AIRLINE SERVICES AGREEMENT Between Frontier Airlines, Inc.and Republic Airline, Inc. and, in a limited capacity, Frontier Airlines Holdings, Inc. and Republic Airways Holdings Inc. Dated as of January 11, 2007
Exhibit
10.56
CONFIDENTIAL
TREATMENT
REQUESTED
PURSUANT TO RULE 24b-2
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.
Between
Frontier
Airlines, Inc.and
Republic
Airline, Inc.
and,
in a limited capacity,
Frontier
Airlines Holdings, Inc.
and
Dated
as of January 11, 2007
This
Airline Services Agreement (this “Agreement”),
dated
as of January 11, 2007 (the “Effective
Date”),
is
between Frontier Airlines, Inc., a Colorado corporation (“Frontier”),
Republic Airlines, Inc., an Indiana corporation (“RAI”),
Frontier Airlines Holdings, Inc., a Delaware corporation, solely with respect
to
Section
10.20
herein,
and, Republic Airways Holdings Inc., a Delaware corporation, solely with respect
to Section
10.19
herein.
NOW,
THEREFORE,
in
consideration of the foregoing premises and the mutual covenants and obligations
hereinafter contained, the parties agree to:
ARTICLE
I
DEFINITIONS
Capitalized
terms used in this Agreement (including, unless otherwise defined therein,
in
the Schedules, Appendices and Exhibits to this Agreement) shall have the
meanings set forth in Exhibit
A
hereto.
ARTICLE
II
AIRLINE
SERVICES, SCHEDULES AND FARES
Section
2.01 Capacity
Purchase.
Frontier
agrees to purchase the capacity of each Covered Aircraft for the period
beginning on the date such aircraft is presented for service by RAI under this
Agreement and ending on the last day of the Term, or as such date may be
extended pursuant to Section
10.17
hereof,
in each case unless such aircraft is earlier withdrawn pursuant to Article
VIII,
all
under the terms and conditions set forth herein and for the consideration
described in Article III.
Subject
to the terms and conditions of this Agreement, RAI shall provide all of the
capacity of the Covered Aircraft solely to Frontier and use the Covered Aircraft
solely to operate the Scheduled Flights. Except as provided in Section
2.01(e),
the
Covered Aircraft may not be used by RAI for any other purpose without the
express prior written consent of Frontier.
(a) Fares,
Rules and Seat Inventory.
Frontier shall establish and publish all fares and related tariff rules for
all
seats on the Covered Aircraft. RAI shall not publish any fares, tariffs, or
related information for the Covered Aircraft. In addition, Frontier shall have
complete control over all seat inventory and inventory and revenue management
decisions for the Covered Aircraft, including overbooking levels, discount
seat
levels and allocation of seats among various fare buckets.
(b) Flight
Schedules.
Frontier shall, in its sole discretion, establish and publish all schedules
for
the Covered Aircraft (such scheduled flights, together with Charter Flights
and
ferry flights required to accommodate such scheduled flights and Charter Flights
or otherwise made at Frontier's request, referred to herein as “Scheduled
Flights”),
including determining the city-pairs served, frequencies, utilization and timing
of scheduled arrivals and departures, and shall, in its sole discretion, make
all determinations regarding the establishment and scheduling of any Charter
Flights;
provided
that
such schedules shall be subject to Reasonable Operating Constraints. Frontier
shall also be entitled, in its sole discretion and at any time prior to takeoff,
to direct RAI to delay or cancel a Scheduled Flight, including without
limitation for delays and cancellations that are air traffic control or weather
related, and RAI shall take all necessary action to give effect to any such
direction, provided, however, that such delays or cancellations will not violate
the minimum scheduling parameters of Exhibit
G.
Subject
to the notice requirement set forth in Section 4.08 regarding international
service, Frontier will provide RAI with a preliminary schedule in a Standard
Schedule Input Message (“SSIM”)
file
format 45 days prior to the first day of the month to which the preliminary
schedule relates. RAI will review the proposed schedule and provide feedback
to
Frontier no later than seven days following receipt of the preliminary schedule
by RAI. Frontier will send RAI a Final Monthly Schedule, together with
operational assumptions for the month (the “Operational
Assumptions”),
including without limitation the weighted average number of Covered Aircraft,
estimated passengers, revenue passenger miles, departures, block hours, and
flights hours, based on the Final Monthly Schedule, no later than two Business
Days following receipt of RAI’s comments to the preliminary schedule. Following
delivery of the Final Monthly Schedule, however, Frontier may make such
adjustments to the proposed Final Monthly Schedule as it deems appropriate
(subject to Reasonable Operating Constraints).
(c) Wet
Leases.
At
Frontier's option, and provided that RAI is not adversely affected in any
material respect, RAI shall “wet lease” one or more of the Covered Aircraft to
Frontier, on terms mutually acceptable to the parties hereto, which terms are
identical in all material respects, economically and otherwise, to the terms
of
this Agreement (taking into account the inherent differences between a “wet
lease” arrangement and a capacity purchase arrangement), and such “wet lease”
shall supersede the capacity purchase provisions of this Agreement with respect
to such Covered Aircraft. In such event, RAI's compensation hereunder, including
without limitation in this Article
II,
in
Article
III
and in
Exhibit
D,
shall
be adjusted so that RAI's aggregate compensation from such “wet lease”
arrangements and the capacity purchase arrangements applicable to the remaining
Covered Aircraft are equal to the amount of RAI's aggregate compensation had
no
such “wet lease” arrangements been entered into.
(d) Start
Up Dates.
The
Covered Aircraft shall be placed into service under the terms and conditions
of
this Agreement on such dates as are provided on
Exhibit B.
(e) Spare
Aircraft.
The
Spare Aircraft constituting a Covered Aircraft shall be used by RAI solely
as an
operational and maintenance spare to replace Covered Aircraft that are out
of
service due to scheduled maintenance or to cover for other irregular operations,
provided, RAI may use the Spare Aircraft for flights operated for its own
benefit or to cover flights for any other airline subject to the following
conditions:
(1) Frontier
will have the right to designate which of the first twelve Covered Aircraft
will
be the Spare Aircraft no later than the inservice date of the twelfth Covered
Aircraft, such designation to be provided to RAI in writing no fewer than 90
days prior to the inservice date of the aircraft to be designated as the Spare
Aircraft.
(2) The
Spare
Aircraft will be in a neutral livery as set forth in Exhibit C to this Agreement
and configured in accordance with the Frontier specifications set forth in
Exhibit C and its principal base of operations will be Denver International
Airport.
(3) The
Spare
Aircraft will be pooled with other neutral spare aircraft operated by RAI for
other air carriers (the “Pool
Participants”)
and
will be available for use by RAI to cover flying for Pool Participants due
to
irregular operations, aircraft damage, or maintenance events incurred by Pool
Participants. RAI shall give Frontier notice of its intent to use the Spare
Aircraft as early as operationally possible. If necessary, Frontier will apprise
RAI of its operational situation related to re-deployment of the Spare Aircraft.
Nothwithstanding the above, Frontier acknowledges and agrees that RAI will
at
all times retain operational control of the Spare Aircraft.
(4) Regardless
of RAI’s use of the Spare Aircraft to cover flights of Pool Participants, the
Spare Aircraft will be considered a Covered Aircraft for purposes of calculating
Frontier’s Fixed Costs. Frontier will not be obligated to pay or reimburse RAI
for any Variable Costs or Pass-Thru Costs relating to (i) the ferrying of the
Spare Aircraft to and from locations necessary to cover flying for other Pool
Participants, or (ii) the covered flying itself. Fixed Costs, Variable Costs
and
Pass-Thru Costs as used in this paragraph are as described on Exhibit
D.
(5) In
consideration of Frontier making the Spare Aircraft available for flights
operated by Pool Participants according to this Section, Frontier will be
entitled to use the neutral spare aircraft contributed to the pool by other
Pool
Participants, provided,
Frontier will be responsible for the payment of Variable Costs and Pass-Thru
Costs relating to (i) the ferrying of the neutral spare aircraft to and from
the
location necessary to cover for Frontier Scheduled Flights, and (ii) the covered
Scheduled Flights, provided further, Frontier will not be responsible under
Section 2.01 (e)(5)(i) if the neutral aircraft is being ferried to cover for
flights canceled or delayed due to aircraft damage caused by RAI, its agents,
contractors or employees.
(6) Frontier
will have the right, in its sole discretion, to remove the Spare Aircraft from
the neutral spare pool at any time during the period from the date the Spare
Aircraft first entered the neutral aircraft pool until the first anniversary
thereof by providing RAI with 30 days advance written notice. Should the Spare
Aircraft be removed from the neutral aircraft pool, (i) RAI will incur all
costs
to convert the aircraft livery to the Frontier livery set forth in Exhibit
C,
and (ii) from and after the date of removal, the Spare Aircraft will be
dedicated to supporting Frontier’s Scheduled Flights and will no longer be
available for use by RAI to cover flights for itself or any other airline and
Frontier shall no longer have the use of the neutral spare aircraft of any
Pool
Participant for Regional Airline Services.
(f)
Fleet
Expansion.
During
the term of this Agreement, RAI will advise Frontier of any regional jet
aircraft that RAI believes will become available, whether due to RAI option
positions, the return of aircraft previously in service for another airline,
or
the removal of the aircraft from RAI's own fleet, or otherwise, for potential
inclusion in the Frontier fleet of Covered Aircraft. Notwithstanding
the foregoing, such regional jet aircraft shall only be deemed a Covered
Aircraft upon an amendment to this Agreement.
Section
2.02 Flight-Related
Revenue.
RAI
acknowledges and agrees that all revenues resulting from the sale and issuance
of passenger tickets associated with the operation of the Covered Aircraft
and
all other sources of revenue associated with the operation of the Covered
Aircraft, including without limitation fees related to ticket changes,
unaccompanied minors, excess baggage and nonrevenue pass travel, revenues
relating to the transportation of cargo or mail, and revenues associated with
food, beverage, passenger entertainment, duty-free services, and guaranteed
or
incentive payments from airport, local or municipal authorities in connection
with scheduling flights to such airport or locality, are the sole property
of
and shall be retained by Frontier (or, if received by RAI, shall be promptly
accounted for and remitted to Frontier).
Section
2.03 Pass
Travel. RAI
maintenance personnel traveling to provide critical repair services and dead
heading RAI crews will be entitled to travel on flights operated by RAI or
Frontier as must ride passengers. Commuting RAI crew members and all other
RAI
employees will be entitled to travel on Frontier and Frontier JetExpress flights
at a priority category one level below the lowest category for Frontier
employees and subject to the fare policies applicable to individuals traveling
at that priority level. To the extent permitted by existing arrangements,
Frontier employees will be entitled to (x) travel on Scheduled Flights operated
by RAI under the category of travel and fare policies to which they are entitled
to travel on Frontier flights, and (y) will be entitled to travel on all other
RAI operated flights at a category one level below the lowest category for
RAI
employees.
Section
2.04 Conversion
of Covered Aircraft.
RAI will
be responsible for all costs and expenses of preparing each Covered Aircraft
prior to its being placed into service hereunder in accordance with the
specifications, cabin configurations and livery as required by Exhibit
C,
provided, it is expressly understood that the first four aircraft scheduled
to
be placed in service under Exhibit
C
(the
"Two-Class Aircraft") will be placed in service on the dates indicated in RAI’s
two-class 70-seat configuration. RAI, at its sole cost and expense, will convert
the Two-Class Aircraft to the specifications, cabin configurations and livery
as
described in Exhibit
C
and
obtain all necessary approvals, documentation, and certifications required
or
prudent in connection with such configuration and conversion no later than
June
30, 2007. During the period between the initial inservice date and the inservice
date following the reconfiguration of the Two-Class Aircraft, the monthly
aircraft rent rate as set forth in Exhibit
D
will be
reduced by [* ]
per
month per aircraft, with a pro rata rent reduction for any partial
month.
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Confidential
ARTICLE
III RAI COMPENSATION
Section
3.01 Base
and Incentive Compensation.
For and
in consideration of the aircraft and services to be provided by RAI hereunder,
Frontier shall pay RAI the base and incentive compensation as provided in
Exhibit
D
hereto,
subject to the terms and conditions set forth in this
Article III.
Section
3.02 Periodic
Adjustment of Base Compensation.
The
rates under this Agreement set forth in Appendix
1
to
Exhibit
D
hereto
shall remain in effect throughout the Term of this Agreement, provided,
the
rates on Appendix
1
to
Exhibit
D
hereto
will be adjusted from time to time as described in Exhibit
D,
and,
provided
further,
that
the rates on Appendix
1
to
Exhibit
D
designated as “Subject to Escalation” will remain in effect through December 31,
2007, and thereafter shall be adjusted on each January 1, beginning with January
1, 2008, as follows: the new rates, applicable beginning on such January 1,
shall equal the rates in effect on the immediately preceding December 31
multiplied by ([*] (Annual Change in PPI [*])), where PPI = the annual Producer
Price Index, Commodities, Finished Goods (not seasonally adjusted), Series
ID:
WPUSOP3000 as published by the Bureau of Labor Statistics for January of the
applicable year, provided
further,
annual
adjustments will not decrease from the prior year and will not increase more
than [*]over the prior year. Adjustments will be calculated as soon as the
PPI
for the prior year is published by the Bureau of Labor Statistics and the
adjusted rates will be applied retroactively to the 1st
day of
the calendar year and paid as part of the next monthly payment.
Section
3.03 RAI
Expenses.
Except
as provided otherwise in Section
3.04,
RAI
shall pay in accordance with commercially reasonable practices all expenses
incurred in connection with RAI's provision of Regional Airline
Services.
Section
3.04 Frontier
Expenses
(a) Certain
Expenses.
Frontier shall incur directly those expenses relating to the Regional Airlines
Services that are described in Paragraph
6
of
Exhibit D.
(b) Design
Changes.
Except
as set forth in Section 2.04 with respect to RAI’s obligation to convert the
Two-Class Aircraft, Frontier shall be responsible for any reasonable
out-of-pocket expenses relating to interior and exterior design changes to
the
Covered Aircraft and other product-related changes required by Frontier,
including facility-related design changes and the cost of changes in aircraft
livery, in each case that occur outside of the Covered Aircraft specifications,
livery and other requirements of Exhibit
C
to this
Agreement or as otherwise specified in this Agreement.
Section
3.05 Audit
Rights; Financial Information.
RAI
shall make available for inspection by Frontier and its outside auditors and
advisors, within a reasonable period of time after Frontier makes a written
request therefor, all of RAI's books and records (including all financial and
accounting records and operations reports, and records of other subsidiaries
or
affiliates of RAI, if any) as necessary to audit any reimbursement of Pass-Thru
Costs or other expenses set forth in Paragraph
6
of
Exhibit
D
hereto.
In connection with such audit, Frontier and its outside auditors and advisors
shall be entitled to make copies and notes of such information as they deem
necessary and to discuss such records with RAI's Chief Financial Officer or
such
other employees or agents of RAI knowledgeable about such records. Upon the
reasonable written request of Frontier or its outside auditors or advisors,
RAI
will cooperate with Frontier and its outside auditors and advisors to permit
Frontier and its outside auditors and advisors access to RAI Holding's outside
auditors for purposes of reviewing such records. In addition, RAI shall deliver
or cause to be delivered to Frontier (I) as soon as available, but in any event
within 90 days after the end of each fiscal year, a copy of the consolidated
balance sheet of RAI Holdings, as at the end of such year, and the related
consolidated statements of income and retained earnings and of cash flows of
RAI
Holdings for such year, setting forth in each case in comparative form the
figures for the previous year, reported on by an independent certified public
accountants of nationally recognized standing; and (II) as soon as available,
but in any event not later than 45 days after the end of each of the first
three
quarterly periods of each fiscal year, the unaudited consolidated balance sheet
of RAI Holdings, as at the end of such quarter, and the related unaudited
consolidated statements of income and retained earnings and of cash flows of
RAI
Holdings for such quarter and the portion of the fiscal year through the end
of
such quarter, setting forth in each case in comparative form the figures for
the
previous year, certified by a responsible officer of RAI Holdings, as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);
provided
, that
no party shall be required to deliver financial statements pursuant to this
sentence if such party is a reporting issuer pursuant to Section 13 or 15(d)
of
the Securities Exchange Act of 1934, as amended, and such financial statements
are timely filed with the Securities and Exchange Commission pursuant thereto.
All financial statements delivered hereunder shall be complete and correct
in
all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
Section
3.06 Billing
and Payment; Reconciliation.
(a) Billing
and Payment.
No
later than ten calendar days prior to the beginning of the month covered by
a
Final Monthly Schedule and the Operational Assumptions for a given month
pursuant to Section 2.01(b),
RAI
shall present a reasonably detailed written invoice for amounts due under this
Agreement in respect of the Base Compensation for the Scheduled Flights during
the month to which such Final Monthly Schedule and Operational Assumptions
pertain, calculated in accordance with Paragraph
2
of
Exhibit
D.
Frontier shall pay RAI the amount due under such invoice (the “Invoiced
Amount”),
subject to Frontier's right to dispute any calculations set forth on such
invoice that do not comply with the terms of this Agreement, net of amounts
owed
by RAI to Frontier, as follows:
(i) Thirty-four
percent (34%) of the Invoiced Amount on the later of the first Business Day
of
the covered month or the third Business Day following receipt by Frontier of
the
invoice, by electronic transfer of funds to a bank account designated by
RAI;
(ii) Thirty-three
(33%) of the Invoiced Amount on the 10th
calendar
day of the covered month, or the next Business Day thereafter, by electronic
transfer of funds to a bank account designated by RAI; and
(iii) Thirty-three
(33%) of the Invoiced Amount on the 20th
calendar
day of the covered month, or the next Business Day thereafter, by electronic
transfer of funds to a bank account designated by RAI.
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Confidential
(b) Reconciliation.
Not
later than 30 days following the end of each month, RAI and Frontier shall
reconcile actual amounts due in respect of such month for the Fixed Cost and
Variable Cost elements set forth in Appendix
1
to
Exhibit D
with the
estimated amounts included in the Invoiced Amount for such elements for such
month in accordance with the terms and conditions set forth in Exhibit
D.
On or
before the 15th day following the end of such reconciliation period (or if
such
day is not a Business Day, the next Business Day), such reconciled amounts
for
such month to the extent applicable: (i) shall be paid by Frontier to RAI,
together with any payment to be made by Frontier pursuant to Section 3.06(a)(iii)
above,
or (ii) shall be paid by RAI to Frontier or set off by Frontier against any
other amounts owing to RAI under this Agreement.
(c)
Reimbursed
Costs.
From
time to time it is anticipated that RAI may incur certain costs and expenses
in
connection will the provision of Regional Airline Services under this Agreement
for which RAI will be reimbursed by Frontier. These costs and expenses are
indicated as “Pass-Thru Costs” on Appendix
1
to
Exhibit
▇.
▇▇▇
will pay all Pass-Thru Costs in advance, and will submit to Frontier an invoice
together with all supporting documentation for all Pass-Thru Costs incurred.
Frontier will reimburse RAI for all uncontested Pass-Thru Costs within five
Business Days following receipt of the invoice and supporting documentation
by
electronic transfer of funds to a bank account designated by RAI. RAI will
provide any additional supporting information and documentation to Frontier
for
any Pass-Thru Costs contested by Frontier at RAI’s earliest convenience. Any
disputed Pass-Thru Costs not resolved within 30 days of receipt of the invoice
by Frontier will be resolved in accordance with the arbitration provisions
of
this Agreement.
ARTICLE
IV RAI OPERATIONS AND AGREEMENTS WITH FRONTIER
Section
4.01 Crews,
Etc. RAI
shall be responsible for providing all crews (flight and cabin) and maintenance
personnel necessary to operate the Scheduled Flights and for all aspects
(personnel and other) of dispatch control. Flight crews will be domiciled in
Denver, Colorado and Indianapolis, Indiana and any other location deemed
suitable for RAI’s staffing requirements. RAI will maintain pilot reserves
sufficient to achieve performance objectives set forth in Section
4.03,
but no
lower than [* ],
throughout the Term. RAI pilots will wear neutral uniforms with RAI logo items.
RAI flight attendants will wear neutral uniforms with accessories displaying
approved Frontier Marks and designs. RAI flight attendants will obtain Frontier
branded accessories through Frontier or its approved vendor (subject to the
vendor’s approval), and will be responsible for all costs and expenses,
including shipping, relating to their orders.
Section
4.02 Governmental
Regulations.
Except
as noted in Section
9.01(j),
RAI has
and shall maintain all certifications, permits, licenses, certificates,
exemptions, approvals, plans, and insurance required by governmental
authorities, including, without limitation, FAA, DOT and TSA, to enable RAI
to
perform the services required by this Agreement. All flight operations, dispatch
operations and all other operations and services undertaken by RAI pursuant
to
this Agreement shall be conducted, operated and provided by RAI in compliance
with all U.S. and foreign governmental laws, regulations and requirements,
including, without limitation, those relating to airport security, the use
and
transportation of hazardous materials and dangerous goods, crew qualifications,
crew training and crew hours, the carriage of persons with disabilities and
without any violation of U.S. or foreign laws, regulations or governmental
prohibitions. All Covered Aircraft shall be operated and maintained by RAI
in
compliance with all laws, regulations and governmental requirements, RAI's
own
operations manuals and maintenance manuals and procedures, and all applicable
equipment manufacturers' manuals and instructions.
Section
4.03 Quality
of Service.
At all
times, RAI shall provide Regional Airline Services with appropriate standards
of
care, but in no event lower than such standards held by Frontier as of the
date
of this Agreement. Frontier procedures, performance standards and means of
measurement thereof concerning the provision of air passenger and air cargo
services shall be applicable to all Regional Airline Services provided by RAI.
RAI shall achieve at least the comparable quality of airline service as provided
by Frontier, subject to limitations imposed by the type of aircraft used by
RAI
and its route network. RAI shall comply with all airline customer service
commitments and policies of Frontier as of the date hereof, including without
limitation the employee conduct, appearance and training policies in place
as of
the date hereof, and shall handle customer-related services in a professional,
businesslike and courteous manner. In connection therewith, RAI shall maintain
aircraft cleaning cycles and policies, and shall maintain adequate staffing
levels, to achieve a level of operations that routinely meet or exceed the
on-time performance Target Threshold and the completion factor Target Threshold
as set forth in Appendix
2
to
Exhibit
▇.
▇▇▇
shall provide Frontier with timely communication regarding the status of all
Scheduled Flights. At either party's request, RAI and Frontier will meet to
discuss and review RAI's customer service and handling procedures and policies
and its employees' conduct, appearance and training standards and policies.
Frontier shall give RAI not less than 15 days prior written notice of any
non-safety-related breach of this Section
4.03
prior to
exercising any remedy regarding such breach.
Section
4.04 Incidents
or Accidents.
RAI
shall promptly notify Frontier of all irregularities involving a Scheduled
Flight or Covered Aircraft operated by RAI, including, without limitation,
aircraft accidents and incidents, which result in any damage to persons and/or
property or may otherwise result in a complaint or claim by passengers or an
investigation by a governmental agency or authority. RAI shall furnish to
Frontier as much detail as practicable concerning such irregularities and shall
cooperate with Frontier at RAI's own expense in any appropriate
investigation.
Section
4.05 Emergency
Response.
RAI
shall adopt Frontier's Emergency Response Plan for aircraft accidents or
incidents. In the event of an accident or incident involving a Covered Aircraft
or Scheduled Flight, Frontier will have the right to manage the emergency
response efforts on behalf of RAI with full cooperation from RAI and if such
right is exercised, RAI acknowledges and agrees that Frontier representatives
will conduct all public communications, and that RAI will make no public
statements, regarding such accident or incident.
Section
4.06 Safety
Matters. In
the event of a reasonable safety concern, Frontier shall have the right, at
its
own cost, to inspect, review, and observe RAI's operations of Scheduled Flights.
Notwithstanding the conduct or absence of any such review, RAI is and shall
remain solely responsible for the safe operation of its aircraft and the safe
provision of Regional Airline Services, including all Scheduled Flights, and
nothing in this Section 4.06 or otherwise in this Agreement is intended or
shall
be interpreted to make Frontier responsible for such safety
matters.
Section
4.07 Codeshare
Terms.
RAI
agrees to operate all Scheduled Flights using the Frontier flight code and
flight numbers assigned by Frontier, or such other flight codes and flight
numbers as may be assigned by Frontier (to accommodate, for example, a Frontier
alliance partner), and otherwise under the codeshare terms set forth in
Exhibit
E
.
Section
4.08
Slots and Route Authorities.
Should
Frontier schedule Covered Aircraft on international routes, Frontier will
provide RAI notice of such intent no fewer than 150 days in advance of the
intended start date. To the extent permitted under applicable laws and
regulations, Frontier will obtain the necessary slots, route authorities or
other approval required for such service at its own cost and expense, provided
such items may be held and controlled by Frontier. If it is required that RAI,
as the operator of the Scheduled Flights, obtain the authorities and approvals,
or if Frontier is prohibited from holding such authorities and approvals in
its
own name, RAI will use its commercially reasonable efforts to obtain all
necessary licenses, permits, route authorities or slots and complete all
necessary filings and registrations, all at RAI’s sole cost and expense, in
order to initiate such service. During the Term, RAI will operate Scheduled
Flights on these routes solely on behalf of Frontier. At the request of Frontier
made during the Term or upon termination of this Agreement, so long as Frontier
is not in breach of a material obligation under this Agreement, RAI shall use
its commercially reasonable efforts to transfer to Frontier or its designee,
to
the extent permitted by law, any airport takeoff or landing slots, route
authorities or other similar regulatory authorizations held by RAI in connection
with Scheduled Flights, or held or acquired by RAI and used for Scheduled
Flights, in consideration of the payment to RAI of the reasonable, documented
out of pocket expenses incurred by RAI in order to obtain such transferred
rights, authorities and slots. Frontier will be responsible for all costs and
expenses relating to such assignment, including without limitation reasonable
attorneys’ fees. RAI's obligations herein shall survive the termination of this
Agreement for so long as any transfer requested pursuant to this Section
4.08
shall
not have been completed. RAI hereby agrees that all of RAI's contacts or
communications with any applicable regulatory authority concerning any airport
takeoff or landing slots, route authorities or other similar regulatory
authorizations used for Scheduled Flights will be coordinated through Frontier.
If any airport takeoff or landing slot, route authority or other similar
regulatory authorization transferred to RAI by Frontier for use in connection
with Scheduled Flights, or held by RAI and used for Scheduled Flights, is
withdrawn or otherwise forfeited as a result of circumstances or events within
RAI's reasonable control, then RAI agrees (i) to purchase a reasonably
acceptable replacement slot, route authority or other similar regulatory
authorization, or (ii) to pay to Frontier promptly upon demand an amount equal
to the greater of (y) [* ]of
the
revenue loss for [*] days after the date such slot, authority or authorization
is withdrawn or forfeited, or (z) the interrupted trip expense and
reaccommodation costs incurred by Frontier due to the withdrawal or forfeiture
of the slot, authority or authorization.
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Confidential
Section
4.09 Use
of Frontier Marks.
Frontier
hereby grants to RAI the non-exclusive and non-transferable rights to use the
Frontier Marks as provided in, and RAI shall use the Frontier Marks, in
accordance with the terms and conditions of Exhibit
C.
Section
4.10 Use
of RAI Marks.
RAI
hereby grants to Frontier the non-exclusive and non-transferable rights to
use
the RAI Marks as provided in, and Frontier shall use the RAI Marks, in
accordance with the terms and conditions of Exhibit
F.
Section
4.11 Catering
Standards.
(a)
Station
Services.
RAI and
Frontier will negotiate separate handling or catering agreements at those
airports where Frontier elects, in its sole discretion, to select RAI as its
handling agent pursuant to separately negotiated agreements.
(b)
Onboard Services.
Frontier
will determine, in its sole discretion, meal/beverage service parameters and
scheduling for Scheduled Flights. Frontier has right to conduct onboard service
audits on Scheduled Flights to ensure service standards are being met. RAI
flight attendants providing Regional Airline Services will be trained on meal
and beverage service procedures, including liquor and duty-free sales and cash
handling, and will collect all on-board revenue for liquor and duty-free sales.
RAI will provide sufficient galley service ship's equipment to operate onboard
services, such as hot jugs, coffee makers and trash bins. Frontier will provide
all liveried catering items, such as cups and napkins, and all food, liquor
and
other beverage items.
Section
4.12
RAI Charters or Other Operations.
RAI will
not be permitted to operate the Covered Aircraft to fly charters, other revenue
service, or to cover flights for other carriers, without the express prior
written consent of Frontier, except with respect to the Spare Aircraft as
provided in Section
2.01(e).
Section
4.13 Negative
Operational Covenant.
During
the term of this Agreement, RAI will not enter into any contracts or agreements
of any kind or type that would prohibit or restrict RAI’s ability to operate the
Covered Aircraft on any city pair, segment or route requested by Frontier
pursuant to the terms of this Agreement.
ARTICLE
V CERTAIN RIGHTS AND OBLIGATIONS OF FRONTIER
Section
5.01 Use
of Covered Aircraft.
RAI
agrees that, except as otherwise directed or approved in writing by Frontier
in
Frontier's sole discretion and as provided in Section
2.01(e)
herein
with respect to the Spare Aircraft, the Covered Aircraft may be used only to
provide Regional Airline Services. Without the written consent of Frontier,
the
Covered Aircraft may not be used by RAI for any other purpose, including without
limitation flying for any other airline or on RAI's own behalf except as
provided in Section
2.01(e)
with
respect to the Spare Aircraft.
Section
5.02 Frontier
Obligations.
Frontier shall provide to RAI, at no cost to RAI, the following support services
(either directly or by contracting with third party vendors or by contracting
with RAI pursuant to a separately negotiated handling agreement):
(a) all
airport passenger service and aircraft ground handling at all airports served,
including without limitation:
|
(i)
|
all
ticket counter and gate check-in
services;
|
|
(ii)
|
all
passenger enplaning and deplaning services, including sky cap and
wheelchair services;
|
|
(iii)
|
aircraft
loading and unloading services, including airside
busing;
|
|
(iv)
|
passenger
ticketing;
|
|
(v)
|
jet
bridges and air stairs, including maintenance and
cleaning;
|
|
(vi)
|
janitorial
services;
|
|
(vii)
|
deicing
services;
|
|
(viii)
|
aircraft
towing and push back; and
|
|
(ix)
|
airport
security services.
|
(b) all
Frontier logo items, such as drink cups, napkins, pillows, blankets and inflight
magazines;
(c) lavatory
service and light aircraft cleaning at Denver International Airport, all
aircraft overnight locations that are not RAI maintenance locations, and, upon
the written request of RAI, at other cities served by the Covered
Aircraft;
(d) denied
boarding amenities and travel voucher compensation certificates consistent
with
Frontier mainline customer service programs;
(e) customer
reaccommodations due to schedule disruption;
(f) interface
and all technological support necessary to ensure accurate and reliable dynamic
transfer of operational data from Frontier to RAI’s system operational control
center in Indianapolis, Indiana, a data interface of RAI’s ACARS to Frontier’s
reservation systems, and of RAI’s system control with Frontier’s flight
information data;
(g) capital
expenditures for aircraft ground handling;
(h) advertising
and sales programs;
(i) operations
space at Denver International Airport, including gates, holdrooms, and airport
concourse space for offices, break rooms, parts storage, crew lounges, and
flight operations (the “Denver Space Requirements”), all as agreed to by the
parties no later than January 31, 2007; and
(j) hangar
space at Denver International Airport sufficient to accommodate the maintenance
activities referred to in Section
2(a) and 3
of
Exhibit
G.
Section
5.03
Change of Control.
Upon the
occurrence of a Change of Control of any party hereto (including RAI Holdings
or
Frontier Holdings) without the prior written consent of the other party, the
non-consenting party shall have the right to terminate this Agreement on 90
days
prior written notice, such notice to be delivered not later than 90 days after
the non-consenting party becomes aware of such Change of Control (which
termination shall not be effective if the circumstances giving rise to such
Change of Control shall no longer exist on the 30th day after the written notice
of termination is delivered).
Section
5.04 Transfer of Assets.
Neither
Frontier nor RAI will enter into an agreement (or series of agreements) to
sell,
assign, transfer or convey all or substantially all of its assets to any Person
unless, as part of such agreement, such Person agrees to assume any and all
of
the seller’s rights, duties and obligations arising under this Agreement and the
non-selling party consents in writing in advance to such sale, assignment,
transfer or conveyance.
ARTICLE
VI
INSURANCE
Section
6.01 Minimum
Insurance Coverages.
During
the Term, in addition to any insurance required to be maintained by RAI pursuant
to the terms of any aircraft lease, or by any applicable governmental or airport
authority, RAI shall maintain, or cause to be maintained, in full force and
effect policies of insurance with insurers of recognized reputation and
responsibility, in each case to the extent available on a commercially
reasonable basis, as follows:
(a) Comprehensive
airline liability insurance, including bodily injury and personal injury, third
party propery damage, passenger liability (including passengers' baggage and
personal effects), cargo and mail legal liability, for a combined single limit
of not less than [* ]
per
occurrence (or whatever higher amount RAI may carry from time to time), limited
in the case of personal injury to [*] per occurrence and in the aggregate
(except with respect to passengers to whom the full policy limit applies),
and War Risk liability insurance as per London form AVN.52E or current
equivalent, or as provided by the Federal Aviation Administration program,
with
a combined single limit no less than [*]
per
occurrence (or whatever higher amount RAI may carry from time to
time);
(b)
All
Risk Hull Insurance on aircraft performing services hereunder, insured on an
agreed value basis with standard market deductibles, including hull war coverage
as per London form LSW 555 or equivalent, or as provided by the Federal Aviation
Administration program.
(c) Workers'
compensation as required by the appropriate jurisdiction and employer's
liability with a limit of not less than [*]
combined single limit; and
(d) Other
property and liability insurance coverages of the types and in the amounts
that
would be considered reasonably prudent for a business organization of RAI's
size
and nature, under the insurance market conditions in effect at the time of
placement, but in any event of the type and the amount that Frontier may
reasonably require to prevent or minimize a disruption in the provision of
Regional Airline Services resulting from a casualty or liability incident
related to RAI's operations. All coverages described in this Section
6.01
shall be
placed with deductibles reasonably prudent for a business organization of RAI's
size and nature, under the insurance market conditions in effect at the time
of
placement.
Section
6.02 Endorsements.
RAI
shall cause the policies described in Section
6.01
to be
duly and properly endorsed by RAI's insurance underwriters with respect to
RAI's
flights and operations as follows:
(a)
with
respect to liability coverage to provide that Frontier, and its directors,
officers, agents, employees and other authorized representatives shall be
endorsed as additional insured parties;
(b) To
provide that the underwriters shall waive subrogation rights against Frontier,
its directors, officers, agents, employees and other authorized
representatives;
(c) with
respect to liability coverage, to provide that insurance shall be primary to
and
without right of contribution from any other insurance which may be available
to
the additional insureds;
(d) To
include a breach of warranty provision in favor of the additional
insureds;
(e) To
accept and insure RAI's hold harmless and indemnity undertakings set forth
in
this Agreement, but only to the extent of the coverage afforded by the policy
or
policies;
(f)
with
respect to liability coverages to provide that the inclusion of more than one
corporation, person, organization, firm or entity as Insured under the policies
shall not in any way affect the rights of any such corporation, person,
organization, firm or entity either as respects any claim, demand, suit, or
judgment made, brought or recovered by or in favor of any other Insured, or
by
or in favor of any employee of such other Insured. The policy shall protect
each
corporation, person, organization, firm or entity in the same manner as though
a
separate policy had been issued to each. Nothing herein shall operate to
increase the liability of the insurers as set forth in the policies beyond
the
amount for which the insurers would have been liable if only one person or
interest had been included as an insured.
(g) To
provide that such policies shall not be canceled, terminated or materially
altered, changed or amended until 30 days (but seven days or such lesser period
as may be available in respect of hull, war and allied perils) after written
notice shall have been sent to Frontier.
Section
6.03 Evidence
of Insurance Coverage.
At the
commencement of this Agreement, and thereafter at Frontier's request, RAI shall
furnish to Frontier evidence reasonably satisfactory to Frontier of such
insurance coverage and endorsements, including certificates certifying that
such
insurance and endorsements are in full force and effect. Initially, this
evidence shall be a certificate of insurance. If RAI fails to acquire or
maintain insurance as herein, provided,
Frontier may at its option secure such insurance on RAI's behalf at RAI's
expense.
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Confidential
ARTICLE
VII INDEMNIFICATION
Section
7.01 RAI
Indemnification of Frontier.
RAI
shall be liable for and hereby agrees to fully defend, release, discharge,
indemnify and hold harmless Frontier, its directors, officers, employees and
agents from and against any and all claims, demands, damages, liabilities,
suits, judgments, actions, causes of action, losses, costs and expenses of
any
kind, character or nature whatsoever, including attorneys' fees, costs and
expenses in connection therewith and expenses of investigation and litigation
thereof, which may be suffered by, accrued against, charged to, or recoverable
from Frontier or its directors, officers, employees or agents, including but
not
limited to, any such losses, costs and expenses involving (i) death or
injury (including claims of emotional distress and other non-physical injury
by
passengers) to any person including any of RAI's or Frontier's directors,
officers, employees or agents, (ii) loss of, damage to, or destruction of
property (including real, tangible and intangible property, and specifically
including regulatory property such as route authorities, slots and other landing
rights), including any loss of use of such property, and (iii) damages due
to
delays in any manner, in each case arising out of, connected with, or
attributable to (x) any act or omission by RAI or any of its directors,
officers, employees or agents relating to the provision of Regional Airline
Services, (y) the performance, improper performance, or non-performance of
any
and all obligations to be undertaken by RAI or any of its directors, officers,
employees or agents pursuant to this Agreement, or (z) the operation,
non-operation, or improper operation of the Covered Aircraft or RAI's equipment
or facilities at any location, in each case excluding only claims, demands,
damages, liabilities, suits, judgments, actions, causes of action, losses,
costs
and expenses to the extent resulting from the gross negligence or willful
misconduct of Frontier or its directors, officers, agents or employees (other
than gross negligence or willful misconduct imputed to such indemnified person
by reason of its interest in a Covered Aircraft). RAI will use commercially
reasonable efforts to cause and assure that RAI will at all times be and remain
in custody and control of all aircraft, equipment, and facilities of, or
operated by, RAI, and Frontier and its directors, officers, employees and agents
shall not, for any reason, be deemed to be in custody or control, or a bailee,
of such aircraft, equipment or facilities.
Section
7.02 Frontier
Indemnification of RAI.
Frontier
shall be liable for and hereby agrees fully to defend, release, discharge,
indemnify, and hold harmless RAI, its directors, officers, employees, and agents
from and against any and all claims, demands, damages, liabilities, suits,
judgments, actions, causes of action, losses, costs and expenses of any kind,
character or nature whatsoever, including attorneys' fees, costs and expenses
in
connection therewith and expenses of investigation and litigation thereof,
which
may be suffered by, accrued against, charged to, or recoverable from RAI, or
its
directors, officers, employees or agents, including but not limited to, any
such
losses, costs and expenses involving (i) death or injury (including claims
of
emotional distress and other non-physical injury by passengers) to any person
including any of RAI's or Frontier's directors, officers, employees or agents,
(ii) loss of, damage to, or destruction of property (including real, tangible
and intangible property, and specifically including regulatory property such
as
route authorities, slots and other landing rights), including any loss of use
of
such property, and (iii) damages due to delays in any manner, in each case
arising out of, connected with, or attributable to, (x) the performance,
improper performance, or nonperformance of any and all obligations to be
undertaken by Frontier or any of its directors, officers, employees or agents
pursuant to this Agreement, (y) the operation, non-operation or improper
operation of Frontier's aircraft, equipment or facilities (excluding, for the
avoidance of doubt, Covered Aircraft and any equipment or facilities leased
or
subleased by Frontier to RAI) at any location, in each case excluding only
claims, demands, damages, liabilities, suits judgments, actions, causes of
action, losses, costs and expenses to the extent resulting from the negligence
or willful misconduct of RAI or its directors, officers, agents or
employees.
Section
7.03 Indemnification
Claims.
A party
entitled to indemnification (the “Indemnified
Party”)
from
another party under the terms of this Agreement (the “Indemnifying
Party”)
shall
provide the Indemnifying Party with prompt written notice (an “Indemnity
Notice”)
of any
third party claim which the Indemnified Party believes gives rise to a claim
for
indemnity against the Indemnifying Party hereunder. The Indemnifying Party
shall
be entitled, if it accepts financial responsibility for the third party claim,
to control the defense of or to settle any such third party claim at its own
expense and by its own counsel;
provided
that the
Indemnified Party's prior written consent (which may not be unreasonably
withheld or delayed) must be obtained prior to settling any such third party
claim. The Indemnified Party shall provide the Indemnifying Party with such
information as the Indemnifying Party shall reasonably request to defend any
such third party claim and shall otherwise cooperate with the Indemnifying
Party
in the defense of any such third party claim. Except as set forth in this
Section
7.03,
the
Indemnified Party shall not enter into any settlement or other compromise or
consent to a judgment with respect to a third party claim as to which the
Indemnifying Party has an indemnity obligation hereunder without the prior
written consent of the Indemnifying Party (which may not be unreasonably
withheld or delayed), and the entering into of any settlement or compromise
or
the consent to any judgment in violation of the foregoing shall constitute
a
waiver by the Indemnified Party of its right to indemnity hereunder to the
extent the Indemnifying Party was prejudiced thereby. Any Indemnifying Party
shall be subrogated to the rights of the Indemnified Party to the extent that
the Indemnifying Party pays for any loss, damage or expense suffered by the
Indemnified Party hereunder. If the Indemnifying Party does not accept financial
responsibility for the third party claim or fails to defend against the third
party claim that is the subject of an Indemnity Notice within 30 days of
receiving such notice (or sooner if the nature of the third party claim so
requires), or otherwise contests its obligation to indemnify the Indemnified
Party in connection therewith, the Indemnified Party may, upon providing written
notice to the Indemnifying Party, pay, compromise or defend such third party
claim without the prior consent of the (otherwise) Indemnifying Party. In the
latter event, the Indemnified Party, by proceeding to defend itself or settle
the matter, does not waive any of its rights hereunder to later seek
reimbursement from the Indemnifying Party.
Section
7.04 Employer's
Liability; Independent Contractors; Waiver of Control
(a) Employer's
Liability and Workers' Compensation.
Each
party hereto assumes full responsibility for its employer's and workers'
compensation liability to its respective 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 or retirement
benefits, pensions or annuities now or hereafter imposed upon employers by
the
government of the United States or any other governmental body, including state,
local or foreign, with respect to such employees measured by the wages,
salaries, compensation or other remuneration paid to such employees, or
otherwise.
(b) Employees,
etc., of RAI.
The
employees, agents, and independent contractors of RAI engaged in performing
any
of the services RAI is to perform pursuant to this Agreement are employees,
agents, and independent contractors of RAI for all purposes, and under no
circumstances will be deemed to be employees, agents or independent contractors
of Frontier. In its performance under this Agreement, RAI will act, for all
purposes, as an independent contractor and not as an agent for Frontier.
Notwithstanding the fact that RAI has agreed to follow certain procedures,
instructions and standards of service of Frontier pursuant to this Agreement,
Frontier will have no supervisory power or control over any employees, agents
or
independent contractors engaged by RAI in connection with its performance
hereunder, and all complaints or requested changes in procedures made by
Frontier will, in all events, be transmitted by Frontier to RAI's designated
representative. Nothing contained in this Agreement is intended to limit or
condition RAI's control over its operations or the conduct of its business
as an
air carrier.
(c) Employees,
etc., of Frontier.
The
employees, agents, and independent contractors of Frontier engaged in performing
any of the services Frontier is to perform pursuant to this Agreement are
employees, agents, and independent contractors of Frontier for all purposes,
and
under no circumstances will be deemed to be employees, agents, or independent
contractors of RAI. RAI will have no supervision or control over any such
Frontier employees, agents and independent contractors and any complaint or
requested change in procedure made by RAI will be transmitted by RAI to
Frontier's designated representative. In its performance under this Agreement,
Frontier will act, for all purposes, as an independent contractor and not as
an
agent for RAI.
(d) RAI
Flights.
The
fact that RAI's operations are conducted under Frontier's Marks and listed
under
the F9 designator code will not affect their status as flights operated by
RAI
for purposes of this Agreement or any other agreement between the parties,
and
RAI and Frontier agree to advise all third parties, including passengers, of
this fact.
Section
7.05 Survival
The
provisions of this Article
VII
shall
survive the termination of this Agreement for a period of seven
years.
ARTICLE
VIII TERM, TERMINATION AND DISPOSITION OF AIRCRAFT
Section
8.01 Term.
The Term
of this Agreement shall commence on and shall be effective as of the Effective
Date and, unless earlier terminated for Cause or breach or extended as provided
herein, shall continue until the eleventh (11th)
anniversary of the date the last Covered Aircraft was placed into service,
as
such date may be extended pursuant to Section
10.17
hereof
(the “Term”).
Section
8.02 Early
Termination
(a) By
Frontier for Cause.
Frontier shall have the right to terminate this Agreement upon written notice
following the occurrence of any event that constitutes Cause. Any termination
pursuant to this Section
8.02(a)
shall
supersede any other termination pursuant to any other provision of this
Agreement (even if such other right of termination shall already have been
exercised) The notice of termination provided by Frontier pursuant to this
Section
8.02(a)
shall
designate a termination date (which may be any date between the date of the
notice and a date no more than 120 days of the date of the notice) and will
also
indicate whether or not Frontier intends to submit a Wind-Down Schedule pursuant
to Section
8.03(a),
and the
termination date set forth in the notice provided by Frontier will be the
Termination Date for purposes of this Agreement (and such Termination Date
pursuant to this Section
8.02(a)
shall
supersede any other Termination Date that may have been previously established
pursuant to another termination). In the event that Frontier shall not have
delivered written notice of termination pursuant to this Section
8.02(a) within
45
days after Frontier receives written notice from RAI of the occurrence of any
event that constitutes Cause by RAI, then Frontier shall be conclusively deemed
to have waived any right to terminate this Agreement based upon such
event;
provided
that
such waiver shall not apply to any subsequent or continuing event that
constitutes Cause.
(b) By
Frontier for Breach.
Frontier may terminate this Agreement, upon two Business Days’ prior written
notice, upon the occurrence of (A) a material breach of this Agreement by RAI
as
described in clause
(i)
below,
which breach shall not have been cured within such two Business Day period,
or
(B) a breach by RAI of its covenant contained in Section
5.04.
Frontier may also terminate this Agreement upon the occurrence of any other
material breach of this Agreement by RAI, which breach shall not have been
cured
within 60 days after written notice of such breach is delivered by Frontier
to
RAI (which 60-day notice period may run concurrently with the 15-day notice
period, if any, provided pursuant to Section
4.03
for
non-safety-related breaches). Any termination notice provided by Frontier
pursuant to this Section
8.02(b)
shall
specify a Termination Date that will be no more than 90 days from the date
of
such notice. The parties hereto agree that, without limiting the circumstances
or events that may constitute a material breach, each of the following shall
constitute a material breach of this Agreement by RAI: (i) a reasonable and
good
faith determination by Frontier, using recognized standards of safety, that
there is a material safety concern with the operation of any Scheduled Flights,
or (ii) the grounding of the Covered Aircraft by regulatory or court order
or
other governmental action. In the event that Frontier shall not have delivered
written notice of termination pursuant to this Section
8.02(b)
within
45 days after Frontier receives written notice from RAI of any material breach
of this Agreement by RAI, then Frontier shall be conclusively deemed to have
waived any right to terminate this Agreement based upon such breach;
provided
that
such waiver shall not apply to any subsequent or continuing breach.
(c) By
RAI for Breach.
RAI may
terminate this Agreement upon (i) five Business Days prior written notice upon
(A) any failure by Frontier to make any payment or payments under this Agreement
aggregating in excess of [* ],
including without limitation, any payments which become due during any Wind-Down
Period, but specifically excluding any amounts which are the subject of a good
faith dispute between the parties, which failure shall not have been cured
within five Business Days after written notice of such failure is delivered
by
RAI to Frontier, or (B) a breach by Frontier of its covenant contained in
Section
5.04,
(ii)
the occurrence of any other failure by Frontier to make any payment or payments
under this Agreement aggregating in excess of [*],
including without limitation, any payments which become due during any Wind-Down
Period, but specifically excluding any amounts which are the subject of a good
faith dispute between the parties, which failure shall not have been cured
within 20 days after written notice of such breach is delivered by RAI to
Frontier, or (iii) the occurrence of any other material breach of this Agreement
by Frontier, including without limitation, any breach during any Wind-Down
Period, which breach shall not have been cured within 60 days after written
notice of such breach is received by Frontier. In the event that RAI shall
not
have delivered written notice of termination pursuant to this Section
8.02(c)
within
45 days after RAI receives written notice from Frontier of any material breach
of this Agreement by Frontier, then RAI shall be conclusively deemed to have
waived any right to terminate this Agreement based upon such breach;
provided
that
such waiver shall not apply to any subsequent or continuing breach.
(d) Survival
During Wind-Down Period.
Notwithstanding the Termination Date indicated in any notice of termination
provided by either party pursuant to this Agreement, upon any termination
hereunder where a party has elected to provide a Wind-Down Schedule, the Term
shall continue, and this Agreement shall survive in full force and effect,
beyond the Termination Date until the end of the Wind-Down Period, if any,
and
the rights and obligations of the parties under this Agreement, including
without limitation remedies available upon the occurrence of events constituting
Cause or material breach, shall continue with respect to the Covered Aircraft
until the final Covered Aircraft is withdrawn from this Agreement.
Section
8.03 Disposition
of Aircraft during Wind-Down Period
(a) Termination
by Frontier for Cause.
If this
Agreement is terminated pursuant to Section 8.02(a),
the
Covered Aircraft shall be completely withdrawn from the capacity purchase
provisions of this Agreement as of the Termination Date and shall cease to
be
Covered Aircraft as of such date, unless the notice of termination provided
by
Frontier under Section
8.02(a)
indicates that Frontier intends to submit a Wind-Down Schedule. In such event
within 120 days of sending the notice of termination pursuant to Section
8.02(a),
Frontier will provide an irrevocable Wind-Down Schedule according to which
the
Covered Aircraft will be withdrawn from the capacity purchase provisions of
this
Agreement. The Wind-Down Schedule will provide for the withdrawal of the Covered
Aircraft no sooner than the Termination Date and no later than 24 months from
the Termination Date. The provisions of this Section 8.03(a)
shall
supersede any Wind-Down Schedule delivered pursuant to any other provision
of
this Agreement.
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Confidential
(b) Termination
by Frontier for Breach or Change of Control.
If this
Agreement is terminated by Frontier under Section
8.02(b), Section 5.03,
or
Section
5.04,
then
the Covered Aircraft shall be withdrawn from the capacity purchase provisions
of
this Agreement in accordance with the following terms and
conditions:
(i) Within
180 days of delivery of any notice of termination, Frontier shall deliver to
RAI
an irrevocable written Wind-Down Schedule, providing for the withdrawal of
such
Covered Aircraft from the capacity purchase provisions of this Agreement,
delineating the number of each aircraft to be withdrawn by month, which will
not
be more than [* ]
Covered
Aircraft per month.
(ii) The
Wind-Down Schedule may not provide for the withdrawal of any Covered Aircraft
beyond any date more than 24 months after the Termination Date.
(c) Termination
by RAI for Breach.
If this
Agreement is terminated by RAI under Section
8.02(c)
or
Section
5.03,
then
the Covered Aircraft shall be withdrawn from the capacity purchase provisions
of
this Agreement in accordance with the following terms and conditions: The notice
of termination delivered by RAI to Frontier pursuant to
Section 8.02(c)(i)
shall be
irrevocable and shall contain a Termination Date that is no more than 60 days
after the date of such notice;
provided
that
such termination notice shall be void and of no further effect automatically
upon the payment by Frontier prior to such Termination Date of all unpaid
amounts giving rise to the default under Section
8.02(c)(i).
As of
the Termination Date set forth in a notice of termination delivered pursuant
to
Section
8.02(c)(i),
all of
the Covered Aircraft shall automatically be withdrawn from the capacity purchase
provisions of this Agreement and shall cease to be Covered Aircraft as of such
date. The notice of termination delivered by RAI to Frontier pursuant to
Section
8.02(c)(ii)
shall be
irrevocable and shall contain a Termination Date that is at least 10 and not
more than 360 days after the date of such notice. The notice of termination
delivered by RAI to Frontier pursuant to Section
8.02(c)(iii)
or
Section
5.03
shall be
irrevocable and shall contain a Termination Date that is no fewer than 180
days
after the date of such notice. Prior to the earlier of (i) two Business Days
prior to the Termination Date, and (ii) the 90th day after receipt of such
termination notice pursuant to Section
8.02(c)(ii), 8.02(c)(iii),
or
5.03,
RAI
shall deliver to Frontier a Wind-Down Schedule beginning on such Termination
Date;
provided that
no
Wind-Down Period shall occur following a termination pursuant to Section
8.02(c)(ii)
if
Frontier shall not have cured the payment default giving rise to such
termination prior to or simultaneously with its delivery of the Wind-Down
Schedule to RAI. The Wind-Down Schedule may not provide for the withdrawal
of
any Covered Aircraft beyond any date more than 12 months after the Termination
Date nor provide for the removal of more than [* ]
Covered
Aircraft per calendar month.
(d) Termination
at End of Term.
If the
Agreement is terminated at the end of the Term or any extension thereof (other
than pursuant to Section
8.02),
Frontier shall deliver to RAI a Wind-Down Schedule no fewer than 180 days prior
to the end of the Term or any extension thereof. Such Wind-Down Schedule may
not
provide for the withdrawal of any Covered Aircraft beyond any date more than
18
months after the end of the Term or extension period nor provide for the removal
of more than [*] Covered Aircraft per calendar month
(e) Other
Remedies for Labor Strike and Other Circumstances.
In the
event of (i) the occurrence of a Labor Strike that shall have continued for
at
least three consecutive days or (ii) the mandatory grounding of the Covered
Aircraft by the FAA, then for so long as such Labor Strike or grounding shall
continue and thereafter until the Controllable Completion Factor Percentage
of
Scheduled Flights (calculated on a daily basis) on any day of the week equals
or
exceeds the Controllable Completion Factor Percentage Target Threshold of
Scheduled Flights, Frontier shall not be required to pay any of the Fixed Cost
elements set forth on Appendix
1
to
Exhibit
D.
The
rights set forth in this Section
8.03(e)
are in
addition to, and not in limitation of, any other right of Frontier arising
hereunder.
(f) Punitive
Damages.
No
party to this Agreement or any of its affiliates shall be liable to any other
party hereto or any of its affiliates for claims for punitive, special or
exemplary damages, arising out of or relating to this Agreement or the
transactions contemplated hereby, regardless of whether a claim is based on
contract, tort (including negligence), strict liability, violation of any
applicable deceptive trade practices act or similar law or any other legal
or
equitable principle, and each party releases the others and their respective
affiliates from liability for any such damages. No party shall be entitled
to
rescission of this Agreement as a result of breach of any other party's
representations, warranties, covenants or agreements, or for any other
matter;
provided,
that
nothing in this Section
8.03(f)
shall
restrict the right of any party to exercise any right to terminate this
Agreement pursuant to the terms hereof.
_______________
*
Confidential
ARTICLE
IX REPRESENTATIONS, WARRANTIES AND COVENANTS
Section
9.01 Representations
and Warranties of RAI.
RAI
represents and warrants to Frontier as of the date hereof as
follows:
(a) Organization
and Qualification.
RAI is
a duly organized and validly existing corporation under the laws of the State
of
Indiana. RAI has the corporate power and authority to own, operate and use
its
assets and to provide the Regional Airline Services. RAI is duly qualified
to do
business as a foreign corporation under the laws of each jurisdiction that
requires such qualification, except where the failure to possess such
qualification would not have a material adverse effect on RAI or its ability
to
conduct its business, to provide Regional Airline Services, and otherwise to
perform its obligations hereunder.
(b) Authority
Relative to this Agreement.
RAI has
the corporate power and authority to execute and deliver this Agreement and
to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of
the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of RAI. This Agreement has been duly and validly
executed and delivered by RAI and is, assuming due execution and delivery
thereof by Frontier and that Frontier has legal power and right to enter into
this Agreement, a valid and binding obligation of RAI, enforceable against
RAI
in accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors' rights
generally and legal principles of general applicability governing the
availability of equitable remedies (whether considered in a proceeding in equity
or at law or otherwise under applicable law).
(c) Conflicts.
Neither
the execution or delivery of this Agreement nor the performance by RAI of the
transactions contemplated hereby will (i) violate, conflict with, or constitute
a default under any of the terms of RAI's certificate of incorporation, by-laws,
or any provision of, or result in the acceleration of any obligation under,
any
material contract, sales commitment, license, purchase order, security
agreement, mortgage, note, deed, lien, lease or other agreement to which RAI
is
a party or by which it or any of its properties or assets may be bound, (ii)
result in the creation or imposition of any lien, charge or encumbrance in
favor
of any third person or entity, (iii) violate any law, statute, judgment, decree,
order, rule or regulation of any governmental authority or body, or (iv)
constitute any event which, after notice or lapse of time or both, would result
in such violation, conflict, default, acceleration or creation or imposition
of
liens, charges or encumbrances.
(d) No
Default.
RAI is
not (i) in violation of its charter or by-laws, (ii) in breach or
default in any material respect, and no event has occurred which, with notice
or
lapse of time or both, would constitute such a breach or default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of
its
properties or assets is subject or (iii) in violation of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its business,
where such violation, breach, default or failure would have a material adverse
effect on RAI or on its ability to provide Regional Airlines Services and
otherwise perform its obligations hereunder. To the knowledge of RAI, no third
party to any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument that is material to RAI to which RAI is a party or
by
which any of them are bound or to which any of their properties are subject,
is
in default in any material respect under any such agreement.
(e) Broker.
RAI has
not retained or agreed to pay any broker or finder with respect to this
Agreement and the transactions contemplated hereby.
(f) Financial
Statements.
The
financial statements (including the related notes and supporting schedules)
of
RAI Holdings delivered (or, if filed with the Securities and Exchange
Commission, made available) to Frontier immediately prior to the date hereof
fairly present in all material respects the consolidated financial position
of
RAI Holdings and its results of operations as of the dates and for the periods
specified therein. Since the date of the latest of such financial statements,
there has been no material adverse change nor any development or event involving
a prospective material adverse change with respect to RAI Holdings. Such
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout
the
periods involved, except to the extent disclosed therein.
(g) Insurance.
RAI is
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts and with such deductibles as are customary in
the
businesses in which they are engaged. RAI has not received notice of
cancellation or non-renewal of such insurance. All such insurance is outstanding
and duly in force on the date hereof. RAI has no reason to believe that it
will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material adverse effect
on RAI.
(h) No
Proceedings.
There
are no legal or governmental proceedings pending, or investigations commenced
of
which RAI has received notice, in each case to which RAI is a party or of which
any property or assets of RAI is the subject which, if determined adversely
to
RAI, would individually or in the aggregate have a material adverse effect
on
RAI or on RAI's ability to provide Regional Airlines Services and otherwise
perform its obligations hereunder; and to the best knowledge of RAI, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(i) No
Labor Dispute.
No
labor dispute with the employees of RAI exists or, to the knowledge of RAI,
is
imminent which would reasonably be expected to have a material adverse effect
on
RAI or on its ability to provide Regional Airlines Services and otherwise
perform their respective obligations hereunder.
(j) Permits.
Other
than FAA certification for over-water operations, which certification RAI
intends to obtain prior to the inservice date of the fifth Covered Aircraft,
RAI
possesses all material certificates, authorizations and permits issued by FAA
and other applicable federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, to provide Regional Airlines Services
and otherwise to perform their respective obligations hereunder, and RAI has
not
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a material adverse effect on RAI or on its ability to conduct its
businesses, to provide Regional Airlines Services and otherwise to perform
its
obligations hereunder.
Section
9.02 Representations
and Warranties of Frontier.
Frontier
represents and warrants to RAI as of the date hereof as follows:
(a) Organization
and Qualification.
Frontier is a duly incorporated and validly existing corporation in good
standing under the laws of the State of Colorado.
(b) Authority
Relative to this Agreement.
Frontier has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Frontier. This Agreement has
been duly and validly executed and delivered by Frontier and is, assuming due
execution and delivery thereof by RAI and that RAI has legal power and right
to
enter into this Agreement, a valid and binding obligation of Frontier,
enforceable against Frontier in accordance with its terms, except as enforcement
hereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
the
enforcement of creditors' rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or otherwise under applicable
law).
(c) Conflicts;
Defaults.
Neither
the execution or delivery of this Agreement nor the performance by Frontier
of
the transactions contemplated hereby will (i) violate, conflict with, or
constitute a default under any of the terms of Frontier's certificate of
incorporation, by-laws, or any provision of, or result in the acceleration
of
any obligation under, any material contract, sales commitment, license, purchase
order, security agreement, mortgage, note, deed, lien, lease or other agreement
to which Frontier is a party or by which it or its properties or assets may
be
bound, (ii) result in the creation or imposition of any lien, charge or
encumbrance in favor of any third person or entity, (iii) violate any law,
statute, judgment, decree, order, rule or regulation of any governmental
authority or body, or (iv) constitute any event which, after notice or lapse
of
time or both, would result in such violation, conflict, default, acceleration
or
creation or imposition of liens, charges or encumbrances.
(d) Broker.
Frontier has not retained or agreed to pay any broker or finder with respect
to
this Agreement and the transactions contemplated hereby.
(e) No
Proceedings.
There
are no legal or governmental proceedings pending, or investigations commenced
of
which Frontier has received notice, in each case to which Frontier is a party
or
of which any property or assets of Frontier is the subject which, if determined
adversely to Frontier, would individually or in the aggregate have a material
adverse effect on Frontier or on its ability to perform its obligations
hereunder; and to the best knowledge of Frontier, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(f) Financial
Statements.
The
financial statements (including the related notes and supporting schedules)
of
Frontier Holdings delivered (or, if filed with the Securities and Exchange
Commission, made available) to RAI immediately prior to the date hereof fairly
present in all material respects the consolidated financial position of Frontier
Holdings. Since the date of the latest of such financial statements, there
has
been no material adverse change nor any development or event involving a
prospective material adverse change with respect to Frontier Holdings. Such
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout
the
periods involved, except to the extent disclosed therein.
ARTICLE
X MISCELLANEOUS
Section
10.01 Transition
Arrangements
(a) Scheduling.
Subsequent to the execution of this Agreement, and prior to the inservice date
of the first Covered Aircraft, RAI and Frontier shall work together to
facilitate the initial monthly scheduling of Scheduled Flights.
(b) Other
Setup Arrangements.
Subsequent to the execution of this Agreement, and prior to the inservice date
of the first Covered Aircraft, RAI and Frontier shall work together to
facilitate all other relevant aspects of the commencement of RAI's provision
of
Regional Airlines Services, including without limitation the provision of
passenger-related and technology-related services.
Section
10.02 Notices.
All
notices made pursuant to this Agreement shall be in writing and shall be deemed
given upon (a) a transmitter's confirmation of a receipt of a facsimile
transmission (but only if followed by confirmed delivery by a standard overnight
courier the following Business Day or if delivered by hand the following
Business Day), or (b) confirmed delivery by a standard overnight courier or
delivered by hand, to the parties at the following addresses:
if
to Frontier:
Frontier
Airlines, ▇▇▇.▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Senior Vice President - Marketing & PlanningTelecopy No.: (▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With
copy
to:
Frontier
Airlines, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
General Counsel
Telecopy
No.: ▇▇▇-▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
if
to
RAI:
Republic
Airways Holdings ▇▇▇.▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
President and Chief Executive OfficerTelecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
With
copy
to:
Republic
Airways Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy:
▇▇▇-▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
or
to
such other address as any party hereto may have furnished to the other parties
by a notice in writing in accordance with this
Section 10.02
.
Section
10.03 Binding
Effect; Assignment.
This
Agreement and all of the provisions hereof shall be binding upon the parties
hereto and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except with respect to a merger or other
consolidation of either party with another Person (and without limiting
Frontier's and RAI’s respective rights pursuant to Section
5.03
hereof),
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of
the
other parties.
Section
10.04 Amendment
and Modification.
This
Agreement may not be amended or modified in any respect except by a written
agreement signed by the parties hereto that specifically states that it is
intended to amend or modify this Agreement.
Section
10.05 Waiver.
The
observance of any term of this Agreement may be waived (either generally or
in a
particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but such waiver shall be effective only if it
is
in writing signed by the party against which such waiver is to be asserted
that
specifically states that it is intended to waive such term. Unless otherwise
expressly provided in this Agreement, no delay or omission on the part of any
party in exercising any right or privilege under this Agreement shall operate
as
a waiver thereof, nor shall any waiver on the part of any party of any right
or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of
any
right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement. No failure by
any
party to take any action or assert any right or privilege hereunder shall be
deemed to be a waiver of such right or privilege in the event of the
continuation or repetition of the circumstances giving rise to such right unless
expressly waived in writing by each party against whom the existence of such
waiver is asserted.
Section
10.06 Interpretation.
The
table of contents and the section and other headings and subheadings contained
in this Agreement and in the exhibits and schedules hereto are solely for the
purpose of reference, are not part of the agreement of the parties hereto,
and
shall not in any way affect the meaning or interpretation of this Agreement
or
any exhibit or schedule hereto. All references to days or months shall be deemed
references to calendar days or months. All references to “$” shall be deemed
references to United States dollars. Unless the context otherwise requires,
any
reference to an “Article,” a “Section,” an “Exhibit,” or a “Schedule” shall be
deemed to refer to a section of this Agreement or an exhibit or schedule to
this
Agreement, as applicable. The words “hereof,” “herein” and “hereunder” and words
of similar import referring to this Agreement refer to this Agreement as a
whole
and not to any particular provision of this Agreement. Whenever the words
“include,” “includes” or “including” are used in this Agreement, unless
otherwise specifically provided, they shall be deemed to be followed by the
words “without limitation.” This Agreement shall be construed without regard to
any presumption or rule requiring construction or interpretation against the
party drafting or causing the document to be drafted.
Section
10.07 Confidentiality.
Except
as required by law or stock exchange or other regulation or in any proceeding
to
enforce the provisions of this Agreement, or as otherwise provided below, each
party hereby agrees not to publicize or disclose to any third party (x) the
terms or conditions of this Agreement, or any exhibit, schedule or appendix
hereto or thereto, or any information, data, schedules, route information,
fare
schedules and rules shared between the parties during the course of performance
under this Agreement, without the prior written consent of the other parties
thereto, or (y) any confidential information or data, both oral and written,
received from the other, whether pursuant to or in connection with this
Agreement, and designated as such by the other without the prior written consent
of the party providing such confidential information or data (except that a
party may disclose such information to its third party consultants, advisors
and
representatives, in each case who are themselves bound to keep such information
confidential). Each of party hereby agrees not to use any such confidential
information or data of the other party other than in connection with performing
their respective obligations or enforcing their respective rights under this
Agreement, or as otherwise expressly permitted or contemplated by this
Agreement. If either party is served with a subpoena or other process requiring
the production or disclosure of any of such agreements or information, then
the
party receiving such subpoena or other process, before complying with such
subpoena or other process, shall, unless expressly requested not to do so by
a
government agency issuing the subpoena or other process, immediately notify
the
other parties hereto of same and permit said other parties a reasonable period
of time to intervene and contest disclosure or production. Upon termination
of
this Agreement, each party must return to each 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. Without limiting the foregoing, no party
shall be prevented from disclosing the following terms of this Agreement: the
number of aircraft subject hereto, the periods for which such aircraft are
subject hereto, and any termination provisions contained herein. The provisions
of this Section 10.07
shall
survive the termination of this Agreement for a period of ten
years.
Section
10.08 Arbitration
(a) Agreement
to Arbitrate.
Subject
to the equitable remedies provided under Section
10.11,
any and
all claims, demands, causes of action, disputes, controversies and other matters
in question (all of which are referred to herein as “Claims”)
arising out of or relating to this Agreement, shall be resolved by binding
arbitration pursuant to the procedures set forth by the International Institute
for Conflict Prevention and Resolution (the “CPR”).
Each
of the parties agrees that arbitration under this Section
10.08
is the
exclusive method for resolving any Claim and that it will not commence an action
or proceeding based on a Claim hereunder, except to enforce the arbitrators'
decisions as provided in this Section
10.08,
to
compel any other party to participate in arbitration under this Section
10.08.
The
governing law for any such action or proceeding shall be the law set forth
in
Section
10.08(f).
(b) Initiation
of Arbitration.
If any
Claim has not been resolved by mutual agreement on or before the 15th
day
following the first notice of the Claim to or from a disputing party, then
the
arbitration may be initiated by one party by providing to the other party a
written notice of arbitration specifying the Claim or Claims to be arbitrated.
If a party refuses to honor its obligations to arbitrate under this provision,
the other party may compel arbitration in either federal or state court in
New
York, New York and seek recovery of its attorneys' fees and court costs incurred
if the arbitration is ordered to proceed.
(c) Place
of Arbitration.
The
arbitration proceeding shall be conducted in New York, New York, or some other
location mutually agreed upon by the parties.
(d) Selection
of Arbitrators.
The
arbitration panel (the “Panel”)
shall
consist of three arbitrators who are qualified to hear the type of Claim at
issue. They may be selected by agreement of the Parties within thirty days
of
the notice initiating the arbitration procedure, or from the date of any order
compelling such arbitration to proceed. If the Parties fail to agree upon the
designation of any or all the Panel, then the Parties shall request the
assistance of the CPR. The Panel shall make all of its decisions by majority
vote. Evident partiality on the part of an arbitrator exists only where the
circumstances are such that a reasonable person would have to conclude there
in
fact existed actual bias, and a mere appearance or impression of bias will
not
constitute evident partiality or otherwise disqualify an arbitrator. The
decision of the Panel will be binding and non-appealable, except as permitted
under the Federal Arbitration Act.
(e) Choice
of Law as to Procedural Matters.
The
enforcement of this agreement to arbitrate, and all procedural aspects of the
proceeding pursuant to this agreement to arbitrate, including but not limited
to, the issues subject to arbitration (i.e., arbitrability), the scope of the
arbitrable issues, and the rules governing the conduct of the arbitration,
unless otherwise agreed by the Parties, shall be governed by and construed
pursuant to the Federal Arbitration Act.
(f) Choice
of Law as to Substantive Claims.
In
deciding the substance of the parties' Claims, the arbitrators shall apply
the
substantive laws of the State of New York (excluding New York choice-of-law
principles that might call for the application of the law of another
jurisdiction).
(g) Procedure.
It is
contemplated that the arbitration proceeding will be self-administered by the
parties and conducted in accordance with procedures jointly determined by the
Panel and the Parties; provided,
however, that if either or both Parties believes the process will be enhanced
if
it is administered by the CPR, then either or both Parties shall have the right
to cause the process to become administered by the CPR and, thereafter, the
arbitration shall be conducted, where applicable or appropriate, pursuant to
the
administration of the CPR. In determining the extent of discovery, the number
and length of depositions, and all other pre-hearing matters, the Panel shall
endeavor to the extent possible to streamline the proceedings and minimize
the
time and cost of the proceedings.
(h) Final
Hearing.
The
final hearing shall be conducted within 120 days of the selection of the entire
Panel. The final hearing shall not exceed ten business days, with each party
to
be granted one-half of the allocated time to present its case to the
arbitrators, unless otherwise agreed by the Parties.
(i) Damages.
Only
actual damages may be awarded. It is expressly agreed that the Panel shall
have
no authority to award treble, exemplary or punitive damages of any type under
any circumstances regardless of whether such damages may be available under
the
applicable law.
(j) Decision
of the Arbitration.
The
Panel shall render its final decision and award in writing within 20 days of
the
completion of the final hearing completely resolving all of the Claims that
are
the subject of the arbitration proceeding. The Panel shall certify in its
decision that no part of its award includes any amount for treble, exemplary
or
punitive damages. The Panel's decision and award shall be final and
non-appealable to the maximum extent permitted by law. Any and all of the
Panel's orders and decisions will be enforceable in, and judgment upon any
award
rendered in the arbitration proceeding may be confirmed and entered by, any
federal or state court in New York, New York having jurisdiction.
(k) Confidentiality.
All
proceedings conducted hereunder and the decision and award of the Panel shall
be
kept confidential by the Panel and, except as required by law or stock exchange
regulation or in any proceeding to enforce any decision or award by the Panel,
by the Parties.
Section
10.09 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. The Agreement may be executed by facsimile signature.
Section
10.10 Severability.
Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section
10.11 Equitable
Remedies; Certain Liquidated Damages
(a) Equitable
Remedies.
Each
party acknowledges and agrees that, under certain circumstances, the breach
by a
party of a term or provision of this Agreement will materially and irreparably
harm the other party, that money damages will accordingly not be an adequate
remedy for such breach and that the non-defaulting party, in its sole discretion
and in addition to its rights under this Agreement and any other remedies it
may
have at law or in equity, may apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any breach of
the
provisions of this Agreement.
(b) Certain
Liquidated Damages.
RAI
will update from time to time Exhibit
B
to
reflect the exact in-service week and in-service day that each of the TBD
aircraft appearing on Exhibit
B
is
known, with notification to Frontier as to such week being no later than
[* ]
in
advance of the in-service week and the notification as to such date being no
later than [*] in advance of the in-service date. RAI will deliver such amended
Exhibit
B
to
Frontier as soon as possible. If RAI shall fail to provide a Covered Aircraft
(such Covered Aircraft being referred to as a “Delayed Aircraft”) on the
applicable in-service day reflected on the amended Exhibit
B, or, if no inservice date has been specified, the last day of the applicable
scheduled inservice week, or, if no inservice week has been designated, the
last
day of the inservice month (in each case, the “Anticipated Service
Date”),
RAI
will pay to Frontier liquidated damages in an amount equal to [* ]
per
each day between the Anticipated Service Date and the actual in-service date
of
such aircraft (or, if applicable, the date of any election by Frontier to remove
the aircraft, as provided below), provided
that,
in the
event such inservice delay is due to circumstances beyond the control of RAI
and
RAI provides prior notice (the “Delay
Notice”)
of
such delay, such liquidated damages shall not in any event exceed (x) [*] if
the
Delay Notice is provided to Frontier no fewer than [*] prior to the Anticipated
Service Date for the Delayed Aircraft, or (y) if such notice is delivered fewer
than [*] prior to the Anticipated Service Date for the Delayed Aircraft, (i)
[*]
plus (ii) [*] times the difference between [*] minus the number of days between
the date of such notice and the Anticipated Service Date for the Delayed
Aircraft, and provided
further,
if the
revised delivery date for the Delayed Aircraft indicated in the Delay Notice
(or
in any subsequent notice as a result of subsequent delays), is more than [*]
beyond the Anticipated Service Date, Frontier will have the right, to be
exercised within five Business Days of receipt of such notice (or subsequent
notice), to elect to remove the Delayed Aircraft from the terms of this
Agreement. Should Frontier elect to remove the Delayed Aircraft from the terms
of this Agreement pursuant to this Section
10.11(b),
(x) if
such removal occurs prior to the Anticipated Service Date, no liquidated damages
shall be payable by RAI, and (y) if such removal occurs after the Anticipated
Service Date as a result of any such subsequent notice, the liquidated damages
described herein will be calculated based on the number of days between the
Anticipated Service Date and the date of Frontier’s election to remove such
aircraft from this Agreement.
The
parties agree that the damages to be suffered by Frontier in connection with
RAI's failure to deliver an aircraft on an Anticipated Service Date shall be
difficult to calculate, and that the foregoing liquidated damages are a good
faith estimate of such damages, and that such liquidated damages are not
intended to be a penalty. The parties further agree that the foregoing
liquidated damages shall be Frontier's sole and exclusive remedies against
RAI
for any damages suffered solely as a result of RAI's failure to deliver an
aircraft on an Anticipated Service Date as described above.
(c) Other
Limitations on Seeking Damages.
Neither
the right of any party to terminate this Agreement, nor the exercise of such
right, shall constitute a limitation on such party's right to seek damages
or
such other legal redress to which such party may otherwise be
entitled;
provided
that,
absent the occurrence of another breach of this Agreement by RAI, Frontier
shall
not be entitled to seek damages solely for the occurrence of (i) an event of
Cause of the type described in clause
(iii)
or
clause
(iv)
of the
definition thereof, (ii) a material breach of the type described in clause
(ii)
of
Section
8.02(b),
or
(iii) a termination pursuant to Section
5.03.
Section
10.12 Relationship
of Parties.
Nothing
in this Agreement shall be interpreted or construed as establishing between
the
parties a partnership, joint venture or other similar arrangement.
Section
10.13 Entire
Agreement; No Third Party Beneficiaries.
This
Agreement (including the exhibits and schedules hereto) are intended by the
parties as a complete statement of the entire agreement and understanding of
the
parties with respect to the subject matter hereof and all matters between the
parties related to the subject matter herein or therein set forth. This
Agreement is made among, and for the benefit of, the parties hereto, and the
parties do not intend to create any third-party beneficiaries hereby, and no
other Person shall have any rights arising under, or interests in or to, this
Agreement.
Section
10.14 Governing
Law.
Except
with respect to matters referenced in
Section 10.08(e)
(which
shall be governed by and construed pursuant to the Federal Arbitration Act),
this Agreement shall be governed by and construed in accordance with the laws
of
the State of New York (excluding New York choice-of-law principles that might
call for the application of the law of another jurisdiction) as to all matters,
including matters of validity, construction, effect, performance and remedies.
Except as otherwise provided in Section
10.08(e),
any
action arising out of this Agreement or the rights and duties of the parties
arising hereunder may be brought, if at all, only in the state or federal courts
located in the City and County of New York, New York.
Section
10.15
Right of Set-Off.
If any
party hereto shall be in default hereunder to any other party, then in any
such
case the non-defaulting party shall be entitled to set off from any payment
owed
by such non-defaulting party to the defaulting party hereunder any amount owed
by the defaulting party to the non-defaulting party thereunder;
provided
that
contemporaneously with any such set-off, the non-defaulting party shall give
written notice of such action to the defaulting party;
provided further
that the
failure to give such notice shall not affect the validity of the set-off. It
is
specifically agreed that (i) for purposes of the set-off by any non-defaulting
party, mutuality shall be deemed to exist among the parties; (ii) reciprocity
among the parties exists with respect to their relative rights and obligations
in respect of any such set-off; and (iii) the right of set-off is given as
additional security to induce the parties to enter into the transactions
contemplated hereby. Upon completion of any such set-off, the obligation of
the
defaulting party to the non-defaulting party shall be extinguished to the extent
of the amount so set-off. Each party hereto further waives any right to assert
as a defense to any attempted set-off the requirements of liquidation or
mutuality. This set-off provision shall be without prejudice, and in addition,
to any right of set-off, combination of accounts, lien or other right to which
any non-defaulting party is at any time otherwise entitled (either by operation
of law, contract or otherwise), including without limitation pursuant to
Section
3.06(b)(ii)
hereof.
Section
10.16 Cooperation
with Respect to Reporting.
Each of
the parties hereto agrees to use its commercially reasonable efforts to
cooperate with each other party in providing necessary data, to the extent
in
the possession of the first party, required by such other party in order to
meet
any reporting requirements to, or otherwise in connection with any filing with
or provision of information to be made to, any regulatory agency or other
governmental authority.
Section
10.17 Extension
of Term.
Frontier may extend the Term of this Agreement for up to two extension periods
by delivering to RAI written notice on such extension no less than 365 days
prior to the end of the then existing Term. Any extension shall be for no less
than three years.
_______________
*
Confidential
Section
10.18
Life Limited Parts.
Frontier
and RAI shall each cooperate with one another in order to manage and minimize
engine life limited parts (“LLP”)
expenses for Covered Aircraft. To that end, RAI shall provide annual projections
of LLP requirements and supplemental notice of specific engine maintenance
events which require LLP replacement as they are scheduled. Frontier may, at
its
option and with RAI's consent (which consent shall not be unreasonably withheld)
provide or arrange the provision of used serviceable LLPs that otherwise meet
RAI's specifications and reasonable minimum cycle-remaining requirements, to
be
incorporated into a Covered Aircraft. In connection with the withdrawal of
any
Covered Aircraft from the capacity purchase provisions of this Agreement
(whether at the end of such aircraft's scheduled term or otherwise), Frontier
shall pay RAI for the pro-rata cost (based on useful life and using the
then-current catalogue price for LLPs) of all LLPs consumed for all Scheduled
Flights by such Covered Aircraft under this Agreement, and RAI shall pay
Frontier for the pro-rata cost (based on useful life and using the then-current
catalogue price for LLPs) of all LLPs provided by Frontier and incorporated
into
such Covered Aircraft pursuant to the previous sentence and not consumed for
any
Scheduled Flights under this Agreement.
Section
10.19 RAI Holdings Guarantee.
(a) RAI
Holdings does hereby unconditionally and irrevocably guaranty to Frontier,
as a
primary obligor and not merely as surety, (i) the due, punctual, and full
payment (when due, by acceleration or otherwise) of each amount which RAI is
or
may become obligated to pay under this Agreement, (ii) the full and punctual
performance and observance by RAI of each term, provision, condition, agreement
and covenant for which it is liable contained in this Agreement, and (iii)
the
accuracy of each of the representations and warranties of RAI set forth in
this
Agreement. RAI Holdings hereby expressly waives notice, promptness, presentment
and diligence as to the obligations guaranteed hereby and acceptance of this
guarantee or any requirement that Frontier proceed first against RAI or any
security for or any other guarantor of any of the obligations guaranteed
hereunder (and without having to join any other person in any such action).
RAI
Holdings agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to, this Agreement or any payments or performance obligations
required of RAI herein.
(b) This
guarantee by RAI Holdings is a guarantee of payment and performance and not
merely a guaranty of collection, and RAI Holding’s liabilities and obligations
under this guarantee are and shall at all times continue to be absolute,
irrevocable and unconditional in all respects in accordance with the terms
of
this Section 10.19, and shall at all times be valid and enforceable without
set
off, deduction, or counterclaim irrespective of any other agreements or
circumstances of any nature whatsoever which might otherwise constitute a
defense to this guarantee or the obligations of RAI Holdings
hereunder.
(c) The
guarantee by RAI Holdings in this Section 10.19 shall continue to be effective,
or be reinstated, as the case may be, if at any time payment by RAI or RAI
Holdings of all or any part of any sum payable pursuant to this Agreement or
this guarantee is rescinded or otherwise must be returned by Frontier upon
RAI’s
insolvency, bankruptcy or reorganization, all as though such payment had not
been made. Until all of the obligations guaranteed hereunder shall have been
paid and performed in full, RAI Holdings shall have no right of subrogation
or
any other right to enforce any remedy which Frontier now has or may hereafter
have against RAI.
(d) RAI
Holdings hereby represents and warrants (i) that it has the necessary power
and
authority to execute and deliver this Agreement, (ii) all required consents,
approvals and authorizations have been obtained with respect to the execution
and delivery of this Agreement by RAI Holdings, and (iii) that this Agreement
has been duly executed and delivered by RAI Holdings and is enforceable against
RAI Holdings in accordance with its terms, and (iv) the execution and delivery
of this Agreement by RAI Holdings does not violate its certificate of
incorporation or bylaws or the terms of any material contract to which it is
a
party or by which it is bound, provided,
the
representations and warranties set forth in clauses (i) through (iv) above
are
solely as to the extent necessary to provide the guarantee set forth in this
Section
10.19,
and,
provided
further,
that
such representations and warranties as to enforceability are qualified to the
extent enforceability may be effected by the laws of bankruptcy and
equity.
Section
10.20 Frontier Holdings Guarantee.
(a) Frontier
Holdings does hereby unconditionally and irrevocably guaranty to RAI, as a
primary obligor and not merely as surety, (i) the due, punctual, and full
payment (when due, by acceleration or otherwise) of each amount which Frontier
is or may become obligated to pay under this Agreement, (ii) the full and
punctual performance and observance by Frontier of each term, provision,
condition, agreement and covenant for which it is liable contained in this
Agreement, and (iii) the accuracy of each of the representations and warranties
of Frontier set forth in this Agreement. Frontier Holdings hereby expressly
waives notice, promptness, presentment and diligence as to the obligations
guaranteed hereby and acceptance of this guarantee or any requirement that
RAI
proceed first against Frontier or any security for or any other guarantor of
any
of the obligations guaranteed hereunder (and without having to join any other
person in any such action). Frontier Holdings agrees that it shall not be
required to consent to, or receive any notice of, any amendment or modification
of, or waiver, consent or extension with respect to, this Agreement or any
payments or performance obligations required of Frontier herein.
(b) This
guarantee by Frontier Holdings is a guarantee of payment and performance and
not
merely a guaranty of collection, and Frontier Holding’s liabilities and
obligations under this guarantee are and shall at all times continue to be
absolute, irrevocable and unconditional in all respects in accordance with
the
terms of this Section 10.20, and shall at all times be valid and enforceable
without set off, deduction, or counterclaim irrespective of any other agreements
or circumstances of any nature whatsoever which might otherwise constitute
a
defense to this guarantee or the obligations of Frontier Holdings
hereunder.
(c) The
guarantee by Frontier Holdings in this Section 10.20 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment by
Frontier or Frontier Holdings of all or any part of any sum payable pursuant
to
this Agreement or this guarantee is rescinded or otherwise must be returned
by
RAI upon Frontier’s insolvency, bankruptcy or reorganization, all as though such
payment had not been made. Until all of the obligations guaranteed hereunder
shall have been paid and performed in full, Frontier Holdings shall have no
right of subrogation or any other right to enforce any remedy which RAI now
has
or may hereafter have against Frontier.
(d) RAI
Holdings hereby represents and warrants (i) that it has the necessary power
and
authority to execute and deliver this Agreement, (ii) all required consents,
approvals and authorizations have been obtained with respect to the execution
and delivery of this Agreement by RAI Holdings, and (iii) that this Agreement
has been duly executed and delivered by RAI Holdings and is enforceable against
RAI Holdings in accordance with its terms, and (iv) the execution and delivery
of this Agreement by Frontier Holdings does not violate its certificate of
incorporation or bylaws or the terms of any material contract to which it is
a
party or by which it is bound, provided,
the
representations and warranties set forth in clauses (i) through (iv) above
are
solely as to the extent necessary to provide the guarantee set forth in this
Section
10.19,
and,
provided
further,
that
such representations and warranties as to enforceability are qualified to the
extent enforceability may be effected by the laws of bankruptcy and
equity.
IN
WITNESS WHEREOF, the parties hereto have caused this Airline Services Agreement
to be duly executed and delivered as of the date and year first written
above.
|
FRONTIER
AIRLINES, INC.
|
REPUBLIC
AIRLINE INC.
|
|
By
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
|
By
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇, President
|
▇▇▇▇▇
▇▇▇▇▇▇▇, President
|
|
By
/s/ ▇▇▇▇ ▇. ▇▇▇▇
|
|
|
▇▇▇▇
▇. ▇▇▇▇, Senior Vice President
|
The
parties signing below do so solely with respect to their respective obligations
under Section 10.19 and Section 10.20 of this Agreement.
|
FRONTIER
AIRLINES HOLDINGS, INC.
|
|
|
By
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
By
/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇, President
|
▇▇▇▇▇
▇▇▇▇▇▇▇, President
|
|
By
/s/
▇▇▇▇ ▇. ▇▇▇▇
|
|
|
▇▇▇▇
▇. ▇▇▇▇, Senior Vice President
|
Exhibits
Exhibit
A
- Definitions
Exhibit
B
- Covered
Aircraft & Inservice Schedule
Exhibit
C
- Aircraft
Specification, Interior Configuration, Livery and Use of Frontier
Marks
Exhibit
D
- Compensation
Exhibit
E
- Terms
of Codeshare Arrangements
Exhibit
F
- Use
of RAI Marks
Exhibit
G
- Reasonable
Operating Constraints
EXHIBIT
A
Definitions
Agreement
- means
the Airline Services Agreement, dated as of January 11, 2007, among Frontier
and
RAI, as amended from time to time pursuant to Section
10.04
hereof.
Base
Compensation
- is
defined in
Paragraph A.1 of Exhibit D.
Business
Day
- means
each Monday, Tuesday, Wednesday, Thursday and Friday unless such day shall
be a
day when financial institutions in New York, New York or Denver, Colorado are
authorized by law to close or the general offices of Frontier or RAI are closed
due to weather or other natural forces.
Cause
- means
(i) the suspension for three consecutive days or longer or the revocation of
RAI's authority to operate as a scheduled airline, (ii) the ceasing of RAI's
operations as a scheduled airline, other than as a result of a Labor Strike
or
the mandatory grounding of the Covered Aircraft by the FAA, and other than
any
temporary cessation for not more than 14 consecutive days, (iii) the occurrence
of a Labor Strike that shall have continued for 10 consecutive days or longer,
(iv) beginning after the month in which the 12th
aircraft
is placed in service, RAI operating at or below the Default Threshold for
Controllable arrivals within [* ]
minutes
or the Default Threshold for Controllable Completion Factor Percentage, each
as
described in Appendix
2
to
Exhibit
D,
for any
two consecutive calendar months, or (v) a willful or intentional material breach
of this Agreement by RAI that substantially deprives Frontier of the benefits
of
this Agreement, which breach shall have continued for 45 days after notice
thereof is delivered by Frontier to RAI.
Change
of Control
- means,
with respect to any Person, the merger of such Person with, or the acquisition
of direct or indirect control of such Person 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 such Holding
Company, unless (1) such Person is the acquiring or surviving entity in such
merger or acquisition, or (2) the ultimate beneficial ownership of the surviving
entity immediately following such transaction is substantially similar (i.e.,
at
least 80% common ownership) to the ultimate beneficial ownership of such Person
immediately prior to such transaction.
Charter
Flights
- means
any flight by a Covered Aircraft for charter operations at the direction of
Frontier that is not reflected in the Final Monthly Schedule.
Effective
Date
- is as
set forth in the preamble to this Agreement.
Frontier
- means
Frontier Airlines, Inc., a Colorado corporation, and its successors and
permitted assigns. Frontier
Marks
- is
defined in Exhibit
C.
Frontier
Holdings
- means
Frontier Airlines Holdings, Inc., a Delaware corporation.
Covered
Aircraft
- means
all of the aircraft listed on Exhibit
B
(as
amended from time to time pursuant to the provisions of this Agreement) and
presented for service by RAI, as adjusted from time to time for withdrawals
pursuant to Article
VIII
and for
extensions pursuant to Section
10.17
.
DOT
- means
the United States Department of Transportation.
Enplanement
- means
one passenger for such passenger's entire one-way flight itinerary, regardless
of how many Scheduled Flights or flight segments comprise such
itinerary. FAA
- means
the United States Federal Aviation Administration.
Final
Monthly Schedule -
means
the final schedule of Scheduled Flights for the next calendar month
delivered by Frontier to RAI pursuant to Section 2.01(b).
Labor
Strike
- means
a labor dispute, as such term is defined in 29 U.S.C.
Section 113(c) involving
RAI and some or all of its employees, which dispute results in a
union-authorized strike resulting in a work stoppage.
LLP
- is
defined in Section
10.18.
Denver
Maintenance Base
- is as
described in paragraph 3 of Exhibit
G
Person
- means
an individual, partnership, limited liability company, corporation, joint stock
company, trust, estate, joint venture, association or unincorporated
organization, or any other form of business or professional entity.
RAI
- means
Republic Airlines, Inc., an Indiana corporation, and its successors and
permitted assigns.
RAI
Holdings -
means
Republic Airways Holdings Inc., a Delaware corporation.
RAI
Marks
- is
defined in
Exhibit F.
Reasonable
Operating Constraints
- means
the operating constraints on Scheduled Flights set forth on Exhibit
G.
Reconciled
Expenses
- are
those Variable Cost elements subject to reconciliation as described in
Exhibit
D.
Regional
Airline Services
- means
the provisioning by RAI to Frontier of Scheduled Flights and related ferrying
using the Covered Aircraft or neutral spare aircraft in accordance with this
Agreement.
Scheduled
Flight
- means
a flight as determined by Frontier pursuant to Section 2.01(b)
(including all Charter Flights).
Spare
Aircraft
- means
any Aircraft designated as such by Frontier that will not be part of the
Scheduled Flights and is intended to be used in place of Aircraft that are
removed from Scheduled Flights due to mechanical issues or heavy check
requirements, and may be used to cover flights for RAI or other carriers;
provided
that,
“Spare
Aircraft”
shall
also mean a neutral spare aircraft operated by RAI for another carrier which,
as
a result of operational needs, is required on a temporary basis to Scheduled
Flights under the Agreement, all in accordance and subject to the limitations
set forth in Section
2.01(e)
of this
Agreement.
Subsidiary
- means,
as to any Person, (a) any corporation more than 50% of whose stock of any
class or classes having by the terms thereof ordinary voting power to elect
a
majority of the directors of such corporation (irrespective of whether or not
at
the time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned
by such Person directly or indirectly through Subsidiaries and (b) any
partnership, association, joint venture, limited liability company, joint stock
company or any other form of business or professional entity, in which such
Person directly or indirectly through Subsidiaries has more than 50% equity
interest at any time.
Term
- has
the meaning set forth in Section
8.01,
as
earlier terminated pursuant to
Section 8.02,
if
applicable, and any Wind-Down Period.
Termination
Date
- means
the date of early termination of this Agreement, as provided in a notice
delivered from one party to the others pursuant to Section 8.02,
or, if
no such early termination shall have occurred, the date of the end of the
Term.
TSA
- means
the United States Transportation Security Administration.
Wind-Down
Period
- means
the period after the Termination Date and until the time when the last Covered
Aircraft has been withdrawn from the capacity purchase provisions of this
Agreement.
Wind-Down
Schedule -
means
the schedule, determined as provided in
Article VIII
of this
Agreement, for Covered Aircraft to be withdrawn from the capacity purchase
provisions of this Agreement.
_______________
*
Confidential
EXHIBIT
B
Covered
Aircraft& In-Service Schedule
|
Number1
|
Aircraft
Type
|
Scheduled
In-Service Month
|
Scheduled
In-Service Week
|
Scheduled
In-Service Day
|
|
1.
|
EMB
170²
|
[* ]
|
[*]
|
[*]
|
|
2.
|
EMB
170²
|
[*]
|
[*]
|
[*]
|
|
3.
|
EMB
170²
|
[*]
|
[*]
|
[*]
|
|
4.
|
EMB
170²
|
[*]
|
[*]
|
[*]
|
|
5.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
6.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
7.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
8.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
9.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
10.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
11.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
12.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
13.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
14.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
15.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
16.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
|
17.
|
EMB
170
|
[*]
|
[*]
|
[*]
|
1
Frontier will designate which of the first twelve aircraft will be the spare
aircraft no later than delivery of the 12th
aircraft.
²
Aircraft initially delivered in two-class configuration and to be converted
to
single class Frontier specifications no later than June 30, 2007 in accordance
with the terms of the Agreement.
_______________
*
Confidential
EXHIBIT
C
Aircraft
Specification, Interior Configuration, Livery and Use of Frontier
Marks
|
1.
|
Aircraft
Specification.
The specifications of the Covered Aircraft will be as set forth in
Schedule
1
of
this Exhibit
C.
|
|
2.
|
Grant.
Frontier hereby grants to RAI, and RAI accepts, a non-exclusive,
personal,
non-transferable, royalty-free right and license to adopt and use
the
Frontier Marks in connection with the rendering by RAI of Regional
Airline
Services, subject to the conditions and restrictions set forth
herein.
|
|
3.
|
Ownership
of the Frontier Marks.
|
|
a.
Frontier shall at all times remain the owner of the Frontier Marks
and any
registrations thereof and RAI's use of any Frontier Marks shall clearly
identify Frontier as the owner of such marks (to the extent practical)
to
protect Frontier's interest therein. All use by RAI of the Frontier
Marks
shall inure to the benefit of Frontier. Nothing in this Agreement
shall
give RAI any right, title, or interest in the Frontier Marks other
than
right to use the Frontier Marks in accordance with the terms of this
Agreement.
|
|
▇.
▇▇▇ acknowledges that Frontier is the owner of the Frontier Marks
and
hereby agrees to take no action that would be contrary to Frontier’s
ownership of the Frontier Marks and agrees to cooperate with all
of
Frontier’s reasonable request to take any and all actions necessary to
protect and preserve Frontier’s ownership of the Frontier
Marks.
|
|
4.
|
Use
of the Frontier Marks.
|
|
▇.
▇▇▇ shall use the Frontier Marks only as authorized herein by Frontier
and
in accordance with such standards of quality as Frontier may
establish.
|
|
|
▇.
▇▇▇ shall use the Frontier Marks on all Covered Aircraft (other than
the
Spare Aircraft) and all facilities, equipment and printed materials
used
in connection with the Regional Airline
Services.
|
|
▇.
▇▇▇ shall not use the Frontier Marks for any purpose other than as
set
forth in this
Exhibit C,
and specifically shall have no right to use the Frontier Marks on
or in
any aircraft other than Covered Aircraft or in connection with any
other
operations of RAI.
|
|
|
d.
Frontier shall have exclusive control over the use and display of
the
Frontier Marks, and may change the Frontier Marks at any time and
from
time to time, in which case RAI shall as soon as practicable make
such
changes as are requested by Frontier to incorporate the new Frontier
Marks;
provided
that Frontier shall either pay directly the reasonable costs of making
such changes or shall promptly reimburse RAI for its reasonable expenses
incurred in making such changes.
|
|
|
e.
Nothing shall abridge Frontier's right to use and/or to license the
Frontier Marks, and Frontier reserves the right to the continued
use of
all the Frontier Marks, to license such other uses of the Frontier
Marks
and to enter into such agreements with other carriers providing for
arrangements similar to those with RAI as Frontier may desire. No
term or
provision of this Agreement shall be construed to preclude the use
of the
Frontier Marks by other persons or for similar or other uses not
covered
by this Agreement.
|
|
5.
|
Frontier-Controlled
Litigation.
Frontier at its sole expense shall take all steps that in its opinion
and
sole discretion are necessary and desirable to protect the Frontier
Marks
against any infringement or dilution. RAI agrees to cooperate fully
with
Frontier in the defense and protection of the Frontier Marks as reasonably
requested by Frontier. RAI shall report to Frontier any infringement
or
imitation of, or challenge to, the Frontier ▇▇▇▇, immediately upon
becoming aware of same. RAI shall not be entitled to bring, or compel
Frontier to bring, an action or other legal proceedings on account
of any
infringements, imitations, or challenges to any element of the Frontier
Marks without the written agreement of Frontier. Frontier shall not
be
liable for any loss, cost, damage or expense suffered or incurred
by RAI
because of the failure or inability to take or consent to the taking
of
any action on account of any such infringements, imitations or challenges
or because of the failure of any such action or proceeding. If Frontier
shall commence any action or legal proceeding on account of such
infringements, imitations or challenges, RAI agrees to provide all
reasonable assistance requested by Frontier in preparing for and
prosecuting the same.
|
|
6.
|
Revocation
of License.
Frontier shall have the right to cancel the license provided herein
in
whole or in part at any time and for any reason, in which event all
terminated rights to use the Frontier Marks provided RAI herein shall
revert to Frontier and the Frontier Marks shall not be used by RAI
in
connection with any operations of RAI. The following provisions shall
apply to the termination of the license provided herein: in the case
of a
termination of the license to use the Frontier Marks, RAI shall cease
all
use of the Frontier Marks with respect to each Covered Aircraft within
30
days of such aircraft being withdrawn from the capacity purchase
provisions of the Agreement, and shall cease all use of the Frontier
Marks
in all other respects within 30 days of last Covered Aircraft being
withdrawn from this Agreement. Within such specified period, RAI
shall
cease all use of such other Frontier Marks, and shall change its
facilities, equipment, uniforms and supplies to avoid any customer
confusion or the appearance that RAI is continuing to have an operating
relationship with Frontier, and RAI shall not thereafter make use
of any
word, words, term, design, name or ▇▇▇▇ confusingly similar to the
Frontier Marks or take actions that otherwise may infringe the Frontier
Marks.
|
|
7.
|
Assignment.
The non-exclusive license granted by Frontier to RAI is personal
to RAI
and may not be assigned, sub-licensed or transferred by RAI in any
manner
without the written consent of a duly authorized representative of
Frontier.
|
|
8.
|
Frontier
Marks.
The Frontier Marks are as set forth in Schedule
2
to
this Exhibit
C
and also include the Aircraft Livery, including, without limitation,
the
use of an animal image on the tail of the aircraft, the Frontier
flight
code and other trade names, trademarks, service marks, graphics,
logos,
employee uniform designs, distinctive color schemes and other
identification selected by Frontier in its sole discretion for the
Regional Airline Services to be provided by RAI, whether or not such
identification is copyrightable or otherwise protected or protectable
under federal law.
|
|
9.
|
Aircraft
Livery.
With the exception of the Spare Aircraft (which may be in neutral
livery),
the Covered Aircraft will be painted in accordance with the designs
shown
on Schedule
3
to
this Exhibit
C
at
RAI’s sole cost and expense.
|
|
10.
|
Survival.
The provisions of this
Exhibit C
shall survive the termination of this Agreement for a period of six
years.
|
Attachments
to Exhibit C
Schedule
1
-
Aircraft Specifications
Schedule
2
-
Frontier Marks
Schedule
3
-
Aircraft Livery
SCHEDULE
1 TO EXHIBIT C
Aircraft
Specifications
1. EMBRAER
170 CONFIGURATION
1.1. EMBRAER
170 Standard Aircraft
The
Aircraft EMBRAER 170 was manufactured in accordance with (i) the standard
configuration specified in the Preliminary Technical Description PTD-170 Rev.
4
dated May 2003 and (ii) the characteristics described in the items
below.
1.2. EMBRAER
170 Optional Equipment
The
Aircraft will also be fitted with the following options selected by
Buyer:
1.2.1.
Aircraft
Model and Engines
a.
▇▇▇▇▇▇▇ ▇▇▇
▇▇
▇.
▇▇ ▇▇▇▇-▇▇▇
Engine
1.2.2.
Options
By Ata Chapter
|
ATA
02
|
Ditching
Certification (FAA and ANAC) (1)
|
|
ATA
21
|
Fwd
Baggage Compartment Ventilation (live animals transportation)
|
|
ATA
23
|
3rd
Digital VHF (data)
|
|
ATA
23
|
CMU
(ACARS) (requires 3rd VHF digital)
|
|
ATA
25
|
Ultraleather
cover for passenger seats
|
|
ATA
25
|
Elite
Seats on Economy Class (38 double seats) (2)
|
|
ATA
25
|
Handicapped
lavatory with soft partition
|
|
ATA
31
|
QAR
(Quick Access Recorder) (Follow-on certification)
|
|
ATA
34
|
2nd
Radio Altimeter
|
|
ATA
34
|
Turbulence
Detection Mode on Weather Radar (model WU-880)
|
|
ATA
34
|
2nd
FMS / GPS
|
|
ATA
35
|
77
cubic feet Oxygen cylinder (std = 50 cubic feet)
|
|
ATA
35
|
3rd
oxygen masks for all RH seats
|
|
ATA
35
|
3rd
oxygen masks for all LH seats
|
|
ATA
44
|
Audio
Entertainment (CD Player)
|
|
ATA
45
|
Dataloader
Management Unit (CD/Floppy drive)
|
|
ATA
52
|
Door
sill doublers (scuff plates at passenger, cargo and service doors)
|
|
ATA
52
|
FAA
Cockpit Reinforced Door
|
|
(1)
|
Ditching Certification does not include any operational equipment required for Extended Overwater Operations, such as ELT, life rafts etc. Such equipment shall be acquired by Republic. |
|
(2)
|
Last row of seats do not recline. |
1.2.3.
EMBRAER
170 Interior Configuration (76 seats)
|
Class
|
#
of Seats
|
Pitch
|
|
Economy
|
4
(1 row)
|
30”
|
|
Economy
|
72
(18 rows)
|
31”
|
[Missing
Graphic Reference]
|
Galley
Inserts
|
G12HM*
|
G33FL*
|
|
Half
Size Trolley
|
2
|
6
|
|
Standard
Unit
|
1
|
4
|
|
Mini
Oven
|
---
|
---
|
|
Coffee
Maker
|
2
|
2
|
*
G12HM -
Forward Galley Insert
*
G33FL -
Rear Galley Insert
Additional
Comments:
| - |
Extended
wardrobe (PN171-43850-801)
to
accommodate 3 life rafts (PN
66536-103).
|
-
Embraer
will implement the new weight increase modification with improved operational
characteristics as described to Republic and Frontier.
SCHEDULE
2 TO EXHIBIT C
Frontier
Marks
[Missing
Graphic Reference]
[MissingGraphic
Reference]
SCHEDULE
3 TO EXHIBIT C
Frontier
E170 Livery
[Missing
Graphic Reference]
[Missing
Graphic Reference]
EXHIBIT
D
Compensation
Base
and Incentive Compensation.
|
1.
|
Base
Compensation.
Frontier will pay to RAI, in respect of the Covered Aircraft, the
rates
set for on Appendix 1 to this Exhibit D for each calendar month,
times,
the applicable Unit of Measure, times, in each case where the rate
category is indicated as being “Subject to Margin” on Appendix 1, a margin
of [* ]
(the “Margin”). Rates indicated as “Subject to Escalation on Appendix 1 to
this Exhibit D will be adjusted in accordance with Section 3.02 of
this
Agreement.
|
|
2.
|
Pre-▇▇▇▇
Invoiced Amount.
The Invoiced Amount calculated in accordance with Section 3.06 (a)
of the
Agreement will be calculated by using the data from the Final Monthly
Schedule and the Operational Assumptions for any given month as
follows:
|
a. the
Invoiced Amount for each of the Fixed Cost cost elements will be calculated
by
multiplying (i) the Rate, times (ii) the Unit of Measure (as set forth in the
Final Monthly Schedule and the Operational Assumptions for the month), times
(iii) the Margin, where “W/A A/C” is the weighted average number of Covered
Aircraft for the month and “Days” is the number of calendar days in the month.
The Rate for each Fixed Cost element will not change during the Term except
for
the annual adjustment pursuant to Section 3.02 of the Agreement for those
elements noted as “Subject to Escalation”; plus
b. the
Invoiced Amount for each of the Variable Cost elements will be calculated by
multiplying (i) the Rate, times (ii) the Unit of Measure (as set forth in the
Final Monthly Schedule and the Operational Assumptions for the month), times
(iii) the Margin, times (iv) (other than those determined by using the “W/A A/C”
Unit of Measure) the Completion Factor Target Threshold percentage as in effect
at the time of calculation, where “Blk Hrs” are the block hours estimated to be
flown by the Covered Aircraft for the month, “W/A A/C” is the weighted average
number of Covered Aircraft for the month, “Departures” is the number of
departures estimated to be made by the Covered Aircraft during the month, “Flt
Hrs” are the flight hours estimated to be flown by the Covered Aircraft for the
month, “Pax” is the number of passengers estimated to be transported by the
Covered Aircraft during the month, and “1000 RPMS” is the estimated revenue
passenger miles flown by the Covered Aircraft during the month divided by 1,000.
The Rate for each Variable Cost element will not change during the Term except
for (i) the annual adjustment pursuant to Section 3.02 of the Agreement for
those elements noted as “Subject to Escalation, and (ii) those elements noted as
subject to “Periodic Adjustment” will be adjusted based on the actual costs of
the related insurance premiums paid by RAI, taking into account any increases
or
reductions in those premiums due to end of the coverage year calculations based
on RAI’s operational statistics.
|
3.
|
Reconciled
Costs.
The Fixed Cost elements calculated by using the “W/A A/C” Unit of Measure,
and the Variable Cost elements will be reconciled pursuant to Section
3.06
(b) of the Agreement by calculating the difference between the Invoiced
Amount for such elements and the amount due for such elements based
on the
Rate for each Variable Cost element times the actual Unit of Measure
for
the month.
|
|
4.
|
Pass-Thru
Costs.
Frontier will reimburse RAI for each Pass-Thru Cost element in accordance
with Section 3.06 (c) of the Agreement. Pass-Thru Costs are actual
costs
incurred and are not subject to Margin, Escalation or Periodic
Adjustment.
|
|
5.
|
Incentive
Compensation.
With respect to each calendar month, incentive compensation shall
be
calculated as follows:
|
|
a.
|
On-Time
Bonus/Rebate.
The reconciliation for any calendar month shall include, as applicable,
a
bonus (represented by a payment by Frontier to RAI) or a rebate or
offset
(represented by a payment by RAI to Frontier), in each case in respect
of
on-time performance, as determined pursuant to
Appendix 2
to
this Exhibit
D
.
|
b. Completion
Factor Bonus/Rebate.
The
reconciliation for any calendar month shall include, as applicable, a bonus
(represented by a payment by Frontier to RAI) or a rebate or offset (represented
by a payment by RAI to Frontier), in each case in respect of RAI’s completion
factor for the month, as determined pursuant to
Appendix 2
to this
Exhibit
D.
| 6. | Frontier Expenses. With respect to Scheduled Flights, in consideration of the provision by RAI of Regional Airline Services and its compliance with the other terms and conditions of this Agreement, the following expenses shall be incurred directly Frontier, provided that, should RAI incur any such expenses, RAI will be reimbursed for such expenses in accordance with Section 3.06 (c) of the Agreement: |
(a) Covered
Aircraft fuel, including into plane charges, taxes and administrative
fees;
(b) Landing
fees;
(c) Passenger
catering;
(d) Travel
agency and OAL related CRS booking fees;
(e)
Revenue
taxes and PFCs;
(f) Credit
card processing fees;
(g) Deicing
services at all cities;
(h) All
customer inconvenience charges;
(i) TSA
fees
or charges and any other passenger security fees;
(j) NAV
Canada fees; and
(k) Any
future ATC or enroute navigation fees charged in the United States of America;
and
(l) Station
expenses;
(m) Staged
overnight hotel and per diem expense; and
(n) Rates
and
charges relating to the Denver Space Requirements as defined in Section
5.02(i) and
the
hangar space as described in
Section 5.02(j).
|
|
7.
|
No
Reconciliation for Fines, Etc. Notwithstanding
anything to the contrary contained in this
Exhibit D
or
the Agreement, Frontier shall not be required to incur any cost or
make
any reconciliation payment to RAI to the extent that such cost or
reconciliation payment is attributable to any costs, expenses or
losses
(including fines, penalties and any costs and expenses associated
with any
related investigation or defense) incurred by RAI as a result of
any
violation by RAI of any law, statute, judgment, decree, order, rule
or
regulation of any governmental or airport authority, provided
that,
Frontier shall be liable for all any costs, expenses or losses (including
fines, penalties and any costs and expenses associated with any related
investigation or defense) incurred by RAI as a result of any violation
by
Frontier or its agents of any law, statute, judgment, decree, order,
rule
or regulation of any governmental or airport
authority.
|
_______________
*
Confidential
Exhibit
D Appendices
Appendix
1 Base Compensation Rates
Appendix
2 Incentive Bonuses/Rebates
APPENDIX
1 TO EXHIBIT D
|
COST
|
SUBJECT
|
SUBJECT
|
UNIT
OF
|
PERIODIC
|
||||
|
ELEMENT
|
TO
MARGIN
|
TO
ESCALATION
|
MEASURE
|
RATE
|
ADJUSTMENT
|
|||
|
FIXED
COSTS:
|
||||||||
|
[* ]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
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|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
VARIABLE
COSTS:
|
||||||||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
PASS-THRU
COSTS:
|
||||||||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
|||
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
_______________
*
Confidential
Appendix
2 to Exhibit D
Incentive
Bonuses/Rebates
1. On
Time Bonus/Rebate:
The
bonus or rebate/offset, as the case may be, for on-time performance shall be
determined as follows:
Beginning
each month or partial month after the 12th
Covered
Aircraft is placed in service, the percentage of RAI’s Controllable arrivals
within [* ]
minutes
will be measured using ACARS data for each completed Scheduled Flight as soon
as
practicable following the end of each calendar month of operation. A flight
cancellation will not also be counted as a delayed flight. The Target Threshold
is for [*]of all Scheduled Flights to arrive within [*] minutes of scheduled
arrival. The Bonus Threshold is [*]. The Penalty Threshold is [*]and the Default
Threshold is [*]. Should RAI fall below the Penalty Threshold for Controllable
arrivals within [*] minutes, RAI shall pay Frontier a minimum penalty of [*]
plus and an additional [*] per full percentage point below the Penalty
Threshold. Should RAI’s Controllable arrivals within [*] minutes be between the
Penalty Threshold and the Bonus Threshold, there shall be no payment due to
or
from either party. In the event that RAI meets or exceeds the Bonus Threshold
for Controllable arrivals within [*] minutes, Frontier shall pay to RAI a
minimum bonus payment of [*] plus an additional [*] per full percentage point
above the Bonus Threshold.
2. Completion
Factor Bonus/Rebate:
The
bonus or rebate/offset, as the case may be, for completion factor shall be
determined as follows:
Beginning
each month or partial month after the 12th
Covered
Aircraft is place in service, the percentage of RAI’s Controllable Completion
Factor Percentage will be measured for each Scheduled Flight as soon as
practicable following the end of each calendar month of operation. The Target
Threshold is for [*] of all Scheduled Flights to be completed. The Bonus
Threshold is [*]. The Penalty Threshold is [*]and the Default Threshold is
[*].
Should RAI fall below the Penalty Threshold for Controllable Completion Factor
Percentage in any month, RAI shall pay Frontier, for each percentage point
(rounded to the next highest full percentage in all cases) below the Penalty
Threshold, a penalty of [*] for the first month, [*] for the second consecutive
month, [*] for the third consecutive month, and [*] for the fourth consecutive
month and each consecutive month thereafter that the Penalty Threshold is not
met. Should RAI’s Controllable Completion Factor Percentage be between the
Penalty Threshold and the Bonus Threshold in any month, there shall be no
payments due to or from either party. In the event RAI meets or exceeds the
Bonus Threshold for Controllable Completion Factor Percentage in any month,
Frontier will pay RAI a bonus of [*].
3.
Bonus/Penalty
Payment Terms and Definitions.
a. “Controllable”
means factors other than those that are beyond RAI’s direct control, including,
without limitation, weather, natural disasters, air traffic control, ground
stops, taxi and parking delays, lightening strikes or bird strikes, delays
caused by or requested by Frontier personnel, including aircraft ground
damage.
b. Frontier
will be responsible for coding all delays and cancellations. When aircraft
are
scheduled for heavy maintenance, Frontier will determine, in its sole
discretion, whether to reduce the flight schedule or use the spare aircraft
to
maintain schedule integrity. Should Frontier decide to use the spare aircraft
to
replace aircraft in scheduled heavy maintenance, incentive bonuses and rebates
will be suspended until such time that the spare is removed from scheduled
service to act once again as a spare or the out of service aircraft is returned
to service, either as a scheduled aircraft or a spare aircraft.
c. Any
final
settlement for bonuses or penalties will occur within 30 days after the end
of
each performance period. If any matters relating to the measurement or
calculation of any penalties remain in dispute at the end of the 30 day period,
Frontier will be entitled to set off the penalty amount it believes due against
the next monthly payment due RAI, and will refund any excess over the final
determined penalty within 5 business days’ of the parties reaching agreement on
the measurement and calculation. If any matters relating to the calculation
of
bonuses remain in dispute at the end of the initial 30 day period, at the time
final agreement is reached between the parties regarding the amount of bonus
due, Frontier will pay the bonus to RAI plus interest on the agreed amount
at an
annual rate of prime plus [* ]
for
each day from the initial date of calculation through the date of
payment.
_______________
*
Confidential
EXHIBIT
E
Terms
of Codeshare Arrangements
1. RAI's
use of F9 code.
During
the Term of the Agreement, Frontier shall place its designator code, “F9”, on
all Scheduled Flights operated by RAI. Frontier may suspend the display of
its
code on flights operated by RAI if RAI is in breach of any of its safety-related
obligations, or material breach of any of its operational obligations, under
the
Agreement during the period that such breach continues. All RAI operated flights
that display the F9 code are referred to herein as “F9 Flights”.
2. RAI's
display of F9 code.
(a) All
F9
Flights will be included in the schedule, availability and fare displays of
all
computerized reservations systems in which Frontier and RAI participate, the
Official Airline Guide (to the extent agreed upon) and Frontier's and RAI's
internal reservation systems, under the F9 code, to the extent possible.
Frontier and RAI will take the appropriate measures necessary to ensure the
display of the schedules of all F9 Flights in accordance with the preceding
sentence.
(b) Frontier
and RAI will disclose and identify the F9 Flights to the public as actually
being a flight of and operated by RAI, in at least the following
ways:
(i) a
symbol
or a flight number range will be used in timetables and computer reservation
systems indicating that F9 Flights are actually operated by RAI;
(ii) to
the
extent reasonable, messages on airport flight information displays will identify
RAI as the operator of flights shown as F9 Flights;
(iii) Frontier
and RAI advertising concerning F9 Flights and Frontier and RAI reservationists
will disclose RAI as the operator of each F9 Flight; and
(iv) in
any other manner prescribed by law or DOT regulation.
3. Terms
and Conditions of Carriage.
In all
cases the contract of carriage between a passenger and a carrier will be that
of
the carrier whose code is designated on the ticket. Frontier and RAI shall
each
cooperate with the other in the exchange of information necessary to conform
each carrier's contract of carriage to reflect service offered by the other
carrier.
4. Notification
of Irregular Operations.
RAI
shall promptly notify Frontier System Operations Control via both positive
phone
contact and email of all irregularities involving a F9 Flight which result
in
any material damage to persons or property as soon as such information is
available and shall furnish to Frontier as much detail as practicable. For
purposes of this section, notification shall be made as follows:
Frontier
Airlines System Operations Control (SOC)
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
SOC Shift Manager
Phone
no.
(▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Email:
▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
5. Code
Sharing License.
(a) Grant
of License.
Subject
to the terms and conditions of the Agreement, Frontier hereby grants to RAI
a
nonexclusive, nontransferable, revocable license to use the F9 designator code
on all of its flights operated as a F9 Flight.
(b) Control
of F9 Flights.
Subject
to the terms and conditions of the Agreement, RAI shall have sole responsibility
for and control over, and Frontier shall have no responsibility for, control
over or obligations or duties with respect to, each and every aspect of RAI's
operation of F9 Flights.
6. Display
of other Codes.
During
the Term of the Agreement, Frontier shall have the exclusive right to determine
which other airlines (“Alliance
Airlines”),
if
any, may place their two letter designator codes on flights operated by RAI
with
Covered Aircraft and to enter into agreements with such Alliance Airlines with
respect thereto.
RAI will
cooperate with Frontier and any Alliance Airlines in the formation of a code
share relationship between RAI and the Alliance Airlines and enter into
reasonably acceptable agreements and make the necessary governmental filings,
as
requested by Frontier, with respect thereto.
EXHIBIT
F
Use
of RAI Marks
1. Grant.
RAI
hereby grants to Frontier, and Frontier accepts, a non-exclusive, personal,
non-transferable, royalty-free right and license to adopt and use the RAI Marks
(as defined below) in connection with Frontier's entering into this Agreement,
subject to the conditions and restrictions set forth herein.
2. Ownership
of the RAI Marks.
▇. ▇▇▇
shall
at all times remain the owner of the RAI Marks and any registrations thereof
and
Frontier's use of any RAI Marks shall clearly identify RAI as the owner of
such
marks (to the extent practical) to protect RAI's interest therein. All use
by
Frontier of the RAI Marks shall inure to the benefit of RAI. Nothing in this
Agreement shall give Frontier any right, title, or interest in the RAI Marks
other than right to use the RAI Marks in accordance with the terms of this
Agreement
b. Frontier
acknowledges RAI's ownership of the RAI Marks and further acknowledges the
validity of the RAI Marks. Frontier agrees that it will not do anything that
in
any way infringes or abridges RAI's rights in the RAI Marks or directly or
indirectly challenges the validity of the RAI Marks.
3. Use
of
the RAI Marks.
a. Frontier
shall use the RAI Marks only as authorized herein by RAI and in accordance
with
such standards of quality as RAI may establish.
b. Frontier
shall use the RAI Marks as necessary or appropriate in Frontier's sole
discretion in connection with the Regional Airline Services, including without
limitation the sale or disposition by Frontier of the seat inventory of the
Scheduled Flights.
c. Frontier
shall not use the RAI Marks for any purpose other than as set forth in
this
Exhibit F,
and
specifically shall have no right to use the RAI Marks in connection with any
other operations of Frontier.
▇. ▇▇▇
may
change the RAI Marks at any time and from time to time (including by adding
or
deleting marks from the list specified in this Exhibit
F),
in
which case Frontier shall as soon as practicable make such changes as are
requested by RAI to utilize the new RAI Marks;
provided
that RAI
shall either pay directly the reasonable costs of making such changes to the
RAI
Marks or shall promptly reimburse Frontier for its reasonable expenses incurred
in making such changes.
e. Nothing
shall abridge RAI's right to use and/or to license the RAI Marks, and RAI
reserves the right to the continued use of all the RAI Marks, to license such
other uses of the RAI Marks and to enter into such agreements with other
carriers providing for arrangements similar to those with Frontier as RAI may
desire. No term or provision of this Agreement shall be construed to preclude
the use of the RAI Marks by other persons or for other similar uses not covered
by this Agreement.
4. RAI-Controlled
Litigation.
RAI at
its sole expense shall take all steps that in its opinion and sole discretion
are necessary and desirable to protect the RAI Marks against any infringement
or
dilution. Frontier agrees to cooperate fully with RAI in the defense and
protection of the RAI Marks as reasonably requested by RAI. Frontier shall
report to RAI any infringement or imitation of, or challenge to, the RAI Marks,
immediately upon becoming aware of same. Frontier shall not be entitled to
bring, or compel RAI to bring, an action or other legal proceedings on account
of any infringements, imitations, or challenges to any element of the RAI Marks
without the written agreement of RAI. RAI shall not be liable for any loss,
cost, damage or expense suffered or incurred by Frontier because of the failure
or inability to take or consent to the taking of any action on account of any
such infringements, imitations, challenges or because of the failure of any
such
action or proceeding. If RAI shall commence any action or legal proceeding
on
account of such infringements, imitations or challenges, Frontier agrees to
provide all reasonable assistance requested by RAI in preparing for and
prosecuting the same.
5. Revocation
of License.
RAI
shall have the right to cancel the license provided herein in whole or in part
at any time and for any reason, in which event all terminated rights to use
the
RAI Marks provided Frontier herein shall revert to RAI and the RAI Marks shall
not be used by Frontier in connection with any operations of Frontier. Frontier
shall cease all use of the RAI Marks in all respects upon the last Covered
Aircraft being withdrawn from this Agreement. Frontier shall not thereafter
make
use of any word, words, term, design, name or ▇▇▇▇ confusingly similar to the
RAI Marks or take actions that otherwise may infringe the RAI
Marks.
6. Assignment.
The
non-exclusive license granted by RAI to Frontier is personal to Frontier and
may
not be assigned, sub-licensed or transferred by Frontier in any manner without
the written consent of a duly authorized representative of RAI.
7. RAI
Marks.
The RAI
Marks are as follows:
[Need
Graphic Reference or other description of RAI Marks]
8. Survival.
The
provisions of this Exhibit
F
shall
survive the termination of this Agreement for a period of six
years.
EXHIBIT
G
Reasonable
Operating Constraints
The
schedules for the Covered Aircraft shall meet all of the following quarterly
average requirements:
1. Minimum
& Maximum Scheduling Parameters:
|
|
Minimum
|
Maximum
|
|
Scheduled
Block Hours per Aircraft per day
|
[* ]
|
[*]
|
|
Scheduled
Cycles per Aircraft per day
|
[*]
|
[*]
|
Note:
the
above minimum and maximum schedule parameters apply only to those Covered
Aircraft in scheduled service, not to the Spare Aircraft.
2. Aircraft
Maintenance and Crew Requirements.
Frontier
agrees to take into consideration RAI’s operational requirements for overnight
maintenance and crew productivity (including, where feasible, mid-day flights
into RAI crew base cities for crew exchanges) and legality.
(a)
Frontier shall use its best efforts to produce a Final Monthly Schedule in
cooperation with RAI that meets the following location and minimum (block to
block) hour requirements for overnight aircraft:
(i)
one-quarter (but in no event fewer than one) of the scheduled Covered Aircraft
will remain overnight at Denver International Airport for normal maintenance
(the “Required Denver ▇▇▇ Aircraft”);
(ii)
one-half (but in no event fewer than one and otherwise rounded down to the
nearest whole number) of the Required Denver ▇▇▇ Aircraft will be scheduled
to
provide 9 hours of available maintenance time;
(iii)
the
remaining Required Denver ▇▇▇ Aircraft will in no event have fewer than 7 hours
of available maintenance time;
(iv)
at
least one day per week, one of the Required Denver ▇▇▇ Aircraft will be
scheduled to provide at least 14 hours of available maintenance time (block
to
block)
(b)
On
the first Business Day of each calendar quarter, RAI will provide Frontier
a
listing of all scheduled heavy maintenance for the next twelve month period
for
all Covered Aircraft, and will use commercially reasonable best efforts to
complete all scheduled heavy maintenance on the Aircraft during the four
shoulder months of April, May, September and October.
3. Maintenance
Bases.
RAI
will
establish a crew base and a maintenance base for line and overnight aircraft
maintenance work at Denver International Airport. The Denver maintenance base
will be sufficient to perform intermediate maintenance checks, clear minimum
equipment list and configuration deviation list items, and perform general
maintenance, trouble shooting, and component removals and repairs. RAI will
also
advise Frontier of all other cities where RAI maintains line maintenance bases
upon execution of this Agreement and any overnight time requirements related
to
RAI’s line maintenance obligations.
4. Crew
Overnights.
The
schedule may allow for single overnights, multiple overnights, staged, and
continuous duty overnights of crews in outstations, provided, should Frontier
schedule continuous duty overnights or staged crews, incremental hotel and
per
diem costs related to such continuous duty overnights or staged crews will
be
billed by RAI to Frontier in arrears as a Pass Thru costs not subject to margin.
Frontier reserves the right to review RAI’s crew schedules to ensure efficient
and economic crew scheduling and agrees to negotiate economic settlement with
RAI for schedule changes that materially affect crew utilization or line
maintenance requirements.
5.
Charter
Flights.
Frontier
may schedule, price and sell Charter Flights using the Covered Aircraft,
provided RAI receives 60 days’ advance notice of the tentative dates and times
of such Charter Flights and the final dates are built into the Final Monthly
Schedule. Frontier may also request RAI to consider ad hoc Charter Flights.
Frontier agrees to compensate RAI for any additional operating costs of the
Charter Flights, including but not limited to aircraft ferry costs and
unproductive crew time, as such costs are provided to Frontier at the time
Frontier provides notice to RAI of the Charter Flights, or sufficiently in
advance of Frontier’s bid for the Charter Flight to allow such costs to be
passed through to the charterer.
_______________
*
Confidential