EX-10.41
6
exhibit10_41.htm
UNITED EXPRESS AGREEMENT, BY AND BETWEEN UAL AND SHUTTLE AMERICA
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EXHIBIT
10.41
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CONFIDENTIAL
TREATMENT
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REQUESTED
PURSUANT TO RULE 24b-2
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Certain
portions of this exhibit have been omitted pursuant to a request
for
confidential treatment under Rule 24b-2 of the Securities Exchange
Act of
1934. The omitted materials have been filed separately with the Securities
and Exchange Commission.
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United
Express® Agreement
between
United
Air Lines, Inc.
and
Shuttle
America Corp.
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TABLE
OF CONTENTS
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ARTICLE
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TITLE
PAGE
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I.
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DEFINITIONS
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II.
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SCOPE,
TERM, AND CONDITIONS
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A.
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SCOPE
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B.
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TERM
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C.
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CONDITIONS
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D.
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CERTAIN
ACTIONS UPON EFFECTIVENESS
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III.
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SUPPORT
SERVICES AND FACILITIES
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A.
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GENERAL
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B.
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SPECIAL
SUPPORT SERVICES
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C.
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COMMUNICATIONS
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D.
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RESERVATIONS
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E.
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OPERATIONS
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F.
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STATION
SUPPORT SERVICES
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G.
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TARRIFFS
AND SCHEDULE PUBLICATION
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H.
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ADVERTISING
AND PROMOTIONS
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I.
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AUTOMATION
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J.
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CONTRACTOR
ASSISTANCE
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IV.
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AIR
SERVICES TO BE PROVIDED BY CONTRACTOR
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A.
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AIRCRAFT
TO BE USED
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B.
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TECHNICAL
SPECIFICATIONS
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C.
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SCHEDULES
AND CHARTERS TO BE OPERATED BY CONTRACTOR
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D.
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INVENTORY
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E.
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FLIGHT
CREWS TO BE USED
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F.
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INFLIGHT
SALES
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V.
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OPERATING
RESTRECTIONS
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A.
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UNITED
EXPRESS OPERATIONS ONLY
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B.
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CODE
SHARE LIMITATION
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C.
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NO
OPERATION OUTSIDE AGREEMENT
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D.
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SEVERABILITY
AND REMEDY
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VI.
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LICENSE
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▇.
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▇▇▇▇▇
OF LICENSE
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B.
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TERMS
AND CONDITIONS GOVERNING LICENSE
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C.
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INFRINGEMENT
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VII.
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ADDITIONAL
UNDERTAKINGS
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A.
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PASS
THROUGH COSTS
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B.
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BULK
PURCHASES
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C.
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FUEL
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D.
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UNIFORMS
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E.
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PASSES
AND REDUCED RATE TRAVEL
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F.
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ENVIRONMENTAL
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VIII.
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RATES
PAYABLE TO CONTRACTOR
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A.
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RATES
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B.
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MARKUP
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C.
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OPERATING
GOALS
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D.
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WIRE
TRANSFER AND RECONCILIATION
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IX.
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FEES
PAYABLE TO UNITED
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A.
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GOVERNMENT
ASSISTANCE
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X.
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MAINTENANCE
AND FUELING
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XI.
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U.S.MAIL
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XII.
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INSURANCE
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A.
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INSURANCE
TYPES
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B.
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30-DAY
NOTICE
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C.
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ALTERATIONS
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D.
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FAILURE
TO MAINTAIN INSURANCE
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XIII.
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LIABILITY
AND INDEMNIFICATION
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A.
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EMPLOYER’S
LIABILITY AND WORKERS’ COMPENSATION
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B.
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INDEMNIFICATION
BY CONTRACTOR
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C.
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INDEMNIFICATION
BY UNITED
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D.
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CONTRACTOR’S
SUPPLIES LIABILITY
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E.
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INDEMNITY
FOR INFORMATION
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F.
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CERTAIN
DEFINITIONS
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XIV.
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REPORTS
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A.
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BOARDING
INFORMATION
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B.
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OPERATING
PERFORMANCE
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C.
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FINANCIAL
STATEMENTS
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D.
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BENCHMARKING
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E.
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GOVERNMENT
FILINGS
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F.
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COPY
OF GOVERNMENT REPORTS
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XV.
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INDEPENDENT
CONTRACTORS AND UNAUTHORIZED OBLIGATIONS
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A.
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INDEPENDENT
CONTRACTORS
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B.
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EMPLOYEES
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C.
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UNAUTHORIZED
OBLIGATIONS
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D.
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CONTRACTOR
OPERATED FLIGHTS
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XVI.
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DEFAULT
AND TERMINATION
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A.
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OPERATIONS
DEFAULT
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B.
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COVENANT
DEFAULT
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C.
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DEFAULT
BY CONTRACTOR
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D.
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SIMILAR
AGREEMENTS
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E.
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NON-COMPLIANCE
WITH STANDARDS
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F.
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CONSEQUENCES
OF TERMINATION
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H.
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RESTRICTED
ACTIONS
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I.
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CALL
OPTION
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XVII.
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ASSIGNMENT,
MERGER AND ACQUISITION
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A.
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ASSIGNMENT
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B.
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MERGER
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C.
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ACQUISITION
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XVIII.
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CHANGE
OF LAW
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XIX.
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TAXES,
PERMITS AND LICENSES
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A.
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TRANSACTION
TAXES
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B.
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PAYROLL
TAXES
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C.
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PERMITS
AND LICENSES
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XX.
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REVIEW
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XXI.
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JURUSTICTION
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XXII.
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NOTICES
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XXIII.
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APPROVALS
AND WAIVERS
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XXIV.
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GOVERNING
LAW
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XXV.
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CUMULATIVE
REMEDIES
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XXVI.
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FORCE
MAJEURE
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A.
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FORCE
MAJEURE
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B.
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EFFECT
ON MARKUP
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C.
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FIXED
AND OVERHEAD REDUCTION
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XXVII.
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SEVERABILITY
AND CONSTRUCTION
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XVIII.
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ACKNOWLEDGEMENT
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XXIX.
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CONFIDENTIALITY
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XXX.
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RELATED
AND THIRD PARTY AGREEMENTS
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XXXI.
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ENTIRE
AGREEMENT
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XXXIII.
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REFERENCES
TO TIME PERIODS
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APPENDIX
A
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APPENDIX
B
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APPENDIX
E
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DEFNITIONS
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APPENDIX
F
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APPENDIX
G
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APPENDIX
H
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APPENDIX
I
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APPENDIX
J
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UNITED
EXPRESSÒ
AGREEMENT
This
Agreement between United Airlines Inc. (“United”) and Shuttle America Corp.
(“Contractor”) dated as of December 28, 2006, (a) amends and supercedes the
United ExpressÒ
Agreement between United and Republic Airline Inc., dated as of February 13,
2004, as previously amended (the “Republic Agreement”) and (b) amends and
supercedes the United ExpressÒ
Agreement between United and Shuttle America Corp, dated as of February 13,
2004
as previously amended (the “Shuttle America Agreement”)
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 ▇▇▇▇ 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 ▇▇▇▇ 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).
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
February 13, 2004.
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.
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 ▇▇▇▇ 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-170 regional jet aircraft subject to this Agreement, the
aircraft
shall be divided into two (2) tranches. 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 [*] aircraft) shall expire on June 30, 2015.
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C. CONDITIONS
1. Renewal
Option for Regional Jets.
Upon
expiration of the term of this Agreement for each tranches of ERJ aircraft
as
described in Article
II.B.1,
United
may renew the term for all or none of the ERJ 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 December 31, 2012 which
notice shall specify the period of the renewal term.
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.
4. Pilot
Consideration for 70-seat Regional Jet Employment for Furloughed United
Pilots.
Contractor acknowledges that United has been required to furlough some of its
pilots over the past several years. As additional consideration, Contractor
has
agreed to provisions outlined in Letter Number 03-22, “Job Opportunities for
Furloughed United Pilots” between United and the Air Line Pilot Association
dated August 21, 2003, the express terms of which are incorporated herein by
reference. United retains the right to recall furloughed pilots hired by
Contractor. Any additional expenses borne by Contractor due to (a) incremental
wages that must be paid to furloughed pilots and (b) incremental training
expenses (determined in the manner specified below) will be reimbursed by
United. Incremental training expenses for furloughed United Pilots, which shall
be determined at the end of each calendar quarter during the term of this
Agreement, shall be the remaining unamortized prorated portion of training
expenses (which the parties agree shall be [*]
per
pilot) for any furloughed pilot that is recalled within 24 months of that
furloughed pilot’s commencement of work with Contractor. United agrees that it
shall provide Contractor at least 90 days prior notice before it recalls
furloughed United pilots employed by Contractor.
__________
*
Confidential
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 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.
4. [Intentionally
omitted.]
__________
*
Confidential
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:
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 ▇▇▇▇ Contractor any amount owed under this Section within
[*]
after the end of each calendar [*] 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.
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 ▇▇▇▇
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 (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.
9. Station
Operations Center (SOC) - Hub Locations. At
United’s request and expense (and not included in the rates outlined in Appendix
E), Contractor will provide adequate staffing in the United Airlines SOC of
each
designated hub city. If the number of departures in any single hub city exceeds
[*] per day, Contractor will provide a full-time representative at United’s
request and at United’s expense (in additional to the rates outlined in Appendix
E). Such staffing will be provided during all normal hours of operation. If
the
number of daily departures does not exceed [*] per day, then Contractor will
provide a point of contact and make a representative available on a limited
basis as requested by United.
__________
*
Confidential
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. |
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 Regional
Ground
Operations Manual and will subsequently seek acceptance of the manual
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 ▇▇▇▇ 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.
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. 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
▇▇▇▇ is registered, will so specify. Notwithstanding the above, no
advertisement, solicitation, document or other material using any United ▇▇▇▇
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 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 ▇▇▇▇, 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.
I. 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 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.
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.
J. 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:
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. [*]
ERJ-170 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.
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.
__________
*
Confidential
3. ▇▇▇▇
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 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 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 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 code share or marketing agreements operated for US Airways and Delta
Airlines prior to the date of the Agreement, Contractor will not operate any
additional regional jets (50 seat or larger) or Turbo Props 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 for the term of this
agreement. Should United decide to cease major hub operations at any
aforementioned airport, Code Share Limitations will not apply at that airport.
Notwithstanding the foregoing, Contractor may only fly to aforementioned hubs
under codeshare or marketing relationships with another carrier as a ‘spoke
service’ from another carrier’s hubs from an airport other than those
aforementioned. To the extent Contractor terminates any existing Delta Airlines
or US Airways agreements, which contractually provide for service obligations
at
the aforementioned airports, Contractor may not recommence operations with
that
party which allow hub flying at aforementioned airports at any later time for
the duration of the term of this Agreement.
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
▇. ▇▇▇▇▇
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 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 ▇▇▇▇ in accordance
with the terms of this Agreement infringes a registered trademark or service
▇▇▇▇ of any third party in the United States, and will pay all costs, damages
and attorneys’ fees that a court finally awards as a result of such claim. To
qualify for such defense and payment, Contractor must (i) give United prompt
written notice of any such claim and (ii) allow United to control the defense
of
the claim and all related settlement negotiations and fully cooperate with
United in its defense of the claim and the conduct of any settlement
negotiations. United’s obligation hereunder is conditioned on Contractor’s
agreement that if any ▇▇▇▇ 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
▇▇▇▇
or to replace or modify such ▇▇▇▇ so that it becomes non-infringing. If a United
▇▇▇▇ is changed, it is United’s responsibility to compensate Contractor for any
incremental costs due to the ▇▇▇▇ 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. 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)
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
Rates express
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.
The
Unit
Rates in Appendix E are effective from March 1, 2005 through December 31, 2005
and incorporate the 2005 Annual Adjustment Factor.
__________
*
Confidential
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 January 1, 2005, , the rate for the Completed Block Hours
Reimbursement Category is [*]
per
block hour and the CPI 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.
For
purposes of calculating Annual Adjustment Factors under this Agreement, the
parties agree that CPI shall be calculated based upon the average of the change
for each month during the period at issue for the preceding 12 month period
in
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 U.S.
Department of Labor, Bureau of Labor Statistics for each month. An example
of
such calculation is set forth in the attached Appendix L.
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.
United
will pay actual aircraft ownership costs for the ERJ-170 fleet provided the
fleet average remains between [*]
and
[*].
United
also reserves the right to finance any aircraft allocated for United Express
Services subject to the requirements of paragraph c below. Contractor agrees
to
share on a [*]
basis
the cost savings generated from monthly average fleet ownership costs, which
fall below [*]
per
month per aircraft. Contractor will also share on a [*]
basis
the burden of cost increases due to monthly average fleet ownership costs,
which
rise above [*]
per
month per aircraft. In the event Contractor leases an aircraft, the aircraft
ownership costs for such aircraft shall be the amount payable by Contractor
under the respective lease. In the event Contractor owns an aircraft subject
to
debt financing, the aircraft ownership costs for such aircraft shall be the
amount payable by Contractor as debt service payments in respect of such
Aircraft, calculated as if [*]
of the
aircraft purchase price was financed by such debt. In the event that the amounts
financed under such lease or debt financing do not include Contractor’s third
party costs and expenses incurred in connection with the acquisition and
financing of such aircraft, the aircraft ownership costs shall include, in
addition to the amount of such lease or debt service payments, the additional
costs that would have been reflected in the lease or debt service payments
under
the terms of the respective lease or debt financing for such costs and expenses
not to exceed [*]
of the
aircraft purchase price (the “Additional
Financing Amount”).
Notwithstanding the above, at no time will United’s total aircraft ownership
cost per aircraft exceed a fleet average of [*]
per
aircraft per month excluding Markup.
b)
Amended
[*].
Republic Airways Holdings Inc. (“Republic”) shall provide United with an amended
[*]
(the
“Amended [*]”)
calculated and applied as provided herein. The Amended [*]
shall be
(a) [*]
per
month for each aircraft operated in revenue service (i.e. excluding spares)
by
Chautauqua Airlines Inc. or Contractor under a
United Express Agreement
[*]
aircraft
and up to a total of [*]
aircraft, and (b) [*]
per
month for each aircraft operated in revenue service (i.e. excluding spares)
by
Chautauqua or Contractor under a
United Express Agreement in excess of
[*]
aircraft. For purposes of calculating the Amended [*],
the
Amended [*]
will be
prorated when an aircraft is introduced into service or removed from service
after the start of the month. In addition, irrespective of the ERJ170 spare
count shown on Exhibit B, the actual number of aircraft operated in revenue
service will be used to determine the basis for the Amended [*].
c)Right
to Finance.
Before
finalization of any and all aircraft purchase and financing agreements,
Contractor will advise United of expected, estimated ownership costs for
aircraft covered under proposed aircraft purchase and financing agreements.
Should United be able to secure financing such that the ownership cost to United
(excluding Markup) be less than the [*]
of the
estimated costs (excluding markup) provided by Contractor, United reserves
the
right to finance those aircraft to be covered by the Contractor’s proposed
aircraft purchase and financing agreements. In the event United exercises such
right, (i) it shall provide written notice to Contractor within [*]
after
receipt of notice from Contractor of the proposed aircraft purchase and
financing agreements, and (ii) for each such aircraft it shall make a
[*]
monthly
payment to Contractor in lieu of any Markup on the ownership cost of such
aircraft.
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).
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 actual aircraft ownership costs on Aircraft
plus
a markup of [*],
not to
exceed [*]
per
aircraft per month.
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Confidential
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 Chautauqua Airlines, 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.
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.
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.
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Confidential
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 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 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.
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Confidential
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.
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.
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. 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 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.
E. 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.
F. 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 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. 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.
E. 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.
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Confidential
F. 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 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.
G. 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 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) 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 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
first [*]
following the termination of the Agreement, (b) [*]
for the
next [*],
and (b)
[*]
for the
next [*].
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
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. Such
Call
Option will be governed by the terms set forth below:
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.
__________
*
Confidential
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 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.
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.
__________
*
Confidential
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”),
(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, 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.
__________
*
Confidential
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, 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.
▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
-
Director, United Express
Fax:
▇▇▇-▇▇▇-▇▇▇▇
and
to
Contractor, addressed to:
Shuttle
America Corp.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Chief Executive Officer
Fax:
▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to:
Wexford
Capital LLC
▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
President & General Counsel
Fax
Nos.:
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
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.
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 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.
__________
*
Confidential
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. 165980)
|
b. United
Express Positive Space Travel Agreement (United Contract No.
165979)
c. Emergency
Response Agreement (United Contract No. 165981)
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.
__________
*
Confidential
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.
| SHUTTLE AMERICA
CORP. | | | UNITED AIRLINES,
INC. |
| | | | |
| /s/ ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇ | | | /s/ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ |
|
| | |
|
| Name:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Chief Executive Officer
| | | Name:
▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Title: Executive Vice President and Chief Financial
Officer
|
Accepted
& Agreed
as
to
Sections XVII B & C only
REPUBLIC
AIRWAYS HOLDINGS
INC.
| | | | |
| /s/ ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇ | | | |
|
| | |
|
| Name:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Chief Executive Officer
| | | |
APPENDIX
A
UNITED
MARKS
UNITED
EXPRESS
Stylized
UNITED EXPRESS lettering
UNITED
EXPRESS colors
Stylized
letters UA
Uniform
Design
Aircraft
exterior and interior color decor
Other
United Marks approved by United for use by Contractor
APPENDIX
B
RJ-
70FLEET PLAN
| | | |
Units
|
In-Service
|
Spare
|
Total
Deliveries
| | |
| | | | | | | | | |
|
Delivery
Dates:
| | | | | | | |
| | | | | | |
|
10/17/2004
| | |
3
|
2
|
1
|
3
| | |
|
11/1/2004
| | |
2
|
4
|
1
|
5
| | |
|
11/21/2004
| | |
2
|
6
|
1
|
7
| | |
|
12/1/2004
| | |
1
|
7
|
1
|
8
| | |
|
12/19/2004
| | |
2
|
9
|
1
|
10
| | |
|
1/2/2005
| | |
2
|
11
|
1
|
12
| | |
|
1/16/2005
| | |
1
|
12
|
1
|
13
| | |
|
2/1/2005
| | |
1
|
13
|
1
|
14
| | |
|
3/1/2005
| | |
1
|
14
|
1
|
15
| | |
|
4/1/2005
| | |
1
|
15
|
1
|
16
| | |
|
5/1/2005
| | |
1
|
16
|
1
|
17
| | |
|
6/1/2005
| | |
1
|
17
|
1
|
18
| | |
|
6/12/2005
| | |
1
|
18
|
1
|
19
| | |
|
7/1/2005
| | |
1
|
19
|
1
|
20
| | |
| | | | | | | | | |
| | | | | | | | | |
|
6/7/2005
| | |
1
|
19
|
2
|
21
| | |
|
6/25/2005
| | |
1
|
20
|
2
|
22
| | |
|
7/1/2005
| | |
1
|
21
|
1
|
23
| | |
|
Sep-05
| | |
1
|
22
|
1
|
24
| | |
|
Oct-05
| | |
1
|
23
|
1
|
25
| | |
|
Nov-05
| | |
1
|
24
|
1
|
26
| | |
|
Nov-05
| | |
1
|
25
|
1
|
27
| | |
|
Dec-05
| | |
1
|
26
|
1
|
28
| | |
| | | | | | | | | |
|
Total
| | |
28
|
26
|
2
|
28
| | |
|
Note:
Contractor shall not be liable for any aircraft delivery delays resulting
from verifiable manufacturer
caused
actions.
|
|
|
__________
*
Confidential
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.
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.
APPENDIX
E
REIMBURSEMENT
CATEGORIES
CARRIER
CONTROLLED COSTS IN 2005 ECONOMICS
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
REIMBURSEMENT
CATEGORIES
PASS-THRU
COSTS
|
[*]
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[*]
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[*]
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__________
*
Confidential
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 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) ▇▇▇
(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
limited to costs for the food and beverages, catering supplies
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
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 TSA, or by any third-party contractor
of any governmental agency, with respect to airport security
services
|
| 7. |
Engine
LLP Coverage - a part with a limitation on use stated in cumulative
engine
flight hours or cycles, established by the OEM or the Federal Aviation
Administration.
|
__________
*
Confidential
APPENDIX
F
INCENTIVE
PROGRAM
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Confidential
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.
2. United,
its affiliates, and their respective directors, officers, employees, agents
and
indemnitees are named as additional insureds to the extent of the liability
assumed by Contractor under the Agreement, subject to the policy terms,
conditions, limitations and exclusions.
3. The
Insurers agree that United shall not be liable for, nor have any obligation
to
pay any premium due hereunder, and Insurers further agree that they shall not
offset or counter-claim any unpaid premium against the interest of
United.
4. The
Insurers agree that all provisions of this insurance, except for the limits
of
liability, shall operate in the same manner as if there were a separate policy
issued to each Insured.
5. The
Insurers agree that this insurance shall be primary insurance without any right
of contribution from any other insurance which is carried by
United.
6. The
Insurers agree to waive their rights of subrogation against United, its
officers, directors, employees and indemnitees, to the extent the Contractor
has
waived and released its rights under the Agreement.
7. The
Insurers agree that as respects the interest of United, its directors, officers,
employees and indemnitees, this insurance shall not be invalidated by any action
or inaction of the Contractor, its officers, directors or employees, and shall
insure United, its directors, officers, employees and indemnitees regardless
of
any breach or violation of any warranties, declarations, conditions or
exclusions contained in the policy by the Contractor, its officers, directors
or
employees.
8. In
the
event of cancellation for any reason whatever or if any change of a restrictive
nature is made affecting the insurance certified hereunder, or if this insurance
is allowed to lapse due to non-payment of premium, such cancellation, change
or
lapse shall not be effective as to United, its directors, officers, employees
and indemnitees for at least thirty (30) days (ten (10) days in the case of
non-payment of premiums, seven (7) days notice of cancellation with respect
to
war risk) after written notice by registered mail of such cancellation, change
or lapse shall have been mailed to United.
9. With
respect to claims or causes of action in favor of United or its directors,
officers, agents or employees, they shall not be considered as additional
insured thereunder.
Dated:
Authorized
Representative:
APPENDIX
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.
|
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 its 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.
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 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 its 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.
| · |
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:
| · |
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-170s as opposed to standard equipment required for the operation of
ERJ-170s) 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 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 its 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 Shuttle America, 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.
|
| · |
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.
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
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:
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 for a minimum period of
[*]
per day
for [*] each
week
(Weekday Entry). 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).
| 3. |
Maintenance
Base(s) Contractor
will establish a single maintenance base in Indianapolis, Indiana.
As the
fleet expands it is expected that an additional maintenance base(s)
will
be required, at such time the Contractor will evaluate potential
maintenance base locations. Following a review of the potential locations
with United, the Contractor will determine the location and activation
date of the addition maintenance base. Each maintenance base in the
Contractors United Express system will have at least three (3) Weekday
Entries upon full fleet implementation. Once a maintenance base is
establish, then the Contractor will require a [*]
notice, if United desires to relocate the base. Further, if United
requires that a base to be relocated or if a base no longer meets
the
Weekday Entry minimum stated above, then United will be responsible
for
the Contractors relocation and / or shut down cost. The Contractor
will
use its best efforts to minimize the cost of the relocation and /
or shut
down.
|
| 4. |
Crew
Overnights The
Contractor’s United Express schedule will allow for a single crew (two
Pilots and two Flight Attendants) 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 borne by United. A single crew overnight requires
that
the crew’s scheduled rest period is at least [*]
hours.
|
The
Contractor will establish a single crew base for Pilots and Flight Attendants
in
Indianapolis, Indiana. As the fleet expands it is expected that an additional
crew base(s) will be required, at such time the Contractor will evaluate
potential crew base locations. Following a review of the potential locations
with United, the Contractor will determine the location and activation date
of
the addition crew base. Each crew base in the Contractors United Express system
will have at least [*]
overnight aircraft and [*]
mid-day
aircraft turns. Once a crew base is establish, then the Contractor will require
a [*]
notice,
if United desires to relocate the base. Further, if United requires that a
base
be relocated or if a base no longer meets the scheduling parameters minimums
stated above in this section then, United will be responsible for the
Contractors relocation and / or shut down cost. The Contractor will use its
best
efforts to minimize the cost of the relocation and / or shut down.
| 6. |
International
and New Airport Operations
|
The
Contractor will require [*]
notice
prior to the scheduled operation to any new International
destination.
[*]
__________
*
Confidential