EXHIBIT 10.8
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
DELTA CONNECTION
AGREEMENT
This Agreement (this "Agreement"), dated and effective
the 9th day of September, 1999, is between Delta Air Lines,
Inc., Hartsfield Atlanta International Airport, Atlanta,
Georgia 30320 ("Delta"), and Atlantic Coast Airlines
Holdings, Inc. ("Holdings") and ACA Management, Inc.
("Operator"), each located at 515A Shaw Road, Dulles, Virginia
20166.
WHEREAS, Delta operates the Delta Connection program;
and
WHEREAS, Holdings has agreed to establish and maintain
Operator as a separate business entity, and for Operator to
obtain authority to conduct scheduled passenger air
transportation of jet aircraft; and
WHEREAS, Holdings desires for Operator to exclusively
(except as otherwise provided herein) manage the operations of
the Aircraft (as defined below) as a Delta Connection carrier
under the Delta Connection program; and
WHEREAS, Operator desires for Delta to perform and
provide various marketing, schedule and fare related, and
other services for Operator in connection with the Delta
Connection program; and
WHEREAS, Delta is willing to perform and provide
various marketing, schedule and fare related, and other
services for Operator in connection with the Delta Connection
program; and
WHEREAS, this Agreement will enhance the ability of
Operator and Delta to serve the public and the communities
that they serve or may choose to serve; and
WHEREAS, unless otherwise specified, references in
this Agreement to ACA are to Atlantic Coast Airlines, a
subsidiary of Holdings, and Operator and any affiliate of
Holdings; and
NOW, THEREFORE, for and in consideration of the mutual
undertakings set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Delta and Holdings and Operator, intending to be
legally bound, hereby agree as follows:
ARTICLE 1. FARES AND RULES PUBLICATION.
A. Delta Connection Program and Appointment of Delta as Agent.
Delta hereby grants Operator the authority to operate as a Delta
Connection carrier, and Operator hereby accepts such grant, to
conduct air transportation operating the Aircraft utilizing
certain services together with certain trademarks and service
marks owned by Delta, all as provided herein. In connection
herewith, Operator appoints Delta as its agent to publish its
fares, schedules and related information under Delta's two letter
designator code in city pairs specified by Delta (which shall not
include ---------- unless agreed by Operator) on the twenty (20)
Canadair Regional Jets and twenty-five (25) Dornier 328 regional
jet aircraft set forth on Exhibit A attached hereto and any other
aircraft subsequently agreed to be operated by Operator as Delta
Connection Flights (as such term is defined herein) (the aircraft
identified on Exhibit A, and such subsequently agreed aircraft,
collectively, "Aircraft"), and Delta hereby accepts such
appointment.
B. Fares, Rules and Seat Inventory.Delta shall establish and
publish all fares and related tariff rules for all seats on the
Aircraft, including fares and rules for local traffic in city
pairs served by such Aircraft. Operator shall not publish any
fares, tariffs, or related information for the Aircraft. In
addition, Delta will control all seat inventory and revenue
management decisions for the Aircraft.
C.Schedules Publication. Delta shall establish and publish all
schedules for the Aircraft, including city-pairs served,
frequencies, utilization and timing of scheduled departures.
Schedules shall conform to Operator's reasonable operational
requirements. Operator shall operate the Aircraft in the city-
pairs designated by Delta, subject to the frequency,
scheduling and other requirements established by Delta from
time to time and in a manner at least comparable to ACA's
operational standards as of the date hereof.
Delta will notify Operator of schedule times, frequencies and
related information for the Aircraft at least ---------- days
in advance of the schedule publication date so that the
information can be properly disseminated to Operator for pilot
and flight attendant staffing, and related operational
requirements. Block times for the Aircraft shall be
established by Delta in cooperation with Operator, and -------
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ARTICLE 2. EXCLUSIVITY.
A. With the exception of (i) flights operated by ACA with
United Airlines, Inc. or its successors ("United"), (ii) code
share flights with any non-U.S. carrier with which United has
a code-share agreement, and (iii) flights operated solely
under the "DH" and Operator two letter designator code, ACA
agrees to list its flights only under Delta's code during the
term of this Agreement (the "Delta Connection Flights").
B. ACA must obtain Delta's approval if it chooses to enter into
a code-sharing arrangement with another carrier (other than
United or a non-U.S. carrier with which United has a code share
arrangement).
C. Other than with United or a non-U.S. carrier with which
United has a code share arrangement, ACA (or any affiliated
company) may not operate flights for any other carrier without
Delta's prior written approval other -------------------------
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than in connection with the disposition of ACA's turboprop
aircraft.
D. ACA shall not publish or operate any other scheduled flights
in any city pair that includes -------------------------------
without Delta's prior written consent.
ARTICLE 3. COMPENSATION.
A. Base Compensation.
In exchange for the flying and operation of the Aircraft,
Delta will pay Operator ----------------- percent ------ of the
Cost Recovery Amount (the "Base Compensation").
The "Cost Recovery Amount", which shall be mutually agreed
by Delta and Operator on an annual basis, is ---------------
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B. Incentive Compensation.
In addition to the Base Compensation, Operator shall have an
opportunity to earn additional compensation ("Incentive
Compensation") ---------------------------------------------
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C. Accounting Provisions.
Delta shall retain all revenues for all ticket sales on the
Aircraft for Delta Connection Flights. Operator shall forward to
Delta all monies with respect to all airline ticket sales, on-
board sales, baggage charges, passenger charges, and all other
revenue collected in connection with the operation of the
Aircraft (including credit card transactions).
On each Monday, or if a not a business day, on the following
business day, Delta will advance monies to Operator by wire
transfer using the Base Compensation Amount for Delta Connection
flights to be operated during the period beginning that Monday
through the following Sunday. ----------------------------------
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Ninety (90) days following the end of each month, Delta and
Operator will reconcile actual costs incurred for certain cost
items with the estimated costs identified as part of the Cost
Recovery Amount. These items are: ------------------------------
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- ------------- The reconciliation will include any applicable
Incentive Compensation based on Operator's operating statistics
for the applicable month of its actual completion rate. Within
two (2) business days of completing such reconciliation, Delta or
Operator, as the case may be, shall wire transfer to an account
designated by the other party, monies equal to the reconciled
amount.
D. Audit.
Operator and ACA (to the extent ACA's expenses are shared by
Operator) shall maintain complete and accurate records to support
and document all costs related to the Aircraft hereunder, in
accordance with generally accepted accounting principles
consistently applied to past periods in all material respects.
Prior to the annual negotiation of the Cost Recovery Amount,
Delta's in-house accounting staff and any independent accountants
selected by Delta shall be entitled, following reasonable notice
to ACA, to audit Operator's and, to the extent ACA's expenses are
shared by Operator, ACA's records with respect to services
provided in prior periods, the service levels achieved, and the
determination of charges due pursuant to this Agreement for the
purpose of prospectively adjusting the Cost Recovery Amount. Any
such audit will be conducted during regular business hours at
ACA's offices at a mutually agreed time.
ARTICLE 4. AIRPORT RELATED AND TICKETING SERVICES.
A. Ticketing Services. Delta
will provide its own airport ticketing services, and, if
requested by Delta and agreed by Operator, Operator will
provide ticketing services for Delta Connection Flights at
Operator airport ticketing locations and will use Delta ticket
stock for such purposes.
B. Signage. Delta will design, provide
and pay for appropriate airport and other signage to reflect
the Delta Connection relationship between Operator and Delta.
The nature and type of such signage will be in the sole
discretion of Delta, subject to any airport, governmental or
quasi-governmental restrictions or requirements. Delta will
be responsible for installing and maintaining all such
signage, but the parties will mutually determine which party
will obtain any necessary formal or informal approvals from
appropriate airport or other authorities to install such
signage. The parties will fully cooperate with each other in
all endeavors relating to such signage and any necessary
approvals.
ARTICLE 5. CUSTOMER SERVICES.
A. During the in-flight operation of any and all Delta
Connection Flights and at any location where Operator is
performing customer related services in connection with any
Delta Connection Flight at the request of Delta, ACA will
handle all customer related services in connection with the
Delta Connection Flights in a professional, businesslike and
courteous manner. In order to insure a high level of customer
satisfaction Operator will:
1. establish and maintain customer handling
procedures and policies that are similar to those
utilized by Delta; and
2. establish, maintain and enforce employee conduct,
appearance and training standards and policies that
are similar to those utilized by Delta.
Delta shall provide Operator a reasonable number of copies of all
such Delta policies, training standards and procedures.
B. Operator and Delta will periodically meet to discuss and
review Operator's customer service and handling procedures and
policies and Operator's employee conduct, appearance and
training standards and policies to insure compliance with this
Article 5. Each party will seek to set forth concerns and
complaints under this Article 5 in writing to the other party.
To the extent Delta advises Operator in writing of any
deviation from Article 5(A), the parties will meet to mutually
determine appropriate solutions and to agree to the terms of a
corrective action plan and the timing of its implementation.
In the event Operator shall fail, in any material respect, to
adopt or implement any such agreed corrective action plan in
the time period described therein, any such failure may be
deemed a material breach of this Agreement.
C. Operator shall adopt as its own Delta's Terms and
Conditions of Contract of Carriage ("Contract of Carriage"),
as amended from time to time, and be bound by its terms with
respect to its operation of Delta Connection Flights. Delta
will supply Operator an adequate number of its Contract of
Carriage for distribution as required.
D. At no cost to Operator, Delta's customer affairs
department shall process and adjudicate (including paying cash
or in kind compensation as appropriate in a manner not
inconsistent with its Contact of Carriage) any claims
submitted to Delta or to Operator with respect to the conduct
of any Delta Connection Flights or services provided in
connection therewith, except claims of compensation for
property damage, injury or death of passengers on Delta
Connection Flights arising out of any action or inaction of
Operator. Any claims for such property damage, injury or
death shall be processed by Operator. Each party will
undertake to use Delta's standard procedures for processing
and adjudicating all claims for which it is responsible in
accordance with this Article 5(D) in order to avoid the matter
being the subject of either a law suit or a claim on either
party's insurance policy. At either party's request, the
other party shall reasonably assist the requesting party,
including providing available information, in the processing
or adjudication of any such claims handled by the requesting
party.
E. At any stations agreed to be handled by Operator, Delta
will provide Operator with local in-kind compensation to be
offered to inconvenienced customers in accordance with Delta's
policies and procedures. In addition, in the event Operator
incurs any out of pocket expenses in connection with providing
passenger handling services at the request of Delta, Delta
shall reimburse Operator for any and all such expenses
provided such expenses are in accordance with Delta's Contract
of Carriage and /or customer service procedures, in effect at
such time. Such reimbursement will be made as incurred,
separate and apart from the Cost Recovery Amount, without
markup, provided that should Operator agree, upon Delta's
written request, to provide services in this area on a regular
basis, then the said services would be included in the Cost
Recovery Amount pursuant to Article 8(B) herein.
ARTICLE 6. TRAFFIC DOCUMENTS AND RELATED PROCEDURES.
To the extent that the parties subsequently agree that
Operator will handle traffic documents or passenger handling
services in connection with Delta Connection Flights, the
following terms shall apply, at Delta's cost except as
specifically provided:
A. Pursuant to mutually acceptable procedures, Delta will
periodically provide Operator with Delta machine and manual
ticket stock, miscellaneous charges orders, credit card refund
drafts, FIMs, expense vouchers, expense checks, travel credit
vouchers, credit card refund vouchers and other related
documents (collectively referred to as "Traffic Documents").
Delta will maintain a supply of Traffic Documents at a
suitable location and, upon written request from Operator,
will provide Operator with appropriate supplies of Traffic
Documents.
B. Unless otherwise agreed to by Delta in writing, Traffic
Documents may be used, completed, validated and issued only by
Operator and only in connection with transactions related to
Delta Connection Flights and for no other purpose.
C. Operator will promptly surrender and return all Traffic
Documents to Delta upon Delta's written request.
D. Operator will maintain records of the Traffic Documents in
a manner and format acceptable to Delta. Operator will
acknowledge receipt in writing of all Traffic Documents in the
manner prescribed by Delta.
E. Operator will conform with and abide by all of Delta's
rules and regulations regarding the Traffic Documents.
F. Operator will take all reasonable and necessary measures
to safeguard the Traffic Documents as of the time of receipt
and thereafter and will maintain the Traffic Documents in
accordance with mutually agreed upon security procedures.
Operator shall be responsible for all risk of loss, use,
misuse, misappropriation or theft of Traffic Documents as of
the time Operator takes possession of the Traffic Documents,
provided that Delta has timely audited the use of Traffic
Documents and has provided Operator with prompt notice of any
irregularities.
G. Reporting and Remitting With Respect to Traffic Documents.
1. On a daily basis, Operator will provide Delta with a
report for each Operator ticketing location of all ticketing
and related transactions on Traffic Documents for the prior
day. Such report will be in a format determined by Delta and
will include, without limitation, all credit card transactions
and supporting documentation.
2. Operator will issue all Traffic Documents, and will
collect appropriate charges, in accordance with the tariffs,
fares, rates, rules and regulations of Delta and other
applicable carriers.
H. Refund Vouchers.
1. Delta will use Delta refund vouchers for all refund
transactions handled by Delta involving Operator.
2. Operator will use Delta refund vouchers and credit
card sales refunds and will comply with Delta's rules and
regulations for handling and processing such refunds. Delta
will supply Operator with an adequate supply of refund
vouchers and credit card refund vouchers.
ARTICLE 7. FREQUENT FLYER PARTICIPATION. During the term of this
Agreement, the parties agree that passengers on Operator's Delta
Connection Flights will be eligible to participate in the Delta
SkyMiles frequent flyer program or any other similar program
developed by Delta (the "Program") and all Program award tickets
will be honored for travel on Delta Connection Flights on the
following terms and conditions:
A. Administration. Administration of the Program shall be
performed by and at the cost of Delta. Delta will promote and
administer the Program.
B. Program Information. Title and full and complete ownership
rights to Program membership data and information developed by
Delta, wherever located, shall remain with Delta. ACA
understands and agrees that such data and information constitutes
Delta's proprietary information. Any membership lists, labels,
data, or other compiled membership information supplied to ACA in
any form and any and all copies thereof are to be used by
Operator exclusively in the performance of its obligations under
this Agreement and will not be otherwise used, sold, licensed,
leased, transferred, stored, duplicated or transmitted, in any
form or by any means, without Delta's prior written consent. All
such information will either be returned to Delta or destroyed at
Delta's request.
ARTICLE 8. SUPPORT SERVICES.
A. Services. Delta shall provide certain support services to
Operator, including all customer reservations, customer service,
ground handling, station operations, pricing, scheduling, revenue
accounting, revenue management, frequent flyer, advertising and
other passenger, aircraft and traffic servicing functions in
connection with the operation of the Aircraft other than as
allocated to Operator as described in Exhibit B, and Delta will
be responsible for all taxes and fees associated therewith. Any
and all such services provided by Delta to Operator pursuant to
this Article 8(A) shall be at cost and not be included in the
Cost Recovery Amount as described in Exhibit B.
B. Additional Services. --------------------------------------
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and Operator agree that Operator or Holdings, or its designees,
will provide services that are anticipated to be provided by
Delta in accordance with Article 8(A) hereof, the cost of such
services will be included in the Cost Recovery Amount.
C. Certain Regulatory Compliance. The parties acknowledge that
Operator 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
Delta Connection Flights. The parties further acknowledge that
Delta will provide airport and aircraft handling of Operator's
Delta Connection Flights in accordance with the terms of this
Agreement including providing airport and aircraft security
functions. To facilitate operations contemplated herein,
Operator will adopt as its own Delta's FAA-approved air carrier
security plan subject to any FAA required modifications as
approved by the FAA ("Security Plan"). Delta shall adhere to the
terms and provisions of Operator's Security Plan at all airports
at which Delta handles or will handle Operator's Delta Connection
Flights. -------------------------------------------------------
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Operator shall diligently defend any allegations of violations of
the above, and Delta will cooperate with Operator in
investigating any such claim and to reasonably assistant
Operator, if requested to do so, in defending the matter. If
there are any differences between Operator's Security Plan and
Delta's security plan, Operator will provide to Delta's employees
and contractors any necessary differences training to the extent
required by the FAA and the cost of such training will be
included in the Cost Recovery Amount.
ARTICLE 9. AUTOMATION SERVICES. Delta agrees to provide
Operator, at Delta's sole cost, the following automation and
related services for the Delta Connection Flights, and Operator
agrees to participate in such services in the manner described
below.
A. Internal Reservations and Communications Equipment. Delta
shall provide or arrange for the provision to Operator of an
electronic reservations system (currently referred to as
"Deltamatic" but including any successor reservations system
adopted by Delta) which shall provide Operator with: (i) the
ability to access passenger name records, (ii) automated
ticketing capabilities, (iii) operational message switching
capabilities, (iv) the ability to update Delta Connection Flight
information, (v) the ability to distribute flight releases and
weather packages, and (vi) perform other reservations-related or
operational functions for the Delta Connection Flights
(Deltamatic and any successor system are hereinafter referred to
as the "Res System"). Delta reserves the right to modify the
functionality of the Res System at any time. Operator will use
the Res System made available by Delta for the Delta Connection
Flights only.
B. Delta's Rights and Obligations.
1. Delta will install or cause to be installed the
equipment requested by Operator at the locations set forth on
Exhibit C to this Agreement and shall provide Operator connection
to the Res System. The equipment described on Exhibit C and any
software installed on such Equipment are hereinafter referred to
as the "Equipment." Operator understands and agrees that: (i)
all Equipment shall remain the sole property of Delta; (ii)
Operator shall not remove any identifying marks from the
Equipment; (iii) Operator shall not subject the Equipment to any
lien; (iv) Operator shall not install any computer programs,
software or similar materials on the Equipment; and (v) Delta may
enter Operator's premises to remove the Equipment immediately
upon termination of this Agreement. Exhibit C may be amended
from time to time by mutual agreement of the parties to reflect
the installation, removal or relocation of Equipment and the
corresponding charges therefor.
2. Delta will provide initial and recurrent training to
Operator training staff and other key designated personnel in the
use of the Res System, at Delta's training centers unless
otherwise agreed. Delta may remove from a training program any
Operator employee who is not satisfactorily participating
therein.
3. Delta will provide, or arrange to provide, all
equipment upgrades, repairs and maintenance services required for
the Equipment and will use reasonable business efforts to keep
the Equipment and the Res System in good repair, condition, and
upgrade status consistent with Delta's standard for maintaining
its own equipment. Operator will not perform or attempt to
perform repairs or maintenance of any kind on the Equipment
without prior consultation with Delta and will promptly contact
Delta regarding the need for repairs or maintenance.
C. Operator's Rights and Obligations.
1. The Equipment initially selected by Operator is set
forth by location on Exhibit C. Operator will pay all costs
associated with preparing the location for the Equipment, which
location must conform with the specifications of both Delta and
the Equipment manufacturer and must include adequate electrical
power and in-house voice/data wiring. Delta shall be responsible
for backbone data lines and related communications equipment.
Operator will not for any reason relocate or remove any of the
Equipment without Delta's prior written consent. Delta will pay
all costs associated with, and be responsible for, the
installation, relocation or removal of Equipment.
2. Operator will use the Equipment and the Res System in
strict conformity with the training and operating instructions
provided by, or arranged to be provided by, Delta. Without
limiting the generality of the foregoing, Operator will not use
the Res System to develop or publish any reservation, ticketing,
sales, cargo, tariff or other guide, to provide services not
authorized by this Agreement to third parties, to train persons
other than Operator's employees in the use of the Equipment or
the Res System, or for other uses designated by Delta in writing
as prohibited. Operator may not publish, disclose or otherwise
make available to any third party the compilations of air carrier
service or fares obtained from the Res System; provided, however,
that Operator may use specific air carrier service and fare data
for the benefit of its customers.
3. Operator will encourage and allow its employees to
attend training sessions related to the Res System, and it is
Operator's responsibility to insure that each employee receives
full and adequate training on the Res System.
4. Operator will protect the Equipment from loss, damage
or theft and shall prevent its unauthorized use or improper
operation. Operator will make no alterations to the Equipment
and will return the Equipment to Delta upon the termination of
this Agreement in the same condition as received, excepting only
ordinary wear and tear in the normal course of Operator's
operations. Operator will obtain and maintain insurance for the
Equipment against all risks of damage and loss, including without
limitation loss by fire, theft and such other risks of loss as
are customarily insured in a standard all-risk policy. Such
insurance shall also provide the following:
(a) Full replacement value coverage for the Equipment
(subject to policy deductibles);
(b) An endorsement naming Delta as the loss payee to
the extent of its interest in the Equipment; and
(c) An endorsement requiring the insurer to give Delta
at least thirty (30) days prior written notice of any intended
cancellation, nonrenewal or material change of coverage; provided
that only ten (10) days prior written notice of cancellation,
nonrenewal or material change of coverage need be given in the
event that such cancellation, nonrenewal or material change in
coverage is caused solely by failure to make a premium payment.
Upon request by Delta, Operator will promptly provide
satisfactory evidence of the insurance required pursuant to this
Article 9(C)(4). Notwithstanding the foregoing, Operator shall
be liable to Delta for any loss or damage to the Equipment,
regardless of cause, occurring while the Equipment is in the
possession, custody or control of Operator.
5. Operator waives any proprietary rights that it may have
with respect to information entered into the Res System.
D. Entry and Inspection. Delta personnel and persons
designated or authorized by Delta may enter Operator's premises
during normal business hours for the purposes of (a) monitoring,
inspecting, and reviewing Operator's use of and operations with
respect to the Res System, (b) performing repairs or maintenance
on the Equipment, (c) installing, removing, replacing or
relocating the Equipment (unless otherwise permitted by this
Agreement), or (d) training or retraining Operator's employees in
the use of the Res System; provided that such activities may not
unreasonably interfere with Operator's business.
E. Limitations on Liability. In addition to any other
limitations on liability set forth herein:
1. Delta is not responsible for errors or inaccuracies in
the availability records, fare quotes, or other information
contained in the Res System at any time, for any planned or
unplanned interruptions, delays or malfunctions in the operation
of the Res System or the Equipment.
2. OPERATOR HEREBY WAIVES AND RELEASES DELTA AND ITS
AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS FROM ANY AND ALL OBLIGATIONS AND LIABILITIES AND ALL
RIGHTS, CLAIMS AND REMEDIES OF OPERATOR AGAINST DELTA OR ITS
AFFILIATES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, DUE TO ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR
ERRORS OR MALFUNCTIONS BY, SOFTWARE, THE EQUIPMENT OR THE RES
SYSTEM, INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR
REMEDY IN TORT, AND INCLUDING ALL LIABILITY, OBLIGATION, RIGHT,
CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER
DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.
FURTHER, DELTA DISCLAIMS AND OPERATOR HEREBY WAIVES ANY
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING
TO THE RES SYSTEM, THE EQUIPMENT, DATA, OR SERVICES FURNISHED
UNDER THIS ARTICLE 9.
F. Patent and Copyright Indemnity. Delta will defend or
settle, at its own expense, any action brought against Operator
to the extent that it is based on a claim that the Res System
provided by Delta pursuant to this Agreement, in its normal use,
or any part thereof, infringes any U.S. copyright or patent; and
Delta will pay those costs, damages and attorney's fees finally
awarded against Operator in any such action attributable to any
such claim, but such defense, settlements and payments are
conditioned on the following: (1) that Delta shall be notified
promptly in writing by Operator of any such claim; (2) that Delta
shall have sole control of the defense of any action on such
claim and of all negotiations for its settlement or compromise;
(3) that Operator shall cooperate with Delta in a reasonable way
to facilitate the settlement or defense of such claim, provided
that Delta shall pay all of Operator's reasonable expenses in
connection with any such cooperation requested by Delta; and (4)
should such Res System become, or in Delta's opinion be likely to
become, the subject of such claim of infringement, then Operator
shall permit Delta, at Delta's option and expense, either to (a)
procure for Operator the right to continue using the Res System,
or (b) replace or modify the same so that it becomes
noninfringing and functionally equivalent, or (c) upon failure of
(a) and (b) above despite the reasonable efforts of Delta, accept
immediate termination of this Agreement as it relates to such
system. This paragraph (F) states the entire liability of Delta
with respect to the infringement of copyrights and patents by the
Res System provided hereunder or the operation thereof.
ARTICLE 10. OPERATIONAL PERFORMANCE.
A. Operator agrees to provide to Delta, for each month during
the term of this Agreement, within 10 days of the last day of
each such month, the completion rate (actual) of the Delta
Connection Flights during such month. Operator understands that
it is Delta's goal that participants in the Delta Connection
Program maintain a completion rate (actual) of ---- or greater --
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B. If Operator fails to meet the standard set forth in Article
10(A) above for any---- calendar months in any ----month --------
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- ------------ Delta may advise Operator that it considers said
failure to be a "Performance Deficiency", and Operator agrees to
discuss with Delta such Performance Deficiency and potential ways
to improve such Performance Deficiency. If Operator does not
meet said standard during any of the ----- calendar months
following said discussion, then Delta shall have the right to
terminate this Agreement immediately upon the expiration of such
- ------calendar month period ------------------------. Should
Operator meet said standard for any month during said ------month
period, ---------------------------------------------------------
- -------------------------------- (in either case, a "Performance
Cure"), Delta shall no longer have the right to terminate this
Agreement for the previously discussed Performance Deficiency, or
to provide a new Performance Deficiency based in part on any
months occurring prior to the Performance Cure.
ARTICLE 11. TERM AND TERMINATION.
A. This Agreement is effective on the date first written above
and will continue thereafter until March 31, 2010. At the end of
such initial term, Delta shall have the right to extend the term
of the Agreement for an additional five (5) years on the same
terms and conditions. In the event of a Merger (as defined
below) or Change of Control (as defined below) of Holdings or
Operator, Delta shall have the right to extend the term of the
Agreement for an additional ten (10) years beyond the applicable
termination date of this Agreement pursuant to this Article
11(A).
B. Either party may terminate this Agreement immediately if
the other party files a voluntary petition in bankruptcy,
makes an assignment for the benefit of creditors, fails to
secure dismissal of any involuntary petition in bankruptcy
within sixty (60) days after the filing thereof, or petitions
for reorganization, liquidation, or dissolution under any
federal or state bankruptcy or similar law.
C. In the event of a material breach of this Agreement by
either party remaining uncured for more than thirty (30) days
after receipt of written notification of such breach by the
nonbreaching party, then the nonbreaching party may terminate
this Agreement at its sole option.
D. Notwithstanding the provisions of Articles 11(B) and (C),
Delta shall have the right to terminate this Agreement
immediately and at its sole option upon the occurrence of one
or more of the following:
(i) Holdings or Operator agrees to merge into or with
any entity, to be acquired by any entity, to sell all or
substantially all of its assets to another entity, or enters
into a letter of intent, or similar document, to merge into or
with any entity or to be acquired by any entity or to sell all
or substantially all of its assets to another entity (unless
any such letter of intent or similar document in contains a
provision whereby Delta's prior approval is a condition
precedent to the merger or acquisition), unless Holdings or
Operator, as applicable, is the acquiring or surviving entity
(each such event, a "Merger");
(ii) The acquisition by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than --- of either (a) the then
outstanding shares of common stock of Holdings or Operator, or
(b) the combined voting power of the then outstanding voting
securities of either Holdings or Operator entitled to vote
generally in the election of such party's directors (each such
event, a "Change of Control");
(iii) Operator's level of safety
with respect to its operation of the Aircraft is not
reasonably satisfactory to Delta;
(iv) pursuant to Article 10(B)
hereof;
(v) if Operator fails to maintain any material
insurance pursuant to Articles 13 and 14 of this Agreement.
E. Notwithstanding the provisions of Articles 11(A), (B), (C)
and (D) hereof, Delta may terminate this Agreement, with or
without cause, in its sole discretion, on not less than one
hundred eighty (180) days' prior written notice to ACA; ------
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F. Termination of this Agreement for any reason shall not
relieve either party of rights and obligations incurred prior
to the effective date of termination.
ARTICLE 12. LIABILITY PROVISIONS.
A. Except as otherwise provided in Articles 5(D), 5(E), and
8(C) of this Agreement, Holdings and Operator, jointly and
severally, shall be liable for and each hereby agrees fully to
defend, release, discharge, indemnify, and hold harmless
Delta, its directors, officers, employees and agents from and
against any and all claims, demands, damages, liabilities,
suits, judgments, actions, causes of action, losses, costs and
expenses of any kind, character or nature whatsoever (in each
case whether groundless or otherwise), including attorneys'
fees, costs and expenses in connection therewith and expenses
of investigation and litigation thereof, which may be suffered
by, accrued against, charged to, or recoverable from Delta or
its directors, officers, employees or agents in any manner
arising out of, connected with, or attributable to this
Agreement, the performance, improper performance, or
nonperformance of any and all obligations to be undertaken by
ACA pursuant to this Agreement, the loss, theft, use, misuse
or misappropriation of Traffic Documents, or the operation,
non-operation, or improper operation of the Aircraft or ACA's
equipment or facilities at any location, excluding only
claims, demands, damages, liabilities, suits, judgments,
actions, causes of action, losses, costs and expenses
resulting from the gross negligence or willful misconduct of
Delta, its directors, officers, agents or employees. ACA will
do all things necessary to cause and assure, and will cause
and assure, that ACA will at all times be and remain in
custody and control of all aircraft, equipment, and facilities
of ACA, and Delta, its directors, officers, employees and
agents shall not, for any reason, be deemed to be in custody
or control, or a bailee, of ACA's aircraft, equipment or
facilities.
B. Delta shall be liable for and hereby agrees fully to
defend, release, discharge, indemnify, and hold harmless each
of Holdings and Operator, their directors, officers,
employees, and agents from and against any and all claims,
demands, damages, liabilities, suits, judgments, actions,
causes of action, losses, costs and expenses of any kind,
character or nature whatsoever, including attorneys' fees,
costs and expenses in connection therewith and expenses of
investigation and litigation thereof, which may be suffered
by, accrued against, charged to, or recoverable from Holdings
or Operator, or their directors, officers, employees or agents
in any manner arising out of, connected with, or attributable
to this Agreement, the performance, improper performance or
nonperformance of any and all obligations to be undertaken by
Delta pursuant to this Agreement, or the operation, non-
operation or improper operation of Delta's aircraft, equipment
or facilities at any location, in each case to the extent, but
only to the extent, caused by Delta's gross negligence or
willful misconduct. Delta will do all things necessary to
cause and assure, and will cause and assure, that Delta will
at all times be and remain in custody and control of any
aircraft, equipment and facilities of Delta, and Holdings or
Operator, their directors, officers, employees and agents
shall not, for any reason, be deemed to be in the custody or
control, or a bailee, of Delta's aircraft, equipment or
facilities.
C. ACA and Delta agree to comply with all rules, regulations,
directives and similar instructions of appropriate
governmental, judicial and administrative entities including,
but not limited to, airport authorities, the Federal Aviation
Administration and the Department of Transportation (and any
successor agencies).
D. OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS
AGREEMENT, EACH PARTY DISCLAIMS AND THE OTHER PARTY HEREBY
WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN,
WITH RESPECT TO THIS AGREEMENT OR ITS PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE
RELATING TO ANY EQUIPMENT, DATA, INFORMATION OR SERVICES
FURNISHED HEREUNDER. EACH PARTY AGREES THAT THE OTHER PARTY
IS NOT LIABLE TO IT OR ANY OTHER PERSONS FOR CONSEQUENTIAL OR
PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES.
E. Indemnification Claims. A party
(the "Indemnified Party") entitled to indemnification from the
other party under the terms of this Agreement (the
"Indemnifying Party") shall provide the Indemnifying Party
with prompt written notice (an "Indemnity Notice") of any
third party claim which the Indemnified Party believes gives
rise to a claim for indemnity against the Indemnifying Party
hereunder, and the Indemnifying Party shall be entitled, if it
accepts financial responsibility for the third party claim, to
control the defense of or to settle any such third party claim
at its own expense and by its own counsel; provided that the
Indemnified Party's prior written consent (which may not be
unreasonably withheld or delayed) must be obtained prior to
settling any such third party claim. No consent will be
required for claims defended or settled by an Indemnifying
Party's insurance carrier. If the Indemnifying Party does not
accept financial responsibility for the third party claim or
fails to defend against the third party claim that is the
subject of an Indemnity Notice within thirty (30) days of
receiving such notice (or sooner if the nature of the third
party claim so requires), or otherwise contests its obligation
to indemnify the Indemnified Party in connection therewith,
the Indemnified Party may, upon providing written notice to
the Indemnifying Party, pay, compromise or defend such third
party claim. The Indemnified Party shall provide the
Indemnifying Party with such information as the Indemnifying
Party shall reasonably request to defend any such third party
claim and shall otherwise cooperate with the Indemnifying
Party in the defense of any such third party claim. Except as
set forth above in this Article 12(E), the Indemnified Party
shall not enter into any settlement or other compromise or
consent to a judgment with respect to a third party claim as
to which the Indemnifying Party has an indemnity obligation
hereunder without the prior written consent of the
Indemnifying Party (which may not be unreasonably withheld or
delayed), and the entering into any settlement or compromise
or the consent to any judgment in violation of the foregoing
shall constitute a waiver by the Indemnified Party of its
right to indemnity hereunder to the extent the Indemnifying
Party was prejudiced thereby. Any Indemnifying Party shall be
subrogated to the rights of the Indemnified Party to the
extent that the Indemnifying Party pays for any Loss suffered
by the Indemnified Party hereunder. Notwithstanding anything
contained in this Article 12(E) to the contrary, Operator,
Holdings, and Delta will cooperate in the defense of any claim
imposed jointly against them or as the result of the conduct
of the other.
ARTICLE 13. WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY
INSURANCE PROVISIONS.
A. For purposes of worker's compensation insurance, Delta's
employees, agents and independent contractors under no
circumstances shall be deemed to be, or shall be, employees,
agents or independent contractors of ACA.
B. For purposes of worker's compensation insurance, ACA's
employees, agents and independent contractors under no
circumstances shall be deemed to be, or shall be, the
employees, agents or independent contractors of Delta.
C. Each party assumes full responsibility for, and liability
to, its own employees on account of injury, or death resulting
therefrom, sustained in the course of their employment. Each
party, with respect to its own employees, accepts full and
exclusive liability for the payment of applicable workers'
compensation and employers' liability insurance premiums with
respect to such employees, and for the payment of all taxes,
contributions or other payments for unemployment compensation
and old age benefits, and other similar benefits now or
hereafter imposed upon employers by any government or agency
thereof having jurisdiction in respect of such employee. Each
party also agrees to make such payments and to make and file
all reports and returns and to do all things necessary to
comply with all applicable laws at any time imposing such
taxes, contributions, or payments.
D. Each party will have their workers compensation carrier
endorse their policy to provide a waiver of subrogation
against the other party.
ARTICLE 14. INSURANCE PROVISIONS.
A. Operator shall procure and maintain in full force and
effect during the term of this Agreement policies of insurance
of the types and in the minimum amounts set forth below, with
insurers of recognized reputation and responsibility:
1. All risk hull insurance.
2. Comprehensive airline liability including
premises, products, baggage, cargo, contractual, and
completed operations, covering bodily injury, personal
injury and property damage in an amount not less than
------------ per occurrence; provided, however, that
non-passenger personal injury coverage may be limited
to ----------- per occurrence.
3. Workers' compensation for statutory limits.
4. Employer's liability in an amount not less than --
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5. Automobile liability in an amount not less than ------
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B. The policies of insurance described in Article 14(A) above
shall include:
1. As to the policies of insurance described in Articles
14(A)(1) and (A)(3), to provide that any waiver of
rights of subrogation against other parties by
Operator will not affect the coverage provided
hereunder with respect to Delta, its directors,
officers, employees and agents; and with respect to
Articles 14(A)(1) and (A)(2), to provide that
Operator's underwriters shall provide breach of
warranty coverage to Delta, its directors, officers,
employees and agents, regardless of any breach or
violation by Operator.
2. As to the policies of insurance described in
Articles 14(A)(2) and A(5): (a) to provide that
Delta, its directors, officers, employees and agents
shall be named as additional insured parties
thereunder; and (b) to provide that such insurance
shall be primary insurance.
3. As to the policies of insurance described in
Articles 14(A)(2) and A(5): (a) to provide a cross-
liability clause as though separate policies were
issued for Delta and Operator and their respective
directors, officers, employees and agents.
4. As to any insurance obtained from foreign underwriters, to
provide that Delta may maintain against such underwriters a
direct action in the United States upon such insurance policies
and, to this end, to include a standard service of process clause
designating a United States attorney in New York, New York.
C. Operator shall cause each of the insurance policies to be
duly and properly endorsed to provide that such policy or
policies or any part or parts thereof shall not be canceled,
terminated or materially altered, changed or amended by
Operator's insurance underwriters until after thirty (30)
days' written notice to Delta, which thirty (30) days' notice
shall commence to run from the date such notice is actually
received by Delta.
D. Not later than the date of delivery of the first Aircraft,
and from time to time thereafter upon request by Delta,
Operator shall furnish Delta evidence satisfactory to Delta of
the aforesaid insurance coverages and endorsements, including
certificates certifying that the aforesaid insurance policy or
policies with the aforesaid limits are duly and properly
endorsed as required and are in full force and effect.
E. In the event Operator fails to maintain in full force and
effect any of the insurance and endorsements required to be
maintained by Operator pursuant to Article 14(A), Delta shall
have the right (but not the obligation) to procure and
maintain such insurance or any part thereof on behalf of
Operator. The cost of such insurance shall be payable by
Operator to Delta upon demand by Delta. The procurement of
such insurance or any part thereof by Delta does not discharge
or excuse Operator's obligation to comply with the provisions
set out herein. Operator agrees not to cancel, terminate or
materially alter, change or amend any of the policies until
after providing thirty (30) days' advance written notice to
Delta of Operator's intent to so cancel, terminate or
materially alter, change or amend such policies of insurance,
which thirty (30) day notice period shall commence to run from
the date notice is actually received by Delta.
F. During the term of this Agreement, Operator agrees to
maintain on deposit with the Department of Transportation a
signed counterpart of the interim "Montreal Agreement"
(Agreement CAB 18900), which has the effect of increasing the
limits of liability under the Warsaw Convention to seventy-
five thousand dollars ($75,000.00). Operator further agrees
to be bound by Agreement CAB 18900 and any subsequent
amendment thereto or any subsequent order of the Department of
Transportation or protocol ratified by the United States
government which relates to or modifies the limit of liability
under the Warsaw Convention.
G. With respect to all claims against Operator (but not
against Delta) with respect to which Operator is not entitled
to be indemnified by Delta pursuant to Article 12(B), whether
or not covered by the insurance policies set forth in this
Article 14 or otherwise, Delta is responsible only for filing
an initial report and will reasonably cooperate with Operator
with respect to discovery to the extent information is
available to it, and has no other obligations with respect to
such claims, and Operator is fully responsible for handling
all adjustments, settlements, negotiations, litigation and
similar activities in any way related to or connected with
such claims.
ARTICLE 15. OPERATIONS OF OPERATOR AS A DELTA CONNECTION CARR
IER.
A. Delta and Operator and Holdings agree that, subject to the
provisions of this Agreement, Operator will be operated
exclusively as a Delta Connection carrier.
B. Operator acknowledges and agrees that participation in the
Delta Connection program obligates Operator to offer and maintain
a professional, high quality level of service in terms of
schedules, customer service and the like. Accordingly, not less
than once each year during the term of this Agreement, the
parties will: (a) meet to mutually review and discuss the
services, operations and plans of Operator and Delta for the
Delta Connection program; and (b) jointly develop a business plan
for the Delta Connection operations and services of Operator.
Holdings and Operator will reasonably comply with the business
plans so developed and all reasonable recommendations of Delta in
carrying out the material provisions of the business plan.
C. During the last quarter of each calendar year, Delta shall
develop an advertising budget and program for the next
succeeding calendar year (or portion thereof) during the term
of this Agreement for promoting the Delta Connection and the
relationship between Delta and Operator established by this
Agreement. Delta shall be responsible for the development and
production of all promotional materials for the program.
ARTICLE 16. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of Holdings and Operator.
Holdings and Operator, jointly and severally, represent and
warrant to Delta as of the date hereof as follows:
(1)
Organization and Qualification. Each of Holdings and Operator
is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware and has the
corporate power and authority to own, operate and use its
assets and operate the Delta Connection Flights.
(2)
Authority Relative to this Agreement. Each of Holdings and
Operator has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of
Holdings and Operator. This Agreement has been duly and
validly executed and delivered by Holdings and Operator and
is, assuming due execution and delivery thereof by Delta, a
valid and binding obligation of Holdings and Operator,
enforceable against each of Holdings and Operator in
accordance with its terms.
(3)
Conflicts; Defaults. Neither the execution or delivery of
this Agreement nor the performance by each of Holdings and
Operator of the transactions contemplated hereby will (i)
violate, conflict with, or constitute a default under any of
the terms of either of Holdings' or Operator's articles of
incorporation, by-laws, or any provision of, or result in the
acceleration of any obligation under, any contract, sales
commitment, license, purchase order, security agreement,
mortgage, note, deed, lien, lease, agreement or instrument,
including without limitation, any order, judgment or decree
relating to the Delta Connection Flights, (ii) result in the
creation or imposition of liens in favor of any third person
or entity, (iii) violate any law, statute, judgment, decree,
order, rule or regulation of any governmental authority, or
(iv) constitute any event which, after notice or lapse of time
or both, would result in such violation, conflict, default,
acceleration or creation or imposition of liens.
(4) Broker.
Neither Holdings or Operator has retained or agreed to pay any
broker or finder with respect to this Agreement and the
transactions contemplated hereby.
B. Representations and Warranties of Delta. Delta represents
Holdings and Operator as of the date hereof as follows:
(1)
Organization and Qualification. Delta is a duly incorporated
and validly existing corporation in good standing under the
laws of the State of Delaware.
(2)
Authority Relative to this Agreement. Delta has the corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby in
accordance with the terms hereof. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Delta. This Agreement has
been duly and validly executed and delivered by Delta and is,
assuming due execution and delivery thereof by Holdings and
Operator and that Holdings and Operator each has full legal
power and right to enter into this Agreement, a valid and
binding obligation of Delta, enforceable against Delta in
accordance with its terms.
(3)
Conflicts; Defaults. Neither the execution or delivery of
this Agreement nor the performance by Delta of the
transactions contemplated hereby will (i) violate, conflict
with, or constitute a default under any of the terms of
Delta's articles of incorporation, by-laws, or any provision
of, or result in the acceleration of any obligation under, any
contract, sales commitment, license, purchase order, security
agreement, mortgage, note, deed, lien, lease, agreement or
instrument, including without limitation, any order, judgment
or decree relating to the Delta Connection Flights, (ii)
result in the creation or imposition of any liens in favor of
any third person or entity, (iii) violate any law, statute,
judgment, decree, order, rule or regulation of any
governmental authority, or (iv) constitute any event which,
after notice or lapse of time or both, would result in such
violation, conflict, default, acceleration or creation or
imposition of liens.
(4) Broker. Delta has not retained or
agreed to pay any broker or finder with respect to this
Agreement and the transactions contemplated hereby.
ARTICLE 17. AIRCRAFT.
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B. Future Dornier Regional Jets. In addition to the Aircraft,
as of the date hereof, ACA also has options for eighty five (85)
new Dornier 328 or 428 regional jets (the "Option Dorniers") and
fifty-five (55) additional 328/428 Dornier aircraft on
conditional (subject to approval by United to operate said
aircraft as United Express) order (the "Conditional Dorniers").
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The above aircraft orders assume that ACA is able to compete
definitive amendments to its aircraft acquisition agreement to
allow it to acquire additional Dornier aircraft. The terms of
said amendments are subject to a signed Memorandum of
Understanding as of the date hereof. Should said definitive
agreements not be completed to allow for the acquisition of
additional contemplated aircraft, the above terms will be
adjusted to reflect a lesser number of aircraft orders on
terms described in the Annex A Term Sheet that was attached to
the Memorandum of Understanding between ACAH and Delta dated
August 23, 1999.
C. Additional Regional Aircraft. In order to assure competitive
regional jet growth between United and Delta beyond the aircraft
(whether delivered or not yet delivered) that are allocated by
ACA as of the date hereof to either their United Express or Delta
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ARTICLE 18. AIRPORT FACILITIES.
A. Right of First Refusal. If, at any time during the term
of this Agreement, ACA receives an offer, bid, inquiry or other
expression of interest ("Facilities Offer") to purchase, lease,
sublease, encumber or otherwise acquire any interest in any of
its airport facilities where the Aircraft are operated,
including any slots, gates or other facilities (the "Airport
Facilities"), which Facilities Offer ACA desires to accept, ACA
will, within thirty (30) days of receiving such Facilities Offer,
notify Delta in writing of such Facilities Offer and the material
terms and conditions thereof (the " Facilities Offer Notice").
Upon receipt of a Facilities Offer Notice, Delta will have thirty
(30) days to either (i) notify ACA that it wishes to consummate
the transaction for or in connection with the Airport Facilities
set forth in the Facilities Offer (the "Offered Airport
Facilities") on the same financial terms and conditions as are in
such Facilities Offer, or (ii) notify ACA that it does not wish
to consummate such transaction (failure to reply in such 30 day
period shall be deemed to be an election by Delta not to
consummate such transaction). If Delta elects to consummate the
transaction involving the Offered Airport Facilities, ACA and
Delta shall consummate the transaction contemplated in the
Facilities Offer as soon as reasonably practicable but no later
than 30 days after any and all governmental approvals required
for such transaction have been obtained (Delta and ACA agree to
use their reasonable best efforts to obtain such approvals as
soon as practicable). If Delta elects not to consummate the
transactions contemplated in the Facilities Offer Notice, ACA may
consummate such transaction with the third party or parties
making the Facilities Offer.
B. Exclusions. The right of first refusal with respect to
Airport Facilities set forth in Article 18(A) shall not apply
to the extent any such Airport Facilities are used by ACA for
business purposes other than in connection with the Aircraft
operations, and shall apply only to the extent permitted in
applicable leases; provided, however, that Holdings or ACA, as
applicable, shall use its commercially reasonable efforts to
assign such assets and leases to Delta, at no additional cost
to Delta, Holdings or ACA; provided, if there are any costs
imposed by the airport authority or slot holder with the
transfer, such costs shall be paid by Delta.
ARTICLE 19. CONTRACT INTERPRETATION.
A. This Agreement is subject to, and will be governed by and
interpreted in accordance with, the laws of the State of New
York and of the United States of America.
B. The descriptive headings of the several articles and
sections of this Agreement are inserted for convenience only,
confer no rights or obligations on either party, and do not
constitute a part of this Agreement.
C. Time is of the essence in interpreting and performing this
Agreement.
D. Except as provided in Article 17(B), if applicable, this
Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof, and any
other prior or contemporaneous agreements, whether written or
oral, are expressly superseded hereby.
E. If any part of any provision of this Agreement shall be
invalid or unenforceable under applicable law, such part shall
be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions.
F. This Agreement may be executed by a facsimile and in any
number of counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall constitute
one and the same instrument.
ARTICLE 20. CIRCUMSTANCES BEYOND THE PARTIES' CONTROL.
With the exception of outstanding rights and obligations, each
party will be relieved of its obligations under this Agreement
in the event, to the extent and for the period of time that
performance is delayed or prevented by any cause reasonably
beyond that party's control, including specifically non-
delivery or delay in delivery of aircraft to ACA, delay in
completion of required training of Operator's employees by the
aircraft manufacturer, or delay in receipt of any necessary
government approvals.
ARTICLE 21. TRADEMARKS AND CORPORATE IDENTIFICATION.
A. TRADEMARKS.
1. Each of Delta and ACA acknowledges for all purposes that any
and all logos, trademarks, service marks and trade names of the
other, whether registered or not, are and shall at all times
remain the exclusive property of the other and may not be used
without the prior written consent of such party, except as set
forth herein. Each of Delta and ACA further acknowledges that
any goodwill or other rights which arise as a result of the use
by it of the other party's marks as permitted under this
Agreement shall accrue solely to the benefit of the party or
affiliate of the party owning such marks, whether registered or
not. Should any right, title or interest in the logos,
trademarks, service marks or trade names of a party become vested
in the other party, the latter party shall hold such right, title
and interest in trust for the benefit of the former party and
shall, at the request of the former party, promptly and
unconditionally assign such right, title and interest to the
former party without royalties or compensation of any kind.
2. Each of Delta and ACA hereby grants to the other, a limited
non-exclusive, non-transferable, royalty-free license for the
term of this Agreement to use their respective service marks as
identified to each other from time to time (including Delta's
marks "Delta" and "Delta Connection") (each a "Licensed
Trademark"), subject to the terms and conditions set forth in
this Article 21. This license is limited to the use of the
Licensed Trademarks in connection with the (i) advertising and
promotion of the Delta Connection Flights and (ii) the Livery (as
defined in Article 21(B)(1) below) of the Aircraft as
contemplated by this Agreement.
3. Each party agrees to use the Licensed Trademarks only in a
manner permitted herein or as approved in advance and in writing
by the party owning or possessing the right to license such
Licensed Trademarks. Each Licensed Trademark shall be marked
with an r or SM or other symbol, as appropriate.
4. Each party agrees that all Livery, advertising and
promotional materials bearing the Licensed Trademarks in relation
to air transport services contemplated by this Agreement shall
meet the quality and presentation standards as set forth by the
party owning the relevant Licensed Trademark.
5. Each party agrees that all advertising, promotional and
other materials with the other party's name or Licensed
Trademark, shall be submitted for such other party's prior review
and approval before painting, printing, publishing, or
distributing any such material. Each party's Licensed Trademark
must appear exactly as set forth in specifications provided by
such party. Once a party has approved a specific type of
advertisement the other party may continue to use such party's
name or Licensed Trademark in the same format during the term of
this Agreement. At either party's direction, the other party
shall cause the withholding, discontinuance, recall or
cancellation, as appropriate, of any advertising or promotional
material not approved by such party that differs significantly
from that approved by such party or that is put to a use or used
in a media not approved by such party. Each party reserves the
right to refuse to participate in any advertising or promotional
materials proposed by the other party.
6. Each party has sole discretion to determine the
acceptability of both the quality and presentation of advertising
and promotional materials using its Licensed Trademark.
B. BRANDING.
1. Livery. Each of the Aircraft shall be in the color
scheme, including exterior paint and interior upholstery and
appointments ("Livery") of the Delta Connection Livery, as
provided to Operator by Delta from time to time.
2. On Board Branding. Delta shall control all on board
branding and in-flight materials including, without limitation,
in-flight publications, food and beverage products, paper goods,
service ware and flight attendant uniforms.
22. CONFIDENTIALITY
A. Except as otherwise provided below, each party shall,
and shall ensure that its directors, officers, employees,
affiliates and professional advisors (collectively, the
"Representatives"), at all times, maintain strict confidence and
secrecy in respect of all Confidential Information (as defined
below) of the other party (including its affiliates) received
directly or indirectly as a result of this Agreement. If a party
(the "Disclosing Party") in good faith determines that it is
required to disclose any Confidential Information of other party
(the "Affected Party") in order to comply with any applicable law
or government regulation, or under the terms of a subpoena or
order issued by a court or governmental body, it shall (a) notify
the Affected Party immediately of the existence, terms and
circumstances surrounding such request, (b) consult with the
Affected Party on the advisability of taking legally available
steps to resist or narrow such request and (c) if any disclosure
of Confidential Information is required to prevent the Disclosing
Party from being held in contempt or subject to other legal
penalty, furnish only such portion of the Confidential
Information as it is legally compelled to disclose and use
commercially reasonable efforts (at the cost of the party whose
Confidential Information is being protected) to obtain an order
or other reliable assurance that confidential treatment shall be
accorded to the disclosed Confidential Information. Each party
agrees to transmit Confidential Information only to such of its
Representatives as required for the purpose of implementing and
administering this Agreement, and shall inform such
Representatives of the confidential nature of the Confidential
Information and instruct such Representatives to treat such
Confidential Information in a manner consistent with this Article
22.
For purposes of this Agreement, "Confidential Information"
shall mean (a) all confidential or proprietary information of a
party, including, without limitation, trade secrets, information
concerning past, present and future research, development,
business activities and affairs, finances, properties, methods of
operation, processes and systems, customer lists, customer
information (such as passenger name record or "PNR" data) and
computer procedures and access codes; and (b) the terms and
conditions of this Agreement and any reports, invoices or other
communications between the parties given in connection with the
negotiation or performance of this Agreement; and (c) excludes
(i) information already in a party's possession prior to its
disclosure by other party; (ii) information obtained from a third
person or entity that is not prohibited from transmitting such
information to the receiving party as a result of a contractual,
legal or fiduciary obligation to the party whose information is
being disclosed; (iii) information that is or becomes generally
available to the public, other than as a result of disclosure by
a party in violation of this Agreement; or (iv) information that
has been or is independently acquired or developed by a party, or
its Affiliate, without violating any of its obligations under
this Agreement.
B. Each party acknowledges and agrees that in the event of
any breach of this Article 22, the Affected Party shall be
irreparably and immediately harmed and could not be made whole by
monetary damages. Accordingly, it is agreed that, in addition to
any other remedy at law or in equity, the Affected Party shall be
entitled to an injunction or injunctions (without the posting of
any bond and without proof of actual damages) to prevent breaches
or threatened breaches of this Article 22 and/or to compel
specific performance of this Article 22.
C. The confidential obligations of the parties under this
Article 22 shall survive the termination or expiration of this
Agreement.
ARTICLE 23. MODIFICATION AND WAIVER.
No amendment, modification, supplement, termination or waiver
of any provision of this Agreement, and no consent to any
departure by either party therefrom, shall in any event be
effective unless in writing signed by authorized
representatives of both parties, and then only in the specific
instance and for the specific purpose given.
ARTICLE 24. NOTICES.
Unless otherwise provided herein, all notices, requests
and other communications required or provided for hereunder
shall be in writing (including telecopy or similar
teletransmission or writing) and shall be given at the
following addresses:
(1) If to Delta:
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Attention: Senior Vice President, Network
Management
Telecopy: (404) 715-6018
(2) If to ACA:
Atlantic Coast Airlines Holdings, Inc.
515A Shaw Road
Dulles, Virginia 20166
Attention: President
Telecopy: 703-925-6288
Any such notice, request or other communication shall be
effective (i) if given by mail, upon the earlier of receipt or
the third business day after such communication is deposited
in the United States mails, registered or certified, with
first class postage prepaid, addressed as aforesaid or (ii) if
given by any other means including, without limitation, by air
courier, when delivered at the address specified herein.
Delta or ACA may change its address for notice purposes by
notice to the other party in the manner provided herein.
ARTICLE 25. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of Delta
and ACA and their respective successors and assigns; provided,
however, neither party may assign or transfer this Agreement
or any portion hereof to any person or entity without the
express written consent of the other party. Any assignment or
transfer, by operation of law or otherwise, without such
consent shall be null and void and of no force or effect.
ARTICLE 26. ADDITIONAL DOCUMENTS.
The parties hereby covenant and agree, prior to the
commencement of Delta Connection services by Operator, to
execute and deliver the following additional documents in
connection with this Agreement:
A. A ground handling agreement, providing for ground
handling by Delta at stations operated by Delta-----------
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ARTICLE 27. MISCELLANEOUS.
A. TRAVEL BENEFITS.
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ACA further reserves the right to enter into interline
agreements with other carriers to provide free and reduced
rate travel for ACA's employees, and to provide reciprocal
benefits for employees of such carriers on Delta Connection
Flights on a space available basis.
B. CARGO.
Delta Connection Flights will initially provide small package
services as typically provided under Delta's "Delta Dash"
service. Operator and Delta agree to meet and discuss the
implementation of expanded cargo operations on the Delta
Connection Flights at an appropriate time to be agreed.
C. TRAINING PROVIDED BY OPERATOR.
Operator will train Delta's personnel on aircraft and ground
handling operations as necessary and required with regard to
Delta's handling of the Aircraft.
ARTICLE 28. GOOD FAITH.
Each party shall exercise good faith in its dealings with the
other parties hereto and in performance of its obligations
under this Agreement.
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IN WITNESS WHEREOF, the parties have executed this
Agreement by their undersigned duly authorized
representatives:
Atlantic Coast Airlines Holdings, Inc. Delta Air
Lines, Inc.
By: By:
Name: ____________________ Name:
__________________
Title: _____________________ Title:
___________________
ACA Management, Inc.
By: ______________________
Name: ____________________
Title: _____________________
EXHIBIT A
The Aircraft
No. of Aircraft Scheduled
Aircraft Type Delivery Date
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Exhibit B
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Exhibit C
RES SYSTEM EQUIPMENT
Equipment, as defined in Article 9(B)(1), will be provided to
Operator by Delta at the following of Operator's locations:
Headquarters
Dispatch
Training
Maintenance base for the Aircraft
Operator handled stations
Exhibit D
OUTLINE OF EMERGENCY RESPONSE PROGRAM
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