United Contract No. 152118
Restated United Express Agreement
among
United Air Lines, Inc.
Atlantic Coast Airlines
and
Atlantic Coast Airlines Holdings, Inc.
TABLE OF CONTENTS
ARTICLE TITLE PAGE
I. DEFINITIONS 2
II. SCOPE AND TERM 4
III.SUPPORT SERVICES AND FACILITIES 4
A. GENERAL 4
B. SPECIAL SUPPORT SERVICES 4
C. COMMUNICATIONS 6
D. RESERVATIONS 6
E. OPERATIONS 8
F. STATION SUPPORT SERVICES 9
G. TARIFFS AND SCHEDULE PUBLICATION 9
H. SALES SETTLEMENT 10
I. ADVERTISING AND PROMOTIONS 12
J. AUTOMATION 12
K. OTHER SUPPLIES 15
L. CONTRACTOR ASSISTANCE 16
IV. AIR SERVICES TO BE PROVIDED BY CONTRACTOR 16
A. SCHEDULES AND CHARTERS TO BE OPERATED BY
CONTRACTOR 16
B. AIRCRAFT TO BE USED 18
C. INVENTORY 19
D. FLIGHT CREWS TO BE USED 19
E. REGIONAL JETS 19
F. DULLES AIRPORT GATE FACILITIES 20
V. OPERATING RESTRICTIONS 20
A. UNITED EXPRESS OPERATIONS ONLY 20
B. NO OPERATION OUTSIDE AGREEMENT 21
C. SEVERABILITY AND REMEDY 21
VI. LICENSE 21
A. GRANT OF LICENSE 21
B. TERMS AND CONDITIONS GOVERNING LICENSE 22
C. INFRINGEMENT 23
VII.ADDITIONAL UNDERTAKINGS 24
A. BULK PURCHASES 24
B. UNIFORMS 24
C. PASSES AND REDUCED RATE TRAVEL 24
D. SIGNAGE 24
E. ENVIRONMENTAL 25
VIII. FEES PAYABLE TO CONTRACTOR 25
A. FEES 25
B. PAYMENT 27
C. AIRPORT CHARGES 27
IX. MAINTENANCE AND FUELING 27
X. U.S. MAIL 27
XI. INSURANCE 27
A. INSURANCE TYPES 27
B. 30-DAY NOTICE 28
C. ALTERATIONS 28
D. FAILURE TO MAINTAIN INSURANCE 29
XII.LIABILITY AND INDEMNIFICATION 29
A. EMPLOYER'S LIABILITY AND WORKERS' COMPENSATION 29
B. INDEMNIFICATION BY CONTRACTOR 29
D. CONTRACTOR'S SUPPLIES LIABILITY 30
E. INDEMNITY FOR INFORMATION 30
F. UNITED DEFINITIONS 30
XIII. REPORTS 31
A. CLOSE-OUT ENTRIES 31
B. BOARDING INFORMATION 31
C. OPERATING PERFORMANCE 31
D. INSPECTION 31
E. DAILY PASSENGERS 32
F. GOVERNMENT FILINGS 32
G. COPY OF GOVERNMENT REPORTS 32
XIV.INDEPENDENT CONTRACTORS AND WAIVER OF CONTROL 32
A. INDEPENDENT CONTRACTORS 32
B. EMPLOYEES 33
C. UNAUTHORIZED OBLIGATIONS 33
D. CONTRACTOR FLIGHTS 33
XV. DEFAULT AND TERMINATION 34
A. BANKRUPTCY 34
B. COVENANT DEFAULT 34
C. DEFAULT BY CONTRACTOR 34
D. SIMILAR AGREEMENTS 35
E. NON-COMPLIANCE WITH STANDARDS 35
F. CONSEQUENCES OF TERMINATION 35
G. UNITED'S LIQUIDATED DAMAGES 36
H. CALL OPTION 37
I. OPERATING PERFORMANCE STANDARDS 40
XVI. ASSIGNMENT, MERGER AND ACQUISITION 40
A. ASSIGNMENT 40
B. MERGER 40
C ACQUISITION 41
D. CERTAIN REORGANIZATIONS 42
E. APPLICABLE SECURITIES LAWS 42
XVII. CHANGE OF LAW 43
XVIII. TAXES, PERMITS AND LICENSES 43
A. TRANSACTION TAXES 43
B. PAYROLL TAXES 44
C. PERMITS AND LICENSES 44
XIX.REVIEW 44
XX. JURISDICTION 44
XXI.NOTICES 45
XXII.APPROVALS AND WAIVERS 45
XXIII. GOVERNING LAW 46
XXIV. CUMULATIVE REMEDIES 46
XXV. FORCE MAJEURE 46
XXVI. SEVERABILITY AND CONSTRUCTION 47
XXVII.ACKNOWLEDGMENT 47
XXVIII. CONFIDENTIALITY 47
XXIX. RELATED AND THIRD PARTY AGREEMENTS 48
XXX. ENTIRE AGREEMENT 48
XXXI. REFERENCES TO TIME PERIODS 49
APPENDIX A - UNITED'S MARKS 50
APPENDIX B - AIRPORT SERVICES 51
APPENDIX C - CONTRACTOR SUPPORT SERVICES 53
APPENDIX D - CITY PAIRS, AIRCRAFT TYPE, AND COST PER
DEPARTURE 54
APPENDIX E - INCENTIVE PROGRAM 55
APPENDIX F - LIABILITY INSURANCE 60
APPENDIX G - PARTICIPATION IN UNITED'S TRAVEL CERTIFICATE
PROGRAM 64
APPENDIX H - SAFETY STANDARDS FOR UNITED AIRLINES AND UNITED
EXPRESS CARRIERS 65
RESTATED UNITED EXPRESS AGREEMENT
This Agreement, dated as of November 22, 2000, [as amended
effective February 2, 2001,] is among UNITED AIR LINES,
INC., a Delaware corporation, with its worldwide
headquarters located at 1200 E. Algonquin Road, Elk Grove
Township, IL 60007 ("United"), ATLANTIC COAST AIRLINES, a
California corporation ("ACA"), and ATLANTIC COAST AIRLINES
HOLDINGS, INC., a Delaware corporation ("ACAH"), ACA and
ACAH both having their principal mailing addresses at 515
Shaw Road, Dulles, VA 20166 (ACA and ACAH are hereinafter
individually and collectively referred to as "Contractor").
WITNESSETH:
WHEREAS, United holds a certificate of public convenience
and necessity issued pursuant to the Federal Aviation Act of
1958 authorizing United to engage in air transportation of
persons, property and mail, and is a major airline providing
scheduled air service in both national and international
markets;
WHEREAS, ACA holds a certificate of public convenience and
necessity issued pursuant to the Federal Aviation Act of
1958 authorizing ACA to engage in air transportation of
persons and property and provides high frequency, short-haul
scheduled service in particular regions;
WHEREAS, ACAH is a holding company that owns all of the
voting stock in ACA;
WHEREAS, United owns various trademarks, service marks,
trade names, logos, emblems, uniform designs and distinctive
exterior and interior color decor and patterns for its
aircraft, including, but not limited to, the service mark
United Express (hereinafter referred to individually and
collectively as "United's Marks" or "Marks");
WHEREAS, United has entered into agreements with several
regional carriers to provide air transportation services
under the United Express mark for city pairs where it is
generally uneconomic for United to operate such services;
WHEREAS, United and Contractor are parties to a United
Express Agreement dated October 1, 1991, as amended and
renewed (the "1991 United Express Agreement"), and desire to
restate in full the terms of the 1991 United Express
Agreement pursuant to the terms hereof;
WHEREAS, in connection with entering into this Agreement,
the parties acknowledge it is their desire to restate and
expand their business relationship;
WHEREAS, United will provide Contractor, pursuant to the
terms of this Agreement, a non-exclusive license to use one
or more of United's Marks in connection with Contractor's
United Express Services.
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NOW, THEREFORE, in consideration of the foregoing premises,
mutual covenants and obligations hereinafter contained and
subject to securing any and all necessary corporate and
Federal, State and local regulatory approvals, and where
necessary, airport consents or approvals, the parties agree
as follows:
I. DEFINITIONS
A. "Apollo Services" means the computerized Apollo
Reservations and Ticketing Service (or any similar or
substitute service offered by or on behalf of United), which
performs flight, hotel, rental car and other travel related
services, reservations and ticket issuance functions.
B. "Contractor Location" means any airport terminal
facility where Contractor provides Contractor's United
Express Services pursuant to this Agreement and only
Contractor has employees stationed (including any terminal
facility where Contractor provides Contractor's United
Express Services pursuant to this Agreement that is
different from the terminal facility from which United
operates in the same airport).
C. "Contractor's United Express Services" means the
services or operations provided and maintained by Contractor
or its affiliates in connection with providing scheduled air
transportation service as a United Express Carrier and
related ground and other services to United and its
affiliates pursuant to the terms of this Agreement
(including, without limitation, the services required under
Article IV).
D. "Cost per Departure" shall have the meaning set
forth in Article VIII.
E. "Customer Service Policies and Procedures" means
the procedures prescribed by United from time to time
(including but not limited to United's "Series 65"
regulations and customer service resources contained in the
Apollo Services system) that describe United's approved
procedures for various activities relating to the provision
of air transportation services.
F. "Default" means, individually or collectively, a
Section A Default, a Section B Default, a Section C Default,
a Section D Default, and a Section E Default, each as
defined in Article XV.
G. "Designated Personnel" means all Contractor
employees in job classifications requiring direct public
contact who provide Contractor's United Express Services.
H. "Effective Date" shall have the meaning set forth
in Article II.
I. [Intentionally not used.]
J. "Environmental Laws" means all federal, state,
local and foreign laws and regulations relating to pollution
or the environment, including, without limitation, laws and
regulations relating to storage, release, disposal,
transport or handling of chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and
petroleum products.
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K. "Ground Handling Duties" means the provision of
one or more of the following: (1) lavatory service, (2)
overnight cabin cleaning, (3) loading and unloading of
baggage, mail and freight, (4) receipt and dispatch, and (5)
baggage delivery.
L. "Joint Location" means any airport terminal where
Contractor provides Contractor's United Express Services
pursuant to this Agreement and both United and Contractor
have employees stationed at such terminal facility.
M. "Marks" or "United Marks" shall have the meaning
set forth in the recitals of this Agreement.
N. "Related Agreements" shall have the meaning set
forth in Article XXIX.
O. "Revenue Passenger" means each passenger traveling
on Contractor in connection with Contractor's United Express
Services who holds a ticket (electronic or otherwise),
flight coupon, voucher or other form of document that (i)
entitles that passenger to board an aircraft and (ii) is
issued pursuant to or in connection with a published or
unpublished fare. Passengers traveling on a purchased
ticket (including ID50 airline industry reduced rate
tickets), wholesaler voucher, or voucher issued as denied
boarding compensation, shall be considered to be Revenue
Passengers. In addition, passengers traveling on a free
ticket as (or as part of) a Mileage Plus award or a free
ticket issued in conjunction with a two-for-one fare or
other similar fare established by United, shall be
considered to be Revenue Passengers. A passenger traveling
on any other type of free, or service charge-based, ticket,
including, but not limited to, a site inspection ticket, or
wholesaler compensation ticket, any travel agent or
wholesaler traveling on a positive space or space available
ticket, and each employee of United, Contractor or any other
carrier traveling on either a positive space or space
available ticket, shall not be considered a Revenue
Passengers. All Revenue Passengers shall be considered when
calculating any Monthly Incentive Payment.
P. "Support Services" means those activities set
forth in Article III which are related to the operation of
airline services except during flight.
Q. "Termination Date" shall have the meaning set
forth in Article II.
R. "United Express Carrier" means an air carrier
which has been contractually given a non-exclusive license
to use the mark United Express and one or more of United's
other Marks in connection with providing air transportation
service to United pursuant to an agreement between United
and such air carrier.
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S. "United Location" means any airport terminal
facility where Contractor and United both have operations
and only United has employees stationed in such terminal
facility.
T. "United's Actual Cost" means any and all cost or
costs to United, not including any markup by United or any
additional administrative service charge imposed by United.
II. SCOPE AND TERM
A. Scope. The scope of this Agreement
pertains to Contractor's operations between the city pairs
set forth on the Appendices hereto, and as they may be
amended in accordance herewith from time to time.
B. Term. This Agreement becomes effective at
12:01 a.m., Chicago, Illinois time, on December 1, 2000 (the
"Effective Date") and shall terminate on December 31, 2010
(the "Termination Date"), unless it is terminated at an
earlier date pursuant to one or more of the provisions of
this Agreement. The 1991 United Express Agreement and the
Expanded Partner Fare Revenue Sharing Agreement (United
Contract No. 110570) shall terminate effective for flights
operating as of the Effective Date. However, the provisions
thereof including, but not limited to, provisions for
payments to either party and any third party shall apply
with respect to all obligations arising thereunder prior to
the Effective Date.
C. Contingencies. This Agreement is contingent
upon approval by Contractor's Board of Directors, which must
be obtained no later than December 1, 2000.
III. SUPPORT SERVICES AND FACILITIES
A. GENERAL
1. Support Services. United and Contractor
will provide Support Services and facilities to the extent
and in the manner set forth in the subsequent provisions of
this Article III. All such Support Services and facilities
set forth in this Article III will be furnished only with
respect to Contractor's United Express Services.
2. Approval of Support Services. United
reserves the right to approve or disapprove the
implementation of any Support Services or facilities offered
to Contractor for Contractor's United Express Services by
any third party at any location. Such approval shall not be
unreasonably withheld.
B. SPECIAL SUPPORT SERVICES
In addition to other services to be made available to
or provided by Contractor pursuant to this Agreement, and as
summarized in and in accordance with Appendix B and C
(airport and support services), United or its designees will
provide and Contractor agrees to use the following services
and facilities for Contractor's United Express Services be
they provided by United or its designee:
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1. Use of the United Designator Code. All
scheduled air transportation provided by Contractor as a
part of Contractor's United Express Services will be
displayed in Apollo Services, the Official Airline Guide
("OAG") and all other computerized reservations systems,
using the appropriate United designator code, "UA" or "UA--
," and a flight number within a range of flight numbers
assigned by United.
2. Use of Apollo Services. In selling and
providing air transportation services, Contractor will only
use Apollo Services, including United's automated check-in,
United's ticketing (including United's electronic ticketing
service, E-TicketSM) and boarding passes, advance seat
reservation system, and United's automated baggage tag
printing and baggage tracing systems.
3. Participating in United's Mileage Plus
Program. At United's discretion, all passengers traveling
on a flight segment included in Contractor's United Express
Services, whether or not in conjunction with a United flight
segment, will be awarded mileage credits for United's
Mileage Plus Program. Contractor shall not participate in
the frequent traveler program of any other carrier in
connection with Contractor's United Express Services, unless
otherwise mutually agreed between United and Contractor in
any Mileage Plus Participation Related Agreement referenced
in Article XXIX or under another writing between the
parties.
4. Use of United Ticket Stock, Baggage Tags,
Ticket Wallets and City Timetables. In selling air
transportation of passengers and property, both on-line and
off-line, Contractor will use only United passenger ticket
stock, ticket wallets and baggage tags in connection with
Contractor's United Express Services. Unless otherwise
agreed, United will provide to Contractor all United
passenger ticket stock, city timetables, United airway
bills, United cargo bills and other shipping documentation
for all Contractor's United Express Services, but ticket
wallets and baggage tags for Joint Locations and United
Locations only; and provided that such quantities do not
exceed reasonable levels. Contractor shall reimburse United,
at United's Actual Cost, for all documentation requested by
Contractor in excess of reasonable levels. Ticket wallets,
baggage tags, and other passenger processing documents
approved by United will be acquired by Contractor for all
Contractor Locations through a supplier designated by
United. Contractor shall be required to convert to the use
of different ticket wallets, baggage tags and other
passenger processing documents upon 45 days' prior written
notice to Contractor by United.
5. Credit Card Sales and Rejects, and Bad
Checks. Contractor will use only credit-industry or
airline-industry standard credit card vouchers and receipts
in connection with credit card sales for tickets, cargo,
excess baggage or other services on Contractor's United
Express Services. United will absorb all credit card
discount fees and credit card reject fees for tickets and
vouchers written by United and Contractor for passage or
freight in connection with Contractor's United Express
Services; provided that Contractor complies with United's
credit card acceptance procedures outlined in United's
Customer Service Policies and Procedures, otherwise
Contractor will reimburse United for the expenses of such
discount fees and credit card rejects. Contractor will
absorb the risk of bad checks used as payment for tickets
and vouchers written by Contractor for passage or freight in
connection with Contractor's United Express Services.
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6. Denied Boarding. United will absorb all
denied boarding expenses incurred in the city pair markets
under this Agreement. Contractor will use its reasonable
efforts to provide appropriate information to United to
allow it to manage weight restriction limitations of
Contractor's aircraft.
7. Ticket and Baggage Handling Fees. All ticket
handling, baggage handling and other service charges and
fees assessed by carriers other than United relating to
Contractor's services (including, but not limited to,
Contractor's United Express Services) will be absorbed by
United.
8. Customer Service Training. On a
schedule, at a place, to an extent, for a number of persons,
and in a manner, determined by United, it will provide to
Contractor instructor training United deems sufficient to
permit Contractor's instructors to be able to provide and
train others to provide customer services for Contractor's
United Express Services.
9. Cooperative Advertising. United will work
with Contractor, within a budget and during periods
acceptable to United, to develop and implement advertising
efforts which support Contractor's United Express Services.
C. COMMUNICATIONS
1. Telephone and Data Lines. United will
provide and maintain or arrange for the provision of
reservations telephone lines connecting the city served by
Contractor in connection with Contractor's United Express
Services with United's Reservations Centers. United will
establish, operate and maintain or arrange for the provision
of the data circuits from Contractor's airport ticket
offices and other selected locations linking the United-
approved data processing equipment at those locations with
Apollo Services. United will determine, at its sole
discretion, the necessity and feasibility of installing all
such communications equipment.
2. Protection of Circuits. Contractor will take
all necessary precautions to protect the data circuits
provided for Contractor's use pursuant to this Agreement by
United or its designee.
D. RESERVATIONS
1. Reservations Functions. United agrees to
provide the following reservations functions for
Contractor's United Express Services:
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a. Answering reservations telephones,
providing information, schedules, fares, making bookings and
providing other services normally associated with airline
reservations services in accordance with United's
established procedures.
b. Providing personnel so that telephone
calls are answered at a service level determined by United.
c. Answering all calls terminating on
specified telephone lines as United or United Express, at
United's option.
d. To the extent practicable, re-
accommodate and notify passengers of confirmation on United,
Contractor and other airlines and clearance from wait-list.
e. Review and process inbound prepaid
ticket advices.
f. Provide reservations services to the
hearing impaired via a special telephone number during
normal business hours.
2. Apollo Services Activities. Contractor
agrees to use Apollo Services for the following activities
for Contractor's United Express Services, which are to be
provided by United:
a. Establishment, maintenance, display and
change of passenger name records (PNRs).
b. Confirmation of passenger against seat
inventory on Contractor's United Express Services and
United's scheduled flights and on other airlines where
flight availability is maintained in Apollo Services.
c. Maintenance of seat availability for
Contractor's United Express Services scheduled flights.
d. Transmission of availability status
messages (AVS) for Contractor's United Express Services
schedule flights to other airlines with which United has an
agreement in accordance with Standard Industry Passenger
Procedures (SIPP).
e. Process inbound reservations messages
received from ARINC addressed to Contractor.
f. Routing of all inbound messages received
from ARINC, other than as stated in Article III.D.2.e above,
to a computer message queue.
3. CRS Fees. Contractor will pay all
computerized reservation system fees for reservations made
on Contractor's United Express Service flights pursuant to a
separate agreement between Contractor and the company
operating and providing Apollo Services to its subscribers.
Further, Contractor will pay United for all fees charged to
United at United's Actual Cost, or charged to Contractor at
Contractor's Actual Cost, for bookings on Contractor that
are received from other airlines whose computerized
reservations systems are used by their subscribers.
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E. OPERATIONS
1. Scheduled Service Update. Contractor will
provide accurate updates of its flights' planned and actual
departure and arrival times (including updates of
irregularities) in Apollo Services as soon as the planned
flight schedule is changed and the flight departs and
arrives or suffers an irregularity. In the event of flight
delays, cancellations or other schedule irregularities
affecting Contractor's United Express Service flights, and
as soon as information concerning such irregularities is
available, Contractor shall update Apollo Services to
reflect such information and, when requested by United,
notify the designated United organization. For purposes of
this Agreement, such scheduled and actual departure and
arrival and irregularity information shall be known as
"FLIFO." If Contractor fails ---------- times in any
consecutive thirty (30) day period to update FLIFO in a
timely and accurate manner as soon as it becomes evident to
Contractor that a schedule deviation shall take place, then
upon notification by United to Contractor, Contractor shall
pay United damages of ----------($------) for each
occurrence over and above the first ----- occurrences. Such
damages may be collected by setoffs against other amounts
owed by United to Contractor hereunder.
2. No Flight Dispatch Duty. Contractor will be
solely responsible for, and United will have no obligations
or duties with respect to, the dispatch of Contractor's
flights. For the purposes of this Article III.E.2, the term
flight dispatch will include, but will not be limited to,
all planning of aircraft itineraries and routings, fueling
and flight release.
3. Compliance with Statutes. Contractor hereby
represents, warrants and covenants that all air
transportation services performed by it pursuant to this
Agreement or otherwise will be conducted in full compliance
with all applicable statutes, orders, rules and regulations,
whether now in effect or hereafter promulgated, of all
governmental agencies having jurisdiction over Contractor's
operations, including, but not limited to, the Federal
Aviation Administration ("FAA") and the Department of
Transportation ("DOT"). Contractor's compliance with such
governmental statutes, orders, rules and regulations will be
the sole and exclusive obligation of Contractor and United
will have no obligation, responsibility, or liability,
whether direct or indirect, with respect to such matters
except as otherwise expressly provided herein.
Additionally, Contractor will comply during the term of this
Agreement with the United/United Express Safety Standards,
as described on Appendix H.
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4. Certain Regulatory Compliance. The parties
acknowledge that Contractor is responsible for various
aspects of airport and aircraft security pursuant to certain
FAA regulations, and to other applicable regulations in
connection with the operation of United Express flights.
The parties further acknowledge that United will provide
airport and aircraft handling of Contractor's United Express
flights at United Locations in accordance with the terms of
this Agreement, including providing airport and aircraft
security functions. To facilitate operations contemplated
herein, United will comply with Contractor's security
requirements as contained in the FAA's Air Carrier Standard
Security Program ("ACSSP") for all United Locations at which
United performs ground handling services to Contractor
hereunder. -------- Contractor shall diligently defend any
allegations of violations of the above, and United will
cooperate with Contractor in investigating any such claim
and to reasonably assistant Contractor, if requested to do
so, in defending the matter.
5. Weather Information Service. From time to
time and upon the request of Contractor or its flight crews,
United may furnish Contractor's flight crews with such U.S.
Weather Bureau information or data as may be available to
United; provided, (i) that in furnishing any such weather
information or data to Contractor, neither United nor its
employees or agents will be responsible or liable for the
accuracy thereof and, (ii) that any and all such costs
associated with such weather information or data will be
paid by Contractor.
F. STATION SUPPORT SERVICES
United will provide or cause to be provided, at
its expense, to Contractor certain support services as set
forth on Appendix B, at the United Locations and Joint
Locations set forth in Appendix B; provided that United
shall have the right to add, delete or otherwise modify the
services described on Appendix B, if United provides
Contractor with thirty (30) days' prior written notice of
such modification. At Contractor Locations, Contractor will
provide or cause to be provided at least those services and
facilities set forth in Appendix C. All such station
support services will be provided as of the Effective Date
of this Agreement unless otherwise stated.
G. TARIFFS AND SCHEDULE PUBLICATION
1. General.
United shall have the sole right and power to
establish and modify, from time to time, the fare/rate
classes and fare/rate levels (including through fares) for
all Contractor's United Express Services in these markets in
a manner consistent with pricing (including joint fares)
established by United. United shall comply with applicable
governmental regulations pertaining to public disclosure of
fares, rates and rules tariffs and shall pay for any fines
or civil penalties incurred by Contractor as a result of
violations by United thereof, and for the cost of defense of
such claims of violations including the cost of defending or
negotiating the terms of a consent order or decree.
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2. Passenger Fare Tariffs.
a. All passenger fare tariffs published for
Contractors' United Express Services shall be included as
part of United's tariffs.
b. Contractor shall notify the Airline
Tariff Publishing Company ("ATPCO"), or any successor
company performing the same or equivalent services, that
United is authorized to supply, modify or withdraw such
rates with ATPCO. United may file changes to such fares from
time to time with ATPCO as UA fares.
3. Air Freight and Mail Rates.
For all markets operated by Contractor under
this Agreement, United shall have the sole right and power
to establish and modify from time to time all air freight
and cargo rates and mail rates covering mail, general
commodity, small package and priority air freight shipments
and all other air transportation services (other than mail
delivery) for Contractor's United Express Services in these
markets. All such airfreight rates for Contractor's United
Express Services shall be included as part of United's
airfreight and cargo rates tariffs. Contractor shall notify
ATPCO that United is authorized to supply, modify or
withdraw such rates with ATPCO.
4. Timetables.
United will reflect Contractor's United
Express Services in computerized reservations systems,
United's internal reservations system, and joint city
timetables as UA flights and connections to United will be
listed as UA connections. United will provide information
such that references in computerized reservations systems,
United's internal reservations system, and joint city
timetables to Contractor's United Express Services will also
contain notations indicating that such services are
performed by Contractor as an independent contractor under
the appropriate United Marks. A similar notation will be
made in the OAG or any successor publication commonly used
by the airline industry for the dissemination of schedule
information. Such notations shall comply with all
applicable regulations of DOT.
H. SALES SETTLEMENT
1. Payments to United. Contractor will wire
transfer from each Contractor bank account to United, an
amount equal to Contractor's Total Net Sales Receipts
collected at each Contractor Location ("Total Net Sales
Receipts"), Total Net Sales Receipts equals total gross
sales receipts for all passenger tickets, airway bills,
cargo bills, mail fees and other tickets issued by
Contractor for Contractor's United Express Services (less
refunds thereon paid out by Contractor, and excluding
industry reduced rate tickets written by Contractor on
Contractor's ticket stock) collected during the applicable
period for all tickets (including, air freight) sold or
exchanged by Contractor in connection with Contractor's
United Express Services. ----- The frequency of the wire
transfer will be once a week, on Tuesdays, for all Total Net
Sales Receipts collected during that week. Contractor's wire
transfer will be made by 11:00 a.m. local time to the
following bank account:
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----------
Reference: Atlantic Coast Airlines
Contractor will also require its employees and agents to
forward to United, on a daily basis, all auditors ticket
coupons, airway bills, cargo bills, all lift documentation,
reports, exchange orders and refund detail issued by
Contractor in connection with Contractor's United Express
Services, during the previous day in accordance with the
sales and reporting procedures specified by United.
2. Set Off Amounts. In addition to the terms
of Article VIII, and the other provisions hereof, but
subject to the terms of Article XII, the payment for
transportation furnished by Contractor shall be reduced in
order to set off:
(i) amounts owed by Contractor to United
for:
(a) actual loss of revenue resulting
from a failure on the part of Contractor to
properly effect a sale pursuant to United's
Customer Service Policies and Procedures
applicable to the sale of tickets;
(b) fraudulent, grossly negligent or
erroneous acts of employees of Contractor which
cause United to suffer a loss; and
(c) any ATPCO tariff filing fees
pursuant to Article III.G.
(ii) such other adjustments as may be
mutually agreed to by the parties from time to
time; and
(iii) any other amounts owed by
Contractor to United under this agreement
United will notify Contractor of all such adjustments
made and will provide Contractor with supporting
documentation for such adjustments. Contractor shall have
the right to object to any such adjustment by providing
United with written notice of its objection, together with
supporting documentation, within 30 days of the notice
provided by United describing such adjustments. United
agrees to negotiate, in good faith, with Contractor in order
to resolve all such disputes within 30 days of Contractor's
notice to United.
3. Modified Procedures. United and
Contractor by mutual written agreement may establish
alternative or modified passenger sales procedures in order
to accommodate tickets and exchange orders issued by air
carriers which are not participants in the Airline Clearing
House, Inc.
4. Audits. United may conduct on-site audits,
from time to time, of (i) tickets, air way bills, cargo
bills, exchange orders, refunds and other records relating
to sales and refund activity pertaining to Contractor's
United Express Services and (ii) all financial records
related to Contractor's United Express Services (including,
but not limited to, work papers of accountants) pertaining
to the calculation of the fees payable to Contractor related
to Contractor's United Express Services.
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I. ADVERTISING AND PROMOTIONS
1. Advertising Support. The parties will
promote each other's services throughout the term of this
Agreement through sales, advertising, and promotional
support to enhance the interline exchange of passengers
between the parties, consistent with all applicable laws and
regulations. The parties will confer periodically to
determine the nature and scale of such promotional efforts
and to reasonably allocate any costs associated therewith.
The terms governing participation in United's Travel
Certificate Program are set forth in Appendix G.
2. Right to Advertise Using Marks.
Additionally and to the extent Contractor is licensed to use
the Marks, Contractor may in its capacity as a United
Express Carrier and at its sole expense use the marks to
advertise Contractor's United Express Services. However,
any and all such advertisements using one or more of the
United Marks will identify United as the owner of said Marks
(including in any state company name registrations required
of Contractor), and to the extent that any Mark is
registered, will so specify. Notwithstanding the above, no
advertisement, solicitation, document or other material
using any United Mark will be published or otherwise
promulgated without United's prior inspection and approval.
No advertising that relates in any way to United, United
Express or Contractor's United Express Services will be
placed by Contractor with an outside advertising agency
unless United has given its prior consent regarding copy,
layout and the specific media plan. In addition, where
United has agreed to share the costs of any such
advertising, Contractor will obtain the prior consent of
United regarding the funds to be expended for such
advertising.
3. Prior Approval of United. Contractor
agrees that it will not use (or attempt to register) any
United trade name or service mark, including, but not
limited to, the names "UNITED AIR LINES, Inc.," "UNITED
AIRLINES," or "UNITED," or United's logo in any advertising,
or other document or material without first obtaining
United's prior approval of each such use.
J. AUTOMATION
1. Use and Protection. Contractor will use
internal United Apollo Services automation. Contractor
agrees to comply with and abide by all terms and
restrictions imposed by United on the use of Apollo Services
and associated Automation Equipment, as defined below.
Contractor agrees that all instructions, procedures and
manuals provided by United in connection with Contractor's
use of Apollo Services and Automation Equipment ("Automation
Information") are and will remain the property of United.
Contractor acknowledges that Apollo Services contains
software which is confidential and proprietary information
of United or its affiliates (such as Galileo International
LLC) or any successor thereto. Contractor further agrees
that it will not (nor will it permit) any such software and
Automation Information to be duplicated, copied or otherwise
reproduced or furnished or disclosed to any other party or
to Contractor's employees other than such employees who have
a need to know and who are aware of and understand the
confidential and proprietary nature of the software and
Automation Information.
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2. Installation and Training. United may
install or cause to be installed a minimum of one terminal
plus associated equipment for printing messages, data, air
tickets, boarding passes and baggage tags ("Automation
Equipment") at Contractor's airport locations and selected
administrative locations. United will determine, in the
exercise of its sole discretion and judgment, the necessity
and feasibility of installing and upgrading Automation
Equipment. Any and all modifications, enhancements,
improvements or developments pertaining to the Automation
Equipment, or other new related technology, may be made
available to Contractor by United, in its sole discretion,
under terms and conditions to be determined by United on a
case-by-case basis. United will train Contractor's
instructors, as applicable, in the proper use of Apollo
Services and Automation Equipment as described in the
Customer Service/Reservations Handbook or any other related
United guidelines. Contractor agrees to establish a training
program with internal instructors. Only qualified personnel
who have satisfactorily completed a United prescribed
training program will be permitted to operate any Automation
Equipment (hereinafter "Designated Users"). United may, at
its discretion, monitor or test the proficiency level of
Designated Users. If United determines that their
proficiency levels are insufficient for the proper use of
the Automated Equipment or Apollo Services, then Contractor
must arrange for its Designated Users to undertake any
further training which United determines necessary to bring
such Designated Users to the desired proficiency level.
3. Standards of Use.
(i) To maintain an effective interconnection
between Apollo Services and the Automation Equipment and to
prevent misuse thereof, Contractor agrees that Apollo
Services and the Automation Equipment will be used and
operated (a) in strict accordance with operating
instructions provided by United or its affiliates in the
Customer Services Policies and Procedures, Series 5-18, and
any other related United or affiliate guidelines, and (b)
solely for the performance of the specific business
functions designated by United. Any undesignated business
use and all non-business uses are strictly prohibited.
Prohibited uses include, but are not limited to, personal
messages, servicing subscribers, travel agencies, or any
other third party, training any other party or any other use
designated as prohibited in the Apollo Services Manual.
Contractor will maintain a list of all employees and agents
who have access to Apollo Services and their assigned file
number and passwords. United may at any time deny access to
Apollo Services to any employee of Contractor if such
employee is found by United to have abused Apollo Services
or the Automation Equipment. Contractor will take all
precautions necessary to prevent unauthorized operation or
use of Apollo Services and the Automation Equipment.
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(ii) Contractor will not alter or change the
Apollo Services display as provided by United or its
affiliate without the consent of United as reflected in an
amendment to this Agreement. Contractor may not provide
Apollo Services or its database to any other person or
entity without the consent of United as reflected in an
amendment to this Agreement.
(iii) Except as expressly permitted in this
Agreement or other written agreement with United, Contractor
will not (nor permit) Apollo Services (including, but not
limited to, its software, data bases, intellectual property,
and customer information) to be used (as a basis for any
software development or otherwise), commercially exploited,
copied, redistributed, retransmitted, published, sold,
rented, leased, marketed, sublicensed, pledged, assigned,
disposed of, encumbered, transferred, or otherwise altered,
modified or enhanced, without the express written permission
of United.
(iv) Contractor will not engage in any speculative
booking or reservation of space for any airline, hotel,
rental car company, or any other vendor's service or product
available through Apollo Services.
4. Maintenance, Repair and Modification.
(i) United will provide or cause to be provided
to Contractor repair and maintenance services required for
the Automation Equipment at United's expense. To maintain an
effective interconnection between the Automation Equipment
and Apollo Services and to preserve the functional integrity
of the Automation Equipment, neither contractor nor any
third party, other than a third party designated by United,
will attempt to perform or perform maintenance, repair work,
alterations or modifications, of any nature whatsoever, to
the Automation Equipment. Contractor agrees to maintain a
record of each occasion upon which repair or maintenance
service is provided, including service required outside of
normal business hours, and to make such records available to
United for inspection upon its request. Contractor will
provide free positive space travel on Contractor's flights
for United's Computer Terminal Technicians or replacements
("CTTS") when such travel is for the purpose of repairing
Apollo Services or any Automation Equipment.
(ii) Contractor will reimburse United for the
costs of any such repairs or maintenance attributable to
Contractor's gross negligence.
(iii) United or its designee will have the
right to enter upon any Contractor location during
Contractor's business hours for the purpose of monitoring
Contractor's operation of the Automation Equipment and
Apollo Services, inspecting the Automation Equipment,
performing such repairs or maintenance as may be necessary,
or removing the Automation Equipment; provided, however,
that United will not during the course of such monitoring,
inspection, repair, or removal unreasonably interfere with
Contractor's business.
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5. Downtime. United will notify Contractor of
any scheduled or pre-announced downtimes of Apollo Services.
6. No Warranty; Release.
a. UNITED MAKES NO WARRANTY, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE AUTOMATION EQUIPMENT OR
APOLLO SERVICES.
b. CONTRACTOR HEREBY WAIVES AND RELEASES
UNITED AND ITS AFFILIATES, AND THEIR SUCCESSORS FROM
ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES AND ALL
RIGHTS, CLAIMS AND REMEDIES OF CONTRACTOR AGAINST
UNITED OR ITS AFFILIATES, EXPRESS OR IMPLIED, ARISING
BY LAW OR OTHERWISE, DUE TO ANY DEFECTS, ERRORS
(INCLUDING, WITHOUT LIMITATION, ANY ERRORS IN
RESERVATIONS AVAILABILITY RECORDS), MALFUNCTIONS OR
INTERRUPTIONS OF SERVICE TO APOLLO SERVICES OR THE
AUTOMATION EQUIPMENT, INCLUDING ANY LIABILITY,
OBLIGATION, RIGHT, CLAIM, OR REMEDY IN TORT, AND
INCLUDING ANY LIABILITY, OBLIGATION, RIGHT, CLAIM OR
REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER
DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES.
7. Ownership and Liens. It is understood and
agreed that: (i) all Automation Equipment will remain the
sole property of United; (ii) Contractor will not remove any
identifying marks from any Automation Equipment; (iii)
Contractor will not subject the Automation Equipment to any
lien or encumbrance; and (iv) Contractor will return the
Automation Equipment to United immediately upon the
termination of this Agreement.
K. OTHER SUPPLIES
1. Contractor will pay United for United's
Actual Cost for all forms, documents, papers and
supplies which are required in the normal course of
Contractor's United Express Services under this
Agreement and which are furnished by United or its
designated vendors; provided, however, that United will
absorb the cost of:
a. Baggage tags and ticket wallets, at
Joint Locations and United Locations, and
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b. Passenger ticket stock, at Contractor
Locations, United Locations and Joint Locations.
2. Contractor will provide and only use its own
flight interruption manifests for the rerouting of
passengers resulting from denied boarding or the delay
or cancellation of Contractor's United Express
Services.
L. CONTRACTOR ASSISTANCE
Contractor will furnish United with all information as
United may require to carry out the services and functions
contemplated by this Article III.
IV. AIR SERVICES TO BE PROVIDED BY CONTRACTOR
A. SCHEDULES AND CHARTERS TO BE OPERATED BY
CONTRACTOR
1. City Pairs. Commencing on the
Effective Date of this Agreement, for all markets operated
by Contractor under this Agreement, Contractor will provide
Contractor's United Express Services between the city pairs
and aircraft set forth on Appendix D, as amended from time
to time, subject to rational utilization and flexibility as
mutually agreed and as necessary to optimize operational
efficiencies and revenue for the mutual benefit of the
parties. Schedules for all aircraft to be operated by
Contractor pursuant to this Agreement shall be established
by United in cooperation with Contractor, and United and
Contractor mutually agree to work with each other to fully
utilize said aircraft, consistent with aircraft scheduling
norms for peak and off-peak periods.
2. Code Share Limitation, Delta Airlines
Exception.
(i) Contractor will not operate scheduled
flights to or from IAD or ORD pursuant to a
marketing or code share relationship with any
carrier other than United, without the prior
written concurrence of United. ----------
Nothing herein will prohibit Contractor from
operating scheduled flights at any location
under its own airline code.
(ii) With the exception of (a) flights
operated by Contractor or its affiliates with
Delta Air Lines, Inc. or its successors
("Delta"), (b) code share flights with any
non-U.S. carrier which is a member of the
Delta SkyTeam alliance; (c) flights operated
solely under the "DH" and "DD" two letter
designator code or under the two-letter
designated code of any other affiliate of
Contractor; and (d) ----------, Contractor
agrees to list its flights only under
United's code during the term of this
Agreement. ----------
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3. United Schedule Consent Required. For all
markets operated by Contractor under this Agreement,
Contractor may operate its scheduled air service as a United
Express Carrier only with United's prior written consent,
which consent may be withdrawn at any time by United upon --
- -------- prior written notice to Contractor. United hereby
gives its consent for Contractor to operate as a United
Express Carrier in such markets that are set forth in
Appendix D. Such markets may be changed or withdrawn by
United from time to time subject to: (i) a minimum of -----
- ----- days prior written notice to Contractor; (ii)
compliance with any regulatory requirements with respect to
service to affected airports; (iii) United's providing
Contractor with suitable alternative and additional markets
with which to operate the affected aircraft so as to fully
utilize all aircraft to be operated by Contractor pursuant
to this Agreement. Contractor will ensure that any of its
requests for changes in the use by Contractor of the "UA" or
"UA-" code on future routes or in the flight frequencies or
city pairs, or any of them, as operated or served by
Contractor (whether necessitated by altered connections,
operating experience or other reason) must be submitted to
United:
(i) at least ---------- days prior to the effective date of
such change, for changes affecting United Locations or
involving new city pairs, or
(ii) at least ---------- days prior to the effective date of
such change, for changes other than those either affecting
United Locations or involving new city pairs; and
all such changes must be approved in advance by United. The
requests for such changes, and the approvals thereof, must
be made in writing, by mail, facsimile, telegram, telecopy,
or other electronic message transmittal. If upon review of
Contractor's request, the parties mutually agree to make a
Contractor requested change, and the automation equipment
needed to implement said change is available, then such
change will be made as soon as reasonably practicable within
the aforementioned ---------- day period. Within the
operating capability of the aircraft used by Contractor, as
described in Article IV.B, and subject to the provisions
with respect to changes in markets as provided above,
Contractor will comply with all requests by United to
increase, decrease or in any other way adjust or terminate
the flight frequencies or city pairs, or both, as operated
and served by Contractor pursuant to this Agreement.
4. Charter. United agrees that Contractor shall
be permitted to provide charter flights in any city-pair
market or markets with the same aircraft used in
Contractor's United Express Services, from time to time,
provided that Contractor is able to provide such charter
flight service without interrupting or otherwise adversely
affecting Contractor's United Express Services for scheduled
flights. Contractor shall provide at least ---------- days'
advance written notice to United of proposed charters, or
such lesser period as the charter opportunity becomes
available. Upon such notice, United shall have the
reasonable right to deny Contractor the right to operate the
charter within five business days of United's receipt of
such notice. Contractor shall be permitted to retain all
revenues from such charters. In the case of each such
charter, Contractor hereby represents and warrants that it
will not (and it will not permit others to) operate, promote
or otherwise market the charter under the United Express
name, the UA or UA- designator code or any other United
Marks or identification (only excepting the unavoidable use
of United Express liveried aircraft and permanent airport
signage).
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5. Changes Input to Reservations Systems.
Changes to Contractor's schedules as set forth in this
Article IV.A and which otherwise are in accordance with the
terms and conditions of this Agreement will be submitted by
Contractor for input into United's internal reservations
system and computerized reservations systems. At no time
may Contractor make any changes to flights operated by
United or any other carrier.
B. AIRCRAFT TO BE USED
1. Aircraft Types. Unless otherwise agreed
by United, Contractor will provide Contractor's United
Express Services described in this Article IV with the
aircraft described on Appendix D.
2. Technical Specifications.
a. The aircraft and any replacement
aircraft utilized by Contractor pursuant to this Article
IV.B will bear those United Marks which are expressly
designated by United, whether included on Appendix A or
otherwise established by United. Technical specifications
covering aircraft colors, schemes, United Marks and other
elements of exterior and interior aircraft decor will be
provided to Contractor by United. Contractor will have all
aircraft used to provide Contractor's United Express
Services painted and decorated with the exterior and
interior color decors and patterns specified by United, in
accordance with the technical specifications referenced in
this Article IV.B.2. Contractor will be responsible for
maintaining all of its aircraft.
b. In addition to the use of the United
Marks on its aircraft, Contractor will use and display a
suitable sign or insignia on the exterior of its aircraft
that identifies Contractor as the operator of the services
being provided pursuant to this Agreement. The use and
display of such sign or insignia will be subject to the
prior written approval of United as to its nature, size and
location on Contractor's aircraft.
3. Substitute Aircraft. In addition to the
aircraft referenced in Article IV.B.1 above, if requested by
United, Contractor will use reasonable efforts to arrange
for, and will make available for its use, such spare or
substitute aircraft as are required to effectively maintain
Contractor's United Express Services.
4. Frequency Change. Notwithstanding the
above, in the event Contractor is unable to operate a
particular scheduled frequency with an aircraft bearing
United Marks, Contractor will notify United of such event
and the circumstances of Contractor's inability to so
operate and Contractor will be permitted to operate an
aircraft bearing different elements of aircraft exterior
decor than those specified above. If such operations extend
beyond a continuous forty-eight (48) hour period, Contractor
must seek and obtain United's approval for such aircraft
substitutions; provided that if Contractor purchases or
leases a used aircraft which does not contain appropriate
United Marks, Contractor will notify United and Contractor
may operate such aircraft without United's Marks for up to
60 days after the date of purchase or lease of such aircraft
by Contractor.
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5. Mark Change. United may from time to time
change the Marks to be used for United Express Carriers. At
any time during the term of this Agreement, and in the sole
discretion of United, Contractor may be required to use such
new or different Marks, external or internal color decors
and patterns on its aircraft and uniform design as United
may determine and to discontinue use of old marks, external
and internal color decors and patterns, and uniform designs.
Upon written notice from United, which will include the
specifications for any such changes in Marks or exterior or
interior aircraft decor and patterns or uniform designs,
Contractor will effect such changes in accordance with the
schedule mutually agreed to by the parties. Contractor will
pay all costs it incurs in any painting of its aircraft or
making aircraft interior modifications as a result of a
change in United's specifications.
C. INVENTORY
United will have the sole right to set and control
seat inventory levels for the aircraft used by Contractor in
Contractor's United Express Services and will take all
revenue and inventory risk and will maintain inventory and
pricing responsibility.
D. FLIGHT CREWS TO BE USED
1. Flight Crew. All of Contractor's United
Express Services will be operated with crews consisting of a
captain or pilot, and a first officer or co-pilot. All such
crew members will at all times meet all currently applicable
governmental requirements, as such requirements may be
amended from time to time during the life of this Agreement,
and will be fully licensed and qualified for the services to
be performed hereunder. In addition, each and every one of
Contractor's captains will hold a current Airline Transport
Pilot Certificate. Crewmembers will also meet any and all
requirements imposed by the insurance policies that are to
be maintained pursuant to Article XI.
2. Flight Attendants. Contractor's flight
attendants will at all times possess all necessary training
and meet all currently applicable governmental requirements.
E. REGIONAL JETS
1. Contractor is authorized to operate up to 128 regional
jet aircraft, 50-seat capacity or less, as United Express
under the terms of this Agreement for delivery by December
31, 2003. The deployment of any regional jet aircraft
operated by Contractor, as United Express or operated with
United Express livery, must be approved by United on a city
pair basis. ----------
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2. In recognition of a similar right in the 1991 United
Express Agreement, as amended, between Contractor and
United, Contractor will be authorized to operate a minimum
of ----- of any fifty or fewer seat regional jet aircraft
within the United Express system above ----. Said
percentage will be based upon the total number of such
aircraft operating in the fleets of all United Express
carriers, in excess of the initial ---- fifty or fewer seat
regional jet aircraft, measured as of the end of each
calendar year; provided, however, in applying the foregoing
percentage to determine the number of aircraft allocable to
Contractor, fractional aircraft shall be disregarded. This
authorization terminates March 31, 2009.
3. Notwithstanding the above, if United consummates its
acquisition of US Airways, Contractor's right to operate a
minimum of ----- of any fifty or fewer seat regional jet
aircraft within the United Express system above ---- will be
capped at ---- regional jet aircraft and shall expire as of
December 31, 2005.
F. DULLES AIRPORT GATE FACILITIES
Subject to any applicable laws, regulations, or lease
terms, and to the extent that United is scheduling
Contractor's aircraft to fully utilize the Terminal A Gate
facilities and the Terminal T Gate facilities under the
control of Contractor at Washington-Dulles International
Airport ("IAD"), said facilities will be used by Contractor
only for United Express operations or operations under its
own code and livery and shall not be used for operations of
any other carrier (including, but not limited to, Contractor
operating under the code of another carrier). To the extent
that said facilities are not fully utilized, Contractor
shall have the right to sublease said facilities to another
carrier, provided Contractor offers United a right of first
refusal to sublease said facilities for United's use.
V. OPERATING RESTRICTIONS
A. UNITED EXPRESS OPERATIONS ONLY
Other than pursuant to this Agreement, Contractor shall
not, and it shall ensure that its affiliates do not, either
directly or indirectly, engage or attempt to engage, as
Contractor's United Express Services, on its or their own
behalf or on behalf of a third party in any air
transportation business or otherwise provide flight services
as Contractor's United Express Services.
21
B. NO OPERATION OUTSIDE AGREEMENT
Contractor will not use any of the services or
facilities afforded to Contractor by United or its
affiliates under this Agreement for air transportation or
related services provided by Contractor or its affiliates
outside the scope of this Agreement. Under no circumstances
will Contractor or its affiliates be permitted to operate
aircraft bearing United's Marks in city pairs other than
those specified by United pursuant to Article IV, without
the prior written consent of United other than charters
operated as provided in Article IV.A.4. hereof. Contractor
will not, without United's prior written consent, permit any
third party, whether under a lease arrangement or otherwise,
to operate any aircraft bearing United's Marks.
C. SEVERABILITY AND REMEDY
1. If the restrictions set forth in Article V.A
or V.B or any part thereof should, for any reason
whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the
remainder of such restrictions shall not thereby be
adversely affected. In the event that any time, scope or
territorial limitation is deemed to be unreasonable by a
court of competent jurisdiction, then Contractor agrees and
submits to the reduction of either said time, scope or
territorial limitation to such a time period, scope or area
as said court shall deem reasonable. In the event the
Contractor shall be in violation of the aforementioned
restrictive covenants, then the time limitation thereof
shall be extended for a period of time equal to the period
of time during which such breach or breaches should occur.
2. Contractor acknowledges that United has no
adequate remedy at law and would be irreparably harmed were
Contractor to breach or threaten to breach the provisions of
Article V.A or V.B hereof and, therefore, agrees that United
shall be entitled to injunctive relief to prevent any breach
or threatened breach of Article V.A or V.B hereof, and to
specific performance of the terms of Article V.A and V in
addition to any other legal or equitable remedy it may have.
Contractor also agrees that it shall not raise the defense
that United has an adequate remedy at law in any equity
proceeding involving it relating to Article V.A or V.B
hereof. Nothing in this Agreement shall be construed as
prohibiting United from pursuing any other remedies at law
or in equity that it may have or any other rights that it
may have under any other agreement.
VI. LICENSE
A. GRANT OF LICENSE
Contractor will conduct all operations described
in Article IV.A above, and any additional operations
undertaken by subsequent amendment hereto, under the Marks
set forth in Appendix A or other marks designated by United
pursuant to this Article VI.A and subject to Article IV.B.5.
In consideration for the services to be provided by
Contractor under this Agreement, United hereby grants to
Contractor, upon the terms and conditions herein contained,
a nonexclusive, nontransferable right and license to use
United's Marks, and Contractor hereby undertakes the
obligation to use the license, in connection with the
services to be rendered by Contractor under this Agreement;
provided, however, that at any time during the term of this
Agreement, United may alter, amend or revoke the license
hereby granted and require Contractor's use of any new or
different Marks in conjunction with the air transportation
services provided hereunder as United may determine in the
exercise of its sole discretion and judgment.
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B. TERMS AND CONDITIONS GOVERNING LICENSE
1. United's Marks. Contractor hereby
acknowledges United's ownership of United's Marks, further
acknowledges the validity of United's Marks, and agrees that
it will not do anything in any way to infringe or abridge
United's rights in its marks or directly or indirectly to
challenge the validity of United's Marks.
2. Standards of Service. Contractor agrees
that, in providing services under this Agreement in
conjunction with one or more of the United Marks, it will
comply with all service quality standards prescribed by
United ("Standards of Service"). Standards of Service
include, but are not limited to, United standards for (a)
minimum aircraft type, as set forth in Article IV, (b)
customer service, as set forth in United's Customer Service
Policies and Procedures, (c) minimum customer service
training requirements consistent with United's customer
service practices and procedures, (d) in-flight amenities
and service, (e) aircraft appearance, (f) Ground Handling
Duties, in accordance with Article VI.B.3, (g) United/United
Express safety programs (and Contractor will enter into any
agreements relating to such programs that are similar to
those offered to other United Express Carriers), and (h) any
other quality control measures designated by United, as such
standards may be prescribed by United from time to time. As
necessary, United will provide training to Contractor's
designated instructors in the requirements of United's
Customer Service Policies and Procedures; provided that
United will at its expense provide a trainer and materials,
and United agrees that the Standards of Service prescribed
by it will not be unreasonable in light of the facilities
and aircraft available to Contractor. United will have the
right, from time to time, to inspect Contractor's United
Express Services to determine if they conform to the
Standards of Service. In the event United determines that
Contractor is not in compliance with the Standards of
Service, United will notify Contractor and Contractor will
promptly rectify any such noncompliance. Failure on the
part of United to conduct such inspections will not relieve
Contractor of its obligations to conform to United's
Standards of Service. At United's discretion, material
noncompliance by Contractor with any part of the Standards
of Service following such notice and reasonable opportunity
to cure may result in, but not limited to, restriction or
loss of pleasure travel privileges, suspension of authority
to serve city pair markets, or any other nonexclusive remedy
or remedies deemed appropriate by United under the
particular circumstances.
3. Aircraft Ground Handling Procedures. In
addition, Contractor agrees that in providing Contractor's
United Express Services, it will conform to all of its
Aircraft Ground Handling Procedures. As used herein,
Aircraft Ground Handling Procedures include, but are not
limited to, procedures for (a) deicing, (b) handling and (c)
other aircraft servicing measures, as such procedures may be
prescribed by Contractor from time to time. Contractor
agrees that all Aircraft Ground Handling Procedures
prescribed by it will be established in compliance with all
applicable federal, state, local and industry regulations as
well as any additional procedures, which United may
prescribe from time to time. Contractor will obtain any and
all necessary federal, state, local and regulatory approvals
of such Aircraft Ground Handling Procedures. Once all
necessary approvals are obtained, Contractor will provide a
copy of its Aircraft Handling Procedures to United. At each
Joint Location and United Location, as necessary, Contractor
will train United employees in the requirements of
Contractor's Aircraft Handling Procedures; provided that
Contractor will provide a trainer and materials and United
will pay all other expenses incurred by its employees in
connection with such training.
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4. Liability for Operations. Nothing in this
Article VI.B is intended to nor will be construed so as to
relieve Contractor of any liability or to impose any
liability on United for Contractor's United Express Services
by virtue of any of United's rights under Articles VI.B.2 or
VI.B.3, whether exercised or not.
5. Non-Exclusivity. Nothing in this Agreement
is intended nor will be construed to give Contractor the
exclusive right to use United's Marks, or to abridge
United's right to use or to license its Marks, and United
hereby reserves the right to continue use of United's Marks
and to license such other uses of such Marks as United may
desire.
6. Reversion of Marks. Upon termination of
this Agreement for any reason, the right to use herein
granted for United's Marks will immediately revert back to
United, and Contractor will have no right to use such Marks
in any way. Further, Contractor will at its sole cost and
expense immediately upon termination of this Agreement
remove all United's Marks from its aircraft, its other
vehicles, the uniforms of its personnel, its facilities and
from any and all other places or things controlled or
formerly controlled by Contractor.
C. INFRINGEMENT
United will, at its expense, defend Contractor
against any claim that the use of any United Mark infringes
a registered trademark or service mark of any third party in
the United States, and will pay all costs, damages, and
attorneys' fees that a court finally awards as a result of
such claim. To qualify for such defense and payment
Contractor must (i) give United prompt written notice of any
such claim and (ii) allow United to control and fully
cooperate with United in the defense and all related
settlement negotiations. United's obligation hereunder is
conditioned on Contractor's agreement that if any Mark
becomes, or in United's opinion is likely to become, the
subject of such a claim, Contractor will permit United at
its option either to procure the right for Contractor to
continue using such Mark or to replace or modify such Mark
so that it becomes noninfringing. This Article VI.C states
United's entire obligation to Contractor regarding
infringement or the like.
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VII. ADDITIONAL UNDERTAKINGS
A. BULK PURCHASES
Each party may use its good faith efforts to
assist the other in obtaining goods and services useful to
the other party in the most economical manner, including,
without limitation, fuel, uniforms, supplies and ground
equipment. If the parties agree to participate in a bulk
purchase arrangement, the terms of any such bulk purchase
arrangement will be as set forth in a separate agreement
between the parties.
B. UNIFORMS
Contractor shall require all of its Designated
Personnel to wear uniforms which are in the United Express
colors and styles approved by United from time to time for
the uniforms of Contractor personnel performing Contractor's
United Express Services. Contractor agrees that all such
Designated Personnel employed by Contractor shall wear the
above-described uniforms. Any other employees of Contractor
who are visible to the public, other than Designated
Personnel, will wear uniforms as reviewed and approved by
United, which approval shall not be unreasonably withheld.
C. PASSES AND REDUCED RATE TRAVEL
Each party will comply with the terms of a
separate agreement (which has been entered into) between
them under which are granted to the employees of the other
party certain passes and reduced rate pleasure travel
privileges ---------- Contractor reserves the right to
offer positive space travel consistent with normal industry
practices. Contractor reserves the right to offer travel
privileges for its United Express flights for its employees
and eligible relatives, and to offer buddy passes to its
employees, on a fee or no fee basis, and to retain any fees
charged by Contractor for said services. ACA further
reserves the right to enter into interline agreements with
other carriers to provide free and reduced rate travel for
employees of Contractor and its affiliates, and to provide
reciprocal benefits for employees of such carriers on its
United Express flights on a space available basis.
D. SIGNAGE
As of the Effective Date, Contractor will display
signage advertising its operations as a United Express
Carrier in all Contractor Locations and in those Joint
Locations specified by United. All signage must be approved
by United prior to its use by Contractor, and Contractor
shall be responsible for the acquisition, installation and
maintenance of all such signage approved by United.
25
E. ENVIRONMENTAL
With respect to all matters which relate to or may
affect the environment, Contractor agrees to conduct its
operations (including its compliance with Environmental
Laws) in a prudent manner consistent with United's policies
and practices related to environmental matters including,
without limitation, taking reasonable preventive measures
consistent with such policies and practices to avoid
liabilities related to environmental matters.
VIII. FEES PAYABLE TO CONTRACTOR
A. FEES
1. For and in consideration of the passenger
bookings, transportation services, facilities and other
services to be provided by Contractor hereunder, the right
to control inventory and receive and retain all of the air
fares, cargo rates, mail charges and all other revenue
received by Contractor and United under this subsection and
other valuable consideration provided under this Agreement,
United shall pay Contractor a flat rate per departure ("Cost
per Departure") pursuant to Contractor's United Express
flights operated in the city-pair markets set forth on
Appendix D. Cost per Departure will be subject to the
following:
a. Contractor and United agree to review
the Cost per Departures set forth on Appendix D annually,
and after any event or occurrence (including but not limited
to new union agreements, requests by United to change
livery, and requests by United to close stations) that
either party reasonably deems to be likely to result in a
significant impact on any material provision of this
Agreement. Annual reviews shall take place prior to January
31 in each year, with the first such review to be conducted
in January 2001 for year 2001 departure fees. Each of the
parties agrees to act in good faith upon each such review to
modify the Cost per Departures used in the next 12-month
period (or for the remaining portion of such twelve month
period) to take into account changes in costs.
b. Contractor will include performance
incentive compensation for employees in its Cost per
Departure, but will reimburse United for profit sharing
expense paid as set forth on Paragraph 5 of Appendix E.
c. United and Contractor agree that Costs
per Departure will be based on assumed fuel cost of $-----
per gallon. Each month, Contractor and United will
reconcile actual fuel costs and United will pay Contractor
the difference between assumed fuel costs and actual fuel
costs if actual fuel cost is higher. Contractor will pay
United the difference between assumed fuel costs and actual
fuel cost if assumed fuel cost is higher.
d. Ownership cost for leased aircraft will
be based on actual cash rental payments made by Contractor.
Adjustments will be made for the cost of any additional
improvements to the aircraft made by the Contractor, which
shall be amortized over the life of the aircraft. Ownership
cost for owned aircraft will be based on: (i) depreciation
of the aircraft on a straight-line basis over the period
ending on the applicable date of, and to the amount
guaranteed by, any residual value guarantee held by
Contractor with respect to such aircraft, or to an estimate
of such amounts if no residual guarantee exists; and (ii)
interest expense based on the full value of the aircraft at
the mortgage debt rate.
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e. For newly delivered aircraft, other than
the Former ACAJet CRJs, aircraft rents or ownership costs
for the period between the delivery date and in-service date
will be reimbursed to Contractor by United as incurred. For
the first four newly delivered Former ACAJet CRJs, aircraft
rents or ownership costs will be reimbursed to Contractor by
United for the lesser in duration of the following: (i) the
period between the delivery date and in-service date, or
(ii) 15 days. United will be responsible for determining
the in-service date, and Contractor will cooperate with
United in minimizing the time between the delivery date and
in-service date, but Contractor will not be responsible for
delivery delays caused by the manufacturer.
f. Cost per Departures associated with
direct maintenance for CRJ and D328 aircraft will be based
on the projected average maintenance rate over a term of
16.5 years. Aircraft maintenance rate for J41 and J32
aircraft will be based on ----------.
g. United recognizes that Contractor will
incur transition costs related to changing its operations
under this Agreement. Any transition cost included in Costs
per Departure will be supported by Contractor and shall not
exceed a maximum of $----------.
h. Notwithstanding the provisions of
Article VIII.A.1.e., United will not reimburse any of the
costs associated with transitioning the Former ACAJet CRJs
to the United Express program beyond costs that would be
incurred had the aircraft originally been ordered for United
Express service. These costs include but are not limited to
aircraft painting, aircraft reconfiguration, penalty fees,
or ownership costs. Under no conditions will United provide
any reimbursement for any costs associated with painting or
reconfiguring aircraft that have previously been painted in
Delta Express livery.
2. United and Contractor have developed a
Monthly Incentive Payment that, with respect to Contractor's
operation as a United Express Carrier, is based upon (i) on-
time performance, (ii) completion rates, (iii) baggage
handling, and (iv) customer repurchase intent on all city
pairs under Appendix D, all as measured against pre-
determined and mutually agreeable goals. The incentive
program, unless otherwise agreed in writing, is reflected on
Appendix E, and United shall pay Contractor the Monthly
Incentive Payment calculated in accordance with Appendix E.
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B. PAYMENT
United will pay Contractor each week the
applicable Cost per Departure and a prorated amount,
assuming Level C performance, for the Monthly Incentive
Payment for all departures estimated to be operated during
the next week. Payment of said estimated amounts will be
made by United weekly in advance on each Tuesday, paid
through wire transfer to Contractor's bank, the account
information for which Contractor shall provide to United on
or before the Effective Date. Reconciliation will be within
ninety days after the end of each month based on actual
levels of performance, actual departures, actual fuel costs,
and actual passengers using ticket lift processed by
United's Revenue Accounting Department, and payment of any
adjustments due to reconciliation shall be made by an
adjustment to the applicable monthly payment for the next
month for transportation to be furnished by Contractor.
C. AIRPORT CHARGES
If there are any airport or other charges,
Contractor will either pay such charges directly (or
reimburse United, if already paid by United, for any such
charges relating to Contractor's operations).
IX. MAINTENANCE AND FUELING
United will have no responsibility for maintenance or
fueling of Contractor's aircraft.
X. U.S. MAIL
United and Contractor agree to cooperate in making bids
for mail carriage.
XI. INSURANCE
A. INSURANCE TYPES
During the term of this Agreement and any renewal
thereof, Contractor agrees to procure and maintain in full
force and effect, at its own expense, a policy or policies
of insurance with insurers of recognized reputation and
responsibility, which provides at a minimum the following
insurance:
1. Comprehensive Airline Liability Insurance,
including but not limited to Aircraft Liability, Passenger
Liability, Comprehensive General Liability Insurance, Cargo
Liability and Baggage Liability Insurance, with combined
single limits for each and every loss and each aircraft of
not less than U.S. $---------- combined single limit per
occurrence; provided, however, that non-passenger personal
injury coverage may be limited to $---------- per
occurrence. Any policies of insurance carried in accordance
with this Article XI.A.1 will also contain or be endorsed to
contain those provisions set forth in the attached Appendix
F;
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2. Aircraft Hull All Risks Insurance, including
ground and flight coverage on the Aircraft, including its
engines and all its parts when installed or temporarily
detached from the Aircraft on an agreed value basis, subject
to standard industry deductibles.
3. Insurance for the Automation Equipment and
communications equipment against all risk of loss or damage,
including, without limitation, the risks of fire, theft and
such other risks as are customarily insured in a standard
all-risk policy. Such insurance shall also provide the
following:
a. Full replacement value coverage for the
Automation Equipment provided under this Agreement;
b. Full replacement value coverage for the
communications equipment;
c. An endorsement naming United as a co-
insured and as a loss payee to the extent of its interest
in the Automation Equipment and the communications
equipment; and
d. An endorsement requiring the insurer to
give United at least 30 days' prior written notice of any
intended cancellation, non-renewal, material change in
coverage or any default in the payment of a premium.
B. 30-DAY NOTICE
On or before the Effective Date of this Agreement,
and not less than thirty (30) days before the expiration or
termination date of any insurance required to be maintained
by Contractor under Article XI.A above, Contractor will
furnish United with certificates of insurance evidencing
compliance with the foregoing requirements, unless otherwise
provided in writing between the parties.
C. ALTERATIONS
United has the right to make reasonable
alterations in the requirements set forth in this Article XI
above, in respect of the types and scope of coverage and
amounts of insurance, any such alteration being deemed
reasonable if readily available and if it becomes the custom
in the industry.
29
D. FAILURE TO MAINTAIN INSURANCE
In the event that Contractor fails to acquire or
maintain insurance as herein provided, United may at its
option secure such insurance on Contractor's behalf at
Contractor's expense.
XII. LIABILITY AND INDEMNIFICATION
A. EMPLOYER'S LIABILITY AND WORKERS' COMPENSATION
Each party hereto assumes full responsibility for
its employer's liability and Workers' Compensation liability
to its own officers, directors, employees or agents on
account of injury, or death resulting from or sustained in
the performance of their respective service under this
Agreement. Each party, with respect to its own employees,
accepts full and exclusive liability for the payment of
workers' compensation and employer's liability insurance
premiums with respect to such employees, and for the payment
of all taxes, contributions or other payments for
unemployment compensation or old age benefits, pensions or
annuities now or hereafter imposed upon employers by the
government of the United States or by any state or local
governmental body with respect to such employees measured by
the wages, salaries, compensation or other remuneration paid
to such employees, or otherwise, and each party further
agrees to make such payments and to make and file all
reports and returns, and to do everything to comply with the
laws imposing such taxes, contributions or other payments.
B. INDEMNIFICATION BY CONTRACTOR
Contractor hereby assumes liability for and agrees
to indemnify, release, defend, protect, save and hold
United, its officers, directors, agents, and employees
harmless from and against any and all liabilities, damages,
expenses, losses, claims, demands, suits, fines, or
judgments, including but not limited to attorneys' and
witnesses' fees, costs and expenses incident thereto, which
may be suffered by, accrue against, be charged to or be
recovered from United, its officers, directors, employees or
agents, by reason of any injuries to or deaths of persons,
except for injury or death of United employees, or the loss
of, damage to, or destruction of property, including the
loss of use thereof, arising out of, in connection with, or
in any way related to any act, error, omission, operation,
performance or failure of performance of Contractor or its
officers, directors, employees and agents, regardless of any
negligence either active, passive, or otherwise on the part
of United, its officers, directors, employees or agents (but
excluding the reckless and willful misconduct or gross
negligence of United, its officers, directors, employees or
agents) which is in any way related to the services of
Contractor contemplated by or provided pursuant to this
Agreement, or any other service, act, omission, operation,
performance, failure of performance or use, operation,
maintenance, storage or possession of any aircraft, whether
or not bearing United's exterior decor, colors, and logo,
and whether or not used in the performance of services
contemplated hereby or in connection with any other services
permitted by Article IV or otherwise. United will give
Contractor prompt and timely notice of any claim made or
suit instituted against United which in any way results in
indemnification hereunder, and Contractor will have the
right to compromise or participate in the defense of same to
the extent of its own interest.
30
C. ----------
D. CONTRACTOR'S SUPPLIES LIABILITY
Contractor hereby assumes liability for and agrees
to indemnify, release, defend, protect, save and hold
United, its officers, directors, agents, and employees from
and against any and all liabilities, damages, losses,
claims, demands, suits, fines or judgments, including but
not limited to attorneys' and witnesses' fees, costs and
expenses incident thereto, which may be suffered by, accrue
against, be charged to, or be recovered from United, its
officers, directors, employees, or agents by reason of any
losses or damages incurred on account of the loss,
misapplication, theft or forgery of passenger tickets,
exchange orders, or other supplies furnished by or on behalf
of United to Contractor, or the proceeds thereof, whether or
not such proceeds have been deposited in a bank and whether
or not such loss is occasioned by the insolvency or
bankruptcy of a bank in which Contractor may have deposited
such proceeds, other than a loss caused by a bank to which
funds have been transmitted at the express direction of
United. Contractor's responsibility hereunder for passenger
tickets, exchange orders, and other supplies will commence
immediately upon the delivery of said passenger tickets,
exchange orders, and other supplies into the possession of
Contractor or any duly authorized officer, agent or employee
of Contractor. United will furnish Contractor prompt and
timely notice of any claims made, or suits instituted
against United which in any way may result in the
indemnification hereunder, and Contractor will have the
right to compromise or participate in the defense of same to
the extent of its own interest.
E. INDEMNITY FOR INFORMATION
Contractor hereby assumes liability for and agrees
to release, defend, protect, save, indemnify and hold
United, its officers, directors, employees and agents
harmless from all liabilities, damages, losses, claims,
demands, suits, fines or judgments including but not limited
to attorneys' and witness' fees, costs and expenses incident
thereto, of Contractor and any third person, express or
implied, arising by law or otherwise, as a result of, or
related to, any errors in information provided by United
under this Agreement, regardless of any negligence of United
either active, passive or otherwise (but excluding the
willful misconduct or gross negligence of United).
Contractor's waiver and release to United in this Article
XII applies to any liability, obligation, right, claim, or
remedy in tort and including any liability, obligation,
right, claim, or remedy for loss of revenue or profit or any
other direct, indirect, incidental, special, or
consequential damages.
F. UNITED DEFINITIONS
As used in this Article XII for purposes of
identifying an indemnified party, all references to United
include United's parent company, and any subsidiary or
affiliate of United or its parent company, and their
respective employees, officers, directors and agents. For
purposes of this Article XII any passenger who connects in
any city from a flight on United or Contractor (the
"Carrying Party") within four (4) hours after the end of
such flight to a flight of the other party (the "Connecting
Party") become passengers of the Connecting Party when such
passenger enters the hold room or waiting area to which they
were deplaned in such city from the Carrying Party's flight
to such on-line city. A passenger of the Carrying Party who
does not have a connecting flight with the other party
hereto and prior to entering the hold room or waiting area
after deplaning from the Carrying Party's flight in the
Connection City is a passenger of the Carrying Party. For
purposes of this Article XII, neither loading bridges,
hallways, stairways, nor ramp areas will be considered part
of the hold room or waiting area.
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XIII. REPORTS
A. CLOSE-OUT ENTRIES
Upon departure of each Contractor flight from
Contractor Locations and Joint Locations, close-out entries
shall be made by Contractor in Apollo Services as required
by United and as specified in the Standards of Service. If
Contractor fails ----- times in any consecutive thirty (30)
day period to perform flight close-out, as outlined above,
where such occurrence is caused by or arising out of an act
or omission of Contractor, then upon notification by United
to contractor, Contractor shall pay United damages of ($---
- ----) for each occurrence over and above the first -----
occurrences.
B. BOARDING INFORMATION
Information reports containing data covering
boarding, and other information agreed to by the parties,
for Contractor's operations hereunder will be produced from
the close-out entries and provided by United to Contractor,
on a monthly basis 15 days after the month end.
C. OPERATING PERFORMANCE
Contractor will furnish to United within ten (10)
after the end of each month a detailed report of its
operating performance, which report will include information
on Contractor's performance during the preceding month for
each of the items designated by United, including, but not
limited to, Operating Performance Standards and aircraft
appearance.
D. INSPECTION
United may inspect Contractor's corporate records
and accounts related to Contractor's United Express
Services, from time to time, upon reasonable notice during
the life of this Agreement.
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E. DAILY PASSENGERS
Each day Contractor will furnish to United
(Attention: WHQNC) daily operating reports for the preceding
day which will include the number of Revenue Passengers
boarded; the number of scheduled flight departures; the
number and percentage (compared to schedule) of actual
flight departures; the reason for each flight cancellation;
number of flight departures on time within five minutes;
percentage of flight arrivals within fifteen minutes; and
the month-to-date numbers and percentages for each
measurement listed above.
F. GOVERNMENT FILINGS
Contractor will be responsible for filing all
reports relating to its operations with the DOT, FAA or any
state or airport authority, and Contractor will promptly
furnish United with copies of all such reports and such
other available traffic and operating reports as United may
request from time to time during the life of this Agreement.
To the extent only United is in possession of relevant
statistics used in such reports, United will provide such
available statistics to Contractor as necessary for
Contractor to complete these filings.
G. COPY OF GOVERNMENT REPORTS
Contractor will promptly furnish United with a
copy of every report that Contractor prepares, whether or
not such report is filed with the FAA, NTSB or any other
governmental agency, relating to any accident or incident
involving an aircraft used by Contractor in performing
services under this Agreement, whether or not such aircraft
bears any of United's Marks, when such accident or incident
is claimed to have resulted in the death or injury to any
person or the loss of, damage to or destruction of any
property.
XIV. INDEPENDENT CONTRACTORS AND WAIVER OF CONTROL
A. INDEPENDENT CONTRACTORS
The employees, agents, and independent contractors
of Contractor engaged in performing any of the services
Contractor is to perform pursuant to this Agreement are
employees, agents, and independent contractors of Contractor
for all purposes, and under no circumstances will be deemed
to be employees, agents or independent contractors of
United. In its performance under this Agreement, Contractor
will act, for all purposes, as an independent contractor and
not as an agent for United. Notwithstanding the fact that
Contractor has agreed to follow certain procedures,
instructions and Standards of Service of United pursuant to
this Agreement, United will have no supervisory power or
control over any employees, agents or independent
contractors engaged by Contractor in connection with its
performance hereunder, and all complaints or requested
changes in procedures made by United will, in all events, be
transmitted by United to Contractor's designated
representative. Nothing contained in this Agreement is
intended to limit or condition Contractor's control over its
operations or the conduct of its business as an air carrier,
and Contractor and its principals assume all risks of
financial losses which may result from the operation of the
air services to be provided by Contractor hereunder.
33
B. EMPLOYEES
The employees, agents, and independent contractors
of United engaged in performing any of the services United
is to perform pursuant to this Agreement are employees,
agents, and independent contractors of United for all
purposes, and under no circumstances will be deemed to be
employees, agents, or independent contractors of Contractor.
Contractor will have no supervision or control over any such
United employees, agents and independent contractors and any
complaint or requested change in procedure made by
Contractor will be transmitted by Contractor to United's
designated representative. In its performance under this
Agreement, United will act, for all purposes, as an
independent contractor and not as an agent for Contractor.
C. UNAUTHORIZED OBLIGATIONS
1. Nothing in this Agreement authorizes United
to make any contract, agreement, warranty, or representation
on Contractor's behalf, or to incur any debt or obligation
in Contractor's name ("Contractor Unauthorized Obligation");
and United hereby agrees to defend, indemnify, save, release
and hold Contractor, its officers, directors, employees and
agents harmless from any and all liabilities, claims,
judgments and obligations which arise as a result of or in
connection with, or by reason of any such Contractor
Unauthorized Obligation made by United, its officers,
directors, employees, agents or independent contractors in
the conduct of United's operations.
2. Nothing in this Agreement authorizes
Contractor to make any contract, agreement, warranty, or
representation on United's behalf, or to incur any debt or
obligation in United's name ("United Unauthorized
Obligation"); and Contractor hereby agrees to defend,
indemnify, save, release and hold United, its officers,
directors, employees and agents harmless from any and all
liabilities, claims, judgments and obligations which arises
as a result of or in connection with, or by reason of any
such United Unauthorized Obligation made by Contractor, its
officers, directors, employees, agents or independent
contractors in the conduct of Contractor's operations.
D. CONTRACTOR FLIGHTS
The fact that Contractor's operations are
conducted under United's Marks and listed under the UA
designator code will not affect their status as flights
operated by Contractor for purpose of this Agreement or any
other agreement between the parties, and Contractor and
United agree to advise all third parties, including
passengers, of this fact.
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XV. DEFAULT AND TERMINATION
A. BANKRUPTCY
If either party (the "Section A Defaulting Party")
becomes insolvent; if the other party has evidence that the
Section A Defaulting Party is not paying its bills when due
without just cause; if the Section A Defaulting Party takes
any step leading to its cessation as a going concern; makes
an assignment for the benefit of creditors or a similar
disposition of the assets of the business; or if the Section
A Defaulting Party either ceases or suspends operations for
reasons other than an Article XXV force majeure condition (a
"Section A Default"), then the other party (the "Insecure
Party") may immediately terminate this Agreement on notice
to the Section A Defaulting Party. If bankruptcy
proceedings are commenced with respect to the Section A
Defaulting Party and if this Agreement has not otherwise
terminated, then the Insecure Party may suspend all further
performance of this Agreement until the Section A Defaulting
Party assumes or rejects this Agreement pursuant to Section
365 of the Bankruptcy Code or any similar or successor
provision. Any such suspension of further performance by
the Insecure Party pending the Section A Defaulting Party's
assumption or rejection will not be a breach of this
Agreement and will not affect the Insecure Party's right to
pursue or enforce any of its rights under this Agreement or
otherwise. If a bankruptcy proceeding is commenced with
respect to Contractor, Contractor and United hereby agree
that Contractor's obligations under this Agreement must be
fully performed pursuant to the terms of this Agreement and
that in the event United provides written notice to
Contractor and/or its trustee in bankruptcy of United's
demand that this Agreement be terminated, Contractor and/or
trustee shall be obligated to reject such agreements
pursuant to Section 365 of the Bankruptcy Code within 30
days of such notice and release any and all rights
thereunder to United.
B. COVENANT DEFAULT
If either party (the "Section B Defaulting Party")
shall refuse, neglect, or fail to perform, observe, or keep
any material covenants, agreements, terms, or conditions
contained herein on its part to be performed, observed, and
kept and such refusal, neglect, or failure (individually and
collectively, a "Breach") shall continue for a period of
thirty (30) days after written notice to cure such breach to
the Section B Defaulting Party thereof (a "Section B
Default"), then the other party may upon thirty (30) days'
notice to the Section B Defaulting Party terminate this
Agreement. If a notice of breach is delivered and a notice
of termination is not delivered within forty-five (45) days
thereafter the other party shall be deemed to have waived
its right hereunder to terminate for the particular
occurrence of breach for which the Section B Defaulting
Party received notice.
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C. DEFAULT BY CONTRACTOR
If Contractor shall refuse, neglect or fail to
cure or perform any one of the following conditions, United
may give Contractor written notice to correct such condition
or cure such breach, and if any such condition or breach
shall continue for thirty (30) days, or, in the case of
Article XV.C.1 below, ninety (90) days after notice to
Contractor thereof (a "Section C Default"), then United may
terminate this Agreement upon fifteen (15) days' written
notice to Contractor if:
1. ----------; or
2. ----------; or
3. ----------; or
4. ----------).
- ----------
D. SIMILAR AGREEMENTS
United may immediately terminate this Agreement
(i) pursuant to the terms of Article V (Operating
Restrictions) if Contractor or any of its affiliates are in
breach of the terms of Article V or (ii) if Contractor or
any of its affiliates are in breach of the terms of Article
IV.A.2.(ii) (a "Section D Default").
E. NON-COMPLIANCE WITH STANDARDS
If Contractor shall refuse, neglect, or fail to
perform or observe the provisions of the Standards of
Service or Aircraft Ground Handling Procedures to be
performed, observed, and kept with regard to one or more
city pairs under this Agreement; and such refusal, neglect,
or failure shall continue for a period of sixty (60) days
after written notice to cure such default to Contractor
thereof (a "Section E Default"), then Contractor agrees,
within five business days following receipt of such notice,
to discuss with United such Section E Default and potential
ways to cure such Section E Default. If Contractor does not
cure any material Section E Default within the three
calendar months following such discussion, then United may
upon thirty (30) days' notice to Contractor terminate this
Agreement. If a notice of Section E Default is delivered and
a notice of termination is not delivered within forty-five
(45) days thereafter, United shall be deemed to have waived
its right hereunder to terminate for the particular
occurrence of breach for which Contractor received notice.
F. CONSEQUENCES OF TERMINATION
Any termination pursuant to one or more of the
provisions of this Agreement will be without additional
liability to the party initiating such termination and will
not be construed so as to relieve any party hereto of any
debts or obligations, monetary or otherwise, to the other
party that will have accrued hereunder prior to the
effective date of such termination. Subject to the
provisions of Article XV.G, either party will be entitled to
any and all damages recoverable and remedies under law or in
equity against the other for any material breach hereof. If
either party breaches any term of this Agreement and the
other party does not terminate this Agreement, the breaching
party will pay to the non-breaching party all damages or
other costs suffered by such party as a result of such
breach.
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G. UNITED'S LIQUIDATED DAMAGES
1. If Contractor wrongfully terminates this
Agreement or if United terminates this Agreement pursuant to
the terms of Article XV of this Agreement, including for
Contractor's breach, then Contractor will pay to United as
liquidated damages, and not as a penalty, the Daily United
Damages (in the case of Article XV.G.1.a, below), for each
day remaining during the period commencing with the date of
termination through the end of the term of this Agreement;
provided, however, if United secures another carrier to
replace Contractor:
a. in the city pairs served by Contractor
under this Agreement as a United Express Carrier at any of
the affected stations, or if United determines that United
could replace Contractor without increasing its damages in
these city pairs, then the liquidated damages will be
adjusted as follows:
(1) At such time as the average daily
Total Net Sales Receipts (as defined in Article III.H)
received by United from the replacement carrier or its own
operations with respect to the city pairs previously
included in Contractor's United Express Services for -----
consecutive days (the "Replacement Carrier's Average Daily
Receipts") is at least ----- of Contractor's Average Daily
Receipts, then from that day and thereafter, the Daily
United Lost Receipts will be reduced by ----------
(2) At such time as the Replacement
Carrier's Average Daily Receipts are at least ----- of
Contractor's Average Daily Receipts, then from that day and
thereafter the Daily United Lost Receipts Revenue will be
reduced to equal -----of the original Daily United Lost
Receipts; and
(3) At such time as the Replacement
Carrier's Average Daily Receipts are at least 100% of
Contractor's Average Daily Receipts, then from that day and
thereafter the Daily United Lost Receipts will be reduced to
Zero.
b. "Contractor's Average Daily Receipts"
means the average amount of the daily Total Net Sales
Receipts (as defined in Article III.H) from Contractor's
United Express Services per day over the twelve (12) month
period immediately preceding the date of termination or
Contractor's breach, whichever occurs earlier. The "Daily
United Lost Receipts" shall equal Contractor's Average Daily
Receipts. The amount of the "Daily United Damages" shall
equal the sum of (1) the Daily United Lost Receipts (as
adjusted), plus (2) the difference between the Replacement
Carrier's Average Daily Fees minus Contractor's Average
Daily Fees; provided that, if the sum of the amount in
clause (1) above plus the amount in clause (2) above is less
than zero, then the Daily United Damages shall be zero.
"Contractor's Average Daily Fees" means the average amount
of fees paid by United to Contractor pursuant to Article
III.H.2 under this Agreement per day over the twelve (12)
month period immediately preceding the date of termination
or Contractor's breach, whichever occurs earlier.
"Replacement Carrier's Average Daily Fees" means the total
average of the daily fees paid to another carrier, if any,
and expenses incurred by United to replace Contractor's
United Express Services for the Article IV.A.1 markets.
37
2. If this Agreement is terminated in a manner
such that United shall have the right to damages under this
Article XV.G, United shall, in good faith and in a
commercially reasonable manner, secure another carrier to
replace Contractor and take such other reasonable actions so
as to mitigate the damages owed to United hereunder.
3. The inclusion of this Article XV.G is not
intended to modify, waive or restrict Contractor's rights to
exercise any and all remedies available at law or in equity
for United's breach of this Agreement.
4. The provisions of this Article XV.G shall not
be applicable to a termination of this Agreement by United
pursuant to Article XV.C as a result of Contractor's failure
to meet Operating Performance Standards referenced in
Article XV.C.1; provided, that the exclusion of the
applicability of Article XV.G to Article XV.C.1 shall not be
deemed to be a waiver of any right which United may have for
remedies at law or in equity.
H. CALL OPTION
1. United will have the option to assume
Contractor's ownership or leasehold interest, as the case
may be, in certain aircraft as more fully described in
Article XV.H.2 (the "Call Option") in any one or more of the
following circumstances:
a. if Contractor wrongfully terminates this
Agreement, (in which event United will also be entitled to
Liquidated Damages as provided in Article XV.G):
b. if United terminates this agreement for Contractor's
breach of this agreement for any one or more of the
following reasons (in which event United will also be
entitled to Liquidated Damages as provided in Article XV.G):
- ----------
c. if Contractor's credit rating falls to a rating of ----
- -by Moody's and a rating of -----by Standard & Poors. Under
this circumstance only, United will also have the obligation
to lease or sublease such aircraft to Contractor for use by
Contractor only in the United Express program, ----------.
In no event shall Contractor be deprived of possession of
such aircraft, during the period the Call Option is
exercised and implemented pursuant to this Article XV.H.1.c.
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d. if Contractor removes any one or more aircraft from the
United Express program, without United's prior written
consent, United will have a Call Option on those aircraft.
2. The Call Option shall be governed and limited by
the following:
a. The Call Option shall apply to all (but
not less than all, subject to Article XV.H.1.d above)
regional jet aircraft operated by Contractor as United
Express pursuant to the terms of this Agreement at the time
of the event or events described in Article XV.H.1 above----
- --.
b. United shall deliver a notice of its
election to exercise the Call Option within ----- days
following the date of notice of termination of this
Agreement or the date of the event in Article XV.H.1.c or d
above.
c. Within fourteen days following its
receipt of a notice by United of its election to exercise
the Call Option, Contractor shall provide United with: (i)
copies of documentation relating to interests to be assumed
by United----------; (ii) lease rates and other financial
information relevant to the assignment; and (iii) the
identity of and contact information for all parties with an
interest in said aircraft.
d. ----------Contractor will require that
certain provisions be contained in all future mortgage,
financing, or lease contracts between Contractor and
regional jet creditors or lessors. These provisions will
(i) acknowledge United's right to call such regional jets as
provided in this Agreement and (ii) require that the
creditor or lessor agree to allow Contractor to assign
Contractor's mortgage or lease agreement to United (or, at
United's election, a United affiliate or United Express
Carrier subject to United providing any necessary credit
support acceptable to such creditor or lessor) and that it
will accept United or such designee as the party to such
agreement in lieu of Contractor. ----------
e. ----------As used herein, "senior creditor"
means any person with an interest in the aircraft that is a
lessor, any person lending funds to such lessor, any lender
providing funds to Contractor to acquire the aircraft, any
successor or assignee of any such person or their interest,
any person refinancing any such interest, and any person
holding a lien given priority under applicable law.
f. In the case of aircraft leased to Contractor
by parties not affiliated with Contractor, Contractor shall
be entitled to a full release by creditors and lessors of
Contractor and its affiliates from all further liabilities
and obligations under said documents other than obligations
relating to periods prior to the date of assignment to
United ----------United shall assume all obligations of
Contractor with respect to such lease documentation as of
the date of assignment and adjustments shall be made between
the parties for advance or arrears payment of rent. Such
adjustment shall be the difference between: (x) the cash
amount of rent actually paid under the lease during its
entire term as of the time of the assignment, and (y) the
total rent due during the entire term of the lease times the
percentage of the number of days since the beginning of the
lease to the total number of days in the entire term of the
lease. ----------
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g. In the case of aircraft owned by
Contractor or its affiliates, if United elects to exercise
its Call Option, the aircraft shall be sold to United or its
designee within ----- days following the date Contractor
provides notice to United of the aircraft related
information and delivery condition, and on the basis of the
value which ----------If the parties have not mutually
agreed what the ----- value of the aircraft is within 30
days, then the valuation shall be determined by an appraisal
mutually agreed to by two recognized independent aircraft
appraisers, one of whom shall be chosen by United, and one
by Contractor. If the two appraisers cannot agree on the
valuation within 30 days of being chosen, then each shall
render its own appraisal and shall by mutual consent choose
another appraiser within five days after the end of such 30-
day period. If, within such five-day period, such two
appraisers fail to appoint a third appraiser, then either
Contractor or United, on behalf of both, may apply to the
American Arbitration Association (or any successor
organization thereto) in Chicago, Illinois for the
appointment of a third appraiser. With the appointment of
the third appraiser by AAA or the parties agreement to a
mutually agreed third appraiser the parties shall submit the
matter of the value of the aircraft to binding arbitration
before such third appraiser (the "Arbitrator"), in
accordance with the commercial arbitration rules of the
American Arbitration Association (the "AAA"). The AAA shall
appoint the Arbitrator. The Arbitrator shall be authorized
to set such rules regarding hearings, briefing, discovery,
evidence, witnesses and other matters as the Arbitrator
deems to be necessary in order for Contractor and United to
conclude the arbitration proceeding and the Arbitrator to
render a decision (the "Decision") within 30 days after
Contractor's or United's submission to arbitration. The
Decision shall be in writing. As soon as the Arbitrator has
delivered his Decision and his appraisal, that appraisal
shall be compared with the appraisals given by the other two
appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than
each of the other two determinations, then the determination
of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no
determination is more disparate from the average of all
three determinations than each of the other determinations,
then such average shall be final and binding upon the
parties thereto. ----------
h. Aircraft shall be delivered to United in
"as is" condition, except that all aircraft will be
airworthy.
i. ----------
j. For each aircraft that United acquires
pursuant to the Call Option, United will purchase from the
Contractor and take delivery of a proportional share of
Contractor's spare engines, rotable and expendable spare
parts, and tools, owned by Contractor to support the
operation of the aircraft type. The aggregate proportional
share of Contractor's spare engines, spare parts and tools
shall be determined as the number of aircraft acquired by
United as a percentage of the Contractor's fleet, by
aircraft type. Spare parts, spare engines and tools will be
purchased by United at their fair market value in their as
is condition using the same valuation assumptions and the
same arbitration procedures as set forth in paragraph (g)
above.
40
I. OPERATING PERFORMANCE STANDARDS
1. As used in this Agreement, the term
"Operating Performance Standards" means those Operational
Performance Goals set forth in each of the Performance
Levels D set forth on Appendix E.
2. If at any time during the course of this
Agreement United changes any of its operating performance
standards for any reason, the parties will mutually agree to
modify the corresponding Contractor Operating Performance
Standards.
XVI. ASSIGNMENT, MERGER AND ACQUISITION
A. ASSIGNMENT
This Agreement may be terminated by either United
or Contractor (the "First Party") if there is an assignment
of this Agreement or of any of the rights, duties or
obligations of the other party (except an assignment of the
right to money to be received hereunder) without the prior
written consent of the First Party. In the event that this
Agreement is assigned, whether by operation of law, transfer
of the control of Contractor in violation of ARTICLE XVI or
any Related Agreement or otherwise, without such consent
having been given in writing, the first party will have the
right to terminate this Agreement immediately by telegraphic
or written notice to the other party.
B. MERGER
In the event Contractor merges with or is
controlled or acquired by another air carrier, or a
corporation owning or controlling or affiliated with or
owned or controlled by such an air carrier ("Holding
Company"), or a corporation owned, controlled or affiliated
with any such Holding Company, United will have the option
for ----- days after such merger, change in control or
acquisition event is consummated to terminate this Agreement
without liability to Contractor, except that all amounts due
and payable by Contractor to United or by United to
Contractor pursuant to this Agreement will survive such
termination. If any single entity or individual which
presently owns less than ----- of Contractor's or a Holding
Company's outstanding voting stock, or owns no stock at all,
acquires ----- or more of such outstanding voting stock or
if other unusual activity occurs concerning Contractor's
outstanding voting stock, Contractor will advise United
within ----- days of the date on which such entity or person
reaches or exceeds this ----- threshold.
41
C. ACQUISITION
1. For purposes of this Article XVI.C,
"Qualifying Transactions" means any (a) merger,
consolidation or reorganization of Contractor with another
company, (b) sale, transfer or lease by Contractor of the
assets of ACA or the aircraft utilized under or in
connection with this Agreement (other than in the ordinary
course of business), or (c) issuance or sale of stock in
Contractor representing ----- or more of Contractor's
outstanding stock (on a fully diluted basis after accounting
for such stock issuance or sale); provided, however, that
(i) a merger, consolidation or reorganization shall not be
considered a Qualifying Transaction if the company surviving
such transaction (the "Surviving Corporation") shall agree
to be bound by this Agreement, the stockholders of
Contractor immediately before such transaction own, directly
or indirectly, at least ----- of the combined voting power
of the Surviving Corporation immediately after such
transaction, and at least two of the Company's three senior
executives immediately before such transaction continue to
hold such positions immediately after such transaction and
(ii) the sale of Contractor's common stock in a registered
public offering shall not be deemed to be a Qualifying
Transaction, and (iii) the sale, transfer or lease by
Contractor of the assets of ACA or the aircraft utilized
under or in connection with this Agreement shall not be
considered a Qualifying Transaction if it relates solely to
such assets or aircraft that: (a) have become worn out or
obsolete or are no longer used and useful in Contractor's
day to day business; provided, however, that such sale or
disposition does not impair or negatively affect
Contractor's ability to complete scheduled service on a day
to day basis under this Agreement; or (b) are being replaced
with other assets of a similar type which are at least of
equal quality and utility to Contractor in carrying on its
day to day business and meeting its obligation under this
Agreement; or (c) are used exclusively in connection with
Contractor's Delta Connection operation.
2. Contractor agrees that if it determines to
initiate a Qualifying Transaction, other than in response to
an unsolicited offer from a third party, then, prior to
entering into discussions with a potential party to such
transaction, Contractor will notify United of its intention
(the "Notice"). If requested by United within five (5)
business days after the date of receipt of the Notice,
Contractor and United or United's designee will negotiate in
good faith to determine terms and conditions on which
Contractor and United or United's designee could complete
such Qualifying Transaction and Contractor will grant United
or its designee the right of first refusal regarding such
proposed Qualifying Transaction. If United or United's
designee and Contractor are unable to agree on terms and
conditions for the proposed Qualifying Transaction within
fifteen (15) business days after United's receipt of the
Notice, then Contractor may terminate such negotiations on
three (3) business days notice; provided, however, that any
resulting agreement with any such third party may not be on
terms more favorable to the third party than those offered
by United or its designee, as the case may be, and in the
case of a Qualifying Transaction described in Article
XVI.C.1.a. such agreement must explicitly require such third
party to fully assume this Agreement.
42
3. Contractor agrees that if Contractor receives
any offer by any third party to enter into an agreement for
the consummation of a Qualifying Transaction, Contractor
will notify United in writing of such offer prior to
pursuing negotiations regarding a Qualifying Transaction
with such third party. Contractor agrees that if, prior to
the termination of this Agreement, Contractor and any third
party enter into an agreement providing for the consummation
of a Qualifying Transaction, Contractor will give United
written notice of such third-party agreement, including as
part of such notice a copy of the third-party agreement.
Any such third-party agreement will provide that (a)
Contractor will not be obligated to effect such Qualifying
Transaction and such Qualifying Transaction will not be
consummated until a date thirty (30) days subsequent to the
receipt by United of written notice thereof and (b) it will
terminate if, during such thirty (30) day period, United or
its designee elects to enter into a Qualifying Transaction
upon substantially the same or equivalent terms as are
contained in such third-party agreement and (c) in the case
of a Qualifying Transaction described in Article XVI.C.1.a.,
such third party will explicitly assume this Agreement;
provided that if United or its designee is unable to match
such third-party agreement due to United's or its designee's
inability to provide the specific types of consideration
(e.g., stock, rights or assets) to be delivered by such
third party thereunder, Contractor agrees to negotiate in
good faith in order to determine, within such 30-day period,
an amount and type of consideration with an equivalent
economic value to Contractor or its affliates or
stockholders which could be paid or delivered to Contractor
or its affiliates or stockholders in lieu of such specific
consideration. Contractor agrees that any and all
information provided to any third party in connection with a
proposed Qualifying Transaction will be provided to United
and/or its designee concurrent with being provided notice of
such proposed Qualifying Transaction.
D. CERTAIN REORGANIZATIONS
Articles XVI.A and XVI.B shall not apply to any
merger, consolidation or reorganization as a result of which
the Surviving Corporation shall adopt or assume this
Agreement and the stockholders of Contractor immediately
before such transaction own, directly or indirectly, at
least ----- of the combined voting power of the Surviving
Corporation immediately after such transaction.
E. APPLICABLE SECURITIES LAWS
Nothing contained in this Article XVI or elsewhere
in this Agreement shall prohibit Contractor from (i) taking
and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange
Act of 1934, as amended, or (ii) making any disclosure to
Contractor's stockholders if, in the good faith judgment of
the Board of Directors of ACAH, after consultation with
outside counsel, the Board of Directors of ACAH determines
that disclosure would be required by applicable law.
43
XVII. CHANGE OF LAW
Notwithstanding anything herein to the contrary, in the
event there is any change in the statutes governing the
economic regulation of air transportation, or in the
applicable rules, regulations or orders or interpretation of
any such rule, regulation or order of the DOT or other
department of the government having jurisdiction over air
transportation, which change or changes materially affect
the rights or obligations of either party hereto under the
terms of this Agreement, then the parties hereto will
consult, no later than thirty (30) days after any of the
occurrences described herein, in order to determine what, if
any, changes to this Agreement are necessary or appropriate,
including but not limited to the early mutual termination of
this Agreement. If the parties hereto are unable to agree
whether any change or changes to this Agreement are
necessary and proper, or as to the terms of such changes, or
whether this Agreement should be terminated in light of the
occurrences described above, and such failure to reach
agreement will continue for a period of thirty (30) days
following the commencement of the consultations provided for
by this Article XVII, then this Agreement may be terminated
by either party immediately upon providing the other party
thirty (30) days' prior written notice of such termination.
Any such termination or mutual termination will be without
additional obligation or liability to both parties except
that such termination will not relieve either party of any
debt or obligation, monetary or otherwise, accruing
hereunder prior to the effective date of termination.
XVIII. TAXES, PERMITS AND LICENSES
A. TRANSACTION TAXES
Contractor agrees to pay on demand and to
indemnify and hold United harmless from any and all
penalties or interest arising out of any real and personal
property, sales and use, occupational, gross receipts, value
added, income, franchise and any other taxes, customs,
duties, excise taxes, fees, charges, or assessments, of any
nature whatsoever imposed by any federal, state, local or
foreign government or taxing authority upon Contractor or
United with respect to the performance of this Agreement, or
to Contractor's operations, or the equipment contained
therein or services provided thereby, or the revenues
derived therefrom (except for penalties or interests arising
out of any tax upon or measured by United's net income). If
a claim is made against United for any penalties or interest
referred to above, United will promptly notify Contractor
and request payment of such claim. If reasonably and in good
faith requested by Contractor in writing, United will upon
receipt of indemnity and evidence that Contractor has made
adequate provision for the payment of such penalties or
interest, satisfactory to United, contest the validity,
applicability or amount of such penalties or interest, taxes
and other charges at Contractor's expense. Contractor shall
pay United upon demand for all expenses incurred (including,
without limitation, all costs, expenses, losses, legal and
accountants' fees, penalties and interest) in making
payment, in protesting or seeking refund of such penalties
or interest.
44
B. PAYROLL TAXES
Contractor acknowledges that it is responsible for
and will pay to the appropriate authority, and will
indemnify and hold United harmless from, any and all federal
or state payroll taxes, FICA, unemployment tax, state
unemployment compensation contribution, disability benefit
payments, insurance costs, and any other assessments or
charges which relate directly or indirectly to the
employment by Contractor or Contractor's employees. United
acknowledges that it is responsible for and will pay to the
appropriate authority, and will indemnify and hold
Contractor harmless from, any and all federal or state
payroll taxes, FICA, unemployment tax, state unemployment
compensation contribution, disability benefit payments,
insurance costs, and any other assessments or charges which
relate directly or indirectly to the employment by United or
United's employees.
C. PERMITS AND LICENSES
Contractor will comply with all federal, state,
and local laws, rules and regulations, will timely obtain
and maintain any and all permits, certificates, or licenses
necessary for the full and proper conduct of its operations,
and will pay all fees assessed for airport use including but
not limited to landing fees, user airport fees, and prorated
airport facility fees. Contractor further agrees to comply
with all mandatory resolutions issued by the Air Transport
Association of America ("ATA") and all non-binding
recommended resolutions of the ATA which are adopted by
United.
XIX. REVIEW
During the term of this Agreement United may, at any
time at its discretion, require a joint review of
Contractor's aircraft and facilities to determine whether
Contractor's United Express Services are meeting the
requirements of this Agreement. This review is not intended
nor shall it be construed to relieve Contractor of its
responsibility to provide a quality and airworthy aircraft
that satisfies all FAA regulations. In addition, within
thirty (30) days after each calendar quarter United and
Contractor will meet to review Contractor's United Express
Services during the preceding calendar quarter.
XX. JURISDICTION
With respect to any lawsuit, action, proceeding or
claim relating to this Agreement or any other one or more
agreements between United and Contractor (hereinafter, any
such lawsuit, action, proceeding, or claim is collectively
referred to as a "Lawsuit"), each of the parties hereto
irrevocably (i) submits to the exclusive jurisdiction of the
courts of the State of Illinois and the United States
District Court located in the City of Chicago, Illinois, and
(ii) waives any objection which it may have at any time to
the laying of venue of any Lawsuit brought in any court,
waives any claim that any Lawsuit has been brought in any
inconvenient forum, and further waives the right to object,
with respect to any Lawsuit, that such court does not have
jurisdiction over such party. Nothing in this Agreement
precludes any party hereto from bringing Lawsuits in any
other jurisdiction in order to enforce any judgment obtained
in any Lawsuit referred to in the preceding sentence, nor
will the bringing of such enforcement Lawsuit in any one or
more jurisdictions preclude the bringing of any enforcement
Lawsuit in any other jurisdiction.
45
XXI. NOTICES
Any and all notices, approvals or demands required to
be given in writing by the parties hereto will be sufficient
if sent by certified mail, postage prepaid, overnight
delivery by a nationally recognized delivery company or hand
delivery, to United, addressed to:
United Air Lines, Inc.
1200 E. Algonquin Road
Elk Grove Township, Illinois 60007
Attn: - Director, United Express and
Interline Revenue
and to Contractor, prior to January 1, 2001, addressed to:
Atlantic Coast Airlines
515 Shaw Road
Dulles, VA 20166
Fax: 703-925-6294
and to Contractor, after January 1, 2001, addressed to:
Atlantic Coast Airlines
45200 Business Court Suite 100
Dulles, VA 20166
Fax: (703) 925-6294
or to such other addresses in the continental United States
as the parties may specify in writing. Notices may be sent
by facsimile to the above addresses and will be deemed
delivered two (2) hours after the time of their transmission
if confirmed in writing on the day of transmission by
certified mail, postage prepaid or overnight delivery.
XXII. APPROVALS AND WAIVERS
A. Whenever this Agreement requires the prior
approval or consent of United, Contractor will make a timely
request to United therefor and the consent will be obtained
in writing. United will also consider, in its sole
discretion, other reasonable requests individually submitted
in writing by Contractor for United's consent to a waiver of
any obligation imposed by this Agreement.
46
B. United assumes no liability or obligations to
Contractor by providing any waiver, approval, consent or
suggestion to Contractor in connection with this Agreement,
or by reason of any neglect, delay or denial of any request
therefor.
C. Except as otherwise provided for in this
Agreement, no failure by either party to execute any power
reserved to it by this Agreement, or to insist upon strict
compliance by the other party with any obligation or
condition hereunder, and no custom or practice of the
parties at variance with the terms hereof will constitute a
waiver of such party's right to demand exact compliance with
any of the terms herein. Waiver by such party of any
particular default by the other party will not affect or
impair such party's rights with respect to any subsequent
default of the same, similar or different nature, nor will
any delay, forbearance or omission of such party to exercise
any power or right arising out of any breach or default by
the other party of any of the terms or provisions hereof
will affect or impair such party's right to exercise the
same or constitute a waiver by such party of any right
hereunder or the right to declare any subsequent breach or
default and to terminate this Agreement prior to the
expiration of its term. Subsequent acceptance by such party
of any payments due to it hereunder will not be deemed to be
a waiver by such party of any preceding breach by the other
party of any terms, covenants or conditions of this
Agreement.
XXIII. GOVERNING LAW
This Agreement and any dispute arising thereunder,
including any action in tort, will be governed by and
construed and enforced in accordance with the internal laws
of the State of Illinois.
XXIV. CUMULATIVE REMEDIES
Unless and to the extent as may be otherwise expressly
stated in this Agreement, no right or remedy conferred upon
or reserved to Contractor or United by this Agreement is
intended to be, nor shall be deemed, exclusive of any other
right or remedy herein or by law or equity provided or
permitted, but each will be cumulative of every other right
or remedy.
XXV. FORCE MAJEURE
Except for any payments due hereunder, neither party
shall be liable for delays or failure in performance
hereunder caused by acts of God, acts of terrorism or
hostilities, war, strike, labor dispute, work stoppage,
fire, act of government, court order, or any other cause,
whether similar or dissimilar, beyond the control of that
party. United will not be relieved of its obligation to
make payments due to a strike, labor dispute, work stoppage,
or similar event affecting United's operations so long as
Contractor is performing United Express Services and flights
in accordance herewith.
47
XXVI. SEVERABILITY AND CONSTRUCTION
A. Each term or provision of this Agreement will be
considered severable; and if, for any reason, any such term
or provision herein is determined to be invalid and contrary
to, or in conflict with, any existing or future law or
regulation by a court or agency having valid jurisdiction,
such will not impair the operation of, or have any other
effect upon, other terms or provisions of this Agreement as
may remain otherwise enforceable, and the latter will
continue to be given full force and effect and bind the
parties hereto; and said invalid terms or provisions will be
deemed not to be a part of this Agreement.
B. The captions appearing in this Agreement have been
inserted for convenience only and will not control, define,
limit, enlarge or affect the meaning of this Agreement or
any of its provisions.
XXVII. ACKNOWLEDGMENT
A. Each party expressly disclaims the making of, and
acknowledges that it has not received, any warranty or
guarantee, express or implied, as to the potential volume,
profits or success of the business venture contemplated by
this Agreement.
B Each party acknowledges that it has received,
read and understood this Agreement, and any Supplements,
Exhibits and Appendices hereto.
XXVIII. CONFIDENTIALITY
A. Except as required by law or in any proceeding to
enforce the provisions of this Agreement, United and
Contractor hereby agree not to publicize or disclose to any
third party the terms or conditions of this Agreement or any
of the Related Agreements without the prior written consent
of the other parties thereto.
B. Except as required by law or in any proceeding to
enforce the provisions of this Agreement, United and
Contractor hereby agree not to disclose to any third party
any confidential information or data, both oral and written,
received from the other and designated as such by the other
without the prior written consent of the party providing
such confidential information or data.
C. If either party is served with a subpoena or other
process requiring the production or disclosure of any of the
agreements, information or data described in Articles
XXVIII.A or XXVIII.B, then the party receiving such subpoena
or other process, before complying with such subpoena or
other process, shall immediately notify the other party of
same and permit said other party a reasonable period of time
to intervene and contest disclosure or production.
D. Upon termination of this Agreement, each party
must return to the other any confidential information or
data received from the other and designated as such by the
party providing such confidential information or data which
is still in the recipient's possession or control.
48
XXIX. RELATED AND THIRD PARTY AGREEMENTS
A. United and Contractor have previously entered into
the agreements listed below (the "Related Agreements"),
which relate to the terms hereof and continue to have full
force and effect. To the extent that any of the Related
Agreements contain a termination date, all such Related
Agreements are hereby amended such that each of such Related
Agreements will continue in effect for a term equal to the
term of this Agreement; provided, however, that all such
Related Agreements automatically will terminate
contemporaneously with the termination of this Agreement.
The Related Agreements are as follows:
1. United Mileage Plus United Express
Participation Agreement (United Contract No. 110567).
2. Reciprocal Interline Agreement/Space
Available Employee and Eligible Travel Agreement (United
Contract No. 145807).
3. Emergency Response Services Agreement dated
June 23, 1995.
4. Joint Meeting and Domestic Group Travel
Program Authorization Agreement (United Contract No.
110585).
5. United Pass Plus United Express Participation
Agreement (United Contract No. 110568).
6. Standard Ground Handling Agreement (United
Contract No. 109930)
B. The agreements enumerated in this Article XXIX are
herein referred to as the "Related Agreements."
C. ---------- .
XXX. ENTIRE AGREEMENT
This Agreement, together with the Related Agreements,
including any Appendices (including Appendices A through H),
Attachments and Exhibits attached hereto and thereto,
contains the complete, final and exclusive agreement between
the parties hereto with respect to the subject matter
hereof, and supersedes all previous agreements and
understandings, oral and written, with respect to such
specific matter and said Agreement will not be modified,
amended or terminated by mutual agreement or in any manner
except by an instrument in writing, executed by the parties
hereto.
49
XXXI. REFERENCES TO TIME PERIODS
All references to the term "year" in this Agreement
shall mean contract year unless specifically stated
otherwise. All references to the term "month" in this
Agreement shall mean a full calendar month; provided that if
the Effective Date shall be other than the first day of a
calendar month, then the first "month" of this Agreement
shall commence on the Effective Date and end on the last day
of the month in which the Effective Date occurs. All
references to the term "quarter" in this Agreement shall
mean a calendar quarter. Calendar quarters shall be January
1 through March 31, April 1 through June 30, July 1 through
September 30, and October 1 through December 31; provided
that the first "quarter" of this Agreement shall commence on
the Effective Date and terminate on March 31, 2001.
IN WITNESS WHEREOF, the parties hereto have by their duly
authorized officers caused this Agreement to be entered into
and signed as of the day and year first above written.
ATLANTIC COAST AIRLINES UNITED AIR LINES, INC.
By: _________________________ By:_________________________
Name:Kerry Skeen Name:Rono Dutta
Title:Chairman & Chief Title: President
Executive Officer
ATLANTIC COAST AIRLINES UNITED AIR LINES, INC.
HOLDINGS, INC.
By: _________________________ By:_________________________
Name:Kerry Skeen Name:Christopher Rado
Title:Chairman & Chief Title:Director United Express &
Executive Officer Interline Revenue
50
APPENDIX A - United's Marks
UNITED EXPRESS
Stylized UNITED EXPRESS lettering
UNITED EXPRESS colors
Stylized letters UA
Uniform Design
Aircraft exterior and interior color decor
Other United Marks approved by United for use by Contractor
51
APPENDIX B - Airport Services
Airport Customer Customer Ground Receipt
Service/ Service Handling Dispatch
Ticket / Gates Ramp
Counter Duties
ALBANY, NY UA UA UA UA
ALLENTOWN/BETHLEHEM/ UA UA UA UA
EASTON, PA
BALTIMORE, MD UA UA UA UA
BINGHAMTON, NY Contractor Contractor Contractor Contractor
BUFFALO, NY UA UA UA UA
BURLINGTON, VT UA UA UA UA
CANTON/AKRON, OH Contractor Contractor Contractor Contractor
CHARLESTON, SC Contractor Contractor Contractor Contractor
CHARLESTON, WV Contractor Contractor Contractor Contractor
CHARLOTTESVILLE, VA Contractor Contractor Contractor Contractor
CHICAGO, IL - O'HARE UA Contractor Contractor Contractor
INT'L AIRPORT
CLEVELAND, OH UA UA UA UA
COLUMBIA, SC Contractor Contractor Contractor Contractor
COLUMBUS, OH UA UA UA UA
DAYTON, OH UA UA UA UA
DETROIT, MI - DETROIT UA UA UA UA
METROPOLITAN AIRPORT
FARGO, ND Contractor Contractor Contractor Contractor
GREENSBORO/HIGH UA UA UA UA
POINT/WINSTON-SALEM, NC
GREENVILLE/SPARTENBURG, Contractor Contractor Contractor Contractor
SC
HARRISBURG, PA UA UA UA UA
HARRISONBURG/STAUNTON/ Contractor Contractor Contractor Contractor
WAYNESBORO,VA -
SHENANDOAH VALLEY
REGIONAL AIRPORT
INDIANAPOLIS, IN UA UA UA UA
JACKSONVILLE, FL UA UA UA UA
KNOXVILLE, TN UA UA UA UA
LOUISVILLE, KY Third Third Third Third
party party party party
LYNCHBURG, VA Contractor Contractor Contractor Contractor
MOBILE, AL Contractor Contractor Contractor Contractor
NASHVILLE, TN UA UA UA UA
52
NEW YORK, NY - JOHN F. UA UA Contractor Contractor
KENNEDY INT'L AIRPORT
NEW YORK, NY - LAGUARDIA UA UA UA UA
INT'L AIRPORT
NEWARK, NJ UA Contractor Contractor Contractor
NEWBURGH, NY - STEWART Contractor Contractor Contractor Contractor
INT'L AIRPORT
NEWPORT Contractor Contractor Contractor Contractor
NEWS/WILLIAMSBURG, VA
NORFOLK/VIRGINIA BEACH, UA UA UA UA
VA
PEORIA, IL Third Third Third Third
party party party party
PHILADELPHIA, PA UA UA UA UA
PITTSBURGH, PA UA UA UA UA
PORTLAND, ME UA UA UA UA
PROVIDENCE, RI UA UA UA UA
RALEIGH/DURHAM, NC UA UA UA UA
RICHMOND, VA UA UA UA UA
ROANOKE, VA Contractor Contractor Contractor Contractor
ROCHESTER, NY UA UA UA UA
SAVANNAH, GA Contractor Contractor Contractor Contractor
SIOUX FALLS, SD Third Third Third Third
party party party party
SPRINGFIELD, MO Third Third Third Third
party party party party
STATE COLLEGE, PA Contractor Contractor Contractor Contractor
SYRACUSE, NY UA UA UA UA
TULSA, OK UA UA UA UA
WASHINGTON, DC - DULLES UA Contractor Contractor Contractor
INT'L AIRPORT
WHITE PLAINS, NY - UA UA Third Third
WESTCHESTER COUNTY party party
AIRPORT
WILKES-BARRE/SCRANTON, Contractor Contractor Contractor Contractor
PA
- - Also including Small Package service.
- -- Any unique ground equipment which is needed to service
Contractor's aircraft will be provided by Contractor.
53
APPENDIX C - Contractor Support Services
At all locations not set forth on APPENDIX B where
Contractor operates scheduled air transportation as a United
Express Carrier (i.e., Contractor Locations), Contractor
will provide the following minimum services:
(a) Contractor's employees shall be fully qualified
personnel to handle Contractor's operations.
(b) Posting of signage and decor appointment as specified
by United.
(c) Adequate check-in areas including passenger waiting
room facilities.
(d) Security facilities, personnel and passenger screening
procedures as are required by applicable orders, rules and
regulations of the FAA and those standards specified by
United.
(e) Capability of operating Automation Equipment (Apollo
Services) for the purpose of providing passenger processing
and operations in the configuration and under the procedures
specified by United.
(f) Baggage handling, delivery and tracing in accordance
with procedures issued by United.
APPENDIX D - City Pairs, Aircraft Type, and Cost per
Departure
Market CRJ J41 J32 Market CRJ J41 J32
ABE IAD ---- IAD JFK ----
ALB IAD ---- ---- IAD LGA ----
AVP ORD --- IAD LYH ---- ----
BGM IAD ---- ---- IAD MDT ----
BNA IAD ---- IAD MOB ----
BTV IAD ---- IAD ORF ---- ----
BUF IAD ---- ---- IAD PHF ----
BWI IAD ---- IAD PHL ----
CAE IAD ---- IAD PIT ---- ----
CAE ORD ---- IAD PVD ----
CAK IAD ---- IAD PWM ----
CAK ORD ---- IAD RDU ---- ----
CHO IAD ---- ---- IAD RIC ---- ----
IAD CHS ---- IAD ROA ---- ----
CHS ORD ---- IAD ROC ---- ----
CLE IAD ---- IAD SAV ----
CMH IAD ---- ---- IAD SCE ---- ----
CRW IAD ---- ---- IAD SDF ----
CRW ORD ---- IAD SHD ----
DAY IAD ---- IAD SWF ---- ----
DTW IAD ---- IAD SYR ----
EWR IAD ---- --------- IAD TYS ----
FAR ORD ---- MOB ORD ----
FSD ORD ----- ORD PIA ----
GSO IAD ---- ---- ORD ROA ----
GSP IAD ---- ORD SAV ----
HPN IAD ---- ORD SGF ----
IAD IND ---- ORD TUL ----
IAD JAX ----
Based on August 2000 results with fuel at -----cents and
excludes program fees and traffic commissions. Companies
agree to use the above Cost per Departure schedule for the
first month of this Agreement and to review this rate
schedule upon completion of the Contractor's annual review
with United, the first of which will be conducted in January
2001 for Cost per Departure rates effective for year 2001.
CRJ refers to a 50 seat Canadair Regional Jet
FRJ refers to a 32 seat Fairchild Dornier Regional Jet (for
use starting in 2002)
J41 refers to a 29 seat Jetstream 41 turboprop aircraft
J32 refers to a 19 seat Jetstream 32 turboprop aircraft
APPENDIX E - Incentive Program
55
1. Incentive Program.
To compensate Contractor further for its investment and to
ensure that Contractor has a meaningful incentive to provide
a high quality operation, United will pay Contractor Monthly
Incentive Payments according to the Monthly Incentive
Formula below using the Markup Factors and Passenger
Incentive Rates corresponding to the Actual Performance
Levels attained during the month for each of the four (4)
Performance Categories set forth in the attached Performance
Incentive Schedule.
2. Monthly Incentive Formula.
Monthly Incentive Payment = -------------
where, -----
-----
-----
-----
-----
3. Performance Incentive Schedule.
A. METHOD. For each calendar month and for
Contractor's entire United Express operations hereunder,
determine Contractor's Performance Level (A, B, C or D)
within each of the Performance Categories (completions,
mishandled bags, on-time departures, and intent to
repurchase) in the Performance Incentive Schedule below.
Then, identify in the Markup Factor and Passenger Incentive
Rate Schedule the figures corresponding to the Performance
Levels attained for each of the Performance Categories.
Then, add the four percentage figures together yielding the
Markup Factor and add the four dollar amounts together
yielding the Passenger Incentive Rate. Apply the resulting
factors and rates in the Monthly Incentive Formula to
compute the Monthly Incentive Payment.
56
B. SCHEDULE.
Performance Categories -
Completion
(Excluding weather and ATC)
Jan Feb Mar Apr May Jun
Level A -- --+ -- + -- + -- + -- +
Level B --- --- --- --- --- ---
Level C --- --- --- --- --- ---
Level D --or -- or -- or -- or --or --or
Below Below Below Below Below Below
Jul Aug Sep Oct Nov Dec
Level A -- + -- + -- + -- + -- + -- +
Level B --- --- - --- --- ---
Level C --- --- --- --- --- ---
Level D --or --or --or --or --or --or
Below Below Below Below Below Below
On Time Zero
Jan Feb Mar Apr May Jun
Level A --% + --% + --% + --% + --% + --% +
Level B ----- ----- ----- ----- ----- -----
Level C ----- ----- ----- ----- ----- -----
Level D -- or -- or -- or -- or -- or -- or
Below Below Below Below Below Below
Jul Aug Sep Oct Nov Dec
Level A --% + --% + --% + --% + --% + --% +
Level B ----- ----- ----- ----- ----- -----
Level C ----- ----- ----- ----- ----- -----
Level D -- or -- or -- or -- or -- or -- or
Below Below Below Below Below Below
57
Mishandled Bags
(Mishandlings per 1000 Passengers Boarded)
Jan Feb Mar Apr May Jun
Level A -- or -- or -- or -- or -- or -- or
Below Below Below Below Below Below
Level B ----- ----- ----- ----- ----- -----
Level C ----- ----- ----- ----- ----- -----
Level D -- + --+ --+ --+ --+ -- +
Jul Aug Sep Oct Nov Dec
Level A -- or -- or -- or -- or -- or -- or
Below Below Below Below Below Below
Level B ----- ----- ----- ----- ----- -----
Level C ----- ---- ----- ----- ----- -----
Level D -- + -- + -- + -- + --+ -- +
Repurchase Intent (RPI)
Jan-Mar Apr-Jun Jul-Sep Oct-Dec
Level A -- + -- + -- + -- +
Level B ----- ----- ----- -----
Level C ----- ----- ----- -----
Level D -- or Below -- or Below -- or Below -- or Below
58
4. Markup Factors and Passenger Incentive Rates
Table A
For use while Contractor operates ------- regional jets or
fewer in the United Express program:
Completion On Time Baggage Repurchase
Markup Passenger Markup Passenger Markup Passenger Markup Passenger
Factor Incentive Factor Incentive Factor Incentive Factor Incentive
Rate Rate Rate Rate
Level A -% $-- -% $-- -% $-- -% $--
Level B -% $-- -% $-- -% $-- -% $--
Level C -% $-- -% $-- -% $-- -% $--
Level D -% $-- -% $-- -% $-- -% $--
Table B
In recognition of the benefit of potential increased
regional jet allocations by United to Contractor, Contractor
agrees to lower the Markup Factors and Passenger Incentive
Rates when the number of regional jets operated by
Contractor in the United Express program exceeds -----
While Contractor operates between ----- and ----- aircraft,
multiply the Reduction Factor in the table below
corresponding to the number of United Express regional jets
operated by Contractor and in service on the 15th day of the
month by the applicable Markup Factor and Passenger
Incentive Rate on Table A above.
# of Reduction # of Reduction # of Reduction
Jets Factor Jets Factor Jets Factor
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --% -- --% -- --%
-- --%
59
Table C
For use while Contractor operates ----- regional jets or
more in the United Express program:
Completion On Time Baggage Repurchase
Markup Passenger Markup Passenger Markup Passenger Markup Passenger
Factor Incentive Factor Incentive Factor Incentive Factor Incentive
Rate Rate Rate Rate
Level A -% $-- -% $-- -% $- -% $-
Level B -% $-- -% $-- -% $- -% $-
Level C -% $-- -% $-- -% $- -% $-
Level D -% $-- -% $-- -% $- -% $-
5. Performance Incentive Reimbursement. The
Contractor's cost of employee incentive programs (an expense
to United, which is included in Attachment D Cost per
Departure) is subject to reimbursement to United if
Contractor does not achieve its operating performance goals,
measured monthly, for completion, on-time and baggage
performance only, as reflected in the Performance Category
table above, at the C level or better. Consequently,
monthly achievement of a D level in any of these three
individual performance categories will result in the
reimbursement to United of ----- per performance category,
up to a maximum of ----- of the monthly costs of the
employee incentive programs. The Contractor's cost of
employee incentive programs is reviewed by United every year
as part of the annual review of the Cost per Departures.
60
APPENDIX F - Liability Insurance
Issued by: ----------
------------------
Date of Issue: November 17, 2000
THIS IS TO CERTIFY TO: UNITED AIR LINES, INC.
that Insurers are providing 100% of the following Aircraft
Hull & Liability Insurances:
NAME INSURED: ATLANTIC COAST AIRLINES HOLDINGS,
INC., DBA UNITED EXPRESS, and any
subsidiaries and affiliated,
managed or owned companies.
(Hereinafter referred to as
"Contractor")
PERIOD OF INSURANCE: January 1, 2000 to January 1,
2001
INSURERS: see Exhibit A
POLICY NUMBER: see Exhibit A
GEOGRAPHICAL
LIMITS: Worldwide
AIRCRAFT INSURED: All aircraft owned or operated by
the Named Insured.
DESCRIPTION OF
COVERAGE: Comprehensive Airline Hull and
Liability Insurance, including
Aircraft Liability (all risks),
Passenger Liability, Cargo
Liability and Comprehensive General
Liability, including Hangarkeepers,
Excess Automobile, Dram Shop
Liability, Personal Injury, and
Products Liability coverage.
LIMIT OF
LIABILITY: Combined Single Limit $----------
any one occurrence (except, in the
aggregate, with respect to Products
Liability, and Personal Injury for
non-passengers limited to $--------
-- each offense and in the annual
aggregate); Bodily Injury
Liability, Passenger Liability,
Property Damage Liability
(including Baggage, which is
subject to policy deductible) and
Cargo Liability (Cargo Liability
limited to $---------- per
occurrence and subject to policy
deductibles). As respects Aircraft
Liability, the limit applies
separately to each occurrence.
Aircraft Hull All Risk per the
Agreed Value, or up to $----------
per added aircraft.
61
SPECIAL PROVISIONS:
The insurers agree that coverage under this policy, by
formal endorsement or otherwise, is extended to insure all
relevant terms and conditions of the United Express
Agreement, subject to the policy terms, conditions,
limitations and exclusions, between Contractor and United
concerning Contractor's Aircraft, including any provisions
carried forward into such Agreement from any prior
Agreements as respects said Aircraft (hereinafter referred
to as "Agreement"), including, inter alia:
1. The Insurers accept and insure the Indemnity and Hold
Harmless provisions of the Agreement, subject to the
policy terms, conditions, limitations and exclusions.
2. United, its affiliates, and their respective directors,
officers, employees, agents and indemnitees are named as
additional parties insured ("Insureds") to the extent of
the liability assumed by Contractor under the Agreement,
subject to the policy terms, conditions, limitations and
exclusions.
3. The Insurers agree that United shall not be liable for,
nor have any obligation to pay any premium due
hereunder, and Insurers further agree that they shall
not offset or counter-claim any unpaid premium against
the interest of United.
4. The Insurers agree that all provisions of this
insurance, except for the limits of liability, shall
operate in the same manner as if there were a separate
policy issued to each Insured.
5. The Insurers agree that this insurance shall be primary
insurance without any right of contribution from any
other insurance which is carried by United.
6. The Insurers agree to waive their rights of subrogation
against United, its officers, directors, employees and
indemnitees, to the extent the Contractor has waived and
released its rights under the Agreement.
7. The Insurers agree that as respects the interest of
United, its directors, officers, employees and
indemnitees, this insurance shall not be invalidated by
any action or inaction of the Contractor, its officers,
directors or employees, and shall insure United, its
directors, officers, employees and indemnitees
regardless of any breach or violation of any warranties,
declarations, conditions or exclusions contained in the
policy by the Contractor, its officers, directors or
employees.
62
8. In the event of cancellation for any reason whatever or
if any change of a restrictive nature is made affecting
the insurance certified hereunder, or if this insurance
is allowed to lapse due to non-payment of premium, such
cancellation, change or lapse shall not be effective as
to United, its directors, officers, employees and
indemnitees for at least thirty (30) days (ten (10) days
in the case of non-payment of premiums) after written
notice by registered mail of such cancellation, change
or lapse shall have been received by United.
9. With respect to claims or causes of action in favor of
United or its directors, officers, agents or employees,
they shall not be considered as additional insured
thereunder.
Dated: November 17, 2000
------------------
_______________________
AUTHORIZED REPRESENTATIVE
63
Atlantic Coast Airlines Holdings, Inc.
Airline Hull and Liability Insurers
January 1, 2000 to January 1, 2001
Exhibit A
INSURERS POLICY NO.
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
- ---------- ----------
64
APPENDIX G - Participation in United's Travel Certificate
Program
United will allow Contractor and Contractor agrees to accept
United/United Express Amenities, Promotional Discount(s)
and/or Free Travel Certificates on Contractor's flight
segment(s), whether or not in conjunction with a United
flight segment, in accordance with the following terms and
conditions:
1. Settlement of Promotion Certificates. Contractor agrees
to:
A. Deduct ------- percent (--%) of certificate face
value from confidential, agreed prorate, when travel is in
conjunction with United flight segment(s).
B. Absorb entire certificate face value when travel
is wholly on Contractor's flight operation.
2. Settlement of Amenities. For United Travel
Certificates (in all dollar denominations), Contractor
agrees to:
A. Deduct ------- percent (--%) of certificate face
value from confidential, agreed prorate, when travel is in
conjunction with United flight segment(s).
B. Absorb entire certificate face value when travel
is wholly on Contractor's flight operation.
3. Certificate Supplies.
A. Promotional certificates are issued in exchange
for participation in a promotion program. Program categories
include: retail, public service/charities, financial and
miscellaneous.
B. United amenities certificates are issued from time
to time by United and United Express Carriers.
4. Terms and conditions regarding use appear on each
certificate and must be strictly adhered to in order for
certificate to be valid.
65
APPENDIX H - Safety Standards for United Airlines and United
Express Carriers
We have developed common safety standards to evaluate and
effectively manage safety. We will commit to:
Mutual support of one another in implementing these
standards by sharing safety data, information and expertise.
Quality maintenance and operations training programs
A carrier internal evaluation program to monitor key
safety issues, including maintenance practices, required
inspection items, technical document control, dangerous
goods handling, training records and qualifications for all
personnel.
Quality programs to manage outsourcing of services.
A formalized maintenance quality assurance program.
Implementation of a program to rectify FAA inspection
findings.
Presence of a voluntary disclosure program.
Formal process to routinely bring safety and compliance
issues to the attention of carrier's senior management.
Anonymous safety hazard reporting system.
A Senior Management policy statement supporting open
safety reporting by employees.
Director of Safety, reporting to the highest levels of
management, overseeing the carrier's safety programs.
Process for managing required corrective actions from
FAA and internal audit program as well as employee
disclosure.
Ongoing flight safety education/feedback program.
Ground safety program in airport operating areas.
Incident investigation process that includes
accountability, recommendations and actions taken.
Establishment and maintenance of emergency response
procedures and manual.
Participation in UAL/industry safety information
exchange forum.