sentence and multiplying
that number by the quotient of the weighted average of United Mainline On Time
Zero performance for the hubs in which Contractor operates (weighted by
Contractor hub departures) and the United Mainline System On Time Zero
Performance (performance for United Airlines’ domestic mainline flights,
weighted by departures).

 

ii.               Contractor’s
Controllable Flight Completion (“Controllable Completion” or “Controllable Flight
Completion”) Operating Goal is equal to United’s system-wide
Mainline Operating Performance (United Airlines’ domestic mainline flights,
weighted by departures) for its own operation adjusted downward by [ * ] percentage points.
Controllable Flight Completion excludes cancellations due to weather, Air
Traffic Control (“ATC”) cancellations, requests by United to cancel flights in
conjunction with the Ground Delay Program, acts or omissions by
United, its agents and ground service providers and emergency airworthiness
directives.  

 

iii.            Contractor’s
Mishandled Bag (“Mishandled Bags”) Operating Goal is calculated as equal to
United’s system-wide Operating Performance (domestic performance, weighted by
departures) for its own operation adjusted upward by [ * ] points then adjusted for regional differences.
Regional differences will be accounted for by taking the resulting goal
generated by the previous sentence and multiplying that number by the quotient
of the weighted average of United Mainline Mishandled Bag performance (domestic
flights, for the hubs in which Contractor operates (weighed by Contractor hub
departures) and the United Mainline System Mishandled Bag Performance (domestic
performance, weighted by departures.)

 

iv.           Contractor’s
Year 1 Repurchase Intent (“Repurchase Intent or RPI”) Operating Goal will be
United Express Best Practice minus [ * ]
percentage points. Concurrent with the annual goal setting process, starting in
year [ * ] and ending
in year [ * ], the [ * ] percentage points
referenced in the previous sentence will be reduced by [ * ] percentage points each year such that in year [ * ], and for every year
thereafter Contractor’s Repurchase Intent (“Repurchase Intent or RPI”)
Operating Goal will be United Express Best Practice Performance minus [ * ] percentage points.

 

b.              When
United’s Mainline performance (domestic mainline flights, weighted by
departures) for any of the four Operating Goals for the most recent calendar
year completed is worse than United Express Best Practice Operating Performance
for the most recent calendar year completed, the below methodology shall be
used to determine the goal for the upcoming year for that individual Operating
Goal.  

 

* Confidential

30

 

i.                  Contractor’s
On-Time Zero (“On-Time Zero or On-Time”) Operating Goal is calculated as
equal to the United Express Best Practice Operating Performance (where
individual United Express Carrier Performance has been regionally normalized)
adjusted down [ * ]
percentage points then re-adjusted for regional differences accounting for
regions in which Contractor operates. Regional differences will be accounted
for by taking the resulting goal generated by the previous sentence and
multiplying that number by the quotient of the weighted average of United
Mainline On Time Zero performance (domestic mainline flights, weighted by
departures) for the hubs in which Contractor operates (weighted by Contractor
hub departures) and the United Mainline System On Time Zero Performance
(domestic mainline flights, weighted by departures)

 

ii.               Contractor’s
Controllable Flight Completion  (“Controllable Completion” or “Controllable
Flight Completion”) Operating Goal is equal to United Express Best
Practice Performance adjusted downward by [ * ] percentage points. Controllable Flight Completion
excludes cancellations due to weather, Air Traffic Control (“ATC”)
cancellations, requests by United to cancel flights in conjunction with the
Ground Delay Program, acts or omissions by United and emergency airworthiness
directives.  

 

iii.            Contractor’s
Mishandled Bag (“Mishandled Bags”) Operating Goal is calculated as equal to
United Express Best Practice Performance (where individual United Express
Carrier Performance has been regionally normalized) adjusted upward by [ * ] points then re-adjusted
for regional differences accounting for regions in which Contractor operates.
Regional differences will be accounted for by taking the resulting goal
generated by the previous sentence and multiplying that number by the quotient
of the weighted average of United Mainline Mishandled Bag performance (domestic
flights, weighted by departures) for the hubs Contractor operates in (weighed
by Contractor hub departures) and the United Mainline System Mishandled Bag
Performance (domestic flights, weighted by departures).

 

iv.           Contractor’s
Year 1 Repurchase Intent (“Repurchase Intent or RPI”) Operating Goal will be
United Express Best Practice minus [ * ]
percentage points. Concurrent with the annual goal setting process, starting in
year [ * ] and ending
in year [ * ], the [ * ] percentage points
referenced in the previous sentence will be reduced by [ * ] percentage points each year such that in year [ * ], and for every year
thereafter Contractor’s Repurchase Intent (“Repurchase Intent or RPI”)
Operating Goal will be United Express Best Practice Performance minus [ * ] percentage points.

 

2.               B- Level
Performance.  Contractor’s
Monthly Operating Goals, as defined above in Article VIII.C.1 and
adjusted for seasonality (as outlined in Article VIII.C.6, (below), define the
minimum performance necessary to achieve at least B–Level Performance.

 

3.               Performance
Grade Widths.  “Grade Widths”
(the range between the lowest end of each Performance Level) remain constant
and will not be changed over the entire Term of this Agreement and are as set
forth in Appendix
F.

 

4.               Example.  The Grade Width for A, C and D level
performance will be automatically computed on an annual basis once the numbers
for the bottom of B Performance Levels are established. For example, if the Contractor’s
Monthly Operating Goal for the Controllable Completion Operating Category is
determined to be [ * ],
that is the bottom of the B-Performance Level. 
Applying the

 

* Confidential

31

 

methodology,
in the performance Grade Width table referenced above, the bottom of the A-
Performance Level would be [ * ]
([ * ] plus [ * ]).  Furthermore, the bottom of the C Performance
Level would be [ * ] ([ * ] minus [ * ]).  Based on these numbers the Grade Widths,
before application of any Seasonality Adjustment Factors would be as follows:

 

	
  Level A

  	
  =

  	
  [ * ]

  
	
  Level B

  	
  =

  	
  [ * ]

  
	
  Level C

  	
  =

  	
  [ * ]

  
	
  Level D

  	
  =

  	
  [ * ]

  

 

5.               United
and Contractor have developed a Monthly Incentive Payment (“Markup”)
program (“Incentive Program”) that is based upon Contractor’s scheduled
operating goals established herein (“Operating Goals” or “Monthly Operating
Goals”). Contractor’s performance is evaluated with respect to actual (i)
on-time performance, (ii) controllable flight completion rates (iii) baggage
handling, and (iv) customer repurchase intent on all flights operated by
Contractor as United Express. 
Contractor’s actual performance (“Performance Level” or “Level of Performance”)
with respect to each of these four operating goals will be used to determine
the amount of Markup applicable to the Carrier Controlled Costs pursuant to the
procedures set forth herein

 

6.               Seasonality
Adjustment.  At the beginning
of each year, after Contractor’s Monthly Operating Goals for the year have been
calculated by the methodology outlined above but before Contractor’s Monthly
Operating Goals are finalized, Contractor may create the final Performance
Level goals by multiplying any of the three Contractor’s Monthly Operating
Goals  by
a seasonality factor developed by Contractor provided that the twelve (12)
month straight average of each of Contractor’s Monthly Operating Goals remains
unchanged after seasonality factors are applied.  

 

D.            WIRE TRANSFER AND
RECONCILIATION

 

1.               On
a monthly basis and in a format to be set by United, Contractor will provide an
estimate of its monthly Carrier Controlled Costs with Markup, assuming C Level
Performance and assuming a [ * ]
Completion factor and a [ * ]
load factor, plus its Pass Through Costs (which are never subject to Markup)
with the exception of Markup on aircraft ownership costs and Markup on the
one-time start-up costs for new aircraft, each of which shall be paid in full.
This estimate will be based upon the schedule to be operated during the
upcoming month and shall be provided no later than 7 days prior to the start of
the month in which the wire transfers shall be made.  [ * ]  If such day falls on a Saturday the payment
will be made the previous business day. 
If such day falls on a Sunday or Holiday the payment will be made on the
following business day.  If United
objects to such estimate, United retains the right to withhold payment of only
such costs that are objected to by United, which will then be subject to the
reconciliation process outlined in Article VIII.D.2.  If United objects to such estimate, it shall
provide written notice of such objection, which shall include a detailed
statement of the specific grounds for its objection, within 3 business days
after its receipt of such estimate. 

 

2.               Complete
Reconciliation of Carrier Controlled Costs (and associated Markup) according to
actual Performance Levels, and Pass Through Costs paid under Article VIII.D.1
and as established in accordance with the terms of this Agreement, shall be
completed by United on a monthly basis, but no later than 180 days after
month’s end:

 

a.               Monthly
Reconciliation – Carrier Controlled Costs. 
On or before the thirtieth (30th) day after the last day of
each calendar month, Contractor shall submit to United a report detailing
actual operational statistics pertaining to the payment of Carrier Controlled
Costs, with a content reasonably determined by United, in a format mutually
agreeable to United and Contractor. 
United and Contractor

 

* Confidential

32

 

agree to make a good faith effort to reconcile any differences in
operational statistics data used to calculate reconciliation payments and if
necessary round to the nearest 1/10th of 1%, or if equidistant, to
the nearest even 1/10th of 1%. 

 

b.              Monthly
Reconciliation – Pass Through Costs.  On
or before the ninetieth (90th) day after the last day of each
calendar month, Contractor shall submit to United (in a format to be determined
by United) documentation sufficient to support its actual expenses for Pass
Through Costs items, including copies of invoices. Upon submission of the
information, Contractor must notify United in writing if any 3rd
party information is missing from the submission information, and provide an
explanation for the delay.  Under no
circumstances will Contractor be reimbursed by United for Pass Through Costs
claimed more than six (6) months after the expense was incurred and payable.  United agrees to submit payment
no more than 30 (thirty) days after receipt of this information. United will
make objections to Pass Through Cost reconciliation no later than 180 days
after the expense was incurred.  

 

IX.                                FEES
PAYABLE TO UNITED

 

A.            GOVERNMENT ASSISTANCE

 

Any and all direct or indirect assistance
received by Contractor as a result of government assistance or bail-out plans
that cover costs not incurred by the Contractor or revenues that are generated
by passengers carried by Contractor and pertaining to Contractor’s United
Express Service will be forwarded directly to United.  Examples include, but are not limited to, direct payments to
Contractor, loan programs, reimbursement of security fees, and waivers of any
and all fees and taxes.

 

X.                                    MAINTENANCE AND FUELING

 

United will have no responsibility under this
Agreement for maintenance or fueling of Contractor’s aircraft.

 

XI.                                U.S.
MAIL

 

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

 

XII.                            INSURANCE

 

A.            INSURANCE TYPES

 

During the term of this Agreement, Contractor
agrees to procure and maintain in full force and effect, at its own expense,
policies of insurance with insurers of recognized reputation and
responsibility, which provide, unless otherwise provided in the Aircraft
Leases, at a minimum the following insurance:

 

1.               Comprehensive
Airline Liability Insurance, including but not limited to Aircraft Liability,
Passenger Liability, Comprehensive General Liability Insurance, War Risk and
Allied perils, including both passengers and other third parties, Cargo
Liability and Baggage Liability Insurance, with combined single limits for each
and every loss and each aircraft of not less than (i) U.S. $300,000,000, or
(ii) U.S. $3,000,000 per available seat or (iii) the limits that Contractor has
in place, whichever is greatest.  Any
policies of insurance carried in accordance with this Article XII.A.1 will
also contain or be endorsed to contain those provisions set forth in the
attached Appendix
G.

 

2.               Aircraft
Hull All Risks Insurance, including ground and flight coverage on Contractor’s aircraft,
including its engines and all its parts when installed or temporarily detached
from Contractor’s aircraft on a repair-or-replace basis with a deductible
United has reasonably deemed appropriate.

 

33

 

3.               Contractor
agrees to maintain Workers’ compensation in statutory amounts required by each
state in which any work is performed, in whole or in part; Employers’
Liability, with policy limits not less than $1,000,000 combined single limit,
for all of Contractor’s United Express employees.  United shall in no way be liable for any workers’ compensation
claims paid by Contractor related to any of Contractor’s operations.  The Contractor’s insurer agrees to waive
rights of subrogation against United with respect to worker’s compensation
claims.  

 

4.               Contractor
agrees to maintain Commercial Automobile Liability Insurance covering all
owned, non-owned leased, and hired automobiles, trucks and trailers, with
policy limits of not less than $5,000,000 combined single limit per occurrence
to cover Contractor’s entire United Express operation.

 

5.               Contractor
will be responsible for the first $1,000,000 of loss or damage to all
automation equipment provided by United to Contractor.  Contractor will evidence property insurance
and name United as loss payee. 

 

B.            30-DAY
NOTICE

 

On or before the Effective Date of this
Agreement, and not less than thirty (30) days and seven (7) days notice with
respect to war risk, before the expiration or termination date of any insurance
required to be maintained by Contractor under Article XII.A above,
Contractor will furnish United with certificates of insurance, substantially in
the form of the attached Appendix G, evidencing compliance with the
foregoing requirements, unless otherwise provided in writing between the
parties.

 

C.            ALTERATIONS

 

United has the right to make reasonable
alterations in the requirements set forth in this Article XII above, in
respect of the types and scope of coverage and amounts of insurance, any such
alteration being deemed reasonable if readily available and if it becomes the
custom in the industry.

 

D.            FAILURE TO MAINTAIN
INSURANCE

 

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

 

XIII.                        LIABILITY
AND INDEMNIFICATION

 

A.            EMPLOYER’S LIABILITY
AND WORKERS’ COMPENSATION

 

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

 

34

 

B.            INDEMNIFICATION BY
CONTRACTOR

 

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

 

C.            INDEMNIFICATION
BY UNITED

 

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

 

D.            [Intentionally
omitted.] 

 

E.              CONTRACTOR’S SUPPLIES LIABILITY

 

Contractor hereby assumes liability for and
agrees to indemnify, release, defend, protect, save and hold United and its
officers, directors, agents and employees from and against any and all
liabilities, damages, losses, claims, demands, suits, fines or judgments,
including but not limited to attorneys’ and witnesses’ fees, costs and expenses
incident thereto, which may be suffered by, accrue against, be charged to or be
recovered from United or its officers, directors, employees, or agents by
reason of any losses or damages incurred on account of the loss,
misapplication, theft or forgery of passenger tickets, exchange orders or other
supplies furnished by or on behalf of United to Contractor, or the proceeds
thereof, whether or not such proceeds have been deposited in a bank and whether
or not such loss is occasioned by the insolvency or bankruptcy of a bank in
which Contractor may have deposited such proceeds, other than a loss caused by
a bank to which funds have been transmitted at the express direction of United.  Contractor’s responsibility hereunder for
passenger tickets, exchange orders and other supplies will

 

35

 

commence immediately upon the
delivery of said passenger tickets, exchange orders, and other supplies into
the possession of Contractor or any duly authorized officer, agent or employee
of Contractor.  United will furnish
Contractor prompt and timely notice of any claims made or suits instituted
against United which in any way may result in the indemnification hereunder,
and Contractor will have the right to compromise or participate in the defense
of same to the extent of its own interest. 
This paragraph does not apply in situations to the extent the losses or
damages are caused by the willful misconduct or gross negligence of United or
its officers, directors, employees, or agents

 

F.              INDEMNITY FOR
INFORMATION

 

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

 

G.            CERTAIN DEFINITIONS

 

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

 

XIV.                       REPORTS

 

A.            BOARDING INFORMATION

 

Information reports containing data covering
boarding, and other information agreed to by the parties for Contractor’s
operations hereunder will be produced from the close-out entries and provided
by United to Contractor on a monthly basis 15 days after the month end.

 

B.            OPERATING
PERFORMANCE

 

Contractor will furnish to United within ten
(10) working days after the end of each month a detailed report of its
operating performance, this report will include information on Contractor’s

 

* Confidential

36

 

performance during the
preceding month for each of the items designated by United, including, but not
limited to, Operating Performance Standards and aircraft appearance.  

 

C.            CORPORATE AUDIT

 

United may inspect and audit Contractor’s
corporate records related to Pass Through Costs at any time, provided that such
inspections do not unreasonably interfere with Contractor’s business.  Additionally, United may inspect and audit
all of Contractor’s corporate records and accounts solely related to
Contractor’s United Express Services, in conjunction with the benchmarking
studies conducted in 2009 and 2013 provided that such inspections do not
unreasonably interfere with Contractor’s business.

 

D.            [Intentionally omitted.]

 

E.              FINANCIAL STATEMENTS

 

Contractor will furnish to United, (i) within
45 days after the end of each calendar quarter,  unaudited financial statements, including Contractor’s then
current corporate balance sheet and profit and loss statement, either
separately or on a consolidated basis, and (ii) within 90 days after the end of
the Contractor’s fiscal year, Contractor’s then current, audited financial
statements including, either separately or on a consolidated basis, the balance
sheet and the profit and loss statement, together with associated footnotes,
and a copy of the independent auditor’s report.  If Contractor fails to provide financial statements within the
45-day or 90-day period, as outlined above, United may withhold all
reconciliation payments pending the receipt of financial documents.  Contractor may satisfy its obligations under
this provision by providing United with copies of filings by Contractor or an
affiliate on SEC Forms 10K or 10Q that include Contractor’s financial
performance.

 

F.              BENCHMARKING

 

In 2009 and 2013, Contractor agrees to participate diligently in a
detailed update of Contractor’s United Express expenses.  Contractor agrees not to provide United
Costs data to any other carrier or third party and United agrees not to provide
Contractor cost data to any other carrier or third party  except as required by law (including federal
or state securities laws or regulations) or by the rules and regulations of any
stock exchange or association on which securities of either party or any of its
affiliates are traded, or in any proceeding to enforce the provisions of this
Agreement. In the event either party believes it is required to disclose the
other party’s cost data to any other carrier or third party, it shall provide
to the owner of such data prior written notice of such contemplated disclosure
in sufficient time to enable the owner to seek a protective order or other
appropriate protection, and upon the owner’s request, the disclosing party
shall cooperate with any such effort by the owner.  Nothing in this paragraph is intended to override any
non-disclosure obligation of either party to protect the confidential
information of the other party that is in its possession.

 

G.            GOVERNMENT
FILINGS

 

Contractor will be responsible for filing all
reports relating to its operations with the DOT, FAA and other applicable
government agencies (other than any such reports for which United has assumed
the responsibility to file them on Contractor’s behalf), and commencing at such
time as it commenced United Express flight operations, Contractor will promptly
furnish United with copies of all such reports and such other available traffic
and operating reports as United may request from time to time during the life
of this Agreement.  To the extent only
United is in possession of relevant statistics used in such reports, United
will provide such available statistics to Contractor as necessary for
Contractor to complete these filings. 
If United fails to provide such statistics to Contractor sufficiently in
advance of the applicable deadline for

 

37

 

such filings, and Contractor is
unable to submit such filings by the deadline because of such delay, United
will reimburse Contractor for any fines or penalties incurred by Contractor as
a result of its failure to submit such filings by the deadline.

 

H.            COPY OF GOVERNMENT REPORTS

 

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

 

XV.                           INDEPENDENT
CONTRACTORS AND UNAUTHORIZED OBLIGATIONS 

 

A.            INDEPENDENT CONTRACTORS

 

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

 

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

 

B.            EMPLOYEES

 

The employees, agents and independent
contractors of United engaged in performing any of the services United is to
perform pursuant to this Agreement are employees, agents and independent
contractors of United for all purposes and under no circumstances will be
deemed to be employees, agents or independent contractors of Contractor.  Contractor will have no supervision or
control over any such United employees, agents and independent contractors and
any complaint or requested change in procedure made by Contractor will be
transmitted by Contractor to United’s designated representatives. In its
performance under this Agreement, United will act, for all purposes, as an
independent contractor and not as an agent for Contractor.

 

C.            UNAUTHORIZED OBLIGATIONS

 

1.               Nothing
in this Agreement authorizes United to make any contract, agreement, warranty
or representation on Contractor’s behalf, or to incur any debt or obligation in
Contractor’s name (“Contractor Unauthorized Obligation”); and
United hereby agrees to defend, indemnify, save, release

 

38

 

and hold
Contractor and its officers, directors, employees and agents harmless from any
and all liabilities, claims, judgments and obligations which arise as a result
of or in connection with or by reason of any such Contractor Unauthorized
Obligation made by United or its officers, directors, employees, agents or
independent contractors (other than Contractor) in the conduct of United’s
operations.

 

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

 

D.            CONTRACTOR
OPERATED FLIGHTS

 

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

 

XVI.                       DEFAULT
AND TERMINATION

 

A.            OPERATIONS
DEFAULT 

 

1.               If either party
becomes insolvent; is not regularly paying its bills when due without just
cause; takes any step leading to its cessation as a going concern; makes an
assignment of substantially all of its assets for the benefit of creditors or a
similar disposition of the assets of the business; or either ceases or suspends
operations for reasons other than an Article XXVI Force Majeure condition
(a “Section A
Default”), then the other party (the “Insecure Party”) may
terminate this Agreement on not less than 10 days written notice (the “Notice
Period”) to such party (the “Section A Defaulting Party”) unless
the Section A Defaulting Party immediately gives adequate assurance of the
future performance of this Agreement within the Notice Period by establishing
an irrevocable letter of credit—issued by a U.S. bank acceptable to the
Insecure Party, on terms and conditions acceptable to the Insecure Party, and
in an amount sufficient to cover all amounts potentially due from the
Section A Defaulting Party under this Agreement—that may be drawn upon by
the Insecure Party if the Section A Defaulting Party does not fulfill its
obligations under this Agreement in a timely manner.  

 

2.               If bankruptcy
proceedings are commenced with respect to the Section A Defaulting Party
and if this Agreement has not otherwise terminated, then to the extent
permitted by the Bankruptcy Court, the Insecure Party may upon ninety (90)
days’ prior written notice suspend all further performance of this Agreement
until the Section A Defaulting Party assumes or rejects this Agreement
pursuant to Section 365 of the Bankruptcy Code or any similar or successor
provision.  Any such suspension of
further performance by the Insecure Party pending the Section A Defaulting
Party’s assumption or rejection will not be a breach of this Agreement and will
not affect the Insecure Party’s right to pursue or enforce any of its rights
under this Agreement or otherwise.  

 

B.            COVENANT DEFAULT

 

If either party (the “Section B Defaulting Party”)
shall refuse, neglect or fail to perform, observe, or keep any material
covenants, agreements, terms or conditions contained herein on its part to be
performed, observed, and kept (other than any such covenant or agreement for
which this Agreement provides an exclusive remedy and other than the covenants
described in Article XVI.D), and such refusal, neglect or failure
(individually and collectively, a “Breach”) shall continue for a period of
thirty (30)

 

39

 

days after written notice to cure
such Breach to the Section B Defaulting Party thereof or such longer
period as may be demonstrably  necessary
to complete the cure of such failure (but such longer period may not exceed 60
days after the receipt of the notice to cure) (a “Section B Default”)
then the other party may upon thirty (30) days’ notice to the Section B
Defaulting Party terminate this Agreement. 
If a notice of Breach is delivered and a notice of termination is not
delivered within forty-five (45) days after the end of the 30 or 60 day cure
period, as applicable, the other party shall be deemed to have waived its right
hereunder to terminate for the particular occurrence of Breach for which the
Section B Defaulting Party received notice.  Notwithstanding the foregoing, if United shall permanently cease
operations as a certificated air carrier, Contractor may give written notice
and terminate the Agreement effective immediately after such cessation of
operations.

 

C.            DEFAULT BY CONTRACTOR

 

If Contractor shall refuse, neglect or fail
to cure or perform any one of the following conditions outlined in Article XVI.C.1
or Article XVI,C.2
below , United may give Contractor written notice to correct such condition or
cure such breach.  Upon written notice
of breach, Contractor shall have thirty (30) days in order to cure such breach,
and if any such condition or breach shall continue beyond thirty (30) days
after notice to Contractor thereof (a “Section C Default”), then United may
terminate this Agreement upon thirty (30) days’ written notice to Contractor
if:

 

1.               Contractor’s
operations fall below C level performance in all of the following three goals
for a period of three (3) consecutive months OR for a period of 6 months within
a 12-month period:

 

a.               Controllable
Flight Completion;

 

b.              Mishandled
Bags; or

 

c.               On-Time
Zero;

 

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

 

D.            SIMILAR AGREEMENTS

 

United may immediately terminate this
Agreement (i) if Contractor is in breach of the terms of Article V.A. (United
Express Operations Only) or (ii) if Contractor is in breach of the terms of Article V.B
(Code Share Limitation) (a “Section D Default”). 

 

E.              NON-COMPLIANCE
WITH STANDARDS

 

If Contractor shall refuse, neglect, or fail
to perform or observe the provisions of the United Express Service Standards or
Aircraft Ground Handling Procedures to be performed, observed, and kept with
regard to one or more city pairs under this Agreement, and such refusal,
neglect or failure shall continue for a period of sixty (60) days after United
delivers written notice to cure such default to Contractor thereof (a “Section E
Default”) then United may upon thirty (30) days’ notice to
Contractor terminate this Agreement with regard to the city pairs involved or
ninety (90) days’ notice to Contractor as to the entire Agreement at United’s
discretion.

 

F.              CONSEQUENCES OF
TERMINATION

 

Any termination pursuant to one or more of
the provisions of this Agreement will be without additional liability to the
party initiating such termination and will not be construed so as to relieve
either

 

40

 

party hereto of any debts or
obligations, monetary or otherwise, to the other party that accrued hereunder
prior to the effective date of such termination.  Each party will be entitled to any and all damages recoverable
and remedies under law or in equity against the other for any breach by the
other party of this Agreement, regardless of whether the non-breaching party
elects to terminate this Agreement; provided that the liquidated damages
provided for in Article XVI.G shall constitute full payment and the
exclusive remedy for any damages suffered by United in the event it terminates
this Agreement pursuant to the terms of this Article XVI sections A, B, C.2 or
D. 

 

G.            LIQUIDATED DAMAGES

 

1.               Except
as otherwise provided hereunder, if United terminates this Agreement pursuant
to the terms of this Article XVI as a result of a
Section A Default, a Section B Default, a Section C.2 default or
a Section D default by Contractor, then Contractor will be obligated to
pay United liquidated damages.  Such
liquidated damages will be calculated in the manner provided herein and shall
not constitute a penalty. 

 

2. If United is entitled to collect
liquidated damages from Contractor as a result of Contractor’s material breach
of this Agreement, United’s liquidated damages shall be calculated as
follows:  lost contribution (which shall
be conclusively deemed to be [ * ]
of United’s average monthly net revenue, defined as total Origination and
Destination revenue minus taxes and commissions, from Contractor’s United
Express flights during the immediately preceding [ * ] period) multiplied by the following percentages
for each month in the following periods – (a) [ * ] for the lesser of [ * ] following the termination of the Agreement or the
remaining term of the Agreement at that time, (b) [ * ] for the lesser of [ * ] or the remaining term of the Agreement at that
time, and (c) [ * ]
for the lesser of [ * ]
or the remaining term of the Agreement at that time.  Such amounts shall be subject to mitigation to the extent United
can replace Contractor’s United Express services.

 

3.               The
provisions of this Section XVI.G shall not apply to any termination as a
result of a Section C.1 default, or a Section E default.

 

H.            RESTRICTED ACTIONS 

 

Contractor shall not take, nor agree to take,
any of the following actions without United’s prior written consent: (a)
dispose of any of United’s assets, or (b) enter into any agreements with third
parties which create liens, claims or encumbrances on any of United’s
assets.  To the extent that Contractor
engages in, invests in or otherwise is responsible (financially or otherwise)
for any business, activity or operation other than Contractor’s United Express
Services, and unless otherwise expressly agreed in writing with United,
Contractor will ensure that the costs and expenses associated with or allocable
to such other businesses, activities or operations are not charged to or
recovered from United in any way.

 

I.                 CALL OPTION

 

1.               United
will have the option to assume Contractor’s ownership or leasehold interest, as
the case may be, in certain aircraft as more fully described in Article XVI.I.
(the “Call
Option”) in any one or more of the following circumstances:

 

a.               If
Contractor wrongfully terminates this Agreement, (in which event United will
also be entitled to Liquidated Damages to the extent provided in Article XVI.G);
or 

 

* Confidential

41

 

b.              If
United terminates this Agreement for Contractor’s breach of this Agreement for
any one or more of the following reasons (in which event United will also be
entitled to Liquidated Damages to the extent provided in Article XVI.G)

 

i.                  Contractor’s
operating performance falls below the following two levels for three
consecutive months or any 6 month period within a rolling 12 month period:

 

(a).less than [ * ]
controllable completion factor (excluding cancellations caused solely by
weather, ATC, United caused problems, and/or labor actions); and

 

(b).less than [ * ]
on-time zero;

 

ii.               Contractor
enters into a new codeshare with another airline in breach of Article V.A
or V.B; or 

 

iii.            Contractor
breaches its obligations contained in Article V.A or V.B; or  

 

iv.           Contractor’s
operating certificate is revoked or suspended by the FAA, for safety issues or
concerns, for a period of four consecutive months. 

 

2.                                       The Call Option
shall be governed and limited by the following:

 

a.               The
Call Option shall apply to any or all regional jet aircraft operated by
Contractor as United Express pursuant to the terms of this Agreement at the
time of the event or events described in Article XVI.I.1 above.

 

b.              United
shall deliver notice of its election to exercise the Call Option no later than
45 days following the date of notice of termination of this Agreement. 

 

c.               Within
[ * ] business days
following its receipt of a notice by United of its notice of termination,
Contractor shall provide United with: (i) copies of documentation relating to
interests to be assumed by United or retired at United’s expense as a result of
an aircraft lease
assignment, sublease or
purchase; (ii) lease rates and other financial information
relevant to the assignment, sublease or
purchase; and (iii) the identity of and contact
information for all parties with an interest in said aircraft. 

 

d.              [Intentionally
Omitted.]

 

e.               In the event United exercises its
Call Option (i) with respect to aircraft that are owned by Contractor or an
affiliate of Contractor, Contractor or such affiliate shall sell the aircraft
to United for the purchase price set forth in paragraph f below, and (ii) with
respect to aircraft that are leased by Contractor, (A) if the leases to such
aircraft may be assigned to United, United shall assume the leases with respect
to such aircraft, and (B) if the leases to such aircraft may not be assigned to
United or a consent required cannot be obtained, United shall sublease such
aircraft from Contractor pursuant to a sublease with terms and conditions that
are the same for the remaining term as they are in the lease under which
Contractor leases the aircraft.  The
effective date of any such sale, lease, or sublease shall occur promptly after
United’s election to exercise the Call Option but no later than [ * ] days after the notice.

 

f.                 In
the event of a sale of an aircraft
under paragraph e(i) above, the
purchase price for the
aircraft shall be [ * ]

 

g.              In the event of a lease assumption
under sub paragraph e(ii)(A) above, Contractor shall be entitled to
either a full release
from all liabilities and obligations under such lease

 

* Confidential

42

 

other than obligations relating
to periods prior to the date of assignment to United or United shall indemnify
the Contractor from liabilities and obligations  arising after the date of assignment. Contractor shall indemnify United
from all liabilities and obligations arising prior to the date of the
assignment.  

 

h.              In the event of either a lease
assumption under  paragraph e(ii)(A)
above or a sublease under paragraph e(ii)(B) above United will indemnify Contractor
against all liabilities arising from and after such assignment or sublease as the case may be.
Contractor shall indemnify United from all liabilities and obligations arising
prior to the date of the assignment or sublease, as the case may be.  United shall also attempt to obtain a termination of all guarantees and
return to Contractor
(or reimburse) all applicable deposits, letters of credit, or other collateral, but
such release shall not include (and instead Contractor shall assign to the
extent assignable to United without further compensation, and if not
assignable, Contractor shall subrogate its rights regarding any such deposits
or reserves held by or subject to the security interest of third parties to
United or otherwise put United in the same position as if such rights were
assignable) any deposits or reserves held by or subject to the security interest
of third parties related to the maintenance or operation of the aircraft
(including the airframe, any engine, any landing gear, or other component or
part).  United shall assume all
obligations of Contractor with respect to such lease or sublease as of the date of assignment or sublease and adjustments shall be made
between the parties for advance or arrears payment of rent.  Such adjustment shall be the difference
between:  (i) the cash amount of rent actually
paid under the lease during its entire term as of the time of the assignment,
and (ii) the total rent due during the
entire term of the lease times the percentage of the number of days since the
beginning of the lease to the total number of days in the entire term of the
lease.  In the event that United and the Contractor
working together are unable to obtain a release, for the benefit of Contractor,
then United shall indemnify Contractor from and against all losses and
liabilities of any kind arising from and after such assignment or sublease in the same manner contemplated
above.

 

i.                  Following
a notice of termination from United, provided that Contractor does not operate
the aircraft in a manner that is prohibited under the terms of this Agreement, United shall continue to pay aircraft
ownership costs as provided in Section VIII.A.8 hereof in respect of
all aircraft subject to United’s exercise of its Call Option until (a) in the
event United exercises its Call Option, the effective date of the sale, lease
or sublease of the respective aircraft as provided herein, or (b) in the event
that United does not exercise its Call Option, the date of expiration of its
Call Option, the date of United’s written notice providing United’s early
release of its rights to such Call Option, or the date of United’s revocation
of its exercise of the Call Option as provided under paragraph f, in each case
with respect to any particular aircraft. 

 

j.                  For
each aircraft that United acquires pursuant to the Call Option, United will
purchase from the Contractor and take delivery of a mutually-selected,
proportional share of Contractor’s spare engines, rotable and expendable spare
parts, and tools, owned by Contractor to support the operation of the aircraft
type.  The aggregate proportional share
of Contractor’s spare engines, spare parts and tools shall be determined as the
number of aircraft acquired by United as a percentage of the Contractor’s
fleet, by aircraft type.  Spare parts,
spare engines and tools will be purchased by United at fair market value in “as
is where is” condition with fair
market value determined in the manner provided in
paragraph f
above.

 

k.               In the event United exercises its
Call Option with respect to any aircraft as to which Contractor has prepaid
rent under the terms of any lease or financing agreement, United shall
reimburse Contractor for all prepaid rent to the extent not previously included
in the aircraft ownership costs previously paid by United or otherwise.

 

43

 

XVII.                   ASSIGNMENT,
MERGER AND ACQUISITION

 

A.            ASSIGNMENT

 

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

 

B.            MERGER

 

In the event Contractor or Republic merges
with, or if control of Contractor or Republic is acquired by, another air
carrier, or a corporation directly or indirectly owning or controlling or
directly or indirectly owned or controlled by another air carrier (a “Holding
Company”), or a corporation directly or indirectly owned or
controlled by any such Holding Company, United will have the option to
terminate this Agreement without liability to Contractor, but shall have no
such option if (1) Contractor or Republic is the acquiring or surviving entity
in such merger or acquisition, (2) the ultimate beneficial ownership of the
surviving entity immediately following such transaction is substantially
similar (i.e. at least [ * ]
common ownership) to the ultimate beneficial ownership of Contractor or
Republic as the case may be immediately prior to such transaction.  

 

C.            ACQUISITION

 

1.               For
purposes of this Article XVII.C, a “Qualifying Transaction” means any actual,
contemplated or proposed (a) merger of Contractor or Republic with another
company, (b) sale, transfer or lease by Contractor of substantially all its
assets, rights or powers (other than in the ordinary course of business), or
(c) issuance or sale of stock of Contractor or Republic representing a [ * ] of beneficial
ownership or voting control (other than the issuance or sale of stock in
Contractor or Republic in a registered public offering under the Securities Act
of 1933, as amended) in a single transaction or series of related transactions;
provided, however, that a Qualifying Transaction shall not include (d) a
corporate reorganization or other transaction that does not result in a change
of over [ * ] in the
ultimate beneficial ownership or voting control of Contractor or Republic from
the ownership that existed prior to such transaction, (e) a transaction in
which Contractor or Republic is the surviving entity, (f) a transaction in
which the surviving entity is controlled, directly or indirectly, by Wexford
Capital LLC, provided that in each case the surviving entity agrees to be bound
by this Agreement or (g) any proposed sale or disposition by Contractor of its
aircraft or assets that:  (i) have
become worn out or obsolete or are no longer used and useful in Contractor’s
day-to-day business; provided, however, that such sale or disposition does not
impair or negatively affect Contractor’s ability to complete scheduled service
on a day to day basis under this Agreement; or (ii) are being replaced with
other assets of a similar type which are at least of equal quality and utility
to Contractor in carrying on its day to day business and meeting its obligation
under this Agreement. 

 

2.               Contractor
and Republic each agrees that if it desires to engage in a Qualifying Transaction,
it shall (a) give United written notice of its intention to engage in such
Qualifying Transaction together with the material terms and conditions of such
proposed transaction (the “Notice”),

 

* Confidential

44

 

(b) negotiate
in good faith with United to determine terms and conditions on which Contractor
or Republic and United could complete such Qualifying Transaction and (c) grant
United or any United affiliated entity a right of refusal or of offer (the “United ROFR”)
regarding such proposed Qualifying Transaction, subject to any conflicting
prior right of refusal granted by Contractor, Republic or any of their
affiliates before January 27, 2004. 
The United ROFR shall give United or any United affiliated entity the
right to enter into a Qualifying Transaction upon the terms set forth in the
Notice; provided that if United is unable to match such terms due to United’s
inability to provide the specific types of consideration (e.g., stock, rights
or assets) to be delivered by a third party thereunder, Contractor agrees to
negotiate promptly in good faith in order to determine an amount and type of
consideration with an equivalent after-tax economic value to Contractor or its
affiliates which could be paid or delivered to Contractor or its affiliates in
lieu of such specific consideration. 
Contractor agrees that any and all information provided to any third
party in connection with a Qualifying Transaction will be provided to United
with the Notice or as promptly as possible thereafter. 

 

3.               United
shall deliver to Contractor written notice of its preliminary election to
exercise the United ROFR (a “ROFR Notice”) not later than 10 business
days after the receipt of the Notice by United.  Within 10 business days after the later of (a) United’s delivery
of a ROFR Notice, or (b) the delivery to United by Contractor of the
information referred to in paragraph 2, United shall have the right to withdraw
its ROFR Notice.  If (c) United does not
issue a timely ROFR Notice, (d) withdraws a ROFR Notice, or (e) notwithstanding
United’s issuance and failure to withdraw a ROFR Notice, United and Contractor
or Republic are unable to agree on terms and conditions of a Qualifying
Transaction among themselves, Contractor or Republic shall have the right to
enter into the Qualifying Transaction with a third party, but may not do so on
any terms more beneficial to such third party than was offered to United.

 

XVIII.               CHANGE OF LAW

 

Notwithstanding anything herein to the
contrary, in the event there is any change in the statutes governing the
economic regulation of air transportation, or in the applicable rules,
regulations or orders or interpretation of any such rule, regulation or order
of the DOT or other department of the government having jurisdiction over air
transportation, which change or changes materially affect the rights or
obligations of either party hereto under the terms of this Agreement, then the
parties hereto will consult, no later than thirty (30) days after any of the
occurrences described herein, in order to determine what, if any, changes to
this Agreement are necessary or appropriate, including but not limited to the
early termination of this Agreement.  If
the parties hereto are unable to agree whether any change or changes to this
Agreement are necessary and proper, or as to the terms of such changes, or
whether this Agreement should be terminated in light of the occurrences
described above, and such failure to reach agreement continues for a period of
thirty (30) days following the commencement of the consultations provided for
by this Article XVIII,
then this Agreement may be terminated by either party immediately upon
providing the other party thirty (30) days’ prior written notice of such
termination.  Any such termination will
be without additional obligation or liability to both parties except that such
termination will not relieve either party of any debt or obligation, monetary
or otherwise, accruing hereunder prior to the effective date of termination.

 

XIX.                       TAXES,
PERMITS AND LICENSES

 

A.            TRANSACTION TAXES

 

Contractor agrees to indemnify and hold
United harmless from any and all penalties or interest arising out of any real
and personal property, sales and use, occupational, gross receipts, value
added,

 

45

 

income, franchise and any other
taxes, customs, duties, excise taxes, fees, charges or assessments, of any
nature whatsoever imposed by any federal, state, local or foreign government or
taxing authority upon Contractor or United with respect to Contractor’s
performance of this Agreement, or to Contractor’s operations, or the equipment
contained therein or services provided thereby, or the revenues derived
therefrom (except for penalties or interests arising out of any tax upon or
measured by United’s revenues, net income or any franchise tax). If a claim is
made against United for any penalties or interest referred to above, United
will promptly notify Contractor and request payment of such claim.  If requested by Contractor in writing,
United will upon receipt of indemnity and evidence that Contractor has made
adequate provision for the payment of such penalties or interest, reasonably
satisfactory to United, contest the validity, applicability or amount of such
penalties or interest, taxes and other charges at Contractor’s expense.  Contractor shall pay United upon demand for
all expenses incurred (including, without limitation, all costs, expenses,
losses, legal and accountants’ fees, penalties and interest) in making payment,
in protesting or seeking refund of such penalties or interest.

 

B.            PAYROLL TAXES

 

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

 

C.            PERMITS AND LICENSES

 

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

 

XX.                           REVIEW

 

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

 

XXI.                       JURISDICTION

 

With respect to any lawsuit, action,
proceeding or claim relating to this Agreement or any other agreement between
United and Contractor (hereinafter, any such lawsuit, action, proceeding or claim
is referred to as a “Lawsuit”), each of the parties hereto
irrevocably (i) submits to the exclusive jurisdiction of the courts of the
State of Illinois and the United States District Court located in the City of
Chicago,

 

46

 

Illinois, and (ii) waives any
objection which it may have at any time to the laying of venue of any Lawsuit
brought in any court, waives any claim that any Lawsuit has been brought in any
inconvenient forum, and further waives the right to object, with respect to any
Lawsuit, that such court does not have jurisdiction over such party.  Nothing in this Agreement precludes either
party hereto from bringing Lawsuits in any other jurisdiction in order to
enforce any judgment obtained in any Lawsuit referred to in the preceding
sentence, nor will the bringing of such enforcement Lawsuit in any one or more
jurisdictions preclude the bringing of any enforcement Lawsuit in any other
jurisdiction.

 

XXII.                   NOTICES

 

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

 

United Air Lines, Inc.

1200 E. Algonquin Road

Elk Grove Township, Illinois 60007

Attn:  – Director, United
Express 

Fax:  847-364-6728

 

and to Contractor, addressed to:

 

Chautauqua Airlines, Inc.

2500 South High School Road, Suite 160

Indianapolis, Indiana 46241 

Attn: Chief Executive Officer 

Fax:  317-484-4577

 

With a copy to:

 

Wexford Capital LLC

411 West Putnam Avenue

Greenwich, CT  06830

Attn:  President & General
Counsel

Fax Nos.:  203-862-7320

203-862-7312 

 

or to such other addresses in the continental
United States as the parties may specify in writing. 

 

XXIII.               APPROVALS
AND WAIVERS

 

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

 

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

 

47

 

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

 

XXIV.              GOVERNING
LAW

 

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

 

XXV.                  CUMULATIVE
REMEDIES

 

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

 

XXVI.              FORCE MAJEURE

 

A.            FORCE MAJEURE.

 

Neither party shall be liable for delays or
failure in performance hereunder caused by acts of God, acts of terrorism or
hostilities, war, strike, labor dispute, work stoppage, fire, act of
government, court order or any other cause, whether similar or dissimilar,
individually or collectively, “Force Majeure” events beyond the control of
Contractor or United. 

 

B.            EFFECT ON MARKUP.

 

 In the event of a Force Majeure or other
disruption resulting in at least a one-day suspension of greater than [ * ] of Contractor’s United
Express scheduled flights for a period of more than [ * ], United retains the right to reduce Contractor’s
Markup to [ * ] for A,
B, or C level performance, and to [ * ]
for D level performance, for the lesser of the duration of effect of the Force
Majeure event or [ * ].
The adjusted Markup under a Force Majeure event will be part of a broader
United Express program where all carriers provide assistance at levels that are
proportionate to their United Express operations. 

 

C.            FIXED AND OVERHEAD REDUCTION.

 

In the event of a Force Majeure event,
resulting in a suspension of greater than [ * ] of Contractor’s United Express scheduled flights
for a period of more than [ * ],
upon providing prior written notice to Contractor United shall have the right
after the date of such notice to apply an equivalent percentage reduction to
all Fixed and Overhead cost categories (Non-Aircraft), for the duration of the
Force Majeure event.  This reduction
will become permanent in the event a permanent schedule reduction is
necessary.  The reduction in fixed and
overhead costs under a Force Majeure event will be part of a

 

* Confidential

48

 

broader United Express program
where all carriers provide assistance at levels that are proportionate to their
United Express operations.

 

XXVII. SEVERABILITY AND CONSTRUCTION

 

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

 

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

 

XVIII.
ACKNOWLEDGMENT

 

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

 

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

 

XXIX.
CONFIDENTIALITY

 

A.            Except
as required by law (including federal or state securities laws or regulations)
or by the rules and regulations of any stock exchange or association on which
securities of either party or any of its affiliates are traded, or in any
proceeding to enforce the provisions of this Agreement, or is required in
connection with a S-1 filing with redactions as agreed upon by both parties,
United and Contractor hereby agree not to publicize or disclose to any third
party the terms or conditions of this Agreement or any of the Related
Agreements without the prior written consent of the other parties thereto.

 

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

 

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

 

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

 

49

 

XXX.                  RELATED
AND THIRD PARTY AGREEMENTS

 

United and Contractor shall
enter into agreements listed below in this Article XXX (the “Related Agreements”). All
such Related Agreements will automatically terminate contemporaneously with the
termination of this Agreement unless termination shall otherwise be effected in
accordance with the terms of such Related Agreements.

 

a.               Reciprocal
Interline Agreement/Space Available Employee and Eligible Travel Agreement
(United Contract No. 165975)

 

b.              United Express
Positive Space Travel Agreement (United Contract No. 165976)

 

c.               Emergency Response
Agreement (United Contract No. 165977)

 

XXXI.              ENTIRE
AGREEMENT

 

This Agreement, together with the Related
Agreements, including any Appendices, Attachments and Exhibits attached hereto
and thereto, contains the complete, final and exclusive agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
previous agreements and understandings, oral and written, with respect to such
specific matter and said Agreement will not be modified, amended or terminated
by mutual agreement or in any manner except by an instrument in writing,
executed by the parties hereto.

 

XXXIII. REFERENCES TO TIME PERIODS

 

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

 

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

 

	
  CHAUTAUQUA AIRLINES, INC.

  	
  UNITED AIR LINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Bryan K. Bedford

  	
   

  	
  By:

  	
  /s/ Gregory T. Taylor

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Bryan K.
  Bedford

  	
  Name:

  	
  Gregory T.
  Taylor

  
	
  Title:

  	
  Chief
  Executive Officer

  	
  Title:

  	
  Senior Vice
  President Planning

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted
  & Agreed

  	
   

  
	
  as to
  Sections XVII B & C only

  	
   

  
								

 

50

 

	
  REPUBLIC AIRWAYS
  HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Bryan K. Bedford

  	
   

  	
   

  
	
  Name:

  	
  Bryan K. Bedford

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
					

 

51

 

APPENDIX A

 

UNITED MARKS

 

UNITED EXPRESS

 

Stylized UNITED EXPRESS lettering

 

UNITED EXPRESS colors

 

Stylized letters UA

 

Uniform Design

 

Aircraft exterior and interior color decor

 

Other United Marks approved by United for use
by Contractor

 

52

 

APPENDIX B

 

RJ- 145 FLEET PLAN

 

 

Deliveries

 

	
  Jun-04

  	
  2

  
	
  Jul-04

  	
  2

  
	
  Aug-04

  	
  3

  
	
  Sep-04

  	
  3

  
	
  Oct-04

  	
  3

  
	
  Nov-04

  	
  3

  

 

Contractor shall not be liable for any delays resulting from verifiable
aircraft delivery delays.  If Contractor
is unable to deliver any Aircraft on or before the last day of the month after
the month that such aircraft is scheduled to be delivered as set forth herein,
Contractor shall provide written notice to United, and United shall have the
option, which shall be exercisable by providing written notice to Contractor
within 10 business days after the receipt of such notice from Contractor, but
in no event sooner than the end of the month when the aircraft was originally
scheduled to be delivered, to delete such aircraft from this Agreement without
liability to either party and the Agreement shall remain in effect only with
respect to the remaining aircraft.

 

53

 

APPENDIX
C

 

GROUND HANDLING***

 

Table left intentionally blank

 

	
  Airport

  	
   

  	
  Customer

  Service/Ticket

  Counter*

  	
   

  	
  Customer

  Service/Gates

  	
   

  	
  Ground

  Handling/Ramp

  	
   

  	
  Receipt/Dispatch

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*                             Includes
Small Package Dispatch (SPD)

 

***               For purposes of the
table above, Contractor or United, as applicable, shall provide or cause to be provided
the designated services as shown in the table. 

 

54

 

APPENDIX D 

 

Contractor Support
Services

 

At all locations not set forth on Appendix C
where Contractor operates scheduled air transportation as a United Express
Carrier (i.e., Contractor Locations), Contractor will provide the following
minimum services:

 

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

 

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

 

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

 

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

 

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

 

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

 

55

 

APPENDIX E

 

REIMBURSEMENT
CATEGORIES

 

CARRIER CONTROLLED
COSTS

 

United shall pay Contractor the following
Reimbursement Category Unit Rates for Contractor’s United Express flights
operated using the aircraft set forth below:

 

	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
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  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  

 

* Confidential

56

 

PASS-THRU COSTS

 

	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
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  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  

 

* Confidential

57

 

DEFINITIONS

 

Descriptions of
Carrier Controlled Costs

 

General
Statement:              Notwithstanding
the following descriptions, any costs incurred by Contractor that are described
as Pass-Through Costs on this Exhibit E shall not be considered Carrier
Controlled Costs.  Any costs incurred by
Contractor that are not Pass-Through Costs under the Agreement, regardless of
whether such costs are described below, shall be considered Carrier Controlled
Costs, except for those costs that are typically considered the responsibility
of the Ground Handling Provider as defined in United’s contracts for ground
handling services.  The characterization
of any cost as a Carrier Controlled Cost in the following descriptions shall
not impair any provision of the Agreement that specifically requires United to
reimburse Contractor for such cost.

 

i)                 Flight Crews (Captains, First Officers and Flight
Attendants)

 

a)              Wages,
benefits (including health insurance, pensions, 401k, and any other benefits),
payroll associated taxes and incentives (premiums for longevity, geography,
certificates/licenses, profit sharing, bonuses and any other incentives) for
all paid hours (including but not exclusive of hours for reserve employees,
overtime, vacation, holidays, sick days, and paid leave) for the following work
categories:

 

ii)              Pilots and Flight Attendants for all equipment
types, including reserve crews and any other crews on the Contractor payroll.

 

iii)           Pilot and Flight Attendant Administration and
Management, including senior management crew scheduling, labor relations
management.

 

iv)          Domicile administration.

 

a)              All
uniform related charges for all of the above work categories, including
purchase, repair, and cleaning charges.

 

b)             All
training associated with the work groups above, including but not exclusive of:

 

v)             Recurring and Attrition:  Any training expense that occurs annually for all types of
employees, new planes or attrition. 
Includes Labor payments to those employees being trained (including all
types of charges mentioned in paragraph i.a), trainer time and salary,
equipment and facility rental, training administration costs associated with
recurring training, and any training materials required. Excludes expenses
associated with bringing new aircraft into the system.  

 

vi)          Ramp-up: 
Training expense that occurs due to new planes taken on.  Includes Labor payments to those employees
being trained (including all items in paragraph i.a); Trainer time and salary;
Equipment and facility rental; Training administration costs associated with
one-time training; Any training materials required; Uniforms & headsets;
Pilot navigational charts.

 

vii)       Maintenance:

 

a)              Maintenance
labor for all labor categories of aircraft mechanics, (e.g., engine
specialists, parts clerks, etc.), including base wages, benefits, payroll
associated taxes and incentives (premiums for longevity, geography,
certificates/licenses, profit sharing, bonuses and any other

 

58

 

incentives)
for all paid hours (including but not exclusive of overtime, holidays,
vacation, sick days and paid leave).  

 

b)             Maintenance
Overhead:  All hangar, parts/storage
shop and maintenance management office rent and maintenance facility charges.
All sundry and clerical items associated with the management of Contractor’s
maintenance function, including but not exclusive of office supplies and
furniture, maintenance schematic drawings and manuals, maintenance IT
hardware/software.

 

c)              Maintenance
Management Overhead: Labor for all management and administration associated
with the Contractor’s management of the maintenance function, including base
wages, benefits, payroll associated taxes and incentives (including premiums
for longevity, geography, certificates/licenses, profit sharing, bonuses and
any other incentives) for all paid hours (including but not exclusive of overtime,
vacation, holidays, sick days and paid leave). 

 

d)             Outsource
Maintenance Services: All charges net of warranty reimbursement for any and all
services and/or products (including but not exclusive of components, line,
engine, airframe, C&D checks, avionics, APU) provided by a third party for
the maintenance of Contractor’s aircraft or maintenance functions.

 

e)              Other
Maintenance: Parts, spares, tools, equipment and any other personnel, service
or material expenses, associated with the maintenance of Contractor’s aircraft
or maintenance functions.

 

viii)    Operations

 

a)              RON
(Remain Over Night):  Hotel,
transportation, and per diem for all pilots and flight attendants.

 

b)             Interrupted
Trip Expense:  Includes all mishandled
bag related expenses and all hotel, transportation and meal accommodation
expenses for any passenger traveling on Contractor’s flights.

 

c)              Catering
and on-board services:  Includes all
cost associated with providing food (snack and beverage service) for
passengers, excluding liquor. This includes but is not exclusive of all costs
for the food and beverages, catering supplies and the services required to
deliver aforementioned items and any other items requested in United Express
Service Standards (e.g., in-flight magazine) to the aircraft prior to a flight.

 

d)             Crew
Scheduling:  Labor for all management
and administration associated with the Contractor’s crew scheduling function,
including base wages, benefits, payroll associated taxes and incentives
(including premiums for longevity, geography, certificates/licenses, profit
sharing, bonuses and any other incentives) for all paid hours (including but
not exclusive of overtime, vacation, holidays, sick days and paid leave).  All Information Technology related charges
(e.g., systems, software and hardware) and other costs associated with crew
scheduling functions.

 

e)              Dispatch/flight
operations center:  Flight operations
center and all costs associated with it including personnel, facilities,
management and systems.

 

ix)            Corporate Overhead

 

a)              Headquarters
Facilities: All corporate real estate rent and associated facility charges

 

59

 

b)             Management
overhead: Labor for all management and administration whether or not based in
Indianapolis, Indiana, including base wages, benefits, payroll associated taxes
and incentives (including premiums for longevity, geography,
certificates/licenses, profit sharing, bonuses and any other incentives) for
all paid hours (including but not exclusive of overtime, vacation, holidays,
sick days and paid leave).  

 

c)              Other:
Out-sourced corporate overhead services (e.g., consulting, legal expenses),
other depreciation and any other overhead costs spread over multiple cost
categories (e.g., memberships, office supplies, employee testing, IT, insurance
costs that are not Pass-Through Costs, other repairs and maintenance, software
licensing, parking, safety office, flight standards, communications, etc.);
includes non-aircraft interest expense, if any.

 

x)               Aircraft Ownership

 

a)              All
charges, except Aircraft Property Taxes (as described in the description of
Pass-Through Costs), associated with aircraft ownership including but not
exclusive of lease, depreciation, other financing expense, and related start-up
costs (including painting).

 

b)             All
spare engine ownership expense

 

c)              Hull
Insurance – consists of premiums and other charges of insurers for Aircraft
Hull All Risks Insurance as described in the Agreement, plus fees and expenses
of insurance brokers in connection with the procurement or maintenance of such
insurance, and surplus lines tax.

 

Descriptions of
Pass-Through Costs

 

1.               Fuel and Oil – consists of the cost of
all aircraft fuel and oil, plus fuel flow charges, into-plane fees, and
de-fueling charges, and all applicable taxes on any of the foregoing.

 

2.               Landing Fees – consists of all airport
landing fees, Aircraft Rescue Fire Fighter (ARFF) charges or similar charges,
apron fees, and any other fees charged by airport operators to cover airfield
costs or other airport facilities.

 

3.               War Risk Insurance – consists of
premiums and other charges of insurers for War Risk and Allied Perils
Insurance, plus fees and expenses of insurance brokers in connection with the
procurement or maintenance of such insurance.

 

4.               Liability Insurance – consists of
premiums and other charges of insurers for all other liability insurance as
described in the Agreement, plus fees and expenses of insurance brokers in
connection with the procurement or maintenance of such insurance.

 

5.               Aircraft Property Taxes – consists of
all property taxes (however designated, including excise or franchise taxes
imposed on the ownership of property, ad valorem taxes, and special assessments
or levies) related to aircraft, spare parts and engines.

 

6.               Security Charges – consists of all
charges imposed by governmental agencies, including the Transportation Security
Administration (TSA) or any other entity performing functions of the

 

60

 

TSA, or by any third-party contractor of any
governmental agency, with respect to airport security services

 

61

 

APPENDIX F 

 

INCENTIVE PROGRAM

 

Schedule 1:

Performance
Related Markup

 

	
   

  	
   

  	
   

  	
   

  	
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* Confidential

62

 

APPENDIX G 

 

LIABILITY
INSURANCE

 

Issued by:

 

Date of Issue:

 

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

 

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

 

	
  NAME INSURED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PERIOD OF INSURANCE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INSURERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  POLICY NUMBER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GEOGRAPHICAL LIMITS:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  AIRCRAFT INSURED:

  	
   

  	
  All aircraft owned or operated by the Named Insured.

  
	
   

  	
   

  	
   

  
	
  DESCRIPTION OF COVERAGE:

  	
   

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

  
	
   

  	
   

  	
   

  
	
  LIMIT OF LIABILITY

  	
   

  	
  Combined Single Limits to be specified consistent with Article I.2.1.
  Aircraft Hull All Risk per the Agreed Value, or up to $300,000,000 per added
  aircraft.

  
	
   

  	
   

  	
   

  

 

SPECIAL PROVISIONS:

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

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
  Authorized
  Representative:

  	
   

  	
   

  
					

 

 

64

 

APPENDIX H 

 

SAFETY STANDARDS
FOR UNITED AIRLINES AND UNITED EXPRESS CARRIERS

 

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

 

Contractor
represents and warrants that it is in compliance with the U.S. Department of
Defense (DoD) Quality and Safety Requirements (and any other applicable
governmental quality or safety requirement) and continues to comply with all
applicable Federal Aviation Regulations (F.A.R.). Contractor further warrants
that it shall maintain compliance with these requirements for the term of this
Agreement. Any failure to maintain such compliance shall immediately be brought
to United’s attention together with the corrective actions taken by Contractor
or a correction action plan. Any non-compliance with any safety requirements or
corrective action plans shall be grounds for partial or complete suspension or
termination by United, without further liability, of this Agreement or any of
the terms or conditions of this Agreement; but, with reservation of all other rights
and remedies available to United. 
Additional safety reviews and audits may be required at United’s
discretion and Contractor shall cooperate with all such reviews and audits. 

 

In addition, Contractor agrees to the
following:

 

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

•                  Quality
maintenance and operations training programs

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

•                  Quality programs
to manage outsourcing of services.

•                  A formalized
maintenance quality assurance program.

•                  Implementation
of a program to rectify FAA inspection findings.

•                  Presence of a
voluntary disclosure program.

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

•                  Anonymous safety
hazard reporting system.

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

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

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

•                  Ongoing flight
safety education/feedback program.

•                  Ground safety
program in airport operating areas.

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

•                  Establishment
and maintenance of emergency response procedures and manual.

•                  Participation in
UAL/industry safety information exchange forum.

 

65

 

APPENDIX I

 

UNITED EXPRESS SERVICE STANDARDS

 

These Service Standards are meant to provide
an overview for United Express carriers of the service expectations established
by United Airlines for the day-to-day delivery of United’s product. This
document is not intended to be an all inclusive manual of regulations, but to
instead serve as a simple, helpful source of information.  The Service Standards outlined herein may
change from time to time, subject to the needs of the operation and our product
delivery objectives. Any changes to these standards are at the sole discretion
of United Airlines and are not subject to contractual negotiations as to
United’s right to change the standards. 
Provided, however, since the parties have agreed to specific
compensation formulas and performance goals in this Agreement, it follows that
the parties would agree that the standards 
shall not be altered or changed, if such changes would  affect the Contractor’s economics within the
Agreement.  If such changes are mutually
deemed by United and the Contractor to materially affect the economics of the
Agreement, then the parties will agree upon the economic changes required to
compensate the Contractor for the change in the standards.  If, after 30 days, no agreement can be
reached between the parties as to either materiality or cost impact, an
independent arbitrator will be mutually agreed to and assigned to settle the
dispute. 

 

It is the responsibility of each United Express carrier to maintain an
adequate number of employees at each station to operate in a safe and reliable
manner, which serves the customer at the levels of service outlined by these
Service Standards.

 

CUSTOMER
SERVICE

 

Uniforms: United Express employees are
required to wear the United designated uniform for Customer Service personnel.
There is to be no deviation from this uniform and it is to be worn at all times
while on duty. Employees in uniform, on or off duty are not allowed to drink
intoxicating beverages, give the appearance of being intoxicated or visit any
establishment whose primary purpose is to dispense liquor (e.g. bars, saloons,
cocktail lounges, liquor stores). “Uniform” refers to any uniform apparel
bearing the United brand or insignia, or which can be in any way identified
with United Airlines or United Express. Because the actions and appearance of
employees influence, to a considerable extent, the public’s opinion of the
United brand, uniformed employees must be mindful of this and conduct
themselves accordingly.  For complete
information on the uniform and accessory items, review the Customer Service
Uniform Appearance Guidelines.

 

United may elect to change the United Express uniform from time to
time, and may request that old uniform items be eliminated as an approved
uniform item.   Following such a change
in the designated uniform, United will compensate the Contractor and/or it’s
employees for the value lost on the retired uniform item(s).   

 

Training: Each United Express carrier is
responsible to train all Customer Service Representative (CSR) employees of the
Contractor, including employees of another carrier who may be contracted to
perform these duties on behalf of the Contractor, using the same training
modules and computer assisted training provided by United Airlines. This
training will include, but is not limited to, all functional aspects for
customer handling at the ticket counter, gate, or baggage service The
Contractor, in stations where the Contractor is not the United designated
United Express Customer Service provider, will be responsible for the training
the employees of the designated Customer Service provider regarding the
difference in the Contractors procedures and policies, and the handling of the
Contractors Aircraft.

 

66

 

United Airlines will provide the necessary “Train the Trainer” support,
but it is the responsibility of each United Express carrier to maintain trainer
proficiency, knowledge and skill level.

 

•                  Each new
hire  or newly assigned CSR of the
Contractor, must receive formal Express customer service training as soon as
possible, but not later than 30 days from the date of employment or 30 days
after his or her assignment. In either case, training must be specific to the
employee’s job function and task assignment. An employee may not work in an
area in which he or she has not been properly trained.

 

•                  Each CSR of the
Contractor must maintain proficiency in product knowledge, delivery and skill
level.

 

•                  Each United
Express carrier may add to the United training curriculum to meet its
individual carrier needs, but it may not delete any portion of the United
designated curriculum without written approval by United Airlines.

 

•                  All CSRs of the
Contractor must complete TL17/17 lessons each week within 7 days of issuance.

 

Service Delivery: In the most basic
interaction with the customer, United’s service standards encompass the
foundation of service, which is: 1) Greet the customer. 2) Use the customer’s
name. 3) Listen to the customer and respond to their needs. 4) Give direction
to the next step. 5) Acknowledge the customer’s importance to United and thank
them for flying United Express.

 

Goals:

 

•                  Lobby line wait
time: 10 minutes

•                  Jet bridge
delivery time:  1 minute

•                  Meet the inbound
aircraft (non-jet bridge locations) and open aircraft passenger door within 2
minutes of block time.

 

Service Tools:  Customer Problem Resolution, or CPR, was created as a means to
provide customer service employees with the ability to resolve customer
problems on the spot, as they occur. CPR may include certificates for a free drink,
a credit of Mileage Plus miles to a customer’s Mileage Plus account, or a
Travel Certificate to be used towards the purchase of future airline tickets.
Other tools may also include accommodation vouchers for hotels, cab/bus, or
meals. It is the responsibility of the Express carrier to use and manage these
tools within United Airlines guidelines. The Express carrier is accountable for
the safeguarding and appropriate use of these very important customer
tools.  As long as CPR tools are used
appropriately, the Contractor will not be charged by United for the cost
associated with such usage. 

 

Flight Close Out:  In any city in which the Contractor is hired to perform ground
handling, the Contractor is responsible for ensuring all flights are closed out
in Apollo/ACI immediately after departure. 
This includes making the appropriate PB, PFS and PD entries.  All passenger counts, including revenue and
non-revenue passengers, denied boardings, as well as an accounting of any bags
held off due to weight/space restrictions, should be noted in the open comments
field of the flight close out message. Flight close out must be completed
within 10 minutes of flight departure.

 

Flight Information (FLIFO):  All flights must be updated with
OUT/OFF/ON/IN times within ten (10) minutes of actual occurrence to ensure
accurate information to customers and to employees making

 

67

 

operational decisions.  The
ground handling agent must also enter all ETAs and ETDs within ten (10) minutes
of the scheduled departure/arrival, and at every 10 minute interval thereafter
for ongoing or rolling delayed flights.

 

Customer Service Supplies:  A carrier designated by United to perform
Customer Service functions at a location must maintain an adequate amount of
Customer Service supplies to conduct its day-to-day business operation. Such
carrier will use United Airlines designated supplies and vendors and is
responsible for the purchase of those supplies, except where United handles
that carrier.

 

RAMP SERVICE

 

Uniforms: United Express employees are required to wear the
United designated uniform for Ramp Service personnel. There is to be no
deviation from this uniform and it is to be worn at all times while on duty.
Employees in uniform, on or off duty are not allowed to drink intoxicating
beverages, give the appearance of being intoxicated or visit any establishment
whose primary purpose is to dispense liquor (e.g. bars, saloons, cocktail
lounges, liquor stores). “Uniform” refers to any uniform apparel bearing the
United brand or insignia, or which can be in any way identified with United
Airlines or United Express. Because the actions and appearance of employees
influence, to a considerable extent, the public’s opinion of the United brand,
uniformed employees must be mindful of this and conduct themselves accordingly.

 

•                  In a line station, employees may combine pieces of
the customer service uniform with pieces of the ramp uniform as long as the
shirt or blouse is either the customer service shirt or blouse, or the ramp
knit shirt.

 

•                  In a hub
station, ramp personal must wear combinations of the United ramp uniform only.

 

For a review of the Ramp Service uniform, review the Ramp Service
Uniform Guide.

 

United may elect to change the United Express uniform from time to
time, and may request that old uniform items be eliminated as an approved
uniform item.   Following such a change
in the designated uniform, United will compensate the Contractor and/or it’s
employees for the value lost on the retired uniform item(s).   

 

Training: 
It is the responsibility of each Express carrier to train its Ramp
Service employees including employees of another carrier who may be contracted
to perform these duties on behalf of the Contractor. This training will
include, but is not limited to, load planning, baggage handling, ramp safety
and security, ramp driving, aircraft familiarization, aircraft servicing,
receipt and dispatch of aircraft, baggage make-up, baggage transfer, claim area
delivery, baggage scanning, live animal handling, dangerous goods and aircraft
de-icing.  The Contractor, in stations
where the Contractor is not the United designated United Express Ramp Service
provider, will be responsible for the training the employees of the designated
Ramp Service provider regarding the difference in the Contractors procedures
and policies, and the handling of the Contractors Aircraft.

 

68

 

•                  Each new hire,
or newly assigned Ramp Service employee of the Contractor, must receive
formalized training as soon as possible, but not later than 30 days after his
or her date of employment or date of assignment.

 

•                  Each Ramp
Service employee of the Contractor must maintain product and delivery
proficiency, knowledge and skill level.

 

Baggage Transfer: In a Hub or connecting
station, the United designated Ramp Service provider  is responsible for the transfer of all baggage/mail/cargo to
United, other United Express carriers and other airlines.  Transferred bags are delivered as follows:

 

•                  Carry-on
(security checked) bags placed in the pit/hole, are to be removed and delivered
to the customers immediately at planeside.

 

•                  ‘City Bags’ are
to be delivered directly to the baggage claim area.

 

•                  ‘Hot Bags’,
whose window of time is determined on a local level by United Airlines, are to
be delivered to the connecting flight at the gate. The gate drop point is to be
determined locally by United.

 

•                  ‘Cold Bags’,
bags outside the Hot Bag window, are to be delivered to the designated sorter
belt or transfer point.

 

•                  ‘Interline Bags’
(non United or United Express connecting bags) are to be delivered to the
designated interline drop point.

 

Goals for the United Designated Ramp Service Provider:

 

•                  Claim Area
Baggage Delivery: Priority Bags delivered First; Last City bag
delivered within 20 minutes of flight Block time

•                  Scanning:
97% scanning rate uploaded within 10 minutes of departure of each flight

•                  MBTA
(Mishandled Baggage Trend Analysis or the ratio of passengers mishandled per
1000 boarded.): Rates are determined in conjunction with United’s
corporate goal on an annual basis

•                  Message or
meter to downline station with the transfer bag loading placements referred to
as XBUE (Express Baggage loading message): Sent within 10 minutes of
the departure of each flight

•                  Baggage
Loading Audits: 95% compliance

 

Ground Handling: United Express carriers are
responsible for obtaining all applicable federal, state, and local regulatory
approvals for conducting business at each location from which they operate.  In addition, carriers will ensure their
ground handling procedures will satisfy all federal, state, and local
regulations. Each carrier will provide United with a copy of its station and
ground handling procedures.

 

From time to time, it may become necessary for United to ground handle
United Express, or on very limited occasions for United Express to handle
United.. It is the responsibility of the Contractor to train the ground
handling carrier in all aspects of the required work to be performed to support
the Contractors procedures and policies, and the handling of the Contractors
Aircraft. . Such work may include, but is not limited to:

 

69

 

•                  Receipt and
dispatch of aircraft, ramp safety, ramp driving, aircraft differences, aircraft
servicing (potable water and lavatory), aircraft cleaning, towing, baggage
handling, baggage loading and transferring, live animal handling, deicing,
weight and balance, and dangerous goods.

 

Required training may be done one-on-one, group, or train-the-trainer.
In the case of train-the-trainer, it is then the responsibility of the
ground-handling carrier to train other additional personnel. The ground
handling carrier will ensure that proper training records are initiated, retained
and current.

 

The ground-handling carrier will ensure that all required licenses and
logs are maintained and retained as necessary.

 

Each carrier is responsible for acquiring its required licenses.

 

The ground handling carrier will cooperate with any required
governmental or corporate inspection or audit, and will correct any
deficiencies found in an immediate and timely manner.

 

The Contractor is responsible for managing all performance related
criteria. However,  the ground handling
carrier will make every “best faith” effort to ensure that all performance
requirements are met and that the operation of the Contractor is given the same
priority as that given it’s own operation and the operation of other United
Express carriers.

 

The ground handler agrees to keep the Contractor informed of any
deficiencies, irregularities and breach of procedures or problems of any type
that may negatively impact the Contractor or carrier’s certificate.  Further, if an employee(s) of ground handler
are found to be responsible for a breach that results in a fine to the
Contractor, then United will use reasonable efforts to require the ground
handling carrier to compensate the Contractor for the amount of the fine.

 

The ground handler will immediately advise the Contractor of any
material change in space, parking location, manpower, or any other shortcoming
that may impact its operation or costs. 
The ground handler will make every “best faith” effort to ensure that
all performance requirements are met and that the operation of the Contractor
is given the same priority as that given it’s own operation and the operation
of other United Express carriers.

 

The ground handler will use its own ground equipment wherever possible.
However, if specialized equipment ( i.e. equipment specific to Contractor’s
operations of ERJ-145s as opposed to standard equipment required for the
operation of ERJ-145s) for the Contractor’s particular aircraft is needed, it
is the responsibility of the Contractor to provide said equipment at no cost to
the ground handler. However, United will compensate the Contractor for the cost
of providing specialized equipment as defined above, provided United has the
opportunity in advance to approve such specialized equipment.

 

IN FLIGHT

 

Uniforms: United Express Flight Attendants are
required to wear the United designated uniform. Notwithstanding this, United
and the Contractor have agreed to modifications in the uniform requirements as
outlined in Section VII.D of the Agreement. Employees in uniform, on or
off duty are not allowed to drink intoxicating beverages, give the appearance
of being intoxicated or visit any establishment whose primary purpose is to
dispense liquor (e.g. bars, saloons, cocktail lounges, liquor stores).
“Uniform” refers to any uniform apparel bearing the United brand or insignia,
or which can be in any way identified with

 

70

 

United Airlines or United Express. Because the actions and appearance
of employees influence, to a considerable extent, the public’s opinion of the
United brand, uniformed employees must be mindful of this and conduct
themselves accordingly. For complete information on the uniform and accessory
items, review the Customer Service Uniform Appearance Guidelines.

 

United may elect to change the United Express uniform from time to
time, and may request that old uniform items be eliminated as an approved
uniform item.   Following such a change
in the designated uniform, United will compensate the Contractor and/or it’s
employees for the value lost on the retired uniform item(s).   

 

Training:  It is the responsibility of each United Express carrier to train
its own Flight Attendants in accordance with its FAA Certified program.

 

In Flight Service:

 

•                  Wherever
possible, snack and beverage items should be consistent with the products
served by United Airlines.  United
acknowledges that Contractor has priced its rates for in flight service to
provide  a soft drink and a peanut-like
snack to each passenger.  Any changes to
this level of in flight service will require an adjustment to the catering cost
category.

•                  Each United
Express aircraft will be supplied by United with an adequate supply of
Hemispheres and SkyMall Magazines. United Express must place these two
magazines in the designated seat pocket of each seat. Hemisphere and SkyMall
magazines are the only magazines authorized in the seat pockets. Exceptions
must be approved in writing by United

•                  In all on board
announcements, it is appropriate to announce the United Express carrier’s name,
but the name “United Express” must be included. For example, “On behalf of
Chautauqua Airlines, we would like to thank you for flying United Express
today”.

•                  While the
contract carrier provides basic announcements, United may request that United
Express make promotional announcements on behalf of United from time to time.
Such requests will be honored and executed.

 

OPERATIONAL
GOALS

 

There are four (4)
primary operational Goals that each Express carrier is expected to achieve:
On-time-zero; Controllable Completion (less Weather/ATC/UA Requested
Cancellations); MBTA, and Repurchase Intent. These goals are set at the
beginning of each calendar year and may be adjusted year over year. In
addition, other target goals may be added to help improve the operation, such
as: STAR, Arrival: 14, Block Time, etc. It is expected that each carrier use
its “best faith effort” in achieving these goals, whether contractual or
otherwise, provided that the addition or changes to the goals do not affect the
economics of the Agreement. Such goals may be changed or added to, as
operational needs demand. 

 

•                  Controllable
Completion: The Controllable flight completion goal shall be defined
as to exclude all cancellations due to weather, ATC restrictions, acts or omissions
caused by United or its employees or agents, cancellations resulting from
emergency airworthiness directives, and requests made by United to cancel
flights to free up ATC slots.

 

•                  On Time
Zero: The On Time Zero goal is the carriers system wide On Time
Performance. 

 

71

 

•                  Mishandled
Baggage-MBTA: (See above definition) 

 

Repurchase Intent (RPI) – Marketrak:   United Airlines receives feedback from our
customers through the “Marketrak” survey program on their satisfaction in
flying United Express. Each United Express carrier participates fully in this
program.  Ratings for RPI are not
compared between carriers. Each carrier’s individual rating is compared to its
own historical performance.

 

•                  Repurchase Intent
(RPI):  RPI is based upon
customer response to their intent to repurchase or use again the United Express
product as reflected in the Marketrak survey

 

MISCELLANEOUS

 

ACARS:  The Contractor  is expected to use an ACARS system on all United Express flights
for the purpose of providing timely and accurate Flight Information
(FLIFO).  United agrees that the cost of
ACARS unit will be part of the Aircraft Ownership cost of the airplanes, and
that United will assume responsibility for the one time connectivity cost of
the ACARS  system. 

 

Signage: 
It is the responsibility of  the
designated  United Express ground
handler to provide appropriate and adequate brand signage, which is designated
and approved by United Airlines.  Brand
name(s) to be used on signage is as follows:

 

•                  United
Handled City: All signage will reflect the United Airlines brand.
United Express signs may be used at the departure gate for United Express
flights at the discretion of United.

•                  Shared
United/United Express Handled City: All signage at the ticket
counter will reflect the United Airlines brand. Signage at the United Express
handled gate(s) will reflect the United Express brand. Signage on the approach
to the airport and on the curb to the airport terminal will primarily reflect
United Airlines, but may, if appropriate, reflect United Express as well.

•                  United
Express Handled City: All signage will reflect the United Express
brand.

 

It is the responsibility of the designated United Express ground
handler to ensure that all federally mandated signage is in place in accordance
with regulations at each United Express station.  The  Contractor will be
responsible for such signage on the aircraft.

 

Small Package Dispatch (SPD):  Express carriers will participate in
United’s SPD program, accepting SPD shipments at the ticket counter up to 30
minutes prior to the departure of each flight and returning SPD shipments to
the designated delivery point within 30 minutes of the arrival of each flight.

 

U.S. Mail: 
Express carriers will participate with United in the transportation of
U.S. Mail in accordance with applicable guidelines. Each carrier will work with
United in obtaining USPS Air System Contracts for United designated market.

 

Station Operations Center (SOC) – Hub Locations:
Each United Express carrier will provide adequate staffing in the United
Airlines SOC of each designated hub city where the Contractor has more than 100
daily departures.  Such Staffing, when
required, will be provided during all normal hours of operation.

 

72

 

APPENDIX J

 

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

 

[ * ]

 

[ * ] & Chief Operation Officer [ * ]

 

[ * ]

 

Does not include children or other dependents

 

* Confidential

73

 

APPENDIX K

 

SCHEDULE PARAMETERS

 

The weekly schedules for the aircraft specified by United must meet the
following minimum and maximum schedule parameters:

 

	
   

  	
   

  	
  Minimum

  	
   

  	
  Maximum

  
	
  Average Scheduled Block Hours per day 

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average Scheduled Departures per day 

  	
   

  	
   

  	
   

  	
  [ * ]

  

 

United will meet the following criteria in devising the schedule:

 

1.               Aircraft Turn Times

For operations at United designated hub the minimum turn time (defined
as the time from Aircraft blocking in to Aircraft unblocking) will be
[ * ].  For operations at a
non-United hub, the minimum turn time will be [ * ].  Turn times for aircraft that will have a
scheduled crew change will be a minimum of [ * ].

 

2.               Aircraft Maintenance Requirements

Contractor will require the greater of [ * ] aircraft or
[ * ] of the fleet to be scheduled for overnight maintenance,
[ * ] each week (Weekday Entry). 
The minimum period for at least one half of the Weekday Entries will be
[ * ] and all of the entries will be for a period of at least
[ * ].  To support a fleet of
[ * ] aircraft the number of Weekday Entries required will be
[ * ].  In addition, the
greater of [ * ] aircraft or [ * ] of the fleet will be
scheduled for [ * ] of continuous maintenance time each week
beginning on Saturday afternoon (Weekend Entry). To support a fleet of
[ * ] aircraft the number of Weekend Entries required will be
[ * ].

 

3.               Maintenance Base(s) and Workload
Allocation

The Contractor will maintain maintenance bases in Columbus, Ohio,
Indianapolis, Indiana, Louisville, Kentucky and Orlando, Florida.  At least [ * ] prior to the first
scheduled United Express flight operation, the Contractor and United will agree
on the allocation of the required Weekday Entries and Weekend Entries workload
among the three maintenance bases listed above.   Once a maintenance base workload allocation plan is establish,
then the Contractor will require a [ * ] notice, if United desires to
re-allocate a required Weekday Entry or a Weekend Entry from one base to
another base.  United agrees that it
will be responsible for the Contractors relocation cost that may result from a
request to re-allocate the maintenance workload.  The Contractor agrees that it will use its best efforts to
minimize the relocation cost of any requested re-allocation.   If during the Term of the Agreement, the
Contractor elects to close one of the maintenance bases listed above, then the
Contractor will bare the cost of the relocation.

 

4.               Crew Overnights

The Contractor’s United Express schedule will allow for a single
crew (two Pilots and one Flight Attendant) overnight in outstations and will
not require the Contractor to schedule any continuous duty overnights.   Any costs incurred by Contractor as a
result of United failing to meet this parameter will be

 

* Confidential

74

 

borne by United.  A single crew
overnight requires that the crew’s scheduled rest period is at least
[ * ] hours.

 

5.               Crew Bases

The Contractor will utilize crew bases for Pilots and Flight Attendants
in Buffalo, New York, Columbus, Ohio, Indianapolis, Indiana and/or Louisville,
Kentucky.  At least [ * ]
prior to the first scheduled United Express flight operation, and subsequently
[ * ] prior to every schedule change thereafter, the Contractor
and United will agree on an allocation plan of overnight aircraft and mid-day
aircraft turns in the above crew bases. 
To support a fleet of [ * ] aircraft, the Contractor will
require six overnights collectively across the above crew bases, in addition
the Contractor also requires [ * ] collective mid-day turns in the
crew bases.  Once a crew base plan is
establish, then the Contractor will require a [ * ] notice, if United
desires to re-allocate workload among the bases. United agrees that it will be
responsible for the Contractors relocation cost, that may result from a request
to re-allocate the crew base workload. 
The Contractor agrees that it will use its best efforts to minimize the
relocation cost of any requested re-allocation.  If during the Term of the Agreement, the Contractor elects to
close one of the crew bases listed above, then the Contractor will bare the
cost of the relocation.

 

6.               International and New Airport Operations

The Contractor
will require [ * ] notice prior to the scheduled operation to any new
International destination.

 

[ * ]

 

* Confidential

75

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